Q4 2024 Earnings Summary
- Halliburton expects to generate an additional $2.5 billion to $3 billion of annual revenue within 3 to 5 years through its four growth engines: drilling technology, unconventionals, well intervention, and artificial lift. The company is well-positioned with a strong suite of technologies in these areas and anticipates meaningful impact from all four sectors.
- The company's technological advancements, such as Zeus e-fleets, Octiv Auto Frac, and Sensori fracture monitoring, are driving customer adoption and delivering value. Halliburton continues to invest in technology development and is set up with waves of new technologies over the next 2 to 3 years, positioning it to outgrow the market and achieve outsized growth.
- Anticipated increases in U.S. natural gas activity due to rising power demand and LNG exports are expected to tighten the market for frac services. Halliburton believes this tightening will lead to improved margins and increased activity levels, benefiting the company as equipment availability becomes constrained.
- Halliburton expects revenue and margins to decline in Q1 2025, driven primarily by lower activity in Mexico and decreased completion tool sales after strong performance in Q4 2024. This indicates potential challenges in sustaining revenue growth in the near term. ,
- Downward pricing pressure is impacting Halliburton's margins, especially in North America. The company acknowledges it is "not immune to pricing" and has accepted lower negotiated prices for a portion of its fleet, which is expected to affect margins in 2025. This suggests a challenging pricing environment that could compress profitability. ,
- Reliance on future technology development and bolt-on M&A for growth introduces execution risk. Halliburton's growth projections depend on successful technology innovation and integration from acquisitions, which may not materialize as anticipated, potentially impacting their ability to achieve the projected $2.5 to $3 billion in additional revenue over the next 3 to 5 years. ,
Metric | Period | Previous Guidance | Current Guidance | Change |
---|---|---|---|---|
Corporate & other expenses | Q4 2024 | Increase by $10M vs Q3 | No current guidance | no current guidance |
SAP S/4 migration expenses | Q4 2024 | Increase by $5M vs Q3 | No current guidance | no current guidance |
Net interest expense | Q4 2024 | Increase by $5M vs Q3 | No current guidance | no current guidance |
Other net expense | Q4 2024 | $35M | No current guidance | no current guidance |
Effective tax rate | Q4 2024 | 23.5% | No current guidance | no current guidance |
C&P revenue | Q4 2024 | Down 1% to 3% sequential | No current guidance | no current guidance |
C&P margins | Q4 2024 | Down 75–125 bps | No current guidance | no current guidance |
D&E revenue | Q4 2024 | Flat to up 2% sequential | No current guidance | no current guidance |
D&E margins | Q4 2024 | Flat to up 50 bps | No current guidance | no current guidance |
Capital expenditures | FY 2024 | 6.4% of revenue | No current guidance | no current guidance |
Free cash flow | FY 2024 | At least 10% higher than 2023 | No current guidance | no current guidance |
International revenue | FY 2024 | In line with market but below prior guidance | No current guidance | no current guidance |
North America revenue | FY 2024 | Decline at low end of prior guidance | No current guidance | no current guidance |
Zeus platform adoption | 2025 | 50% of active fleets expected to be electric by 2025 | No current guidance | no current guidance |
Corporate expenses | Q1 2025 | No prior guidance | Decrease slightly vs Q4 2024 | no prior guidance |
SAP S/4 migration expenses | Q1 2025 | No prior guidance | $25M | no prior guidance |
Net interest expense | Q1 2025 | No prior guidance | $90M | no prior guidance |
Other net expense | Q1 2025 | No prior guidance | $40M | no prior guidance |
Effective tax rate | Q1 2025 | No prior guidance | 23% | no prior guidance |
C&P revenue | Q1 2025 | No prior guidance | Down 3%–5% sequential | no prior guidance |
C&P margins | Q1 2025 | No prior guidance | Down 175–225 bps | no prior guidance |
D&E revenue | Q1 2025 | No prior guidance | Down 8%–10% sequential | no prior guidance |
D&E margins | Q1 2025 | No prior guidance | Flat to down 50 bps | no prior guidance |
SAP S/4 migration expenses | FY 2025 | No prior guidance | ~$100M | no prior guidance |
Effective tax rate | FY 2025 | No prior guidance | 25.5% | no prior guidance |
Capital expenditures | FY 2025 | No prior guidance | ~6% of revenue | no prior guidance |
Free cash flow | FY 2025 | No prior guidance | $1.6B returned to shareholders | no prior guidance |
Metric | Period | Guidance | Actual | Performance |
---|---|---|---|---|
SG&A (Proxy for Corporate & Other Expenses) | Q4 2024 | Increase by US$10 million vs. Q3 | Increased by US$6 million vs. Q3 (from US$55 millionTo US$61 million) | Beat |
Net Interest Expense | Q4 2024 | Increase by US$5 million vs. Q3 | Decreased by US$1 million vs. Q3 (from US$85 millionTo US$84 million) | Beat |
Capital Expenditures (CapEx) | FY 2024 | ~6.4% of revenue | 6.29% of revenue (US$1,442 millionOn US$22,944 million) | Beat |
Topic | Previous Mentions | Current Period | Trend |
---|---|---|---|
Recurring margin pressures in North America | Consistently highlighted in Q1–Q3 2024, driven by pricing pressures, lower fracturing activity, and overall reduced demand in North America. | Facing ongoing margin pressure from pricing dynamics, partly mitigated by technology and contracted fleets. | Persistently highlighted, no major sentiment shift |
Middle East expansion | Discussed in Q1–Q3 2024 as a key growth region with unconventional contracts, gas expansions, and technology deployments across Saudi Arabia and nearby markets. | Revenue up 7% sequentially from higher stimulation and completion activity in the Middle East, partially offset by reduced drilling in Asia. | Still present but less emphasized compared to earlier quarters |
