Halliburton Co (HAL) Q1 2025 Earnings Call Highlights: Navigating Revenue Declines and ...

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Wed, Apr 23, 2025, 1:03 AM 4 min read

Total Revenue: $5.4 billion for Q1 2025, a decrease of 7% compared to Q1 2024.
Adjusted Operating Margin: 14.5% for Q1 2025.
International Revenue: $3.2 billion, a decrease of 2% year over year.
North America Revenue: $2.2 billion, a 12% decrease year over year.
Cash Flow from Operations: $377 million for Q1 2025.
Free Cash Flow: $124 million for Q1 2025.
Net Income per Diluted Share: Reported at $0.24; Adjusted at $0.60.
Completion and Production Division Revenue: $3.1 billion, a decrease of 8% compared to Q1 2024.
Drilling and Evaluation Division Revenue: $2.3 billion, a decrease of 6% compared to Q1 2024.
Capital Expenditures: $302 million for Q1 2025.
Share Repurchase: Approximately $250 million of common stock repurchased in Q1 2025.
Pre-tax Charge: $356 million due to severance costs, asset impairments, and other items.

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Release Date: April 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Halliburton Co (NYSE:HAL) delivered total company revenue of $5.4 billion and an adjusted operating margin of 14.5% for the first quarter of 2025.
The company generated $377 million of cash flow from operations and $124 million of free cash flow, while repurchasing approximately $250 million of its common stock.
Halliburton Co (NYSE:HAL) won significant contracts, including work with Shell in Brazil and exploration projects in Suriname and West Africa, showcasing its strong value proposition and service quality.
The ZEUS IQ closed-loop autonomous fracturing operation was successfully completed, highlighting Halliburton Co (NYSE:HAL)'s technological advancements in the North American market.
The company expects to return at least $1.6 billion of cash to shareholders through buybacks and dividends in 2025, demonstrating a commitment to shareholder returns.

Negative Points

International revenue decreased by 2% year over year, primarily due to lower activity in Mexico, which remains a challenging market with no immediate recovery in sight.
North America revenue was down 12% compared to the first quarter of 2024, driven by lower stimulation activity and decreased completion tool sales.
The company recognized a pretax charge of $356 million due to severance costs, asset impairments, and other items, impacting financial results.
There is increased uncertainty in the market due to recent economic concerns and the faster-than-expected return of OPEC production, which could affect future performance.
Tariff impacts are expected to affect margins, with an estimated $0.02 to $0.03 per share impact in the second quarter, and further clarity on the full-year impact is pending.

Q & A Highlights

Q: How do you view US activity for the rest of the year given the current commodity price environment, and what oil price would significantly change customer behavior? A: Jeffrey Miller, Chairman, President, and CEO, stated that customers are currently digesting recent changes in the market, including commodity prices and tariffs. He noted that activity in the 60s range could impact production if it slows down significantly. The market is not building new equipment, which is a positive sign, and any decline in activity is quickly underpinned by its impact on production.

Q: Can you provide an update on the situation in Mexico and its impact on margins? A: Jeffrey Miller explained that the situation in Mexico remains unsettled, with no immediate recovery expected. The new administration and Pemex are working through their plans, but significant decline rates in the market are expected to drive recovery eventually. However, the timing of this recovery is uncertain.

Q: What is the outlook for Saudi Arabia within Halliburton's portfolio, and how does it fit into the flat international outlook for the year? A: Jeffrey Miller highlighted Saudi Arabia as a significant market with expected growth in 2025. He mentioned exciting opportunities, including tenders for Jafurah and other projects, where Halliburton's technology and growth engines, such as unconventional intervention and artificial lift, are expected to perform well.

Q: How do you view the margin progression for the rest of the year, especially considering the white space in North America? A: Eric Carre, CFO, explained that Q2 margins are expected to be impacted by tariffs, mobilization costs, and a mix issue with software sales. However, he anticipates that margins in the second half of 2025 will be in the same range as 2024, driven by growth in international markets and the performance of growth engines.

Q: Can you elaborate on the impact of tariffs and how you plan to mitigate them? A: Eric Carre stated that the tariff impact is expected to be $0.02 to $0.03 per share in Q2, with 60% affecting the Completion and Production division and 40% the Drilling and Evaluation division. Halliburton is working on mitigating the impact through a diversified supply chain and other levers, but more clarity is needed to fully understand the overall impact.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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