(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Emerging growth company |
Three Months Ended | |||||||||||||||||||||||
September 30 | June 30 | ||||||||||||||||||||||
2021 | 2020 | 2021 | |||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Completion and Production | $ | 2,136 | $ | 1,574 | $ | 2,048 | |||||||||||||||||
Drilling and Evaluation | 1,724 | 1,401 | 1,659 | ||||||||||||||||||||
Total revenue | $ | 3,860 | $ | 2,975 | $ | 3,707 | |||||||||||||||||
Operating income: | |||||||||||||||||||||||
Completion and Production | $ | 322 | $ | 212 | $ | 317 | |||||||||||||||||
Drilling and Evaluation | 186 | 105 | 175 | ||||||||||||||||||||
Corporate and other | (50) | (42) | (58) | ||||||||||||||||||||
Impairments and other charges (a) | (12) | (133) | — | ||||||||||||||||||||
Total operating income | 446 | 142 | 434 | ||||||||||||||||||||
Interest expense, net | (116) | (122) | (120) | ||||||||||||||||||||
Other, net | (14) | (21) | (19) | ||||||||||||||||||||
Income (loss) before income taxes | 316 | (1) | 295 | ||||||||||||||||||||
Income tax provision (b) | (76) | (18) | (65) | ||||||||||||||||||||
Net income (loss) | $ | 240 | $ | (19) | $ | 230 | |||||||||||||||||
Net (income) loss attributable to noncontrolling interest | (4) | 2 | (3) | ||||||||||||||||||||
Net income (loss) attributable to company | $ | 236 | $ | (17) | $ | 227 | |||||||||||||||||
Basic and diluted net income (loss) per share | $ | 0.26 | $ | (0.02) | $ | 0.26 | |||||||||||||||||
Basic and diluted weighted average common shares outstanding | 894 | 882 | 890 | ||||||||||||||||||||
(a) | See Footnote Table 1 for details of the impairments and other charges recorded during the respective periods. | ||||||||||||||||||||||
(b) | The tax provision includes the tax effect on impairments and other charges recorded during the three months ended September 30, 2020. | ||||||||||||||||||||||
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 (Loss) to Adjusted Net Income. |
Nine Months Ended | |||||||||||||||||
September 30 | |||||||||||||||||
2021 | 2020 | ||||||||||||||||
Revenue: | |||||||||||||||||
Completion and Production | $ | 6,054 | $ | 6,029 | |||||||||||||
Drilling and Evaluation | 4,964 | 5,179 | |||||||||||||||
Total revenue | $ | 11,018 | $ | 11,208 | |||||||||||||
Operating income (loss): | |||||||||||||||||
Completion and Production | $ | 891 | $ | 713 | |||||||||||||
Drilling and Evaluation | 532 | 452 | |||||||||||||||
Corporate and other | (161) | (152) | |||||||||||||||
Impairments and other charges (a) | (12) | (3,353) | |||||||||||||||
Total operating income (loss) | 1,250 | (2,340) | |||||||||||||||
Interest expense, net | (361) | (380) | |||||||||||||||
Loss on early extinguishment of debt (b) | — | (168) | |||||||||||||||
Other, net | (55) | (92) | |||||||||||||||
Income (loss) before income taxes | 834 | (2,980) | |||||||||||||||
Income tax benefit (provision) (c) | (193) | 265 | |||||||||||||||
Net Income (loss) | $ | 641 | $ | (2,715) | |||||||||||||
Net (Income) loss attributable to noncontrolling interest | (8) | 5 | |||||||||||||||
Net Income (loss) attributable to company | $ | 633 | $ | (2,710) | |||||||||||||
Basic and diluted net income (loss) per share | $ | 0.71 | $ | (3.08) | |||||||||||||
Basic and diluted weighted average common shares outstanding | 891 | 879 | |||||||||||||||
(a) | See Footnote Table 2 for details of the impairments and other charges recorded during the respective periods. | ||||||||||||||||
(b) | During the nine months ended September 30, 2020, Halliburton recognized a $168 million loss on extinguishment of debt related to the early redemption of $1.5 billion aggregate principal amount of senior notes. | ||||||||||||||||