New Q4 focus on additional $2.5–$3 billion in revenue | Not mentioned in Q1–Q3 2024. | Announced a plan to achieve $2.5–$3B annual revenue growth over 3–5 years through drilling technology, unconventionals, well intervention, and artificial lift. | Newly introduced in Q4 |
Shift from negative to positive sentiment on U.S. onshore natural gas demand | Q2 2024 included some optimism for 2025, with no clear positivity in Q3. | No mention of a specific sentiment shift in Q4 [n/a]. | Not referenced in Q4 |
Consistent emphasis on new technology (Zeus, e-fleets, Octiv Auto Frac, Sensori) | Major focus area throughout Q1–Q3 2024, with repeated mentions of electric fleets, automation, and real-time diagnostics as key differentiators. | Highlighted expansion of e-fleet share and integrated use of Octiv and Sensori, which remain central to growth. | Consistently emphasized, viewed as a core growth driver |
Intervention business | Cited in Q1 as an organic growth focus and in Q3 as offering lower cyclicality, with investment in emerging technologies. | Listed as one of four key growth engines, featuring riserless coil and advanced mechanical tools. | Continues to gain importance |
Cybersecurity event mentioned in Q3 | Discussed in detail in Q3 2024, impacting earnings, free cash flow, and ERP rollout; incurred $35 million in related expenses. | Not referenced in Q4 [n/a]. | Discontinued topic after Q3 |
Deepwater expansion projects in West Africa and the North Sea | Q3 and Q1 discussions of potential West Africa and North Sea growth, with Q3 noting some delays and Q1 highlighting long-term deepwater projects beyond 2025. | No mention in Q4 [n/a]. | Not referenced in Q4 |
Reliance on technology development and bolt-on M&A | Q1 discussion of strategic, smaller acquisitions and R&D focus to enhance capital efficiency and returns; viewed as complementary to organic growth. | Emphasized as a driver of above-market growth; no explicit discussion of associated risks. | Reiterated in Q4, consistent with Q1 approach |
Weather-related disruptions in Q1 | Discussed in Q1 for negatively impacting margins; not referenced in Q2–Q3. | Not mentioned in Q4 [n/a]. | No further references post-Q1 |
Paused share repurchases in Q3 | Q3 repurchases were paused due to cybersecurity concerns; plan to catch up in Q4 was announced. | No mention in Q4 [n/a]. | Not updated after Q3 |
Increasing power demand from AI and data centers | Cited in Q2 2024 as a positive trend for gas usage and again in Q1 as a growing factor for power demand. | Seen as a secular driver for natural gas, creating a long-term tailwind for Halliburton’s North America business. | Stronger emphasis in Q4 as an energy demand catalyst |
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2025 Margin Outlook
Q: How will pricing affect C&P margins in 2025?
A: Management expects solid returns in 2025 despite slight pricing pressure. They acknowledge being at the high end of the pricing range but emphasize sticking with their strategy, which hasn't changed over the years, to deliver consistent margins. -
$2.5-3 Billion Growth Engines
Q: Where will the additional $2.5-3 billion revenue come from?
A: Over the next 3-5 years, the company anticipates $2.5-3 billion in additional revenue driven by four growth engines: unconventionals, intervention, artificial lift, and drilling technology. These areas are expected to see meaningful impact due to technology development, investments, and market positioning. , -
U.S. Gas Activity Impact
Q: How will increased U.S. gas activity affect the industry?
A: An increase in U.S. gas activity is expected to tighten the frac market meaningfully and quickly, leading to equipment availability constraints. This tightness could result in improved pricing and higher margins as demand for equipment increases. , -
Technology Offsetting Pricing Pressures
Q: Can technology offset deflationary trends and impact pricing?
A: Innovations like Zeus pumps and auto frac are creating outsized value that offsets pricing stability. The company is at the leading edge of efficiency, allowing them to have a different conversation with customers and achieve differential outcomes despite market deflationary trends. -
Mexico Revenue Decline
Q: How will Mexico's activity affect international revenues?
A: Activity in Mexico is expected to decline by about 25%, impacting international revenues. This decline is due to a new administration and management at PEMEX. However, management is confident that activity will pick up as oil and gas remain critical to Mexico's economy. -
Offshore Market Outlook
Q: What is the outlook for offshore revenues in 2025?
A: Management sees solid growth in offshore activities, with rigs moving between markets and a strong pipeline of FIDs expected in early 2025 and beyond. They are not overly concerned about white space and expect offshore to be an important component of international growth. -
Power Generation Strategy
Q: What is Halliburton’s position on power generation in the Permian?
A: Halliburton is involved in power generation through their investment in VoltaGrid, giving them a front-row seat in the market. They find this area attractive and aligned with their core competencies, and see potential opportunities for participation. -
D&E Operating Margin Outlook
Q: What is the expectation for D&E margins in 2025?
A: D&E margins are expected to be fairly flat in 2025, remaining in the same range as in 2024. Despite strong product introductions and previous margin improvements, the company anticipates similar performance in the D&E segment. -
Customer Preference for Frac Fleets
Q: Do customers prefer dual fuel over electric frac fleets?
A: While some industry preferences lean towards dual fuel, management is confident in the ongoing demand for their electric solutions. They continue to plan deliveries for 2025 and beyond, with technologies like auto frac and Sensori becoming more important and driving demand.