HALLIBURTON CO Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Highlights: Full year total company revenue $22.9 billion. International business grew 6% year-over-year, led by Middle East/Asia (8% growth). North America business declined 8% year-over-year but outperformed rig count and completion activity. Generated $3.9 billion cash from operations and $2.6 billion free cash flow. Repurchased $1 billion of common stock and paid $600 million of dividends.
• Industry Outlook: Energy will continue to play a critical role in economic growth. Attitudes toward hydrocarbon development will be pragmatic.
• International Markets: 2024 international revenue grew 6% year-over-year, led by Middle East/Asia (8% growth). 2025 expected flat international revenues, with growth in most markets offset by Mexico activity reduction. Long-term outlook confident based on growth engines (drilling technologies, unconventionals, well intervention, artificial lift) and customer alliances.
• North America: 2024 North America revenue $9.6 billion, down 8% year-over-year. 2025 expected low to mid-single digit decrease. Fleets working under committed/contract programs. Zeus e-fleets to comprise 50% of fleet by end of 2025. Technologies like Octiv Auto Frac and iCruise rotary steerables being adopted.
• Technology and Innovation: Deep technology portfolio, global reach, collaborative value proposition. Growth engines in drilling, unconventionals, well intervention, artificial lift.

Segment Performance

• Completion and Production division: Q4 2024 revenue was $3.2 billion, a 4% sequential decrease. Operating income was $629 million, a 6% sequential decrease. Operating margin was 20%, a 49 basis point sequential decrease. Drivers: Lower stimulation activity in North America and decreased pressure pumping services in Latin America, partially offset by improved artificial lift activity in North America and increased stimulation activity in Africa and the Middle East.
• Drilling and Evaluation division: Q4 2024 revenue was $2.4 billion, flat sequentially. Operating income was $401 million, flat sequentially. Operating margin was 16%, a 44 basis point sequential decrease. Drivers: Increased fluid services in the Middle East and Europe/Africa and improved drilling related services in the North Sea, offset by decreased drilling services in the Middle East and Latin America.
• Geographic results: Q4 international revenue increased 3% sequentially. Latin America revenue in Q4 was $953 million, a 9% sequential decrease (due to lower activity in Mexico, partially offset by higher activity in Brazil). Europe/Africa revenue in Q4 was $795 million, a 10% sequential increase (due to improved drilling related services in the North Sea, etc.). Middle East/Asia revenue in Q4 was $1.6 billion, a 7% sequential increase (due to higher stimulation activity, fluid services, and completion tool sales in the Middle East). North America Q4 revenue was $2.2 billion, a 7% sequential decrease (due to lower stimulation activity, partially offset by higher artificial lift activity and completion tool sales).

Guidance

• 2025 international: Flat year-over-year revenues, with growth in most markets offset by Mexico activity reduction; absent Mexico, low to mid-single digit growth.
• 2025 North America: Revenue expected to decrease low to mid-single digits from 2024 levels or approximately flat with second half of 2024.
• Cash Returns: Expect to return at least $1.6 billion of cash in 2025.

Risks

• Mexico activity reduction impacting Latin America revenue.
• Unfavorable foreign exchange movements affecting results.
• SAP migration and other one-time expenses.

Question and Answer

• Q: David Anderson on North America pricing, C&P margins, and Auto Frac with Coterra A: Jeff Miller discussed pricing management, efficiency from technology like Auto Frac, and Coterra announcement as an example of value creation.
• Q: Roger Read on U.S. gas need and margins A: Jeff Miller said margins can move up, driven by gas activity and private operators divesting assets.
• Q: Saurabh Pant on Mexico and growth engines A: Jeff Miller talked about Mexico's new administration and activity reset, and growth engines in unconventionals, intervention, artificial lift, drilling technology.
• Q: Arun Jayaram on Octiv Auto Frac and Sensori commercial model A: Eric Carre explained Octiv Auto Frac's control and Sensori's verification, Jeff Miller said it's a valuable solution priced accordingly.
• Q: Kurt Hallead on power generation in Permian A: Jeff Miller mentioned VoltaGrid and alignment with power generation opportunity.
• Q: Douglas Becker on Q1 revenue drivers and D&E margins A: Jeff Miller discussed Q1 revenue drivers by division, Eric Carre said D&E margins expected to be flat in 2025.
• Q: Stephen Gengaro on power cost and Frac fleet preference A: Jeff Miller talked about VoltaGrid and confidence in power availability, and continued deliveries of e-fleets