Halliburton Third-Quarter Profit Falls To $417 Million On $107 Million Severance Cost; CEO Sees 2027 Margins Near 15%
Adjusted earnings rose to $0.60 a share from $0.55 as Middle East work offset weaker U.S. pressure pumping.
Halliburton earned $417 million, or $0.50 per diluted share, in the third quarter, down from $534 million, or $0.64, in the second quarter, according to the earnings release attached to an 8-K filed Tuesday. Excluding impairments and other charges and tax adjustments, adjusted net income rose to $501 million, or $0.60 a share, from $461 million, or $0.55.
What the results show
Revenue was $5.7 billion, flat from the second quarter. Operating income fell to $624 million from $778 million, while adjusted operating income rose to $731 million from $683 million. Adjusted operating margin was 12.8%, and adjusted EBITDA was $1.0 billion versus $948 million.
The gap between reported and adjusted profit comes from a pre-tax charge of $107 million for impairments and other items. The filing says it was primarily $107 million of severance costs tied to rationalizing the company's global headcount, plus $25 million of inventory write-downs, partly offset by a $36 million gain on selling some shares in an equity investment.
North America revenue fell 5% from the second quarter to $2.2 billion, driven by lower pressure pumping in U.S. Land. International revenue rose 3% to $3.5 billion. Middle East/Asia climbed 8% to $1.4 billion on higher activity in Saudi Arabia and Kuwait, while Latin America and Europe/Africa were each flat at $1.1 billion and $1.0 billion.
By segment, Completion and Production revenue fell 4% to $3.1 billion, and Drilling and Evaluation rose 4% to $2.6 billion. Drilling and Evaluation operating income rose 16% to $391 million.
Cash, buybacks and the 2027 outlook
Cash flow from operations was $368 million and free cash flow was $156 million. The company repurchased about $250 million of stock and paid dividends of $0.17 per share.
CEO Jeff Miller, who is also chairman and president, said the company is "another three months into one of the largest energy disruptions in history" and expects restoring production and rebuilding inventories to drive multi-year demand growth for oilfield services. For 2027, he said he expects "mid-single digit revenue growth and operating margins of about 15%."
The outlook assumes a flat North America market. Miller said it does not require a North America fracking recovery: "To us, that recovery is purely upside."
What to watch
Halliburton scheduled a conference call for 9:00 a.m. ET Tuesday to discuss the results.
Miller's 15% margin target would be about 200 basis points, or 2 percentage points, above current levels, in his words.
Sources
- 8-K Filing — HALLIBURTON CO (HAL) — SEC EDGAR
- Exhibit livemastererdocument.htm — HALLIBURTON CO 8-K exhibit — SEC EDGAR
