001-03492 | No. 75-2677995 |
(Commission File Number) | (IRS Employer Identification No.) |
3000 North Sam Houston Parkway East Houston, Texas | 77032 |
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
• | Reported net income of $0.17 per diluted share |
• | Adjusted net income of $0.23 per diluted share, excluding impairments and other charges |
• | Halliburton announced it will build the first oilfield chemical manufacturing plant in Saudi Arabia. Upon the plant’s completion in 2020, Halliburton will begin local manufacturing of a broad slate of specialty chemicals for stimulation, production, midstream and downstream engineering treatment programs to help customers achieve production and reliability goals in applications from the reservoir to the refinery. |
• | Halliburton signed a Memorandum of Understanding with the Egyptian Ministry of Petroleum & Mineral Resources to support a specialized development program for Egypt’s middle management and young professional employees. The Memorandum is a collaborative agreement under which Halliburton will utilize its strength in human capital development to provide on-the-job training for Egyptians who show the potential to be future leaders in the oil and gas industry. Additionally, Halliburton will customize a development program for select participants to enhance their capabilities and assist Egypt in its role as a leading regional oil and gas hub. |
• | Halliburton introduced a Motors Center of Excellence, a new approach to drilling motor development that combines specialized engineering and manufacturing capabilities to customize motor designs for specific basin challenges. By establishing a dedicated team of scientists in polymer chemistry, materials, bearing and power section design, Halliburton can accelerate research and development activities to deliver leading drilling motors to the industry. |
• | Halliburton announced the execution of an integrated services contract with Royal Dutch Shell for post-salt development and pre-salt exploration in Brazil’s Campos and Santos Basins. Under the contract, which includes a three-year term with a two-year extension, Halliburton will provide drilling services to drive greater efficiency by integrating multiple product offerings and technologies. Halliburton has an established track record in Brazil’s pre-salt fields, which have some of the most complex wells ever drilled and require a broad scope of technologies and capabilities to achieve economical and operational success. |
• | Dr. M. Katherine Banks and Ms. Patricia Hemingway Hall have been named to the Company’s board of directors. The appointments were effective February 13, 2019, and both will stand for election by shareholders at the annual meeting on May 15, 2019. "With Katherine and Pat, we strengthen our board with one leader who has extensive experience in engineering and technology and another who served as a CEO in the rapidly changing healthcare industry and has substantial corporate governance experience," said Jeff Miller, Halliburton chairman, president and CEO. |
Three Months Ended | ||||||||||||
March 31 | December 31 | |||||||||||
2019 | 2018 | 2018 | ||||||||||
Revenue: | ||||||||||||
Completion and Production | $ | 3,662 | $ | 3,807 | $ | 3,832 | ||||||
Drilling and Evaluation | 2,075 | 1,933 | 2,104 | |||||||||
Total revenue | $ | 5,737 | $ | 5,740 | $ | 5,936 | ||||||
Operating income: | ||||||||||||
Completion and Production | $ | 368 | $ | 500 | $ | 496 | ||||||
Drilling and Evaluation | 123 | 188 | 185 | |||||||||
Corporate and other | (65 | ) | (69 | ) | (73 | ) | ||||||
Impairments and other charges (a) | (61 | ) | (265 | ) | — | |||||||
Total operating income | 365 | 354 | 608 | |||||||||
Interest expense, net | (143 | ) | (140 | ) | (137 | ) | ||||||
Other, net | (30 | ) | (25 | ) | (13 | ) | ||||||
Income from continuing operations before income taxes | 192 | 189 | 458 | |||||||||
Income tax (provision) benefit (b) | (40 | ) | (142 | ) | 210 | |||||||
Net income | $ | 152 | $ | 47 | $ | 668 | ||||||
Net income attributable to noncontrolling interest | — | (1 | ) | (4 | ) | |||||||
Net income attributable to company | $ | 152 | $ | 46 | $ | 664 | ||||||
Basic and diluted net income per share | $ | 0.17 | $ | 0.05 | $ | 0.76 | ||||||
Basic weighted average common shares outstanding | 873 | 875 | 873 | |||||||||
