HALLIBURTON CO (HAL) Q3 2025 Earnings Summary

Executive Summary

Q3 results beat consensus as adjusted EPS of $0.58 topped S&P Global by ~$0.08 (+17%) and revenue of $5.60B beat by ~$0.21B (+3.9%); adjusted operating margin was 13% despite broad impairments and a U.S. tax valuation allowance tied to OBBBA . Consensus from S&P Global shown with asterisks; values retrieved from S&P Global.*
Mix: International was flat q/q ($3.2B) as Middle East/Asia softened (Saudi) while North America rose 5% sequentially to $2.4B on stronger stimulation and Gulf of America activity .
Management executed defensively: idled uneconomic fleets, actions to reduce labor costs delivering ~$100M quarterly savings starting Q4, and reset 2026 capex down ~30% to ~$1.0B; also returned ~$250M via buybacks and paid a $0.17 dividend in Q3 .
New vectors: a strategic collaboration with VoltaGrid positions HAL for international distributed power for AI/data centers (initial Middle East), a potential medium-term growth leg alongside offshore and artificial lift .

What Went Well and What Went Wrong

What Went Well
- Adjusted earnings and revenue beat consensus; adj. operating margin at 13% on cost actions and less North America “white space” than expected; HAL reiterated ~$100M per quarter cost savings starting Q4 .
- D&E margin improved sequentially; strength in project management and wireline in LatAm, drilling services in NA and Europe/Africa, and higher software sales in Europe/Africa .
- Strategic wins and tech adoption: Petrobras deepwater completions/stimulation contracts (start 2026), NEP CCS award in UK, Shell ROCS framework, and LOGIX/iCruise/Zeus IQ momentum; CEO: “Our growth engines are on track” .
- Management quote: “We…took steps that will deliver estimated savings of $100 million dollars per quarter…reset our 2026 capital budget and idled equipment that no longer meets our return expectations” .
What Went Wrong
- GAAP EPS fell to $0.02 on $540M of charges (impairments/other items plus Argentina investment impairment and a $125M U.S. tax valuation allowance tied to OBBBA); operating margin compressed to 6% GAAP .
- Middle East/Asia softness (Saudi) pressured both segments; International total flat q/q, Middle East/Asia -3% sequentially; C&P operating income flat q/q despite higher revenue .
- Tariffs rising: Q3 gross impact ~$31M, with Q4 expected ~$60M (notably artificial lift supply chain), and CFO flagged higher net interest and corporate expense in Q4 .
- Q4 outlook: NA seasonal/white space to drive ~12–13% sequential revenue decline; C&P revenue -4% to -6% with margin down 25–75 bps; D&E flat to -2% with margin up 50–100 bps .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($B)	$5.697	$5.510	$5.600
Operating Income ($M)	$871	$727	$356
Operating Margin (%)	15.3%	13.2%	6.4%
Adjusted Operating Income ($M)	$987	$727	$748
Adjusted Operating Margin (%)	17.3%	13.2%	13.4%
GAAP Diluted EPS	$0.65	$0.55	$0.02
Adjusted EPS	$0.73	$0.55	$0.58
Cash from Operations ($M)	—	$896	$488
Free Cash Flow ($M)	—	$582	$276
Share Repurchases ($M)	—	~$250	~$250
Dividends per Share	—	$0.17	$0.17

Actual vs S&P Global Consensus (Q3 2025)*

Metric	Consensus	Actual	Surprise
Revenue ($B)	$5.389*	$5.600	+$0.211B / +3.9%*
EPS (Adj)	$0.496*	$0.58	+$0.084 / +16.9%*
EBITDA ($B)	$0.974*	$1.005*	+$0.031B / +3.1%*

Segment Revenue and Operating Income

Segment ($M)	Q3 2024	Q2 2025	Q3 2025
Completion & Production (Rev)	$3,299	$3,171	$3,223
Drilling & Evaluation (Rev)	$2,398	$2,339	$2,377
Completion & Production (Op Inc)	$669	$513	$514
Drilling & Evaluation (Op Inc)	$406	$312	$348

