01—Abstract
Summary
Summary of the 10-Q filed April 24, 2024. Cited figures are marked; the original filing is the authoritative source.
Halliburton Company's Form 10-Q for the first quarter ended March 31, 2024 reports total revenue of $5.80 billiona, up from $5.68 billion a year earlier, and operating income of $987 million, roughly flat versus $977 million in the prior-year quarter.
Net income attributable to the company was $606 millionb, or $0.68 per basic and diluted share, compared with $651 million, or $0.72 per share, in Q1 2023. Drilling and Evaluation revenue rose to $2.43 billion from $2.27 billion, while Completion and Production revenue was $3.37 billion versus $3.41 billion. North America revenue fell to $2.55 billion from $2.77 billion, while Latin America rose to $1.11 billion from $915 million.
Pre-tax income was reduced by $82 millionc of charges, including a $38 million loss tied to the fair value decrease of a note from an Argentina investment and a $38 million loss from Egyptian pound devaluation, along with $34 million of SAP S4 upgrade expense. Cash flow from operations was $487 million versus $122 million a year earlier, with capital expenditures of $330 million. The company repurchased 7.0 million shares for $250 million and paid $151 million in dividends.
Cash and equivalents ended the quarter at $1.89 billiond, and total debt carrying value was $7.64 billion. The filing highlights an ongoing dispute with the IRS over the classification of a $3.5 billion termination fee paid to Baker Hughes in 2016.
The IRS proposed a NOPA on September 28, 2023, and the company estimates that, if the IRS position prevails through appeals and litigation, cash taxes due could be approximately $650 million plus interest. The company states that no payment is currently required and that it expects its capital return framework to continue, with a goal of returning at least 50% of annual free cash flow to shareholders.
02—Key points
Key Highlights
- Total revenue of $5.80 billion, up from $5.68 billion in Q1 2023; operating income of $987 million, versus $977 million a year earlier.
- Net income attributable to the company of $606 million, or $0.68 per diluted share, compared with $651 million, or $0.72 per share, in Q1 2023.
- Drilling and Evaluation revenue rose to $2.43 billion from $2.27 billion, while North America revenue declined to $2.55 billion from $2.77 billion.
- Charges of $82 million were recorded in other, net, including an Argentina investment impairment and Egyptian currency devaluation; a $34 million SAP S4 upgrade expense was also recognized.
- Operating cash flow was $487 million versus $122 million in the prior-year quarter; capital expenditures were $330 million.
- Shareholder returns included $250 million of share repurchases (7.0 million shares) and $151 million of dividends; approximately $3.8 billion remained authorized for repurchases.
- The IRS has proposed reclassifying a $3.5 billion 2016 Baker Hughes termination fee deduction; the company estimates cash taxes of approximately $650 million plus interest if the IRS position prevails, and it is contesting the proposal.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 24, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $5.80B$5.68B | +2.2% |
| Operating Expenses | $4.82B$4.70B | +2.5% |
| Operating Income | $987.00M$977.00M | +1.0% |
| Net Income | $609.00M$655.00M | −7.0% |
| EPS (Basic) | $0.68$720000.00 | −100.0% |
| EPS (Diluted) | $0.68$720000.00 | −100.0% |
| Shares Outstanding (Basic) | 889.00M904.00M | −1.7% |
| Shares Outstanding (Diluted) | 891.00M907.00M | −1.8% |
05—Questions
Frequently Asked Questions
How did Halliburton's revenue and profitability compare with the prior-year quarter?
Total revenue increased to $5.80 billion from $5.68 billion, and operating income was $987 million versus $977 million. Net income attributable to the company declined to $606 million ($0.68 per diluted share) from $651 million ($0.72 per share), reflecting higher other, net charges of $108 million compared with $47 million a year earlier.
What drove segment and regional performance?
Drilling and Evaluation revenue rose 7% to $2.43 billion, and Completion and Production revenue was slightly lower at $3.37 billion. By region, Latin America grew 21% to $1.11 billion and North America fell 8% to $2.55 billion, mainly due to lower pressure pumping services in U.S. land.
What is the status of the IRS dispute, and what is the potential exposure?
The IRS issued a Notice of Proposed Adjustment on September 28, 2023, proposing to reclassify approximately 95% of the $3.5 billion termination fee paid to Baker Hughes in 2016 from an ordinary deduction to a capital loss. The company strongly disagrees and has begun the IRS administrative appeals process, which may take more than 12 months. If the IRS position prevails, cash taxes could be approximately $650 million plus interest, though no payment is currently required.
How is Halliburton managing its liquidity and capital returns?
The company ended the quarter with $1.89 billion of cash and equivalents and $3.5 billion of available committed bank credit under a revolving facility expiring April 27, 2027. It expects 2024 capital spending of approximately 6% of revenue and plans to return at least 50% of annual free cash flow to shareholders through dividends and share repurchases. The quarterly dividend is $0.17 per share.
What are the notable one-time items and ongoing cost initiatives?
Other, net included a $38 million loss from the fair value decrease of an Argentina-related note and a $38 million loss from Egyptian pound devaluation of approximately 35%. The company also recorded $34 million of SAP S4 upgrade expense in the quarter, with the migration expected to be completed by the end of 2025 and a total project investment estimated at about $250 million, of which $85 million has been incurred to date.
06—Continue