Halliburton Misses Q3 Expectations As North America Sales Falter; International Growth On The Horizon

Halliburton Company HAL shares are trading lower after the company reported third-quarter results below the street expectations.

HAL reported a third-quarter revenue decline of 1.8% year-over-year to $5.697 billion, missing the consensus of $5.828 billion.

Completion and Production revenue was $3.299 billion, down 5% YoY, and the operating income declined to $669 million, reflecting reduced U.S. pressure pumping and lower tool sales in North America and Europe, partially offset by gains in the Middle East.

Drilling and Evaluation revenue rose 3.5% YoY to $2.398 billion, with operating income at $406 million, supported by higher Latin American drilling, global software sales, and increased Middle East wireline activity, offset by declines in Europe, North America, and Latin America testing.

HAL’s North America revenue declined 8.5% YoY to $2.386 billion, impacted by reduced U.S. pressure pumping and Gulf hurricane disruptions, partially offset by higher U.S. artificial lift and Canadian/Gulf stimulation activity. International revenue was $3.3 billion, flat sequentially.

Operating income stood at $871 million (-16% YoY), with an operating margin of about 15.3%, down 258 bps YoY. Adjusted operating margin was 17.3%, down 54 bps.

Adjusted EPS was $0.73, down from $0.79 a year ago and below the consensus of $0.75.

The company repurchased ~$200 million of its common stock during the quarter. Operating cash flow was $2.41 billion for the nine months ended September, and free cash flow was $1.542 billion. For the quarter, operating cash flow was $841 million, and FCF was $543 million.

“We experienced a $0.02 per share impact to our adjusted earnings from lost or delayed revenue due to the August cybersecurity event and storms in the Gulf of Mexico. Our full year expectations for free cash flow and cash return to shareholders remain unchanged, and we expect both to accelerate in the fourth quarter,” commented Jeff Miller, Chairman, President and CEO.

“I see solid opportunities across business lines and geographies for Halliburton. As we execute on our strategy, we will target opportunities to deliver unique value, allocate capital to the highest return opportunities, and prioritize free cash flow generation and shareholder returns,” added Miller.

Price Action: HAL shares are down 4.44% at $29.15 at the last check Thursday.