Geographic Revenue

Region ($M)	Q3 2024	Q2 2025	Q3 2025
North America	$2,386	$2,259	$2,364
Latin America	$1,053	$977	$996
Europe/Africa/CIS	$722	$820	$828
Middle East/Asia	$1,536	$1,454	$1,412

KPIs and Non-GAAP/One-time Items

KPI	Q3 2024	Q2 2025	Q3 2025
SAP S4 Migration Spend ($M)	—	$32	$50
“Impairments & other charges” ($M)	$116	—	$392
Argentina Investment Impairment ($M)	—	—	$23 (“Other, net”)
U.S. Tax Valuation Allowance (OBBBA) ($M)	$(41) benefit	—	$125 expense

Notes: Adjusted figures exclude “Impairments and other charges,” Argentina investment impairment, and tax valuation allowance impacts per company reconciliations .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
C&P Revenue (seq)	Q4 2025	—	Down 4%–6%	New
C&P Margin (seq)	Q4 2025	—	Down 25–75 bps	New
D&E Revenue (seq)	Q4 2025	—	Flat to -2%	New
D&E Margin (seq)	Q4 2025	—	Up 50–100 bps	New
International Revenue	Q4 2025	—	Up ~3%–4% on flat activity; seasonal software/completion tools	New
Corporate & Other Expense	Q4 2025	Q3 baseline	+~$5M vs Q3	Raised
Net Interest Expense	Q4 2025	Q3 baseline	+~$5M vs Q3	Raised
SAP S4 Expense	Q4 2025	Q3 $50M	~$40M	Lowered
Effective Tax Rate	Q4 2025	Q3 21.5%	~Flat vs Q3	Maintained
Tariffs (gross impact)	Q4 2025	Q3 ~$31M	~$60M	Raised
2025 Capex	FY 2025	~6% of revenue	~6% of revenue	Maintained
2026 Capex	FY 2026	—	~$1.0B (~30% lower y/y)	New
Cost Savings Run-Rate	From Q4 2025	—	~$100M per quarter	New
Shareholder Returns	2025	>50% of FCF via div/buybacks implied	Continue buybacks/dividends	Maintained

Earnings Call Themes & Trends

Topic	Q1 2025 (prior-2)	Q2 2025 (prior-1)	Q3 2025 (current)	Trend
North America strategy (idling, returns focus)	Emphasis on tech, autonomous frac; pricing pressure noted	White space emerging; stack fleets below return thresholds	Idled uneconomic fleets; NA down ~12–13% expected in Q4; focus on Zeus/Zeus IQ	More defensive
International growth engines (unconventionals, drilling, production services, lift)	Strong tendering, integrated offshore wins	Expect international revenue to contract mid-single digits for 2025; specific wins and technology deployments	Engines “on track”; offshore ~half of non-NA revenue; mixed Middle East/Asia; LatAm/Europe highlights	Mixed but resilient
Middle East/Saudi	Increased stimulation and tool sales in KSA in Q1, but some well construction down	KSA reductions impacting C&P and D&E	Middle East/Asia -3% q/q; expect gradual improvement into 2026	Stabilizing into 2026
Offshore/deepwater	Technology and collaborative model wins; Norway/Namibia activity	Expect growth in Brazil/Norway; deepwater traction	Petrobras deepwater contracts; Shell ROCS framework	Positive
AI/data center power (VoltaGrid)	—	—	Strategic collaboration; initial Middle East rollout; HAL as international partner	Emerging growth leg
Tariffs/supply chain	—	Q3 headwind guide ~$35M	Q3 ~$31M; Q4 ~$60M; artificial lift most exposed	Worsening near-term
Tax/regulatory (OBBBA)	—	—	$125M U.S. tax valuation allowance tied to OBBBA	One-time impact
Capex	—	2025 ~6% rev; Zeus build demand-driven	2026 reset to ~$1.0B (-~30%)	Lowering 2026

