01—Abstract
Summary
Summary of the 10-K filed February 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Halliburton Company's 2023 Form 10-K reports total revenue of $23.0 billiona, up 13% from $20.3 billion in 2022, with operating income of $4.1 billion versus $2.7 billion a year earlier.
Completion and Production revenue rose 18% to $13.7 billionb and Drilling and Evaluation revenue rose 7% to $9.3 billion. North America revenue increased 9% to $10.5 billion and international revenue improved 17%, with the company citing higher activity and pricing gains. Net income attributable to the company was $2.64 billion, or $2.92 diluted per share, compared with $1.57 billion in 2022.
Operating cash flow was $3.5 billionc and capital expenditures were $1.4 billion. Capital returns were a major focus. Halliburton returned $1.4 billion to shareholders through buybacks ($800 million) and dividends ($576 million), repurchased $300 million of debt, and reduced long-term debt to $7.6 billion from $7.9 billion.
The Board's capital return framework targets returning at least 50% of annual free cash flow, and the company does not intend to incur additional debt in 2024. Cash and equivalents were $2.3 billiond, and the company had $3.5 billion of available committed bank credit. Key risks include an IRS Notice of Proposed Adjustment received September 28, 2023, which relates to reclassifying about 95% of a $3.5 billion 2016 termination fee paid to Baker Hughes.
The company strongly disagrees and plans to contest it; if the IRS prevails, the filing estimates cash taxes of approximately $650 million plus interest. Losses from Argentina's currency devaluation ($131 million) and a $110 million loss on Blue Chip Swap transactions also weighed on 2023 results. KPMG LLP issued an unqualified opinion on the financial statements and on internal control over financial reporting.
02—Key points
Key Highlights
- Total revenue rose 13% to $23.0 billion, with Completion and Production up 18% and Drilling and Evaluation up 7%.
- Operating income increased to $4.08 billion from $2.71 billion, and Completion and Production operating margin was cited as 21% and Drilling and Evaluation as 17%.
- Net income attributable to the company was $2.64 billion, or $2.92 per diluted share, compared with $1.57 billion in 2022.
- Shareholder returns totaled $1.4 billion ($800 million in buybacks and $576 million in dividends), with about $4.1 billion remaining under the repurchase authorization.
- Debt was reduced by $300 million through repurchases, and the company does not plan to incur additional debt in 2024.
- The IRS proposed reclassifying a $3.5 billion 2016 termination fee deduction; the filing estimates cash taxes of about $650 million plus interest if the IRS prevails, which the company plans to contest.
- The 2024 plan calls for capital expenditures of about 6% of revenue and returning over 50% of annual free cash flow to shareholders.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 6, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $23.02B$20.30B | +13.4% |
| R&D Expenses | $408.00M$345.00M | +18.3% |
| Operating Expenses | $18.93B$17.59B | +7.6% |
| Operating Income | $4.08B$2.71B | +50.8% |
| Net Income | $2.66B$1.59B | +66.9% |
| EPS (Basic) | $2.93$1.74 | +68.4% |
| EPS (Diluted) | $2.92$1.73 | +68.8% |
| Shares Outstanding (Basic) | 899.00M904.00M | −0.6% |
| Shares Outstanding (Diluted) | 902.00M908.00M | −0.7% |
05—Questions
Frequently Asked Questions
How did Halliburton perform financially in 2023?
Total revenue reached $23.0 billion, up 13% from $20.3 billion in 2022. Operating income rose to $4.08 billion from $2.71 billion, and net income attributable to the company was $2.64 billion, or $2.92 per diluted share. The filing attributes the growth to increased demand and pricing gains across all four geographic regions.
How much did Halliburton return to shareholders, and what is its policy?
The company returned $1.4 billion through share buybacks ($800 million) and dividends ($576 million). Its capital return framework, approved by the Board in January 2023, targets returning at least 50% of annual free cash flow through dividends and share repurchases. The quarterly dividend was $0.16 per share during 2023, and the Board declared $0.17 per share for the first quarter of 2024.
What is the main tax risk facing Halliburton?
The IRS issued a Notice of Proposed Adjustment on September 28, 2023, covering the 2016 tax return. It proposes reclassifying about 95% of the $3.5 billion termination fee paid to Baker Hughes from an ordinary deduction to a capital loss. Halliburton strongly disagrees, initiated the IRS appeals process in December 2023, and estimates cash taxes of approximately $650 million plus interest if the IRS position prevails.
What is Halliburton's debt and liquidity position?
Long-term debt was $7.6 billion at December 31, 2023, down from $7.9 billion a year earlier. The company had $2.3 billion of cash and equivalents and $3.5 billion of available committed bank credit under a revolving facility expiring April 27, 2027. The filing notes no financial covenants or material adverse change provisions in its bank agreements, and its credit ratings were BBB+ (S&P) and A3 (Moody's).
What are the main risks to Halliburton's business in Argentina and Mexico?
In 2023, Argentina's peso devalued by more than 50% in December, causing a $131 million loss, and a $110 million loss came from Blue Chip Swap transactions. The company expects currency repatriation restrictions in Argentina to continue in 2024. Receivables from its primary Mexico customer were about 6% of total receivables at year-end 2023, and the company entered a credit default swap relating to a borrowing by that customer.
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