Diluted weighted average common shares outstanding | 873 | 878 | 873 | |||||||||
(a) During the three months ended March 31, 2019, Halliburton recorded $61 million of impairments and other charges, primarily related to an impairment of legacy sand delivery equipment. During the three months ended March 31, 2018, Halliburton recognized a pre-tax charge of $265 million, related to a write-down of its remaining investment in Venezuela, consisting of receivables, fixed assets, inventory and other assets and liabilities. | ||||||||||||
(b) Includes $47 million of accrued taxes in Venezuela for the charge taken during the three months ended March 31, 2018. Includes a $306 million tax benefit during the three months ended December 31, 2018 related to a strategic change in Halliburton's corporate structure. | ||||||||||||
See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income. | ||||||||||||
See Footnote Table 2 for Reconciliation of As Reported Net Income to Adjusted Net Income. | ||||||||||||
March 31 | December 31 | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and equivalents | $ | 1,380 | $ | 2,008 | ||||
Receivables, net | 5,622 | 5,234 | ||||||
Inventories | 3,264 | 3,028 | ||||||
Other current assets | 922 | 881 | ||||||
Total current assets | 11,188 | 11,151 | ||||||
Property, plant and equipment, net | 8,853 | 8,873 | ||||||
Goodwill | 2,824 | 2,825 | ||||||
Deferred income taxes | 1,348 | 1,384 | ||||||
Operating lease right-of-use assets (a) | 1,019 | — | ||||||
Other assets | 1,757 | 1,749 | ||||||
Total assets | $ | 26,989 | $ | 25,982 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,080 | $ | 3,018 | ||||
Accrued employee compensation and benefits | 683 | 714 | ||||||
Current portion of operating lease liabilities (a) | 255 | — | ||||||
Other current liabilities | 1,029 | 1,070 | ||||||
Total current liabilities | 5,047 | 4,802 | ||||||
Long-term debt | 10,307 | 10,312 | ||||||
Operating lease liabilities (a) | 758 | — | ||||||
Employee compensation and benefits | 454 | 483 | ||||||
Other liabilities | 798 | 841 | ||||||
Total liabilities | 17,364 | 16,438 | ||||||
Company shareholders’ equity | 9,605 | 9,522 | ||||||
Noncontrolling interest in consolidated subsidiaries | 20 | 22 | ||||||
Total shareholders’ equity | 9,625 | 9,544 | ||||||
Total liabilities and shareholders’ equity | $ | 26,989 | $ | 25,982 | ||||
(a) During the first quarter of 2019, Halliburton adopted a new lease accounting standard, resulting in $1.0 billion of additional assets and liabilities on the balance sheet at March 31, 2019. | ||||||||
Three Months Ended | |||||||
March 31 | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 152 | $ | 47 | |||
Adjustments to reconcile net income to cash flows from operating activities: | |||||||
Working capital (a) | (515 | ) | (88 | ) | |||
Depreciation, depletion and amortization | 416 | 394 | |||||
Impairments and other charges | 61 | 265 | |||||
Other | (158 | ) | (46 | ) | |||
Total cash flows provided by (used in) operating activities | (44 | ) | 572 | ||||
Cash flows from investing activities: | |||||||
Capital expenditures | (437 | ) | (501 | ) | |||
Proceeds from sales of property, plant and equipment | 43 | 47 | |||||
Other investing activities | (17 | ) | 80 | ||||
Total cash flows provided by (used in) investing activities | (411 | ) | (374 | ) | |||
Cash flows from financing activities: | |||||||
Dividends to shareholders | (157 | ) | (158 | ) | |||
Other financing activities | 2 | (21 | ) | ||||
Total cash flows provided by (used in) financing activities | (155 | ) | (179 | ) | |||
Effect of exchange rate changes on cash | (18 | ) | (24 | ) | |||
Decrease in cash and equivalents | (628 | ) | (5 | ) | |||
Cash and equivalents at beginning of period | 2,008 | 2,337 | |||||
Cash and equivalents at end of period | $ | 1,380 | $ | 2,332 | |||
(a) Working capital includes receivables, inventories and accounts payable. | |||||||
Three Months Ended | |||||||||||
March 31 | December 31 | ||||||||||
Revenue | 2019 | 2018 | 2018 | ||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 3,662 | $ | 3,807 | $ | 3,832 | |||||
Drilling and Evaluation | 2,075 | 1,933 | 2,104 | ||||||||
Total revenue | $ | 5,737 | $ | 5,740 | $ | 5,936 | |||||
By geographic region: | |||||||||||
North America | $ | 3,275 | $ | 3,517 | $ | 3,341 | |||||
Latin America | 587 | 457 | 607 | ||||||||