Management Commentary

“We delivered total company revenue of $5.6 billion and adjusted operating margin of 13%. We…will deliver estimated savings of $100 million dollars per quarter, reset our 2026 capital budget and idled equipment that no longer meets our return expectations” — Jeff Miller, CEO .
“We recorded severance and fixed and other assets write-offs of $284 million…We expect cash operational savings…approximately $100 million in quarterly savings” — Eric Hurey, CFO .
“For the fourth quarter, we expect international revenue to increase 3% to 4% on roughly flat activity levels…typical seasonal software and completion tool sales” — CEO .
“North America…we expect greater than typical white space…approximately 12% to 13% lower sequential revenue” — CEO .
“We signed an agreement with VoltaGrid to be their international partner for delivering distributed power solutions for data centers outside of North America” — CEO .

Q&A Highlights

VoltaGrid collaboration: HAL will co-invest at project level internationally; leverages HAL’s global scale, execution, and customer relationships; projects can be large-scale; supply chain seen as supportive .
Margin beat drivers: Roughly half from earlier-than-expected labor cost reductions; remainder from less NA white space and strong international performance (completion tools/cementing; LatAm project management) .
NA idling/attrition: HAL is idling uneconomic fleets; expects equipment attrition to accelerate; preserves assets for snapback .
2026 outlook: Early; CEO sees “flattish” with bright spots; expects Saudi to improve in 2026 though not back to prior peaks; deepwater gaining traction .
FCF/returns: 2025 FCF targeted ~$1.8–$2.0B as of Q2 call; CFO reiterates commitment to shareholder return framework, with pace maintained; Q3 CFO noted ~$1.7B full-year goal earlier then updated at Q2 to $1.8–$2.0B range .

Estimates Context

Relative to S&P Global consensus, Q3 revenue of $5.60B beat by ~$0.21B (+3.9%)* and adjusted EPS of $0.58 beat by ~$0.084 (+16.9%); EBITDA of ~$1.005B vs ~$0.974B estimate (+3.1%). Cost actions and mix (Gulf of America, LatAm D&E) supported the beat, offsetting Saudi softness and tariffs . Values retrieved from S&P Global.*

Where estimates may adjust:

NA Q4 seasonal step-down (12–13%) and tariff escalation to ~$60M likely push consensus lower for C&P margins in Q4; D&E margins could see upward revisions on software and drilling strength .
2026 capex reset and $100M quarterly cost savings may lift out-year FCF and margin expectations, partially offset by uncertain NA macro and Saudi pacing .

Key Takeaways for Investors

Quality beat on adjusted metrics with clear cost/capex discipline; the $100M/quarter savings and 2026 capex reset underpin resilience into a softer near-term macro .
International portfolio holding up ex-Saudi; deepwater and artificial lift provide secular growth, supplemented by seasonal Q4 uplift in software/completion tools .
North America remains challenging near term; HAL’s idling strategy preserves returns and optionality for a rapid snapback when fundamentals tighten .
Tariffs are a headwind, particularly for lift; management is rewiring supply chains, but Q4 impact doubles vs Q3 (~$60M vs ~$31M) .
New adjacency: VoltaGrid collaboration creates an AI/data center distributed power wedge internationally—watch for project announcements as a potential multiple-expanding catalyst .
Capital returns remain intact (Q3: ~$250M buybacks; $0.17 dividend); FCF seasonally strongest in Q4; cost actions add ~$400M annual opex plus ~$400M lower capex liquidity into 2026 .
Monitor Saudi tender cadence, NA white space in Q4, and software/completion seasonality to gauge Q4 slope and 2026 setup .

Footnote: Items marked with an asterisk (*) are S&P Global consensus/actuals from analyst estimates. Values retrieved from S&P Global.