(1) | Adjusted net income is a non-GAAP financial measure; please see reconciliation of Net Income to Adjusted Net Income in Footnote Table 2. | |||||||
(2) | Adjusted net income per diluted share is a non-GAAP financial measure; please see reconciliation of Net Income to Adjusted Net Income in Footnote Table 2. | |||||||
(3) | Free cash flow is a non-GAAP financial measure; please see reconciliation of Cash Flows from Operating Activities to Free Cash Flow in Footnote Table 4. | |||||||
Three Months Ended | |||||||||||||||||||||||
September 30 | June 30 | ||||||||||||||||||||||
2023 | 2022 | 2023 | |||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Completion and Production | $ | 3,487 | $ | 3,136 | $ | 3,476 | |||||||||||||||||
Drilling and Evaluation | 2,317 | 2,221 | 2,322 | ||||||||||||||||||||
Total revenue | $ | 5,804 | $ | 5,357 | $ | 5,798 | |||||||||||||||||
Operating income: | |||||||||||||||||||||||
Completion and Production | $ | 746 | $ | 583 | $ | 707 | |||||||||||||||||
Drilling and Evaluation | 378 | 325 | 376 | ||||||||||||||||||||
Corporate and other | (64) | (62) | (59) | ||||||||||||||||||||
SAP S4 upgrade expense | (23) | — | (13) | ||||||||||||||||||||
Total operating income | 1,037 | 846 | 1,011 | ||||||||||||||||||||
Interest expense, net | (93) | (93) | (92) | ||||||||||||||||||||
Loss on Blue Chip Swap transactions (a) | — | — | (104) | ||||||||||||||||||||
Other, net | (28) | (48) | (32) | ||||||||||||||||||||
Income before income taxes | 916 | 705 | 783 | ||||||||||||||||||||
Income tax provision (b) | (192) | (156) | (167) | ||||||||||||||||||||
Net income | $ | 724 | $ | 549 | $ | 616 | |||||||||||||||||
Net income attributable to noncontrolling interest | (8) | (5) | (6) | ||||||||||||||||||||
Net income attributable to company | $ | 716 | $ | 544 | $ | 610 | |||||||||||||||||
Basic net income per share | $ | 0.80 | $ | 0.60 | $ | 0.68 | |||||||||||||||||
Diluted net income per share | $ | 0.79 | $ | 0.60 | $ | 0.68 | |||||||||||||||||
Basic weighted average common shares outstanding | 898 | 908 | 901 | ||||||||||||||||||||
Diluted weighted average common shares outstanding | 902 | 910 | 903 | ||||||||||||||||||||
(a) | The Central Bank of Argentina maintains currency controls that limit our ability to access U.S. dollars in Argentina and remit cash from our Argentine operations. The execution of certain trades known as Blue Chip Swaps, effectively results in a parallel U.S. dollar exchange rate. During the three months ended June 30, 2023, Halliburton entered into Blue Chip Swap transactions which resulted in a $104 million pre-tax loss. | ||||||||||||||||||||||
(b) | The tax provision during the three months ended June 30, 2023 includes the tax effect on the loss on Blue Chip Swap transactions. | ||||||||||||||||||||||
See Footnote Table 2 for Reconciliation of Net Income to Adjusted Net Income. |
Nine Months Ended | |||||||||||||||||
September 30 | |||||||||||||||||
2023 | 2022 | ||||||||||||||||
Revenue: | |||||||||||||||||
Completion and Production | $ | 10,372 | $ | 8,400 | |||||||||||||
Drilling and Evaluation | 6,907 | 6,315 | |||||||||||||||
Total revenue | $ | 17,279 | $ | 14,715 | |||||||||||||
Operating income: | |||||||||||||||||
Completion and Production | $ | 2,119 | $ | 1,378 | |||||||||||||
Drilling and Evaluation | 1,123 | 905 | |||||||||||||||
Corporate and other | (181) | (186) | |||||||||||||||
SAP S4 upgrade expense | (36) | — | |||||||||||||||
Impairments and other charges (a) | — | (366) | |||||||||||||||
Total operating income | 3,025 | 1,731 | |||||||||||||||
Interest expense, net | (264) | (301) | |||||||||||||||
Loss on Blue Chip Swap transactions (b) | (104) | — | |||||||||||||||
