Post Earnings Coverage as Halliburton Revenue Gained 5%, Adjusted EPS Exceeded Expectations
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Upcoming AWS Coverage on Oceaneering International Post-Earnings Results
LONDON, UK / ACCESSWIRE / January 30, 2017 / Active Wall St. announces its post-earnings coverage on Halliburton Co. (NYSE: HAL). The Company released its financial results for the fourth quarter and full year 2016 (FY16) on January 23, 2017. The world's No. 2 oilfield services provider swung to its first quarterly operating profit in North America in a year. Register with us now for your free membership at:
One of Halliburton's competitors within the Oil & Gas Equipment & Services space, Oceaneering International, Inc. (NYSE: OII), announced on January 10, 2017, that it will report its financial results for Q4 and full year 2016 on Wednesday, February 08, 2017, after the close of trading on the NYSE. AWS will be initiating a research report on Oceaneering International in the coming days.
Today, AWS is promoting its earnings coverage on HAL; touching on OII. Get our free coverage by signing up to:
For the three months ended on December 31, 2016, Halliburton reported total revenue of $4.02 billion, which increased 5% from revenue of $3.8 billion in Q3 2016. The Company's reported number missed analysts' estimates of $4.09 billion of sales. For FY16, Halliburton reported total revenue of $15.9 billion, down $7.7 billion, or 33% from FY15.
For Q4 2016, Halliburton reported operating income $53 million. The Company's adjusted operating income for the reported quarter was $276 million compared to operating income of $128 million for Q3 2016, which did not include any impairment or other charges. For FY16, Halliburton posted operating loss of $6.8 billion compared to reported operating loss of $165 million for FY15. Excluding special items, adjusted operating income for FY16 was $690 million compared to adjusted operating income of $2.3 billion for FY15. The Company attributed the decline in revenue and operating results during FY16 on impact of lower commodity prices creating widespread pricing pressure and activity reductions on a global basis.
For Q4 2016, Halliburton announced a loss from continuing operations of $149 million, or $0.17 per diluted share. Adjusted income from continuing operations for the reported quarter, excluding impairments and other charges and a class action lawsuit settlement, was $35 million, or $0.04 per diluted share, compared to income from continuing operations for Q3 2016 of $6 million, or $0.01 per diluted share. The Company's earnings number outperformed analysts' estimates of $0.02 per share.
Geographic Regions
Halliburton's revenue from North America in Q4 2016 was $1.8 billion, a 9% sequential increase, relative to a 23% increase in average US rig count. Operating results improved by $94 million from a loss of $66 million in Q3 2016 to income of $28 million in the reported quarter, driven primarily by increased pricing and utilization throughout the United States land sector and effective cost management. The revenue from the North American region accounted for approximately 44.8% of Company's overall revenue.
During Q4 2016, The Company's international revenue totaled $2.2 billion, up 2% on a sequential basis, driven primarily by improved activity in Production Enhancement, Landmark, and Consulting and Project Management. International region generated operating income was $305 million in the reported quarter, a 27% increase compared to Q3 2016. Operating results improved due to software sales and increased onshore activity as well as continued expense reductions.
Halliburton's revenue from Latin America was $428 million, higher by 3% sequentially, with operating income of $30 million, a $19 million increase sequentially. These increases were largely a result of increased activity in Colombia and Argentina and year-end software sales in Mexico and Venezuela. Europe/Africa/CIS revenue in Q4 2016 was $676 million, a 9% decrease sequentially, with operating income of $72 million, down 5% sequentially, primarily driven by weather-related reduced activity in the North Sea and Russia. These decreases were partially offset by improved activity in Nigeria and Egypt.
Halliburton's revenue from Middle East/Asia revenue in Q4 2016 totaled $1.1 billion, a 10% increase sequentially, with operating income of $203 million, a 32% increase sequentially. These increases were driven primarily by increased completion tools sales and project management services across the region.
Operating Segments
Halliburton's Completion and Production revenue in Q4 2016 was $2.3 billion, an increase of $92 million, or 4% from Q3 2016, while operating income was $85 million, a $61 million improvement, primarily due to improved pressure pumping pricing and utilization in the United States land market and higher completion tools sales in the Gulf of Mexico.
Drilling and Evaluation
For Q4 2016, the Company's Drilling and Evaluation revenue registered a 6% growth sequentially to $1.8 billion, while operating income surged 64% to $248 million. These improvements were driven by year-end software sales, improved drilling activity in US land, increased Consulting and Project Management activity in Sub Saharan Africa, and the Middle East, and improved Testing and Subsea activity internationally.
Corporate and Other
In December 2016, Halliburton reached an agreement in principle to settle the Erica P. John Fund class action lawsuit that has been pending for over 14 years. As a result, Halliburton incurred a charge of $54 million during Q4 2016, which is included in Corporate and other.
Balance Sheet
During Q4 2016, Halliburton generated $720 million of cash, improving its cash position at year-end to $4 billion. The Company improved its days' sales outstanding in the quarter by 10 days while its days of inventory dropped by six days. Halliburton noted that it reduced its capital expenditures and exited the year ending 2016 with a total CapEx spending of approximately $800 million. The Company's current guidance for FY17 capital expenditures is $1 billion.
Stock Performance
Halliburton's share price finished last Friday's trading session at $58.21, slightly advancing 0.26%. A total volume of 6.89 million shares exchanged hands, which was higher than the 3 months' average volume of 8.42 million shares. The stock has surged 37.13% and 94.49% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 7.62%. The stock has a dividend yield of 1.24%. At the closing price on Friday, the firm registered a market cap of $50.18 billion.
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