(c) | The tax benefit (provision) includes the tax effect on impairments and other charges recorded during the nine months ended September 30, 2020. Additionally, during the nine months ended September 30, 2020, based on market conditions and the expected impact on the Company's business, Halliburton recognized a $310 million tax expense associated with a valuation allowance on its deferred tax assets. | ||||||||||||||||
See Footnote Table 2 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income | |||||||||||||||||
See Footnote Table 4 for Reconciliation of As Reported Net Income (Loss) to Adjusted Net Income |
September 30 | December 31 | |||||||||||||
2021 | 2020 | |||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 2,632 | $ | 2,563 | ||||||||||
Receivables, net | 3,525 | 3,071 | ||||||||||||
Inventories | 2,354 | 2,349 | ||||||||||||
Other current assets | 920 | 1,492 | ||||||||||||
Total current assets | 9,431 | 9,475 | ||||||||||||
Property, plant, and equipment, net | 4,235 | 4,325 | ||||||||||||
Goodwill | 2,841 | 2,804 | ||||||||||||
Deferred income taxes | 2,149 | 2,166 | ||||||||||||
Operating lease right-of-use assets | 984 | 786 | ||||||||||||
Other assets | 1,385 | 1,124 | ||||||||||||
Total assets | $ | 21,025 | $ | 20,680 | ||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 2,011 | $ | 1,573 | ||||||||||
Accrued employee compensation and benefits | 583 | 517 | ||||||||||||
Current portion of operating lease liabilities | 258 | 251 | ||||||||||||
Current maturities of long-term debt | 11 | 695 | ||||||||||||
Other current liabilities | 1,083 | 1,385 | ||||||||||||
Total current liabilities | 3,946 | 4,421 | ||||||||||||
Long-term debt | 9,125 | 9,132 | ||||||||||||
Operating lease liabilities | 907 | 758 | ||||||||||||
Employee compensation and benefits | 547 | 562 | ||||||||||||
Other liabilities | 807 | 824 | ||||||||||||
Total liabilities | 15,332 | 15,697 | ||||||||||||
Company shareholders’ equity | 5,681 | 4,974 | ||||||||||||
Noncontrolling interest in consolidated subsidiaries | 12 | 9 | ||||||||||||
Total shareholders’ equity | 5,693 | 4,983 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 21,025 | $ | 20,680 |
Nine Months Ended | Three Months Ended | |||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||
2021 | 2020 | 2021 | ||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net Income (loss) | $ | 641 | $ | (2,715) | $ | 240 | ||||||||||||||
Adjustments to reconcile net income (loss) to cash flows from operating activities: | ||||||||||||||||||||
Depreciation, depletion, and amortization | 673 | 829 | 224 | |||||||||||||||||
Working capital (a) | 81 | 476 | 70 | |||||||||||||||||
Impairments and other charges | 12 | 3,353 | 12 | |||||||||||||||||
Deferred income tax provision (benefit) | 11 | (380) | 11 | |||||||||||||||||
Other operating activities | (189) | (320) | 60 | |||||||||||||||||
Total cash flows provided by operating activities | 1,229 | 1,243 | 617 | |||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Capital expenditures | (483) | (510) | (188) | |||||||||||||||||
Proceeds from sales of property, plant, and equipment | 145 | 199 | 40 | |||||||||||||||||
Proceeds from a structured real estate transaction | 87 | — | 87 | |||||||||||||||||
Other investing activities | (57) | (33) | (26) | |||||||||||||||||
Total cash flows used in investing activities | (308) | (344) | (87) | |||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Payments on long-term borrowings | (696) | (1,653) | (504) | |||||||||||||||||
Proceeds from issuance of long-term debt, net | — | 994 | — | |||||||||||||||||
Dividends to shareholders | (121) | (238) | (41) | |||||||||||||||||
Stock repurchase program | — | (100) | — | |||||||||||||||||
Other financing activities | 7 | 25 | 3 | |||||||||||||||||
