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Halliburton Announces Third Quarter 2022 Results

  • Reported net income of $0.60 per diluted share.
  • Adjusted net income per diluted share more than doubled from the same period last year.
  • Revenue of $5.4 billion, increased 39% year-over-year.
  • Operating margin of 16%, increased 393 basis points year-over-year over adjusted operating margin.
  • Cash flow from operating activities of $753 million and free cash flow of $543 million.

Halliburton Company (NYSE: HAL) announced today net income of $544 million, or $0.60 per diluted share, for the third quarter of 2022. This compares to net income for the second quarter of 2022 of $109 million, or $0.12 per diluted share, and the adjusted net income for the second quarter of 2022, excluding impairments and other charges, of $442 million, or $0.49 per diluted share. Halliburton's total revenue for the third quarter of 2022 was $5.4 billion compared to total revenue of $5.1 billion in the second quarter of 2022. Reported operating income was $846 million in the third quarter of 2022 compared to reported operating income of $374 million and adjusted operating income of $718 million in the second quarter of 2022.

“Halliburton’s third quarter results demonstrate the strength of our strategy in action. Total company revenue grew 6% sequentially, as activity and pricing increased simultaneously in North America and International markets. Operating income grew 18% compared to adjusted operating income from the second quarter with strong margin performance in both divisions,” commented Jeff Miller, Chairman, President and CEO.

“In all markets, Halliburton’s strong financial results demonstrate the execution of our strategic priorities. I believe structural demand for more oil and gas supply will provide strong tailwinds for our business, and Halliburton is well-positioned to deliver improved profitability and increased returns for shareholders.

“Our third quarter international performance demonstrates the earnings power of our strategy to deliver profitable international growth through improved pricing, selective contract wins, and the competitiveness of our technology offerings. Our year over year growth and margin expansion demonstrated by both divisions this quarter give me confidence in the earnings power of our international business.

“In North America, I see continued revenue growth -- the inbounds for calendar slots are stronger than I have ever seen at this point in the year. Our solid performance in the third quarter was the result of our strategy to maximize value and cash flow in this extremely tight market.

“Looking forward, we see activity increasing around the world -- from the smallest to the largest countries and producers. We intend to continue to execute on our strategic priorities and drive free cash flow and returns for our shareholders. I believe these strategies equip Halliburton to outperform under any market condition, but especially to maximize returns through this upcycle.” concluded Miller.

Operating Segments

Completion and Production

Completion and Production revenue in the third quarter of 2022 was $3.1 billion, an increase of $225 million, or 8%, when compared to the second quarter of 2022, while operating income was $583 million, an increase of $84 million, or 17%. These results were driven by increased pressure pumping services primarily in North America land, and increased completion tool sales in Middle East/Asia.

Drilling and Evaluation

Drilling and Evaluation revenue in the third quarter of 2022 was $2.2 billion, an increase of $58 million, or 3%, when compared to the second quarter of 2022, while operating income was $325 million, an increase of $39 million, or 14%. These results were due to improved drilling-related services in the Western Hemisphere and Middle East/Asia and increased project management activity and wireline services internationally. These improvements were partially offset by decreased drilling services in Norway, and decreased wireline services in the Gulf of Mexico.

Both divisional results were negatively impacted by the wind down and sale of our Russian operations.

Geographic Regions

North America

North America revenue in the third quarter of 2022 was $2.6 billion, a 9% increase when compared to the second quarter of 2022. This increase was primarily driven by increased pressure pumping services and drilling-related services in North America land. These increases were partially offset by decreased activity across multiple product service lines in the Gulf of Mexico.

International

International revenue in the third quarter of 2022 was $2.7 billion, a 3% increase when compared to the second quarter of 2022.

Latin America revenue in the third quarter of 2022 was $841 million, an 11% increase sequentially, due to increased well construction services and project management activity in Mexico and higher fluids and project management activity in Suriname. Partially offsetting these increases was lower project management activity in Colombia.

