Halliburton(US:HAL)2021-07-20 18:15Financial Data and Key Metrics Changes - Total company revenue increased by 7% sequentially to $3.7 billion, while operating income grew by 17% to $434 million, supported by higher equipment utilization and significant operating leverage [5][25]. - Completion and Production division revenue rose by 10% to $2 billion, with operating income increasing by 26% to $317 million [26]. - Drilling and Evaluation division revenue grew by 5% to $1.7 billion, with operating income increasing by 2% to $175 million [27]. Business Line Data and Key Metrics Changes - Completion and Production division saw improvements driven by higher activity across multiple product service lines in North America, improved cementing activity, and increased completion tool sales [26]. - Drilling and Evaluation division benefited from improved drilling-related services and wireline activity across all regions, although software sales decreased globally [27]. Market Data and Key Metrics Changes - North America revenue increased by 12%, primarily due to higher pressure pumping services and drilling-related activities [27]. - International revenue grew by 4%, with activity increasing in key producing regions despite COVID-19 disruptions [6]. Company Strategy and Development Direction - The company anticipates a multi-year upcycle with simultaneous growth in both international and North American markets, driven by supportive commodity prices and increased demand [7][24]. - Halliburton is focused on technology differentiation, digital adoption, and capital efficiency to maximize value and drive profitable growth [24][33]. - The company is expanding into new market segments, including specialty chemicals and artificial lift businesses, which are expected to provide unique growth opportunities [17][18]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a constructive macro environment for oil demand, expecting continued activity momentum in the second half of 2021 [6][7]. - The company anticipates double-digit annual spending growth in international markets and North America over the next couple of years, despite some ongoing COVID-related disruptions [8][9]. - Management highlighted the importance of maintaining a focus on profitable growth and the need for careful capital deployment in the current market [39][40]. Other Important Information - The company generated strong free cash flow of $265 million in the second quarter, bringing year-to-date free cash flow to almost $425 million [6][31]. - Capital expenditures for the quarter were approximately $190 million, with expectations to remain within the full-year target of 5% to 6% of revenue [30]. Q&A Session Summary Question: Customer alignment with market expansion - Management noted that public customers are following through on their plans to increase supply, with a steady increase in activity expected internationally [36][37]. Question: Pricing and returns on assets - Management indicated that pricing is gradually improving, with expectations for further acceleration into 2022, while emphasizing the importance of profitable growth [38][39]. Question: International market activity and growth trajectory - Management expects mid double-digit growth in the Middle East and other regions, with signs of increasing demand and activity [42][44]. Question: Inflation impact on margins - Management acknowledged inflation in various areas, with expectations to recover costs and improve margins as activity increases [46][47]. Question: Digital contract wins and margin impact - Management stated that digital capabilities positively impact margins across the business, with benefits expected to ramp up in 2022 and beyond [55][57]. Question: Attracting generalist investors - Management emphasized the need for clarity in sustainable growth trajectories, returns on capital, and returning excess capital to shareholders to attract generalist investors [63][66].