01—Abstract
Summary
Summary of the 10-K filed February 5, 2021. Cited figures are marked; the original filing is the authoritative source.
Halliburton Company (HAL) reported a difficult 2020 as the COVID-19 pandemic and an unprecedented downturn in the energy industry drove revenue down 36% to $14.4 billiona from $22.4 billion in 2019.
The company recorded an operating loss of $2.4 billionb, driven by $3.8 billion of impairments and other charges, and a net loss of $2.9 billion, or $3.34 per share. Completion and Production revenue fell 44% to $7.8 billion and Drilling and Evaluation fell 21% to $6.6 billion. North America revenue declined 52%, while international revenue declined 17%.
Shareholders' equity fell to $4.98 billionc from $8.03 billion at year-end 2019. Liquidity remained adequate, with $2.6 billion of cash and equivalents and $3.5 billion of available committed bank credit under a revolving facility expiring in 2024. Operating cash flow was $1.9 billion and capital expenditures were $728 million.
Halliburton cut its quarterly dividend from $0.18 to $0.045d per share in the second quarter of 2020 and paid $278 million in dividends during the year. Credit ratings from S&P (BBB+) and Moody's (Baa1) carried negative outlooks. The company also wrote down its remaining Venezuela investment and reduced employees from approximately 55,000 to 40,000.
Management's 2021 outlook anticipates an activity recovery led by international short-cycle producers and a North American recovery in completions activity. Capital expenditures are expected to be about $750 million in 2021. Investors should weigh the recovery outlook against the company's pandemic-related risks, including customer payment defaults, a possible further dividend reduction, and possible additional impairments.
02—Key points
Key Highlights
- Revenue fell 36% to $14.4 billion in 2020 from $22.4 billion in 2019, with North America revenue down 52% and international revenue down 17%.
- Operating loss of $2.4 billion and net loss of $2.9 billion ($3.34 per share), driven by $3.8 billion of impairments and other charges.
- Cash flow from operations was $1.9 billion and capital expenditures were $728 million, with 2021 capex planned at about $750 million.
- Cash and equivalents of $2.6 billion and $3.5 billion of available committed bank credit under a revolving facility expiring in 2024; the filing states no financial covenants or material adverse change provisions in bank agreements.
- Quarterly dividend cut from $0.18 to $0.045 per share in Q2 2020; S&P (BBB+) and Moody's (Baa1) ratings carry negative outlooks.
- Total shareholders' equity declined to $4.98 billion from $8.03 billion, and total debt was $9.8 billion at year-end 2020.
- Management expects activity recovery in 2021, with international growth in the second half and North American completions activity improving in the first half.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 5, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $14.45B$22.41B | −35.5% |
| R&D Expenses | $309.00M$404.00M | −23.5% |
| Operating Expenses | $16.88B$22.86B | −26.1% |
| Operating Income | -$2.44B-$448.00M | −443.7% |
| Net Income | -$2.94B-$1.13B | −160.6% |
| EPS (Basic) | $-3.34$-1.29 | −158.9% |
| EPS (Diluted) | $-3.34$-1.29 | −158.9% |
| Shares Outstanding (Basic) | 881.00M875.00M | +0.7% |
| Shares Outstanding (Diluted) | 881.00M875.00M | +0.7% |
05—Questions
Frequently Asked Questions
How much did Halliburton's revenue and profitability decline in 2020?
Revenue declined 36% to $14.4 billion from $22.4 billion in 2019. The operating loss was $2.4 billion, compared with an operating loss of $448 million in 2019, and the net loss was $2.9 billion, or $3.34 per share. The company attributed the operating loss mainly to $3.8 billion of impairments and other charges.
Is Halliburton's liquidity sufficient to fund its operations?
Management states that cash on hand, operating cash flows and the revolving credit facility provide sufficient liquidity. At December 31, 2020, the company had $2.6 billion of cash and equivalents and $3.5 billion of available committed bank credit. The company has $185 million of debt due in the first quarter of 2021 and $500 million due in the fourth quarter of 2021.
What happened to Halliburton's dividend in 2020?
The quarterly dividend was reduced in the second quarter of 2020 from $0.18 to $0.045 per common share and remained at that level for the rest of the year. Total dividends paid in 2020 were $278 million. The filing notes that a further reduction or suspension of the dividend is possible if liquidity needs require it.
What is management's outlook for 2021?
Management expects oil prices, which have returned to pre-pandemic levels, to support an activity recovery led by international short-cycle producers. In North America, completions activity is expected to improve in the first half of 2021. The company expects international activity to increase in the second half of 2021 compared with the second half of 2020, but it cautions that the pace of recovery depends on demand and the COVID-19 situation.
What are the main risks flagged in the filing?
Key risks include renewed oil price weakness, reduced customer capital spending, customer payment delays and defaults (about $824 million of allowances for credit losses, primarily tied to Venezuela), possible further asset impairments including goodwill, credit rating downgrades, and the effects of climate-related regulation and the COVID-19 pandemic. The filing also describes exposure to sanctions and political instability in several countries.
06—Continue