Europe/Africa revenue in the third quarter of 2022 was $639 million, an 11% decrease sequentially. Almost all of this reduction was related to exiting our Russia business along with decreased activity in the North Sea. These decreases were partially offset by increased well intervention services across the region.

Middle East/Asia revenue in the third quarter of 2022 was $1.2 billion, a 6% increase sequentially, primarily resulting from increased activity in Saudi Arabia, higher completion tool sales in Qatar, and increased drilling services in Indonesia and Malaysia. Partially offsetting these increases was lower activity in Vietnam.

Other Financial Items

During the third quarter of 2022, Halliburton redeemed the entire $600 million outstanding principal amount of its 3.50% senior notes due 2023 using cash on hand.

During the third quarter of 2022, Halliburton completed the sale of its Russia operations to its former Russia-based management team, which now owns and operates Halliburton’s former Russian business under the name BurService LLC, independent from Halliburton. As a result, Halliburton no longer conducts operations in Russia.

Selective Technology & Highlights

  • Halliburton and TechnipFMC renewed their Technology Alliance after a successful completion of an initial 5-year alliance agreement. The Alliance accelerates the development and commercialization of new technologies that deliver integrated production solutions that span surface, subsea, and subsurface applications.
  • Halliburton Labs announced it selected three new companies to participate in its collaborative environment to advance cleaner, affordable, and reliable energy. As a Halliburton Labs participant, AW-Energy, RedShift Energy, and Renkube will receive access to a broad range of industrial capabilities, technical expertise, and mentorships to scale their respective businesses.
  • Halliburton and CeraPhi Energy have entered into an exclusive drilling and intervention services agreement in exchange for in-kind engineering and project management support to CeraPhi. CeraPhi Energy has turned to Halliburton for its global expertise in well engineering and its seven decades of geothermal experience as part of CeraPhi’s plan to develop a global geothermal energy development company.
  • Halliburton announced that it has signed a Memorandum of Understanding (MoU) with the Saudi Data and Artificial Intelligence Authority (SDAIA) to address national and global energy challenges with DS365.ai to create data science and artificial intelligence (AI) applications and solutions. The two groups will share technologies and co-develop innovative solutions to aid in sustainability and subsurface prediction efforts for the oil and gas sector.
  • Halliburton introduced the HalVue® service for real-time wireline data visualization to expand current features on the HalVue® platform. HalVue is a real-time data monitoring application that gives customers a consistent view of data across operations as it comes in from the rig to help maximize asset value.
  • Halliburton Company announced the implementation of the Halliburton Digital Well Program® and Digital Well Operation DecisionSpace® 365 cloud solutions as the foundation for PETRONAS enterprise digital Well Integrated Operation (WIO). The selection marks the culmination of a two-year technology assessment with multiple technology providers.
  • Halliburton received two prestigious 2022 World Oil Awards, which recognize the upstream oil and gas industry’s leading innovations. Halliburton won the “Best Deepwater Technology Award” for its BrightStar® service and the “Best Oilfield Fluids and Chemicals Award” for the Halliburton Baroid BaraHib™ Gold trackable inhibitive system.
  • Halliburton recently hosted its annual Halliburton Charity Golf Tournament and raised more than $3.4 million for 101 U.S. nonprofit organizations. The tournament has raised more than $28 million for charities since it started 27 years ago.

About Halliburton

Halliburton is one of the world’s leading providers of products and services to the energy industry. Founded in 1919, we create innovative technologies, products, and services that help our customers maximize their value throughout the life cycle of an asset and advance a sustainable energy future. Visit us at www.halliburton.com.