Total cash flows used in financing activities | (810) | (972) | (542) | |||||||||||||||||
Effect of exchange rate changes on cash | (42) | (80) | (14) | |||||||||||||||||
Increase (decrease) in cash and equivalents | 69 | (153) | (26) | |||||||||||||||||
Cash and equivalents at beginning of period | 2,563 | 2,268 | 2,658 | |||||||||||||||||
Cash and equivalents at end of period | $ | 2,632 | $ | 2,115 | $ | 2,632 | ||||||||||||||
(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 |
Three Months Ended | |||||||||||||||||
September 30 | June 30 | ||||||||||||||||
Revenue | 2021 | 2020 | 2021 | ||||||||||||||
By operating segment: | |||||||||||||||||
Completion and Production | $ | 2,136 | $ | 1,574 | $ | 2,048 | |||||||||||
Drilling and Evaluation | 1,724 | 1,401 | 1,659 | ||||||||||||||
Total revenue | $ | 3,860 | $ | 2,975 | $ | 3,707 | |||||||||||
By geographic region: | |||||||||||||||||
North America | $ | 1,615 | $ | 984 | $ | 1,569 | |||||||||||
Latin America | 624 | 380 | 534 | ||||||||||||||
Europe/Africa/CIS | 676 | 649 | 679 | ||||||||||||||
Middle East/Asia | 945 | 962 | 925 | ||||||||||||||
Total revenue | $ | 3,860 | $ | 2,975 | $ | 3,707 | |||||||||||
Operating Income | |||||||||||||||||
By operating segment: | |||||||||||||||||
Completion and Production | $ | 322 | $ | 212 | $ | 317 | |||||||||||
Drilling and Evaluation | 186 | 105 | 175 | ||||||||||||||
Total | 508 | 317 | 492 | ||||||||||||||
Corporate and other | (50) | (42) | (58) | ||||||||||||||
Impairments and other charges | (12) | (133) | — | ||||||||||||||
Total operating income | $ | 446 | $ | 142 | $ | 434 | |||||||||||
See Footnote Table 1 for Reconciliation of As Reported Operating Income to Adjusted Operating Income. |
Nine Months Ended | |||||||||||
September 30 | |||||||||||
Revenue | 2021 | 2020 | |||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 6,054 | $ | 6,029 | |||||||
Drilling and Evaluation | 4,964 | 5,179 | |||||||||
Total revenue | $ | 11,018 | $ | 11,208 | |||||||
By geographic region: | |||||||||||
North America | $ | 4,588 | $ | 4,493 | |||||||
Latin America | 1,693 | 1,242 | |||||||||
Europe/Africa/CIS | 1,989 | 2,171 | |||||||||
Middle East/Asia | 2,748 | 3,302 | |||||||||
Total revenue | $ | 11,018 | $ | 11,208 | |||||||
Operating Income (Loss) | |||||||||||
By operating segment: | |||||||||||
Completion and Production | $ | 891 | $ | 713 | |||||||
Drilling and Evaluation | 532 | 452 | |||||||||
Total | 1,423 | 1,165 | |||||||||
Corporate and other | (161) | (152) | |||||||||
Impairments and other charges | (12) | (3,353) | |||||||||
Total operating income (loss) | $ | 1,250 | $ | (2,340) | |||||||
See Footnote Table 2 for Reconciliation of As Reported Operating Income (Loss) to Adjusted Operating Income. |
Three Months Ended | ||||||||||||||
September 30 | ||||||||||||||
2021 | 2020 | |||||||||||||
As reported operating income | $ | 446 | $ | 142 | ||||||||||
Impairments and other charges: | ||||||||||||||
Catch-up depreciation | 36 | — | ||||||||||||
Severance | 15 | 83 | ||||||||||||
Long-lived asset impairments | — | 31 | ||||||||||||
Inventory costs and write-downs | — | 11 | ||||||||||||
Gain on real estate transaction | (74) | — | ||||||||||||
Other | 35 | 8 | ||||||||||||
Total impairments and other charges (a) | 12 | 133 | ||||||||||||
Adjusted operating income (b) | $ | 458 | $ | 275 | ||||||||||
(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. We also discontinued the proposed sale of our 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, we recognized a $12 million pre-tax charge. During the three months ended September 30, 2020, Halliburton recognized a pre-tax charge of $133 million primarily related to severance costs. | |||||||||||||