Loss on early extinguishment of debt (c) | — | (42) | |||||||||||||||
Other, net | (129) | (120) | |||||||||||||||
Income before income taxes | 2,528 | 1,268 | |||||||||||||||
Income tax provision (d) | (533) | (338) | |||||||||||||||
Net Income | $ | 1,995 | $ | 930 | |||||||||||||
Net Income attributable to noncontrolling interest | (18) | (14) | |||||||||||||||
Net Income attributable to company | $ | 1,977 | $ | 916 | |||||||||||||
Basic and diluted net income per share | $ | 2.19 | $ | 1.01 | |||||||||||||
Basic weighted average common shares outstanding | 901 | 904 | |||||||||||||||
Diluted weighted average common shares outstanding | 904 | 907 | |||||||||||||||
(a) | See Footnote Table 1 for details of the impairments and other charges recorded during the nine months ended September 30, 2022. | ||||||||||||||||
(b) | The Central Bank of Argentina maintains currency controls that limit our ability to access U.S. dollars in Argentina and remit cash from our Argentine operations. The execution of certain trades known as Blue Chip Swaps, effectively results in a parallel U.S. dollar exchange rate. During the nine months ended September 30, 2023, Halliburton entered into Blue Chip Swap transactions which resulted in a $104 million pre-tax loss. | ||||||||||||||||
(c) | During the nine months ended September 30, 2022, Halliburton recognized a $42 million loss on extinguishment of debt related to the early redemption of $600 million aggregate principal amount of senior notes. | ||||||||||||||||
(d) | The tax provision during the nine months ended September 30, 2023 includes the tax effect on the loss on Blue Chip Swap transactions. During the nine months ended September 30, 2022, the tax provision includes the tax effect on impairments and other charges and the loss on early extinguishment of debt. | ||||||||||||||||
See Footnote Table 1 for Reconciliation of Operating Income to Adjusted Operating Income. | |||||||||||||||||
See Footnote Table 3 for Reconciliation of Net Income to Adjusted Net Income. |
September 30 | December 31 | |||||||||||||
2023 | 2022 | |||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 2,036 | $ | 2,346 | ||||||||||
Receivables, net | 5,124 | 4,627 | ||||||||||||
Inventories | 3,336 | 2,923 | ||||||||||||
Other current assets | 1,104 | 1,056 | ||||||||||||
Total current assets | 11,600 | 10,952 | ||||||||||||
Property, plant, and equipment, net | 4,733 | 4,348 | ||||||||||||
Goodwill | 2,850 | 2,829 | ||||||||||||
Deferred income taxes | 2,517 | 2,636 | ||||||||||||
Operating lease right-of-use assets | 1,032 | 913 | ||||||||||||
Other assets | 1,710 | 1,577 | ||||||||||||
Total assets | $ | 24,442 | $ | 23,255 | ||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 3,238 | $ | 3,121 | ||||||||||
Accrued employee compensation and benefits | 643 | 634 | ||||||||||||
Current portion of operating lease liabilities | 248 | 224 | ||||||||||||
Other current liabilities | 1,290 | 1,366 | ||||||||||||
Total current liabilities | 5,419 | 5,345 | ||||||||||||
Long-term debt | 7,783 | 7,928 | ||||||||||||
Operating lease liabilities | 869 | 791 | ||||||||||||
Employee compensation and benefits | 392 | 408 | ||||||||||||
Other liabilities | 790 | 806 | ||||||||||||
Total liabilities | 15,253 | 15,278 | ||||||||||||
Company shareholders’ equity | 9,150 | 7,948 | ||||||||||||
Noncontrolling interest in consolidated subsidiaries | 39 | 29 | ||||||||||||
Total shareholders’ equity | 9,189 | 7,977 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 24,442 | $ | 23,255 |
Nine Months Ended | Three Months Ended | |||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||