Forward-looking Statements

The statements in this press release that are not historical statements, including statements regarding future financial performance, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: the impact of COVID-19 and any variants, the related economic repercussions and resulting negative impact on demand for oil and gas, operational challenges relating to COVID-19 and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, performance of contracts and supply chain disruptions; the ability of the OPEC+ countries to agree on and comply with production quotas; the continuation or suspension of our stock repurchase program, the amount, the timing, and the trading prices of Halliburton common stock, and the availability and alternative uses of cash; changes in the demand for or price of oil and/or natural gas; potential catastrophic events related to our operations, and related indemnification and insurance matters; protection of intellectual property rights and against cyber-attacks; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to oil and natural gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services, and climate-related initiatives; assumptions regarding the generation of future taxable income, and compliance with laws related to and disputes with taxing authorities regarding income taxes; risks of international operations, including risks relating to unsettled political conditions, war, including the ongoing Russia and Ukraine conflict and any expansion of that conflict, the effects of terrorism, foreign exchange rates and controls, international trade and regulatory controls and sanctions, and doing business with national oil companies; weather-related issues, including the effects of hurricanes and tropical storms; changes in capital spending by customers, delays or failures by customers to make payments owed to us, and the resulting impact on our liquidity; execution of long-term, fixed-price contracts; structural changes and infrastructure issues in the oil and natural gas industry; maintaining a highly skilled workforce; availability and cost of raw materials; and agreement with respect to and completion of potential dispositions, acquisitions and integration and success of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2021, Form 10-Q for the quarter ended June 30, 2022, recent Current Reports on Form 8-K and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect Halliburton's business, results of operations, and financial condition. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Millions of dollars and shares except per share data)

(Unaudited)

 

 

Three Months Ended

 

September 30

 

June 30

 

2022

 

2021

 

2022

Revenue:

 

 

 

 

 

Completion and Production

$

3,136

 

 

$

2,136

 

 

$

2,911

 

Drilling and Evaluation

 

2,221

 

 

 

1,724

 

 

 

2,163

 

Total revenue

$

5,357

 

 

$

3,860

 

 

$

5,074

 

Operating income:

 

 

 

 

 

Completion and Production

$

583

 

 

$

322

 

 

$

499

 

Drilling and Evaluation

 

325

 

 

 

186

 

 

 

286

 

Corporate and other

 

(62

)

 

 

(50

)

 

 

(67

)

Impairments and other charges (a)

 

 

 

 

(12

)

 

 

(344

)

Total operating income

 

846

 

 

 

446

 

 

 

374

 

Interest expense, net

 

(93

)

 

 

(116

)

 

 

(101

)

Other, net

 

(48

)

 

 

(14

)

 

 

(42

)

Income before income taxes

 

705

 

 

 

316

 

 

 

231

 

Income tax provision (b)

 

(156

)

 

 

(76

)

 

 

(114

)

Net income

$

549

 

 

$

240

 

 

$

117

 

Net income attributable to noncontrolling interest

 

(5

)

 

 

(4

)

 

 

(8

)

Net income attributable to company

$

544

 

 

$

236

 

 

$

109

 

 

 

 

 

 

 

 

Basic and diluted net income per share

$

0.60

 

 

$

0.26

 

 

$

0.12

 

Basic weighted average common shares outstanding

 

908

 

 

 

894

 

 

 

904

 

Diluted weighted average common shares outstanding

 

910

 

 

 

894

 

 

 

909

 

 

 

(a)

See Footnote Table 1 for details of the impairments and other charges recorded during the three months ended September 30, 2021 and June 30, 2022.

(b)

The tax provision includes the tax effect related to impairments and other charges during the three months ended June 30, 2022.

See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income.

See Footnote Table 3 for Reconciliation of As Reported Net Income to Adjusted Net Income.

HALLIBURTON COMPANY

Condensed Consolidated Statements of Operations

(Millions of dollars and shares except per share data)

(Unaudited)

 

 

 

Nine Months Ended

 

September 30

 

2022

 

2021

Revenue:

 

 

 

Completion and Production

$

8,400

 

 

$

6,054

 

Drilling and Evaluation

 

6,315

 

 

 

4,964

 

Total revenue

$

14,715

 

 

$

11,018

 

Operating income:

 

 

 

Completion and Production

$

1,378

 

 

$

891

 

Drilling and Evaluation

 

905

 

 

 

532

 

Corporate and other

 

(186

)

 

 

(161

)

Impairments and other charges (a)

 

(366

)

 

 

(12

)

Total operating income

 

1,731

 

 

 

1,250

 

Interest expense, net

 

(301

)

 

