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Halliburton (HAL) Q3 Earnings Top Amid North America Softness
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Halliburton Company (HAL - Free Report) reported third-quarter 2023 adjusted net income per share of 79 cents, surpassing the Zacks Consensus Estimate of 77 cents and well above the year-ago quarter profit of 60 cents (adjusted). The outperformance reflects stronger-than-expected profit from its Completion and Production division.
Meanwhile, revenues of $5.8 billion were 8.3% higher than the corresponding period of 2022 but came below the Zacks Consensus Estimate (by some $35 million) on tepid sales from North America.
Inside Halliburton’s Regions & Segments
North American revenue edged down 1% year over year to $2.6 billion, which also failed to meet our projection of $2.8 billion. Revenue from Halliburton’s international operations was up 17.4% from the year-ago period to $3.2 billion but falling short of our estimate of $3.1 billion.
Operating income from the Completion and Production segment was $746 million, up significantly from the year-ago level of $583 million and ahead of our projection of $708.8 million. The division’s performance was buoyed by the strength in Eastern Hemisphere cementing job, higher stimulation activity in the overseas markets, to go with robust completion tool sales globally.
Drilling and Evaluation unit profit improved from $325 million in the third quarter of 2022 to $378 million in the corresponding period of 2023. However, the division could not manage to beat our estimate of $401.4 million. This was primarily due to a decline in drilling-associated services, tepid project management activity and lower software sales in Mexico, partly offset by a pickup in fluid services in the Middle East/Asia and Latin America, plus strong wireline activity in Latin America and Europe/Africa.
Halliburton Company Price, Consensus and EPS Surprise
Halliburton reported third-quarter capital expenditure of $409 million, slightly higher than our projection of $403.5 million. As of Sep 30, 2023, the Zacks Rank #3 (Hold) company had approximately $2 billion in cash/cash equivalents and $7.8 billion in long-term debt, representing a debt-to-capitalization ratio of 45.9. HAL also bought back $198 million worth its stock during the July-September period. The company generated $874 million of cash flow from operations in the third quarter, leading to free cash flow of $511 million.
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong third-quarter performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe, and the long-term oilfield services demand, to drive a strong and sustained upcycle.
Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency, and the global presence points to a rosy outlook. The Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns.
Important Energy Earnings So Far
Let’s take a look at some key energy reports of this season.
SLB (SLB - Free Report) , the largest oilfield contractor, announced third-quarter 2023 earnings of 78 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate by a penny. SLB’s bottom line also significantly increased from the year-ago quarter’s earnings of 63 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activity in the international market. As of Sep 30, 2023, the company had approximately $3.7 billion in cash and short-term investments. It had a long-term debt of $11.2 billion at the end of the third quarter.
Meanwhile, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported third-quarter adjusted earnings per share of 25 cents, a penny below the Zacks Consensus Estimate. The bottom line was adversely affected by a decline in realized natural gas liquid price, which was partially offset by higher gathering and transport volumes. However, KMI’s third-quarter DCF was $1.1 billion, down $28 million from a year ago.
As of Sep 30, 2023, Kinder Morgan reported $80 million in cash and cash equivalents. Its long-term debt amounted to $27.9 billion at the quarter-end. For 2023, KMI reiterated its net income guidance of $2.5 billion and a dividend of $1.13 per share, suggesting an increase of 2% from the prior-year reported figure.
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Halliburton (HAL) Q3 Earnings Top Amid North America Softness
Halliburton Company (HAL - Free Report) reported third-quarter 2023 adjusted net income per share of 79 cents, surpassing the Zacks Consensus Estimate of 77 cents and well above the year-ago quarter profit of 60 cents (adjusted). The outperformance reflects stronger-than-expected profit from its Completion and Production division.
Meanwhile, revenues of $5.8 billion were 8.3% higher than the corresponding period of 2022 but came below the Zacks Consensus Estimate (by some $35 million) on tepid sales from North America.
Inside Halliburton’s Regions & Segments
North American revenue edged down 1% year over year to $2.6 billion, which also failed to meet our projection of $2.8 billion. Revenue from Halliburton’s international operations was up 17.4% from the year-ago period to $3.2 billion but falling short of our estimate of $3.1 billion.
Operating income from the Completion and Production segment was $746 million, up significantly from the year-ago level of $583 million and ahead of our projection of $708.8 million. The division’s performance was buoyed by the strength in Eastern Hemisphere cementing job, higher stimulation activity in the overseas markets, to go with robust completion tool sales globally.
Drilling and Evaluation unit profit improved from $325 million in the third quarter of 2022 to $378 million in the corresponding period of 2023. However, the division could not manage to beat our estimate of $401.4 million. This was primarily due to a decline in drilling-associated services, tepid project management activity and lower software sales in Mexico, partly offset by a pickup in fluid services in the Middle East/Asia and Latin America, plus strong wireline activity in Latin America and Europe/Africa.
Halliburton Company Price, Consensus and EPS Surprise
Halliburton Company price-consensus-eps-surprise-chart | Halliburton Company Quote
Balance Sheet
Halliburton reported third-quarter capital expenditure of $409 million, slightly higher than our projection of $403.5 million. As of Sep 30, 2023, the Zacks Rank #3 (Hold) company had approximately $2 billion in cash/cash equivalents and $7.8 billion in long-term debt, representing a debt-to-capitalization ratio of 45.9. HAL also bought back $198 million worth its stock during the July-September period. The company generated $874 million of cash flow from operations in the third quarter, leading to free cash flow of $511 million.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Management Remarks & Outlook
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong third-quarter performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe, and the long-term oilfield services demand, to drive a strong and sustained upcycle.
Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency, and the global presence points to a rosy outlook. The Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns.
Important Energy Earnings So Far
Let’s take a look at some key energy reports of this season.
SLB (SLB - Free Report) , the largest oilfield contractor, announced third-quarter 2023 earnings of 78 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate by a penny. SLB’s bottom line also significantly increased from the year-ago quarter’s earnings of 63 cents.
SLB’s strong quarterly earnings resulted from higher evaluation and stimulation activity in the international market. As of Sep 30, 2023, the company had approximately $3.7 billion in cash and short-term investments. It had a long-term debt of $11.2 billion at the end of the third quarter.
Meanwhile, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported third-quarter adjusted earnings per share of 25 cents, a penny below the Zacks Consensus Estimate. The bottom line was adversely affected by a decline in realized natural gas liquid price, which was partially offset by higher gathering and transport volumes. However, KMI’s third-quarter DCF was $1.1 billion, down $28 million from a year ago.
As of Sep 30, 2023, Kinder Morgan reported $80 million in cash and cash equivalents. Its long-term debt amounted to $27.9 billion at the quarter-end. For 2023, KMI reiterated its net income guidance of $2.5 billion and a dividend of $1.13 per share, suggesting an increase of 2% from the prior-year reported figure.