2023 | 2022 | 2023 | ||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income | $ | 1,995 | $ | 930 | $ | 724 | ||||||||||||||
Adjustments to reconcile net income to cash flows from operating activities: | ||||||||||||||||||||
Depreciation, depletion, and amortization | 742 | 704 | 256 | |||||||||||||||||
Impairments and other charges | — | 366 | — | |||||||||||||||||
Working capital (a) | (798) | (907) | (209) | |||||||||||||||||
Other operating activities | 109 | (14) | 103 | |||||||||||||||||
Total cash flows provided by operating activities | 2,048 | 1,079 | 874 | |||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Capital expenditures | (980) | (661) | (409) | |||||||||||||||||
Proceeds from sales of property, plant, and equipment | 136 | 157 | 46 | |||||||||||||||||
Other investing activities | (280) | (74) | (65) | |||||||||||||||||
Total cash flows used in investing activities | (1,124) | (578) | (428) | |||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Stock repurchase program | (546) | (46) | (198) | |||||||||||||||||
Dividends to shareholders | (433) | (327) | (144) | |||||||||||||||||
Payments on long-term borrowings | (150) | (1,242) | (150) | |||||||||||||||||
Other financing activities | 2 | 160 | 9 | |||||||||||||||||
Total cash flows used in financing activities | (1,127) | (1,455) | (483) | |||||||||||||||||
Effect of exchange rate changes on cash | (107) | (113) | (32) | |||||||||||||||||
Decrease in cash and equivalents | (310) | (1,067) | (69) | |||||||||||||||||
Cash and equivalents at beginning of period | 2,346 | 3,044 | 2,105 | |||||||||||||||||
Cash and equivalents at end of period | $ | 2,036 | $ | 1,977 | $ | 2,036 | ||||||||||||||
(a) | Working capital includes receivables, inventories, and accounts payable. | |||||||||||||||||||
See Footnote Table 4 for Reconciliation of Cash Flows from Operating Activities to Free Cash Flow. |
Three Months Ended | |||||||||||||||||
September 30 | June 30 | ||||||||||||||||
Revenue | 2023 | 2022 | 2023 | ||||||||||||||
By operating segment: | |||||||||||||||||
Completion and Production | $ | 3,487 | $ | 3,136 | $ | 3,476 | |||||||||||
Drilling and Evaluation | 2,317 | 2,221 | 2,322 | ||||||||||||||
Total revenue | $ | 5,804 | $ | 5,357 | $ | 5,798 | |||||||||||
By geographic region: | |||||||||||||||||
North America | $ | 2,608 | $ | 2,635 | $ | 2,696 | |||||||||||
Latin America | 1,048 | 841 | 994 | ||||||||||||||
Europe/Africa/CIS | 734 | 639 | 698 | ||||||||||||||
Middle East/Asia | 1,414 | 1,242 | 1,410 | ||||||||||||||
Total revenue | $ | 5,804 | $ | 5,357 | $ | 5,798 | |||||||||||
Operating Income | |||||||||||||||||
By operating segment: | |||||||||||||||||
Completion and Production | $ | 746 | $ | 583 | $ | 707 | |||||||||||
Drilling and Evaluation | 378 | 325 | 376 | ||||||||||||||
Total Operations | 1,124 | 908 | 1,083 | ||||||||||||||
Corporate and other | (64) | (62) | (59) | ||||||||||||||
SAP S4 upgrade expense | (23) | — | (13) | ||||||||||||||
Total operating income | $ | 1,037 | $ | 846 | $ | 1,011 | |||||||||||
Nine Months Ended | |||||||||||
September 30 | |||||||||||
Revenue | 2023 | 2022 | |||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 10,372 | $ | 8,400 | |||||||
Drilling and Evaluation | 6,907 | 6,315 | |||||||||
Total revenue | $ | 17,279 | $ | 14,715 | |||||||
By geographic region: | |||||||||||
North America | $ | 8,069 | $ | 6,986 | |||||||
Latin America | 2,957 | 2,252 | |||||||||
Europe/Africa/CIS | 2,094 | 2,034 | |||||||||
Middle East/Asia | 4,159 | 3,443 | |||||||||
Total revenue | $ | 17,279 | $ | 14,715 | |||||||
Operating Income | |||||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 2,119 | $ | 1,378 | |||||||