 

(361

)

Loss on early extinguishment of debt (b)

 

(42

)

 

 

 

Other, net

 

(120

)

 

 

(55

)

Income before income taxes

 

1,268

 

 

 

834

 

Income tax provision (c)

 

(338

)

 

 

(193

)

Net Income

$

930

 

 

$

641

 

Net Income attributable to noncontrolling interest

 

(14

)

 

 

(8

)

Net Income attributable to company

$

916

 

 

$

633

 

 

 

 

 

 

Basic and diluted net income per share

$

1.01

 

 

$

0.71

 

Basic weighted average common shares outstanding

 

904

 

 

 

891

 

Diluted weighted average common shares outstanding

 

907

 

 

 

891

 

 

 

 

 

 

(a)

See Footnote Table 2 for details of the impairments and other charges recorded during the nine months ended September 30, 2022 and 2021.

(b)

During the nine months ended September 30, 2022, Halliburton recognized a $42 million loss on extinguishment of debt related to the early redemption of $600 million aggregate principal amount of senior notes in February 2023.

(c)

The tax provision includes the tax effect related to impairments and other charges and the loss on early extinguishment of debt during the nine months ended September 30, 2022.

See Footnote Table 2 for Reconciliation of As Reported Operating Income to Adjusted Operating Income.

See Footnote Table 4 for Reconciliation of As Reported Net Income to Adjusted Net Income.

 

HALLIBURTON COMPANY

Condensed Consolidated Balance Sheets

(Millions of dollars)

(Unaudited)

 

 

September 30

 

December 31

 

2022

 

2021

Assets

Current assets:

 

 

 

Cash and equivalents

$

1,977

 

$

3,044

Receivables, net

 

4,614

 

 

3,666

Inventories

 

2,842

 

 

2,361

Other current assets

 

978

 

 

872

Total current assets

 

10,411

 

 

9,943

Property, plant, and equipment, net

 

4,203

 

 

4,326

Goodwill

 

2,828

 

 

2,843

Deferred income taxes

 

2,653

 

 

2,695

Operating lease right-of-use assets

 

927

 

 

934

Other assets

 

1,541

 

 

1,580

Total assets

$

22,563

 

$

22,321

 

 

 

 

Liabilities and Shareholders’ Equity

Current liabilities:

 

 

 

Accounts payable

$

3,064

 

$

2,353

Accrued employee compensation and benefits

 

538

 

 

493

Current portion of operating lease liabilities

 

224

 

 

240

Other current liabilities

 

1,142

 

 

1,220

Total current liabilities

 

4,968

 

 

4,306

Long-term debt

 

7,927

 

 

9,127

Operating lease liabilities

 

803

 

 

845

Employee compensation and benefits

 

473

 

 

492

Other liabilities

 

747

 

 

823

Total liabilities

 

14,918

 

 

15,593

Company shareholders’ equity

 

7,621

 

 

6,713

Noncontrolling interest in consolidated subsidiaries

 

24

 

 

15

Total shareholders’ equity

 

7,645

 

 

6,728

Total liabilities and shareholders’ equity

$

22,563

 

$

22,321

HALLIBURTON COMPANY

Condensed Consolidated Statements of Cash Flows

(Millions of dollars)

(Unaudited)

 

 

 

Nine Months Ended

 

Three Months

Ended

 

 

September 30

 

September 30

 

 

2022

 

2021

 

2022

Cash flows from operating activities:

 

 

 

 

 

Net income

$

930

 

 

$

641

 

 

$

549

 

Adjustments to reconcile net income to cash flows from operating activities:

 

 

 

 

 

Depreciation, depletion, and amortization

 

704

 

 

 

673

 

 

 

234

 

Impairments and other charges

 

366

 

 

 

12

 

 

 

 

Working capital (a)

 

(907

)

 

 

81

 

 

 

(97

)

Other operating activities

 

(14

)

 

 

(178

)

 

 

67

 

Total cash flows provided by operating activities

 

1,079

 

 

 

1,229

 

 

 

753

 

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(661

)

 

 

(483

)

