Business context and reporting period
Halliburton Company (NYSE: HAL) provides oilfield products and services through Completion and Production (C&P) and Drilling and Evaluation (D&E), operating in more than 70 countries. This Form 10-K covers the fiscal year ended December 31, 2022; the supplied text does not provide clear standalone fourth-quarter financial results.
Financial performance
Unless otherwise noted, amounts are in U.S. dollars.
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $20.3 billion | $15.3 billion |
| Operating income | $2.7 billion | $1.8 billion |
| Net income attributable to Halliburton | $1.57 billion | $1.46 billion |
| Diluted earnings per share | $1.73 | $1.63 |
| Cash from operations | $2.24 billion | $1.91 billion |
| Capital expenditures | $1.01 billion | $0.80 billion |
- Revenue increased 33% year over year; C&P revenue rose 38% and D&E revenue rose 27%. North America revenue increased 51%, while international revenue increased 20%.
- Operating income increased 50%. Company operating margin was approximately 13.3%; segment operating margins were approximately 17.6% for C&P and 14.8% for D&E, consistent with management’s rounded figures of 18% and 15%.
- Net income attributable to Halliburton increased about 8%. The 2021 comparison included a substantial tax benefit, including a valuation-allowance release; 2022 recorded a $515 million tax provision and a 24.4% effective tax rate.
- Operating cash flow rose 17%, but receivables and inventory growth were significant working-capital uses. The company reported a net $941 million working-capital outflow from receivables, inventories, and accounts payable.
- Cash and equivalents were $2.35 billion at year-end, down from $3.04 billion. Long-term debt was $7.93 billion, down from $9.13 billion. The company repaid about $1.2 billion of debt during 2022.
- Current assets were $10.95 billion and current liabilities $5.35 billion. A $3.5 billion revolving credit facility was fully available at year-end. Capital expenditures were about 5% of revenue.
Material changes versus the prior comparable period
- Stronger customer activity and pricing, particularly in North America, drove broad revenue and operating-income growth. Higher international activity in Latin America and the Middle East also contributed.
- FY 2022 included $366 million of impairments and other charges, primarily a $344 million write-down tied to the sale of Russian operations and a $22 million charge related mainly to assets and receivables in Ukraine. Halliburton completed its Russia sale in the third quarter and no longer operates there.
- Interest expense declined to $375 million from $469 million. Halliburton also recorded a $42 million loss on early debt redemption.
- Dividends paid increased to $435 million from $161 million; the company also repurchased 6.8 million shares for $250 million.
Outlook, commentary, risks and contingencies
- Management expected 2023 international activity to grow at least 14–16% and North American customer spending to increase at least 15% versus 2022. These are management expectations, not guarantees.
- Management expected 2023 capital spending of approximately 5–6% of revenue, stated it did not intend to incur additional debt in 2023, and targeted returning at least 50% of annual free cash flow to shareholders through dividends and repurchases. The Board retains discretion over capital returns.
- Management cited oil and gas demand, energy security, and constrained supply as supportive factors, while noting inflation, supply-chain constraints, customer spending discipline, and possible economic slowdown. Its outlook is exposed to volatile commodity prices and rig activity.
- Other key risks include geopolitical instability and sanctions, environmental and climate regulation, hydraulic-fracturing restrictions, raw-material and labor availability and costs, customer payment delays, foreign exchange, cybersecurity, and operational or project liabilities.
- Credit-loss allowance was $731 million, primarily related to a full reserve against receivables from a customer in Venezuela. One Mexican customer represented about 9% of total receivables; Halliburton reported payment delays but did not expect material write-offs from that customer.
- Management said accrued probable and estimable legal and investigation costs were not material, while noting outcomes remain uncertain. About $2.1 billion of letters of credit, guarantees, and surety bonds were outstanding; no stated collateral-triggering events had occurred.
- KPMG issued unqualified opinions on the financial statements and internal controls. The auditor identified realizability of domestic deferred tax assets as a critical audit matter; realization depends in part on future taxable income forecasts.
Important facts for investors to verify
- Obtain the separate fourth-quarter release or filing for Q4-only revenue, earnings, margins, and cash flow; the supplied 10-K text primarily reports annual results.
- Assess whether working-capital investment, particularly receivables and inventory, converts into cash as activity grows.
- Review the assumptions and expiration schedule supporting deferred tax assets and foreign tax credits.
- Monitor collections and credit exposure, including the Venezuela allowance and delayed Mexican customer payments.
- Compare 2023 activity and capital-return expectations with subsequent results, and distinguish recurring performance from Russia- and Ukraine-related charges.