Europe/Africa/CIS | 748 | 716 | 746 | ||||||||
Middle East/Asia | 1,127 | 1,050 | 1,242 | ||||||||
Total revenue | $ | 5,737 | $ | 5,740 | $ | 5,936 | |||||
Operating Income | |||||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 368 | $ | 500 | $ | 496 | |||||
Drilling and Evaluation | 123 | 188 | 185 | ||||||||
Total | 491 | 688 | 681 | ||||||||
Corporate and other | (65 | ) | (69 | ) | (73 | ) | |||||
Impairments and other charges | (61 | ) | (265 | ) | — | ||||||
Total operating income | $ | 365 | $ | 354 | $ | 608 | |||||
See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income. | |||||||||||
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
As reported operating income | $ | 365 | $ | 354 | |||
Impairments and other changes (a) | 61 | 265 | |||||
Adjusted operating income (b) | $ | 426 | $ | 619 | |||
(a) | During the three months ended March 31, 2019, Halliburton recorded $61 million of impairments and other charges, primarily related to an impairment of legacy sand delivery equipment. During the three months ended March 31, 2018, Halliburton recognized a pre-tax charge of $265 million, related to a write-down of its remaining investment in Venezuela, consisting of receivables, fixed assets, inventory and other assets and liabilities. | ||||||
(b) | Management believes that operating income adjusted for impairments and other charges for the three months ended March 31, 2019 and March 31, 2018 is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes operating income without the impact of these items as an indicator of performance, to identify underlying trends in the business, and to establish operational goals. The adjustments remove the effect of these items. Adjusted operating income is calculated as: “As reported operating income” plus "Impairments and other charges" for the three months ended March 31, 2019 and March 31, 2018. | ||||||
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
As reported net income attributable to company | $ | 152 | $ | 46 | |||
Adjustments: | |||||||
Impairments and other charges (a) | 61 | 265 | |||||
Total adjustments, before taxes | 61 | 265 | |||||
Tax provision (benefit) (b) | (12 | ) | 47 | ||||
Total adjustments, net of taxes (c) | $ | 49 | $ | 312 | |||
Adjusted net income attributable to company | $ | 201 | $ | 358 | |||
Diluted weighted average common shares outstanding | 873 | 878 | |||||
As reported net income per diluted share (d) | $ | 0.17 | $ | 0.05 | |||
Adjusted net income per diluted share (d) | $ | 0.23 | $ | 0.41 | |||
(a) | During the three months ended March 31, 2019, Halliburton recorded $61 million of impairments and other charges, primarily related to an impairment of legacy sand delivery equipment. During the three months ended March 31, 2018, Halliburton recognized a pre-tax charge of $265 million, related to a write-down of its remaining investment in Venezuela, consisting of receivables, fixed assets, inventory and other assets and liabilities. | ||||||
(b) | Represents tax effect of impairments and other charges during the three months ended March 31, 2019 and $47 million of accrued taxes in Venezuela for the charge taken during the three months ended March 31, 2018. | ||||||
(c) | Management believes that net income adjusted for impairments and other charges, is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the company's normal operating results. Management analyzes net income without the impact of these items as an indicator of performance, to identify underlying trends in the business and to establish operational goals. Total adjustments remove the effect of these items. Adjusted net income attributable to company is calculated as: “As reported net income attributable to company” plus "Total adjustments, net of taxes" for the three months ended March 31, 2019 and March 31, 2018. | ||||||
(d) | As reported net income per diluted share is calculated as: "As reported net income attributable to company" divided by "Diluted weighted average common shares outstanding." Adjusted net income per diluted share is calculated as: "Adjusted net income attributable to company" divided by "Diluted weighted average common shares outstanding." | ||||||
HALLIBURTON COMPANY | |||
Date: | April 22, 2019 | By: | /s/ Bruce A. Metzinger |
Bruce A. Metzinger | |||
Vice President, Public Law and | |||
Assistant Secretary | |||