 

 

(251

)

Proceeds from sales of property, plant, and equipment

 

157

 

 

 

145

 

 

 

41

 

Proceeds from a structured real estate transaction

 

 

 

 

87

 

 

 

 

Other investing activities

 

(74

)

 

 

(57

)

 

 

(20

)

Total cash flows used in investing activities

 

(578

)

 

 

(308

)

 

 

(230

)

Cash flows from financing activities:

 

 

 

 

 

Payments on long-term borrowings

 

(1,242

)

 

 

(696

)

 

 

(600

)

Dividends to shareholders

 

(327

)

 

 

(121

)

 

 

(110

)

Other financing activities

 

114

 

 

 

7

 

 

 

(2

)

Total cash flows used in financing activities

 

(1,455

)

 

 

(810

)

 

 

(712

)

Effect of exchange rate changes on cash

 

(113

)

 

 

(42

)

 

 

(60

)

Increase (decrease) in cash and equivalents

 

(1,067

)

 

 

69

 

 

 

(249

)

Cash and equivalents at beginning of period

 

3,044

 

 

 

2,563

 

 

 

2,226

 

Cash and equivalents at end of period

$

1,977

 

 

$

2,632

 

 

$

1,977

 

 

 

(a)

Working capital includes receivables, inventories, and accounts payable.

See Footnote Table 5 for Reconciliation of Cash Flows from Operating Activities to Free Cash Flow.

HALLIBURTON COMPANY

Revenue and Operating Income Comparison

By Operating Segment and Geographic Region

(Millions of dollars)

(Unaudited)

 

 

Three Months Ended

 

September 30

 

June 30

Revenue

2022

 

2021

 

2022

By operating segment:

 

 

 

 

 

Completion and Production

$

3,136

 

 

$

2,136

 

 

$

2,911

 

Drilling and Evaluation

 

2,221

 

 

 

1,724

 

 

 

2,163

 

Total revenue

$

5,357

 

 

$

3,860

 

 

$

5,074

 

 

 

 

 

 

 

By geographic region:

 

 

 

 

 

North America

$

2,635

 

 

$

1,615

 

 

$

2,426

 

Latin America

 

841

 

 

 

624

 

 

 

758

 

Europe/Africa/CIS

 

639

 

 

 

676

 

 

 

718

 

Middle East/Asia

 

1,242

 

 

 

945

 

 

 

1,172

 

Total revenue

$

5,357

 

 

$

3,860

 

 

$

5,074

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

By operating segment:

 

 

 

 

 

Completion and Production

$

583

 

 

$

322

 

 

$

499

 

Drilling and Evaluation

 

325

 

 

 

186

 

 

 

286

 

Total Operations

 

908

 

 

 

508

 

 

 

785

 

Corporate and other

 

(62

)

 

 

(50

)

 

 

(67

)

Impairments and other charges

 

 

 

 

(12

)

 

 

(344

)

Total operating income

$

846

 

 

$

446

 

 

$

374

 

 

See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income.

HALLIBURTON COMPANY

Revenue and Operating Income Comparison

By Operating Segment and Geographic Region

(Millions of dollars)

(Unaudited)

 

 

Nine Months Ended

 

September 30

Revenue

2022

 

2021

By operating segment:

 

 

 

Completion and Production

$

8,400

 

 

$

6,054

 

Drilling and Evaluation

 

6,315

 

 

 

4,964

 

Total revenue

$

14,715

 

 

$

11,018

 

 

 

 

 

By geographic region:

 

 

 

North America

$

6,986

 

 

$

4,588

 

Latin America

 

2,252

 

 

 

1,693

 

Europe/Africa/CIS

 

2,034

 

 

 

1,989

 

Middle East/Asia

 

3,443

 

 

 

2,748

 

Total revenue

$

14,715

 

 

$

11,018

 

 

 

 

 

Operating Income

 

 

 

By operating segment:

 

 

 

Completion and Production

$

1,378

 

 

$

891

 

Drilling and Evaluation

 

905

 

 

 

532

 

Total Operations

 

2,283

 

 

 

1,423

 

Corporate and other

 

(186

)

 

 

(161

)

Impairments and other charges

 

(366

)

 

 

(12

)

Total operating income

$

1,731

 

 

$

1,250

 

 

 

 

 

See Footnote Table 2 for Reconciliation of As Reported Operating Income to Adjusted Operating Income.