(b) | Management believes that operating income adjusted for impairments and other charges for the three months ended September 30, 2021 and 2020, 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. |
Nine Months Ended | ||||||||||||||
September 30 | ||||||||||||||
2021 | 2020 | |||||||||||||
As reported operating income (loss) | $ | 1,250 | $ | (2,340) | ||||||||||
Impairments and other charges: | ||||||||||||||
Catch-up depreciation | 36 | — | ||||||||||||
Severance | 15 | 356 | ||||||||||||
Long-lived asset impairments | — | 2,299 | ||||||||||||
Inventory costs and write-downs | — | 505 | ||||||||||||
Gain on real estate transaction | (74) | — | ||||||||||||
Other | 35 | 193 | ||||||||||||
Total impairments and other charges (a) | 12 | 3,353 | ||||||||||||
Adjusted operating income (b) | $ | 1,262 | $ | 1,013 | ||||||||||
(a) | During the nine months ended September 30, 2021, Halliburton closed the structured transaction for our North America real estate assets, which resulted in a $74 million gain. We also discontinued the proposed sale of our 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, we recognized a $12 million pre-tax charge. During the nine months ended September 30, 2020, Halliburton recognized a pre-tax charge of $3.4 billion, primarily related to long-lived assets impairments. These impairments include impairments of property, plant, and equipment, intangible assets, leases, and real estate facilities. | |||||||||||||
(b) | Management believes that operating income (loss) adjusted for impairments and other charges for the nine months ended September 30, 2021 and 2020, 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 (loss)” plus "Total impairments and other charges" for the respective periods. |
Three Months Ended | ||||||||||||||
September 30 | ||||||||||||||
2021 | 2020 | |||||||||||||
As reported net income (loss) attributable to company | $ | 236 | $ | (17) | ||||||||||
Adjustments: | ||||||||||||||
Impairments and other charges | 12 | 133 | ||||||||||||
Noncontrolling interest equipment impairments | — | (2) | ||||||||||||
Total adjustments, before taxes | 12 | 131 | ||||||||||||
Tax benefit (a) | — | (14) | ||||||||||||
Total adjustments, net of taxes (b) | 12 | 117 | ||||||||||||
Adjusted net income attributable to company (b) | $ | 248 | $ | 100 | ||||||||||
As reported diluted weighted average common shares outstanding (c) | 894 | 882 | ||||||||||||
Adjusted diluted weighted average common shares outstanding (c) | 894 | 883 | ||||||||||||
As reported net income (loss) per diluted share (d) | $ | 0.26 | $ | (0.02) | ||||||||||
Adjusted net income per diluted share (d) | $ | 0.28 | $ | 0.11 | ||||||||||
(a) | The tax benefit in the table above includes the tax effect on impairments and other charges during the three months ended September 30, 2020. | |||||||||||||
(b) | Management believes that net income (loss) adjusted for impairments and other charges, along with the associated noncontrolling interest, 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 (loss) attributable to company” plus "Total adjustments, net of taxes" for the three months ended September 30, 2021 and 2020. | |||||||||||||
(c) | For the three months ended September 30, 2020, as reported diluted weighted average common shares outstanding excludes one million shares associated with stock-based compensation plans as the impact is antidilutive since Halliburton's reported income attributable to company was in a loss position during the period. When adjusting income attributable to company in that period for the adjustments discussed above, these shares become dilutive. | |||||||||||||
