01—Abstract
Summary
Summary of the 10-Q filed July 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Halliburton Company's Form 10-Q for the quarter ended June 30, 2024 shows second-quarter revenue of $5.83 billiona, flat with the prior year's $5.80 billion, and operating income of $1.03 billion, up 2% from $1.01 billion.
Net income attributable to the company was $709 millionb, or $0.80 per diluted share, compared with $610 million, or $0.68 per diluted share, a year earlier. For the six months, revenue was $11.64 billion and net income attributable to the company was $1.32 billion, or $1.48 per diluted share. Completion and Production revenue fell 2% in the quarter while Drilling and Evaluation revenue rose 5%.
North America revenue declined 8%, offset by a 8% increase in Europe/Africa/CIS and a 10% increase in Latin America. Management expects North American revenue to decline in 2024 compared with 2023, but projects about 10% international revenue growth for the full year. Cash and equivalents were $2.14 billionc at June 30, 2024, and operating cash flow for the first six months was $1.57 billion.
The company repurchased $500 milliond of stock and paid $302 million in dividends during the first half. Management expects 2024 capital spending of about 6% of revenue and says shareholder returns will be in line with its framework of returning at least 50% of annual free cash flow. The filing highlights an IRS Notice of Proposed Adjustment related to the 2016 deduction of a $3.5 billion Baker Hughes termination fee.
Halliburton strongly disagrees with the proposal, which it estimates could result in cash taxes of approximately $650 million plus interest if the IRS position prevails through appeals and litigation. The company states that no payment is currently required.
02—Key points
Key Highlights
- Q2 2024 total revenue of $5.83 billion, flat versus $5.80 billion in Q2 2023; operating income of $1.03 billion, up 2%.
- Q2 2024 net income attributable to the company of $709 million, or $0.80 per diluted share, versus $610 million, or $0.68 per diluted share, in Q2 2023.
- Drilling and Evaluation revenue rose 5% in Q2 2024, while Completion and Production revenue declined 2%; North America revenue fell 8%.
- Six-month operating cash flow of $1.57 billion, with capital expenditures of $677 million and cash and equivalents of $2.14 billion at June 30, 2024.
- Repurchased 13.9 million shares for $500 million and paid $302 million in dividends in the first six months of 2024; quarterly dividend is $0.17 per share.
- Management expects North American revenue to decline in 2024 versus 2023, but about 10% international revenue growth for the full year.
- IRS Notice of Proposed Adjustment on the 2016 Baker Hughes termination fee deduction could mean approximately $650 million in cash taxes plus interest if the IRS prevails; the company strongly disagrees and no payment is currently required.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 29, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $5.83B$5.80B | +0.6% |
| Operating Expenses | $4.80B$4.79B | +0.3% |
| Operating Income | $1.03B$1.01B | +2.1% |
| Net Income | $713.00M$616.00M | +15.7% |
| EPS (Basic) | $0.80$680000.00 | −100.0% |
| EPS (Diluted) | $0.80$680000.00 | −100.0% |
| Shares Outstanding (Basic) | 884.00M901.00M | −1.9% |
| Shares Outstanding (Diluted) | 886.00M903.00M | −1.9% |
05—Questions
Frequently Asked Questions
How did Halliburton perform in the second quarter of 2024?
Total revenue was $5.83 billion, essentially flat from $5.80 billion a year earlier, and operating income rose 2% to $1.03 billion. Net income attributable to the company was $709 million, or $0.80 per diluted share, compared with $0.68 per share in the prior-year quarter.
Which segments and regions drove results?
Drilling and Evaluation revenue increased 5% on stronger drilling services in U.S. land and the Middle East. Completion and Production revenue decreased 2%, mainly from lower U.S. land pressure pumping, partly offset by international completion tool sales. By region, North America fell 8%, while Latin America rose 10%, Europe/Africa/CIS rose 8%, and Middle East/Asia rose 6%.
What is the outlook for 2024?
Management expects North American revenue to decline in 2024 compared with 2023 as rig counts fell, but expects international revenue to grow about 10% for the full year. It also expects 2024 capital spending of about 6% of revenue.
How is Halliburton returning cash to shareholders and what is its liquidity position?
In the first half of 2024 the company repurchased $500 million of stock and paid $302 million in dividends. The quarterly dividend is $0.17 per share. At June 30, 2024, it had $2.1 billion of cash and equivalents and $3.5 billion of available committed bank credit under a revolving facility expiring April 27, 2027. Management says it has no financial covenants or material adverse change provisions in its bank agreements.
What is the status of the IRS dispute over the Baker Hughes termination fee?
The IRS issued a Notice of Proposed Adjustment in September 2023 seeking to reclassify about 95% of the $3.5 billion termination fee paid to Baker Hughes in 2016 from an ordinary deduction to a capital loss. Halliburton strongly disagrees and began the IRS appeals process in December 2023. If the IRS position prevails, cash taxes of approximately $650 million plus interest could be due, but the company states no payment is currently required.
06—Continue