FOOTNOTE TABLE 1

 

HALLIBURTON COMPANY

Reconciliation of As Reported Operating Income to Adjusted Operating Income

(Millions of dollars)

(Unaudited)

 

 

 

Three Months Ended

 

 

September 30

 

June 30

 

 

2022

2021

 

2022

As reported operating income

$

846

 

$

446

 

 

$

374

 

 

 

 

 

 

 

Impairments and other charges:

 

 

 

 

 

Catch-up depreciation

 

 

 

36

 

 

 

 

Severance

 

 

 

15

 

 

 

 

Receivables

 

 

 

 

 

 

186

 

Property, plant, and equipment, net

 

 

 

 

 

 

100

 

Inventory

 

 

 

 

 

 

70

 

Gain on real estate transaction

 

 

 

(74

)

 

 

 

Other

 

 

 

35

 

 

 

(12

)

Total impairments and other charges (a)

 

 

 

12

 

 

 

344

 

Adjusted operating income (b) (c)

$

846

 

$

458

 

 

$

718

 

 

 

 

 

 

 

 

(a)

During the three months ended September 30, 2021, Halliburton closed the structured transaction for our North America real estate assets, which resulted in a $74 million gain. Halliburton also discontinued the proposed sale of the Pipeline and Process Services business leading to a depreciation catch-up related to these assets previously classified as held for sale. As a result, among these and other items, a $12 million pre-tax charge was recognized. During the three months ended June 30, 2022, Halliburton recognized a pre-tax charge of $344 million due to management's decision to market for sale the net assets of Russia operations, which was sold in August of 2022.

(b)

Management believes that operating income adjusted for impairments and other charges for the three months ended September 30, 2021 and June 30, 2022, 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 "Total impairments and other charges" for the respective periods.

(c)

We calculate operating margin by dividing reported operating income by reported revenue. We calculate adjusted operating margin by dividing adjusted operating income by reported revenue.

FOOTNOTE TABLE 2

 

HALLIBURTON COMPANY

Reconciliation of As Reported Operating Income to Adjusted Operating Income

(Millions of dollars)

(Unaudited)

 

 

 

Nine Months Ended

 

 

September 30

 

 

2022

 

2021

As reported operating income

$

1,731

 

 

$

1,250

 

 

 

 

 

Impairments and other charges:

 

 

 

Receivables

 

202

 

 

 

 

Property, plant, and equipment, net

 

100

 

 

 

 

Inventory

 

70

 

 

 

 

Catch-up depreciation

 

 

 

 

36

 

Severance

 

 

 

 

15

 

Gain on real estate transaction

 

 

 

 

(74

)

Other

 

(6

)

 

 

35

 

Total impairments and other charges (a)

 

366

 

 

 

12

 

Adjusted operating income (b) (c)

$

2,097

 

 

$

1,262

 

 

 

 

 

 

(a)

During the nine months ended September 30, 2022, Halliburton recorded $366 million of impairments and other charges, primarily due to management's decision to market for sale the net assets of Russia operations, which was sold in August of 2022, and impairment of the assets in Ukraine. During the nine months ended September 30, 2021, Halliburton closed the structured transaction for the North America real estate assets, which resulted in a $74 million gain. Halliburton also discontinued the proposed sale of the Pipeline and Process Services business leading to a depreciation catch-up related to these assets previously classified as held for sale. As a result, among these and other items, a $12 million pre-tax charge was recognized.

(b)

Management believes that operating income adjusted for impairments and other charges for the nine months ended September 30, 2022 and 2021, 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 "Total impairments and other charges" for the respective periods.

(c)

We calculate operating margin by dividing reported operating income by reported revenue. We calculate adjusted operating margin by dividing adjusted operating income by reported revenue.

