Halliburton Company (NYSE:HAL) reported a strong growth of 8% year-over-year in its total revenue and a 23% increase in operating income for the third quarter of 2023. The company's international revenue expanded by 17% year-over-year, driven by heightened activity across all geographic markets. North America's revenue remained stable year-over-year, even with a sequential decrease of 3%. The company's CEO, Jeff Miller, expressed confidence in the current upcycle's longevity and emphasized the critical role of reliable and affordable energy in driving global economic growth.
Key takeaways from the call include:
- Halliburton's completion and production division reported an 11% year-over-year revenue growth and a 280 basis point expansion in margins.
- The drilling and evaluation division experienced a 4% year-over-year revenue growth and a 168 basis point expansion in margins.
- The company generated $874 million in cash from operations and $511 million in free cash flow.
- Halliburton repurchased $200 million of common stock and $150 million of debt during the quarter.
- The company expects continued demand growth for oilfield services in 2024 and beyond.
- Halliburton expects high teens year-on-year growth in its international business in 2023 and anticipates double-digit market growth in 2024.
Miller highlighted the company's strategy of maximizing value in North America, investing in differentiated technologies, and prioritizing returns over market share. He also pointed out the strong performance in international markets, particularly offshore operations, where Halliburton leads in well construction product lines and collaborates closely with customers to deliver superior results.
The company reported a net income per diluted share of $0.79, with total company revenue of $5.8 billion and an operating margin of 17.9% in Q3. Halliburton's completion and production division reported revenue of $3.5 billion and an operating margin of 21%, while the drilling and evaluation division reported revenue of $2.3 billion and an operating margin of 16%.
According to InvestingPro data, Halliburton has a market cap of $36.54 billion and a P/E ratio of 14.89. The company's revenue for the last twelve months (LTM2023.Q2) stood at $22.41 billion, marking a growth of 28.12%. The company's gross profit for the same period was $3982 million, with a gross profit margin of 17.77%.
Geographically, Latin America and Europe/Africa revenue increased by 5% sequentially, Middle East Asia revenue remained flat, and North America revenue decreased by 3% sequentially. Halliburton expects a 3% to 5% sequential decrease in revenue for its completion and production division in Q4, while the drilling and evaluation division is anticipated to see a 4% to 6% sequential revenue growth.
Looking ahead, the company plans to generate over $2 billion of free cash flow for the full year 2023 and continues to prioritize returning at least 50% of free cash flow to shareholders. Halliburton is also focusing on transitioning its diesel fleets to electric, expecting it to drive margins and contribute to growth in the drilling business. The company is mostly contracted for 2024 and expressed confidence in the growth potential of its North America revenue, particularly due to its unique positioning with electric fleets and drilling technology.
InvestingPro Tips suggest that Halliburton yields a high return on invested capital and has consistently increased its earnings per share. The company's stock is trading at a low P/E ratio relative to its near-term earnings growth, indicating a potentially undervalued stock. Investors can find more valuable tips and insights on Halliburton at InvestingPro's website.
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