Drilling and Evaluation | 1,123 | 905 | |||||||||
Total Operations | 3,242 | 2,283 | |||||||||
Corporate and other | (181) | (186) | |||||||||
SAP S4 upgrade expense | (36) | — | |||||||||
Impairments and other charges | — | (366) | |||||||||
Total operating income | $ | 3,025 | $ | 1,731 | |||||||
See Footnote Table 1 for Reconciliation of Operating Income to Adjusted Operating Income. |
Nine Months Ended | ||||||||||||||
September 30 | ||||||||||||||
2023 | 2022 | |||||||||||||
Operating income | $ | 3,025 | $ | 1,731 | ||||||||||
Impairments and other charges: | ||||||||||||||
Receivables | — | 202 | ||||||||||||
Property, plant, and equipment, net | — | 100 | ||||||||||||
Inventory | — | 70 | ||||||||||||
Other | — | (6) | ||||||||||||
Total impairments and other charges (a) | — | 366 | ||||||||||||
Adjusted operating income (b) (c) | $ | 3,025 | $ | 2,097 | ||||||||||
(a) | During the nine months ended September 30, 2022, Halliburton recorded $366 million of impairments and other charges, primarily due to our decision to market for sale the net assets of our Russia operations, which was sold in August 2022, and impairment of the assets in Ukraine. | |||||||||||||
(b) | Adjusted operating income is a non-GAAP financial measure which is calculated as: “Operating income” plus "Total impairments and other charges" for the respective periods. Management believes that operating income adjusted for impairments and other charges is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes operating income without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effect of these items. | |||||||||||||
(c) | We calculate operating margin by dividing operating income by revenue. We calculate adjusted operating margin, a non-GAAP financial measure, by dividing adjusted operating income by revenue. Management believes adjusted operating margin is useful to investors to assess and understand operating performance. |
Three Months Ended | ||||||||||||||||||||
September 30 | June 30 | |||||||||||||||||||
2023 | 2022 | 2023 | ||||||||||||||||||
Net income attributable to company | $ | 716 | $ | 544 | $ | 610 | ||||||||||||||
Adjustments: | ||||||||||||||||||||
Loss on Blue Chip Swap transactions | — | — | 104 | |||||||||||||||||
Total adjustments, before taxes | — | — | 104 | |||||||||||||||||
Tax benefit (a) | — | — | (23) | |||||||||||||||||
Total adjustments, net of taxes (b) | — | — | 81 | |||||||||||||||||
Adjusted net income attributable to company (b) | $ | 716 | $ | 544 | $ | 691 | ||||||||||||||
Diluted weighted average common shares outstanding | 902 | 910 | 903 | |||||||||||||||||
Net income per diluted share (c) | $ | 0.79 | $ | 0.60 | $ | 0.68 | ||||||||||||||
Adjusted net income per diluted share (c) | $ | 0.79 | $ | 0.60 | $ | 0.77 | ||||||||||||||
(a) | The tax benefit in the table above includes the tax effect on the loss on Blue Chip Swap transactions during the three months ended June 30, 2023. | |||||||||||||||||||
(b) | Adjusted net income attributable to company is a non-GAAP financial measure which is calculated as: “Net income attributable to company” plus "Total adjustments, net of taxes" for the respective periods. Management believes net income adjusted for the loss on Blue Chip Swap transactions, along with the tax benefit, is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded item to be outside of the company's normal operating results. Management analyzes net income without the impact of this item as an indicator of performance to identify underlying trends in the business and to establish operational goals. Total adjustments remove the effect of this item. | |||||||||||||||||||
