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Halliburton (HAL) Q1 Earnings Beat as Both Units Outperform

Halliburton Company HAL reported first-quarter 2023 net income per share of 72 cents, surpassing the Zacks Consensus Estimate of 67 cents and well above the year-ago quarter profit of 35 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions and came in spite of the company’s exit from Russia.

Meanwhile, revenues of $5.7 billion were 32.5% higher than the corresponding period of 2022 and came ahead of the Zacks Consensus Estimate (by some $177 million). North American revenues rose 43.6% year over year to $2.8 billion, while revenues from Halliburton’s international operations were up 23.4% from the year-ago period to $2.9 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.

Halliburton was the last of the ‘Big Three’ oil services firms to report first-quarter results after rivals SLB SLB and Baker Hughes BKR also came up with their respective releases last week.  

SLB, the largest oilfield contractor, announced first-quarter 2023 earnings of 63 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 61 cents. SLB recorded total revenues of $7.7 billion, outpacing the Zacks Consensus Estimate by 3.2%.

SLB’s robust quarterly earnings resulted from higher stimulation services across all onshore and offshore areas. The company foresees strong activities across the globe this year. In the Northern Hemisphere, SLB expects a seasonal recovery in the second quarter with capital expansion developments in the Middle East.

Another biggie Baker Hughes reported first-quarter adjusted earnings of 28 cents per share, brushing past the Zacks Consensus Estimate of 26 cents. The outperformance reflects higher contributions from BKR’s Oilfield Services and Equipment, and Industrial & Energy Technology business units.

Baker Hughes’ total orders from all business segments in first-quarter 2023 amounted to $7.6 billion, up 12% year over year. The company generated a free cash flow of $197 million in the reported quarter against a negative free cash flow of $105 million in the year-ago period.

 

Halliburton Company Price, Consensus and EPS Surprise

 

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Halliburton Company price-consensus-eps-surprise-chart | Halliburton Company Quote

 

Inside Halliburton’s Segments

Operating income from the Completion and Production segment was $666 million, more than doubling from the year-ago level of $296 million and ahead of the Zacks Consensus Estimate of $629 million. The division’s performance was buoyed by strength in the pressure pumping business and improving completion tool sales, to go with robust artificial lift activity in onshore North America and Kuwait.

Drilling and Evaluation unit profit improved from $294 million in the first quarter of 2022 to $369 million in the corresponding period of 2022. The division also managed to beat the Zacks Consensus Estimate of $362 million. This was primarily due to a pickup in wireline activity, drilling-associated services and testing services.

Balance Sheet

Halliburton reported first-quarter capital expenditure of $268 million. As of Mar 31, 2023, the Zacks Rank #3 (Hold) company had approximately $1.9 billion in cash/cash equivalents and $7.9 billion in long-term debt, representing a debt-to-capitalization ratio of 48.4. HAL also bought back $100 million worth its stock during the January-March period.  

You can see the complete list of today’s Zacks #1 Rank stocks here.

Management Remarks & Outlook

Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong first-quarter performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe, and the tight service capacity, to drive strong margins home and away throughout this year and beyond.  

Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency, and the global presence points to a rosy outlook. The Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns.

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