Halliburton(HAL) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total company revenue for Q3 2025 was $5,600,000,000, representing a 2% increase compared to Q2 2025 [24] - Adjusted operating margin was 13%, with adjusted operating income of $748,000,000 [24] - Cash flow from operations was $488,000,000, and free cash flow was $276,000,000 [24] - The company repurchased approximately $250,000,000 of its common stock during the quarter [5][24] Business Line Data and Key Metrics Changes - Completion and Production division revenue was $3,200,000,000, a 2% increase from Q2 2025, with operating income flat at $514,000,000 and an operating margin of 16% [25] - Drilling and Evaluation division revenue was $2,400,000,000, also a 2% increase from Q2 2025, with operating income rising 12% to $348,000,000 and an operating margin of 15% [25] Market Data and Key Metrics Changes - International revenue was flat compared to Q2 2025, with Europe Africa revenue at $828,000,000 and Middle East Asia revenue at $1,400,000,000, a 3% decrease [27][28] - North America revenue was $2,400,000,000, a 5% increase sequentially, driven by improved stimulation activity [28] Company Strategy and Development Direction - The company is focusing on cost structure improvements, expecting to save approximately $100,000,000 per quarter going forward [5][7] - Capital expenditures for 2026 are expected to decline by almost 30% to around $1,000,000,000 [7] - The company is prioritizing technology development and maintaining a strong competitive position in the market [7][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth of oil and gas demand, despite near-term volatility in commodity prices [6][20] - The company anticipates a cautious posture from customers in North America due to market conditions, while international markets are expected to remain steady [6][20] - Management highlighted the importance of maintaining cost and capital discipline while investing in technology [20] Other Important Information - The company has a strategic partnership with Voltigrid, focusing on distributed power solutions for data centers, which is expected to be a long-term growth opportunity [18][19] - The company recorded severance and fixed asset write-offs of $284,000,000 due to market conditions [23] Q&A Session Summary Question: Insights on the distributed power generation market and strategic collaboration with Voltigrid - Management highlighted the significant demand for power and AI, emphasizing the growth potential in international markets and the collaborative investment in project economics with Voltigrid [35][37] Question: Drivers of North American revenue outperformance - Management noted less white space than expected in Q3, contributing to better-than-anticipated revenues, and expressed confidence in Halliburton's market positioning for 2026 [40][41] Question: Opportunities in the Middle East and scaling AI - Management identified the Middle East as a region with substantial opportunities due to available energy and capital, and discussed strategies to overcome constraints [43][44] Question: Margins and cost savings impact - Management indicated that half of the margin beat came from earlier-than-expected labor cost reductions, alongside strong performance in North America and international markets [52] Question: VoltaGrid partnership details - Management confirmed that the partnership with Voltigrid is exclusive in certain targeted areas, emphasizing the growth potential for both companies [102] Question: CapEx funding and strategic investments - Management clarified that the $1,000,000,000 CapEx budget for next year does not include investments related to Voltigrid, which will be funded on a project-by-project basis [63] Question: Idling equipment and market dynamics - Management discussed the disciplined approach to idling non-economic fleets, indicating that this could lead to tighter pricing in North America as the market recovers [112] Question: Free cash flow expectations for 2026 - Management projected $1,700,000,000 in free cash flow for 2025, with expectations for improved liquidity in 2026 due to cost reductions and lower CapEx [115]