FOOTNOTE TABLE 3

 

HALLIBURTON COMPANY

Reconciliation of As Reported Net Income to Adjusted Net Income

(Millions of dollars and shares except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

September 30

 

June 30

 

 

2022

 

2021

 

2022

As reported net income attributable to company

$

544

 

$

236

 

$

109

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

Impairments and other charges

 

 

 

12

 

 

344

 

Total adjustments, before taxes

 

 

 

12

 

 

344

 

Tax benefit (a)

 

 

 

 

 

(11

)

Total adjustments, net of taxes (b)

 

 

 

12

 

 

333

 

Adjusted net income attributable to company (b)

$

544

 

$

248

 

$

442

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

910

 

 

894

 

 

909

 

As reported net income per diluted share (c)

$

0.60

 

$

0.26

 

$

0.12

 

Adjusted net income per diluted share (c)

$

0.60

 

$

0.28

 

$

0.49

 

 

 

 

 

 

 

 

(a)

The tax benefit in the table above includes the tax effect related to impairments and other charges during the three months ended June 30, 2022.

(b)

Management believes that net income adjusted for the 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 respective periods.

(c)

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."

FOOTNOTE TABLE 4

 

HALLIBURTON COMPANY

Reconciliation of As Reported Net Income to Adjusted Net Income

(Millions of dollars and shares except per share data)

(Unaudited)

 

 

 

Nine Months Ended

 

 

September 30

 

 

2022

 

2021

As reported net income attributable to company

$

916

 

 

$

633

 

 

 

 

Adjustments:

 

 

 

Impairments and other charges

 

366

 

 

 

12

Loss on early extinguishment of debt

 

42

 

 

 

Total adjustments, before taxes

 

408

 

 

 

12

Tax benefit (a)

 

(24

)

 

 

Total adjustments, net of taxes (b)

 

384

 

 

 

12

Adjusted net income attributable to company (b)

$

1,300

 

 

$

645

 

 

 

 

Diluted weighted average common shares outstanding

 

907

 

 

 

891

As reported net income per diluted share (c)

$

1.01

 

 

$

0.71

Adjusted net income per diluted share (c)

$

1.43

 

 

$

0.72

 

 

 

 

 

(a)

The tax benefit in the table above includes the tax effect related to impairments and other charges and the loss on early extinguishment of debt during the nine months ended September 30, 2022.

(b)

Management believes that net income adjusted for impairments and other charges and the loss on early extinguishment of debt, 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 respective periods.

(c)

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."

FOOTNOTE TABLE 5

 

HALLIBURTON COMPANY

Reconciliation of Cash Flows from Operating Activities to Free Cash Flow

(Millions of dollars)

(Unaudited)

 

 

 

Nine Months Ended

 

Three Months Ended

 

 

September 30

 

September 30

 

 

2022

 

2021

 

2022

Total cash flows provided by operating activities

$

1,079

 

 

$

1,229

 

 

$

753

 

Capital expenditures

 

(661

)

 

 

(483

)

 

 

(251

)

Proceeds from sales of property, plant, and equipment

 

157

 

 

 

145

 

 

 

41

 

Free cash flow (a)

$

575

 

 

$

891

 

 

$

543

 

 

 

 

 

 

 

 

(a)

The Free Cash Flow metric is a non-GAAP financial measure, which is calculated as “Total cash flows provided by operating activities” less “Capital expenditures” plus “Proceeds from sales of property, plant, and equipment.” Management believes that Free Cash Flow is a key measure to assess liquidity of the business and is consistent with the disclosures of Halliburton's direct, large-cap competitors.

Conference Call Details

Halliburton Company (NYSE: HAL) will host a conference call on Tuesday, October 25, 2022, to discuss its third quarter 2022 financial results. The call will begin at 8:00 AM Central Time (9:00 AM Eastern Time).

Please click here to pre-register for the conference call and obtain your dial in number and passcode. You can also visit the Halliburton website to listen to the call via live webcast. A recorded version will be available under the same link immediately following the conclusion of the conference call.

Contacts

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