01—Abstract
Summary
Summary of the 10-K filed February 4, 2022. Cited figures are marked; the original filing is the authoritative source.
Halliburton Company's 2021 Form 10-K reports a return to profitable growth.
Total revenue rose 6% to $15.3 billiona from $14.4 billion in 2020, with Completion and Production revenue up 7% to $8.4 billion and Drilling and Evaluation up 4% to $6.9 billion. Operating income was $1.8 billion, compared with an operating loss of $2.4 billion in 2020 that included $3.8 billion of impairments and other charges. Net income attributable to the company was $1.457 billion, or $1.63 per share.
The company recorded a total income tax benefit of $216 millionb, which included a release of about $519 million of valuation allowance on foreign tax credits. Cash flows from operating activities were $1.9 billion, and cash and equivalents ended the year at $3.0 billion. Balance sheet and capital allocation items were central to the year.
Halliburton repaid the $185 millionc 8.75% senior debentures at maturity in February 2021 and redeemed $500 million of 3.25% senior notes in August 2021. Capital expenditures were $799 million, or 5.2% of revenue, and dividends paid totaled $161 million. No share repurchases were made under the program in 2021, leaving approximately $5.1 billion authorized.
Total debt was $9.1 billiond at year-end, and the company announced it would redeem $600 million of its 3.8% senior notes due 2025 on February 23, 2022, using cash on hand. Management stated it does not intend to incur additional debt in 2022. Credit ratings were BBB+ from S&P and Baa1 from Moody's, both with stable outlooks.
Looking ahead, management expects 2022 capital spending of $1.0 billion, within its 5-6% of revenue target. It expects customer spending to rise in the range of 14-16% internationally and more than 25% in North America. Key risks disclosed include oil price volatility, COVID-19 demand effects, Russia sanctions exposure, and a $352 million gross unrecognized tax benefit balance, of which $266 million may require cash payment.
02—Key points
Key Highlights
- Revenue rose 6% to $15.3 billion in 2021, led by North America land activity; operating income was $1.8 billion versus a $2.4 billion operating loss in 2020, which included $3.8 billion of impairments and other charges.
- Completion and Production operating income was $1.2 billion (up 24%), and Drilling and Evaluation operating income was $801 million (up 41%).
- Net income attributable to the company was $1.457 billion, or $1.63 per share, compared with a loss of $2.945 billion in 2020.
- Operating cash flows were $1.9 billion, and cash and equivalents increased to $3.0 billion at year-end.
- Capital expenditures were $799 million (5.2% of revenue), with 2022 capital spending guided to $1.0 billion.
- Debt was reduced by repaying $185 million of debentures and redeeming $500 million of 3.25% notes; a $600 million 3.8% note redemption is set for February 23, 2022, funded with cash on hand.
- Quarterly dividend was raised to $0.12 per share for the first quarter of 2022, an increase of $0.075 from the 2021 quarterly rate, and roughly $5.1 billion remains authorized for share repurchases.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 4, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $15.29B$14.45B | +5.9% |
| R&D Expenses | $321.00M$309.00M | +3.9% |
| Operating Expenses | $13.49B$16.88B | −20.1% |
| Operating Income | $1.80B-$2.44B | +173.9% |
| Net Income | $1.47B-$2.94B | +149.9% |
| EPS (Basic) | $1.63$-3.34 | +148.8% |
| EPS (Diluted) | $1.63$-3.34 | +148.8% |
| Shares Outstanding (Basic) | 892.00M881.00M | +1.2% |
| Shares Outstanding (Diluted) | 892.00M881.00M | +1.2% |
05—Questions
Frequently Asked Questions
How did Halliburton's profitability change in 2021?
Operating income rose to $1.8 billion from an operating loss of $2.4 billion in 2020, which had included $3.8 billion of impairments and other charges. In 2021, impairments and other charges were only $12 million. Revenue grew 6% to $15.3 billion, mainly from higher activity and pricing in North America land and Latin America.
What drove the 2021 income tax benefit?
The company recorded a total income tax benefit of $216 million on pre-tax income of $1.3 billion, an effective tax rate of -17.2%. The filing attributes much of this to the release of approximately $519 million of valuation allowance on foreign tax credits, reflecting improved energy market conditions and expected future taxable income.
How strong is Halliburton's balance sheet and liquidity position?
At December 31, 2021, the company had $3.0 billion of cash and equivalents and $3.5 billion of available committed revolving credit, with total debt of $9.1 billion. Management stated it has no financial covenants or material adverse change provisions in its bank agreements and does not intend to incur additional debt in 2022.
What is the outlook for 2022 spending and activity?
Capital spending for 2022 is expected to be $1.0 billion, within the 5-6% of revenue target. Management expects customer spending to increase 14-16% internationally and more than 25% in North America compared with 2021, based on its stated assumptions about oil prices and the Omicron variant.
What key risks does the filing highlight for investors?
The filing highlights oil and natural gas price volatility, reductions in customer capital spending, COVID-19 pandemic effects, sanctions affecting Russia and Venezuela, and customer payment delays, including a receivable concentration with a primary customer in Mexico representing about 10% of total receivables. It also notes $352 million of gross unrecognized tax benefits, of which $266 million may require a cash payment.
06—Continue