01—Abstract
Summary
Summary of the 10-K filed February 7, 2023. Cited figures are marked; the original filing is the authoritative source.
Halliburton Company's 2022 annual report shows a year of strong top-line and margin recovery.
Total revenue rose 33% to $20.3 billiona from $15.3 billion in 2021, with Completion and Production revenue up 38% to $11.6 billion and Drilling and Evaluation revenue up 27% to $8.7 billion. Operating income reached $2.7 billion versus $1.8 billion in 2021, net income attributable to the company was $1.57 billion, and diluted EPS was $1.73 compared with $1.63. North America revenue grew 51% on higher activity and pricing, while international revenue improved 20%, partly offset by the company's exit from Russia, which led to a $344 million pre-tax write-down of its Russian net assets.
Cash flow from operations was $2.2 billionb and capital expenditures were $1.0 billion. The company repaid $1.2 billion of debt, paid $435 million in dividends, and repurchased $250 million of stock, with roughly $4.9 billion remaining under its repurchase authorization. Long-term debt fell to $7.9 billion from $9.1 billion, and the company stated it does not intend to incur additional debt in 2023.
Its capital return framework targets returning at least 50% of annual free cash flow to shareholders through dividends and buybacks, and the Board declared a $0.16c quarterly dividend for the first quarter of 2023, up from $0.12. Looking ahead, management expects international activity to grow at least 14-16% in 2023 and North American customer spending to increase by at least 15%. Investors should weigh the company's concentration of exposure to commodity prices, the Venezuela-related allowance for credit losses of $731 million, and the continuing volatility in oil and gas markets, which the filing describes as shaped by Russia's invasion of Ukraine, OPEC+ decisions, and the Inflation Reduction Act of 2022.
02—Key points
Key Highlights
- Revenue of $20.3 billion, up 33% from $15.3 billion in 2021, led by North America revenue growth of 51%
- Operating income of $2.7 billion versus $1.8 billion in 2021; Completion and Production and Drilling and Evaluation operating margins of 18% and 15%, respectively
- Net income attributable to the company of $1.57 billion, with diluted EPS of $1.73 versus $1.63 in 2021
- Cash flows from operations of $2.2 billion, capital expenditures of $1.0 billion, and $1.2 billion of debt repayments during 2022
- Shareholder returns of $435 million in dividends and $250 million in share repurchases; about $4.9 billion remains authorized for buybacks
- $344 million pre-tax write-down tied to the sale of Russian operations, which completed in the third quarter of 2022
- 2023 outlook calls for international activity growth of at least 14-16% and North American customer spending growth of at least 15%
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 7, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $20.30B$15.29B | +32.7% |
| R&D Expenses | $345.00M$321.00M | +7.5% |
| Operating Expenses | $17.59B$13.49B | +30.3% |
| Operating Income | $2.71B$1.80B | +50.4% |
| Net Income | $1.59B$1.47B | +8.7% |
| EPS (Basic) | $1.74$1.63 | +6.7% |
| EPS (Diluted) | $1.73$1.63 | +6.1% |
| Shares Outstanding (Basic) | 904.00M892.00M | +1.3% |
| Shares Outstanding (Diluted) | 908.00M892.00M | +1.8% |
05—Questions
Frequently Asked Questions
How did Halliburton perform financially in 2022?
Total revenue rose 33% to $20.3 billion and operating income increased to $2.7 billion from $1.8 billion. Net income attributable to the company was $1.57 billion, or $1.73 per diluted share, compared with $1.63 per diluted share in 2021. The growth was driven mainly by higher North American land activity and pricing.
How is Halliburton returning cash to shareholders?
The company paid $435 million in dividends and repurchased $250 million of stock in 2022. Its capital return framework targets returning at least 50% of annual free cash flow through dividends and share repurchases. The Board declared a $0.16 per share dividend for the first quarter of 2023, up from $0.12 per quarter during 2022, and about $4.9 billion remained authorized for repurchases at year-end.
What is the impact of the Russia exit on Halliburton?
Following Russia's invasion of Ukraine and resulting sanctions, Halliburton decided to sell its Russian operations and completed the sale in the third quarter of 2022. It recorded a $344 million pre-tax charge to write down the disposal group, and it also recorded a $22 million charge related to its Ukraine assets. The filing states that both segments were negatively affected by the exit.
How strong is Halliburton's balance sheet and debt position?
Cash and equivalents were $2.3 billion at year-end 2022, and long-term debt declined to $7.9 billion from $9.1 billion after early redemptions. The company has a $3.5 billion revolving credit facility expiring in April 2027, which was fully available at year-end, and reported no financial covenants or material adverse change provisions in its bank agreements. Credit ratings are BBB+ from S&P and Baa1 from Moody's, both with stable outlooks.
What does Halliburton expect for 2023?
Management expects international activity to grow at least 14-16% in 2023, mainly from the Middle East and Latin America, and expects North American customer spending to increase by at least 15%. Capital spending is expected to remain within 5-6% of revenue. The company does not intend to incur additional debt in 2023, and the EIA projects lower oil and natural gas prices for 2023 than in 2022.
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