(c) | Net income per diluted share is calculated as: "Net income attributable to company" divided by "Diluted weighted average common shares outstanding." Adjusted net income per diluted share is a non-GAAP financial measure which is calculated as: "Adjusted net income attributable to company" divided by "Diluted weighted average common shares outstanding." Management believes adjusted net income per diluted share is useful to investors to assess and understand operating performance. |
Nine Months Ended | ||||||||||||||
September 30 | ||||||||||||||
2023 | 2022 | |||||||||||||
Net income attributable to company | $ | 1,977 | $ | 916 | ||||||||||
Adjustments: | ||||||||||||||
Loss on Blue Chip Swap transactions | 104 | — | ||||||||||||
Impairments and other charges | — | 366 | ||||||||||||
Loss on early extinguishment of debt | — | 42 | ||||||||||||
Total adjustments, before taxes | 104 | 408 | ||||||||||||
Tax benefit (a) | (23) | (24) | ||||||||||||
Total adjustments, net of taxes (b) | 81 | 384 | ||||||||||||
Adjusted net income attributable to company (b) | $ | 2,058 | $ | 1,300 | ||||||||||
Diluted weighted average common shares outstanding | 904 | 907 | ||||||||||||
Net income per diluted share (c) | $ | 2.19 | $ | 1.01 | ||||||||||
Adjusted net income per diluted share (c) | $ | 2.28 | $ | 1.43 | ||||||||||
(a) | The tax benefit in the table above includes the tax effect on the loss on Blue Chip Swap transactions during the nine months ended September 30, 2023. Additionally, during the nine months ended September 30, 2022, the tax benefit includes the tax effect on the impairments and other charges and the loss on early extinguishment of debt. | |||||||||||||
(b) | Adjusted net income attributable to company is a non-GAAP financial measure which is calculated as: “Net income attributable to company” plus "Total adjustments, net of taxes" for the respective periods. Management believes net income adjusted for the loss on Blue Chip Swap transactions, impairments and other charges, and the loss on early extinguishment of debt, along with the tax benefit, is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes net income without the impact of these items as an indicator of performance to identify underlying trends in the business and to establish operational goals. Total adjustments remove the effect of these items. | |||||||||||||
(c) | Net income per diluted share is calculated as: "Net income attributable to company" divided by "Diluted weighted average common shares outstanding." Adjusted net income per diluted share is a non-GAAP financial measure which is calculated as: "Adjusted net income attributable to company" divided by "Diluted weighted average common shares outstanding." Management believes adjusted net income per diluted share is useful to investors to assess and understand operating performance. |
Nine Months Ended | Three Months Ended | |||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||
2023 | 2022 | 2023 | ||||||||||||||||||
Total cash flows provided by operating activities | $ | 2,048 | $ | 1,079 | $ | 874 | ||||||||||||||
Capital expenditures | (980) | (661) | (409) | |||||||||||||||||
Proceeds from sales of property, plant, and equipment | 136 | 157 | 46 | |||||||||||||||||
Free cash flow (a) | $ | 1,204 | $ | 575 | $ | 511 | ||||||||||||||
(a) | Free Cash Flow is a non-GAAP financial measure which is calculated as “Total cash flows provided by operating activities” less “Capital expenditures” plus “Proceeds from sales of property, plant, and equipment.” Management believes that Free Cash Flow is a key measure to assess liquidity of the business and is consistent with the disclosures of Halliburton's direct, large-cap competitors. |