HALLIBURTON CO (HAL) Q4 2024 Earnings Summary

Executive Summary

• Q4 results: revenue $5.61B, diluted EPS $0.70, operating income $932M, and reported operating margin 17%. International revenue rose 3% sequentially to $3.4B; North America fell 7% to $2.2B .
• Free cash flow was $1.10B on $1.46B cash from operations; HAL repurchased ~$309M stock, retired ~$100M debt, and paid a $0.17 dividend in Q4 .
• 2025 setup: management expects North America to be sequentially softer (Q1 margins hit from price revisions), international “flat” y/y including Mexico but low-to-mid single-digit growth ex-Mexico; FY25 effective tax rate ~25.5% (+300 bps vs 2024), SAP expenses ~$100M, capex ~6% of revenue, and plans to return ≥$1.6B cash to shareholders in 2025 .
• Technology adoption remains a differentiator: Octiv Auto Frac deployed on ~50% of e‑fleets, Sensori used on >2,500 frac stages in Q4; e‑fleets targeted to reach ~50% of fleet by end‑2025, supporting margin resilience and potential catalysts around efficiency/productivity narratives .

What Went Well and What Went Wrong

What Went Well

• International strength and mix: Middle East/Asia +7% q/q to $1.65B; Europe/Africa +10% q/q to $795M, reflecting stronger drilling-related services and fluids; overall international +3% sequentially to $3.4B .
• Cash generation and returns: Q4 free cash flow $1.10B; FY24 FCF $2.65B and ~60% returned to shareholders via buybacks/dividends; Q4 included ~$309M buybacks and $0.17 dividend .
• Technology momentum: “Octiv Auto Frac” and “Sensori” scaled; “We are sold out. All of our fleets are working…”; targeting ~50% e‑fleet mix by end‑2025; iCruise rotary steerables pacing for ~30% NA market by year‑end .

What Went Wrong

• North America softness and pricing: NA revenue -7% q/q to $2.21B driven by lower stimulation and fluids; management flagged lower negotiated prices hitting Q1 2025 margins (C&P margins expected down 175–225 bps) .
• Mexico reset: 2025 international revenue “flat” including Mexico, implying notable drag; management cited new administration and activity reset at PEMEX .
• Higher tax and SAP costs: FY25 effective tax rate guided to ~25.5% (+300 bps), SAP expenses ~$100M (Q4 spend $33M), representing headwinds to EPS/FCF conversion .

Financial Results

Segment revenue and operating income

KPIs and cash returns

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We begin the second half of this decade in a great position, with a transformed balance sheet, leading returns, and strong free cash flow” (Jeff Miller) .
• “We are sold out. All of our fleets are working under committed or contracted programs… e‑fleets will comprise 50% of our fleet by the end of 2025” (Jeff Miller) .
• “Our Q4 cash flow from operations was $1.5 billion… free cash flow in Q4 was $1.1 billion” (Eric Carre) .
• “In 2025, we expect flat international revenues… absent Mexico, we expect our international franchise will grow low to mid-single digits” (Jeff Miller) .
• “For the full year 2025, we expect our effective tax rate to be approximately 25.5%, an increase of 300 basis points over our 2024 effective tax rate” (Eric Carre) .

Q&A Highlights

• North America pricing and margins: Management acknowledged lower negotiated prices for part of the fleet; expects majority of margin impact in Q1 but remains confident strategy and technology will support returns .
• Efficiency monetization: Octiv Auto Frac and Sensori deliver “outsized value”; commercial model is stand-alone and priced; management expects margins to firm in H2 2025 as tool sales stabilize and interventions grow .
• Gas activity catalyst: Management sees potential tightness in frac capacity if U.S. gas activity increases; expects pricing to move up in a tighter market .
• Mexico trajectory: New administration/PEMEX reset likely reduces 2025 activity initially; management expects footing to improve over time .
• Segment outlook: Q1 2025 guide—C&P revenue -3% to -5% (margins down 175–225 bps) and D&E revenue -8% to -10% (margins flat to -50 bps); FY25 capex ~6% of revenue .

Estimates Context

• S&P Global consensus for Q4 2024 revenue and EPS was unavailable at time of access due to provider limit. As a result, we cannot quantify beats/misses versus Street in this report. Values retrieved from S&P Global were unavailable at the time of the request.
• Management’s commentary implies Q4 performance in line with internal expectations (D&E flat sequentially; C&P down on seasonality), but formal estimate comparisons are not provided here .

Key Takeaways for Investors

• Strong cash generation and shareholder returns: $1.10B Q4 FCF; FY25 plan to return ≥$1.6B supports capital return thesis even amid near-term NA softness .
• Near-term margin headwinds: Q1 2025 C&P margins to decline 175–225 bps on price revisions; monitor Q1 print for trough margin/inflection timing .
• International mix and Mexico drag: International flat including Mexico but growth ex‑Mexico; watch PEMEX activity normalization and Middle East/Asia momentum .
• Technology-led differentiation: Rapid adoption of Auto Frac and Sensori, expanding e‑fleet mix toward ~50% by end‑2025, and iCruise gains; supports medium-term margin resilience and share of wallet .
• Tax and SAP overhead rising: FY25 ETR ~25.5% (+300 bps) and SAP ~$100M weigh on EPS; focus on operational offsets and pricing recovery potential .
• Offshore pipeline and collaborations: Stable offshore activity and alliances (e.g., Norway), plus VoltaGrid tie-in for power resiliency, de-risk execution .
• Tactical watch items: NA pricing trajectory, U.S. gas activity uptick (AI/data center power demand), Mexico timelines, and segment tool sales cadence for H2 margin recovery .

All data and statements are sourced from Halliburton’s Q4 2024 8‑K and press release, Q4 earnings call transcript, and relevant Q2/Q3 materials as cited above.