(d) | As reported net income (loss) per diluted share is calculated as: "As reported net income (loss) attributable to company" divided by "As reported diluted weighted average common shares outstanding." Adjusted net income per diluted share is calculated as: "Adjusted net income attributable to company" divided by "Adjusted diluted weighted average common shares outstanding." |
Nine Months Ended | ||||||||||||||
September 30 | ||||||||||||||
2021 | 2020 | |||||||||||||
As reported net income (loss) attributable to company | $ | 633 | $ | (2,710) | ||||||||||
Adjustments: | ||||||||||||||
Impairments and other charges | 12 | 3,353 | ||||||||||||
Noncontrolling interest equipment impairments | — | (9) | ||||||||||||
Loss on early extinguishment of debt | — | 168 | ||||||||||||
Total adjustments, before taxes | 12 | 3,512 | ||||||||||||
Tax benefit (a) | — | (386) | ||||||||||||
Total adjustments, net of taxes (b) | 12 | 3,126 | ||||||||||||
Adjusted net income attributable to company (b) | $ | 645 | $ | 416 | ||||||||||
As reported diluted weighted average common shares outstanding (c) | 891 | 879 | ||||||||||||
Adjusted diluted weighted average common shares outstanding (c) | 891 | 880 | ||||||||||||
As reported net income (loss) per diluted share (d) | $ | 0.71 | $ | (3.08) | ||||||||||
Adjusted net income per diluted share (d) | $ | 0.72 | $ | 0.47 | ||||||||||
(a) | The tax benefit in the table above includes the tax effect on impairments and other charges during the nine months ended September 30, 2020. Additionally, during the nine months ended September 30, 2020, based on market conditions and the expected impact on the Company's business, Halliburton recognized a $310 million tax expense associated with a valuation allowance on its deferred tax assets. | |||||||||||||
(b) | Management believes that net income (loss) adjusted for the loss on early extinguishment of debt and impairments and other charges, along with the associated noncontrolling interest, 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 (loss) attributable to company” plus "Total adjustments, net of taxes" for the nine months ended September 30, 2021 and 2020. | |||||||||||||
(c) | For the nine months ended September 30, 2020, as reported diluted weighted average common shares outstanding excludes one million shares associated with stock-based compensation plans as the impact is antidilutive since Halliburton's reported income attributable to company was in a loss position during the period. When adjusting income attributable to company in that period for the adjustments discussed above, these shares become dilutive. | |||||||||||||
(d) | As reported net income (loss) per diluted share is calculated as: "As reported net income (loss) attributable to company" divided by "As reported diluted weighted average common shares outstanding." Adjusted net income per diluted share is calculated as: "Adjusted net income attributable to company" divided by "Adjusted diluted weighted average common shares outstanding." |
Nine Months Ended | Three Months Ended | |||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||
2021 | 2020 | 2021 | ||||||||||||||||||
Total cash flows provided by operating activities | $ | 1,229 | $ | 1,243 | $ | 617 | ||||||||||||||
Capital expenditures | (483) | (510) | (188) | |||||||||||||||||
Proceeds from sales of property, plant, and equipment | 145 | 199 | 40 | |||||||||||||||||
Free cash flow (a) | $ | 891 | $ | 932 | $ | 469 | ||||||||||||||
(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 our direct, large-cap competitors. Prior periods presented are consistent with this metric. |
HALLIBURTON COMPANY | |||||||||||
Date: | October 19, 2021 | By: | /s/ Bruce A. Metzinger | ||||||||
Bruce A. Metzinger | |||||||||||
Vice President, Public Law and | |||||||||||
Assistant Secretary |