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    HAL
    Earnings call· Jun 2025(Q2 FY25)

    HALLIBURTON Q2 FY25 earnings call HAL

    Jul 22, 2025 Source

    Executive summary

    Halliburton Q2 FY25 — Navigating Near-Term Softness with Strategic Cost Actions and Technology Differentiation

    Halliburton reported mixed Q2 FY25 results, with sequential revenue growth driven by international markets, but faced significant near-term headwinds from commodity market volatility and reduced activity in key regions like North America, Saudi Arabia, and Mexico. The company is implementing strategic cost reductions and asset reallocations to align with softer market conditions, while emphasizing technology differentiation and capital discipline to drive long-term returns and free cash flow generation.

    Highlights

    5

    • Total company revenue increased 2% sequentially to $5.5 billion in Q2 FY25.

    • International artificial lift revenue is expected to grow over 20% this year, with plans to double the installed base of the Intelevate platform.

    • ZEUS IQ deployment is accelerating, with up to one-third of electric fleets expected to operate with the technology by year-end, following Chevron's milestone.

    • Latin America revenue increased 9% sequentially to $977 million, driven by improved activity in Mexico and Brazil.

    • Free cash flow for FY25 is projected between $1.8 billion and $2 billion, with $582 million generated in Q2.

    Concerns

    5

    • Full-year 2025 international revenue is expected to contract by mid-single digits year-on-year, primarily due to activity reductions in Saudi Arabia and Mexico.

    • North America revenue is forecast to decline low double digits year-over-year for FY25, driven by lower drilling and completion activity and pricing headwinds.

    • Completion and Production (C&P) division operating income decreased 3% sequentially to $513 million, with margins declining to 16% due to lower pricing in US Land and reduced Saudi activity.

    • Drilling and Evaluation (D&E) division operating income decreased 11% sequentially to $312 million, with margins at 13% due to seasonal software sales roll-off and increased startup costs.

    • Q3 FY25 guidance includes a sequential margin decrease of 150 to 200 basis points for C&P and a negative tariff impact of $35 million.

    Guidance & targets

    18
    CategoryTargetConfidence
    International Revenue
    contract by mid-single digits
    high materiality
    High
    North America Revenue
    decline low double digits
    high materiality
    High
    International Artificial Lift Revenue Growth
    grow over 20%
    medium materiality
    High
    Intelevate Installed Base
    double the installed base
    medium materiality
    High
    ZEUS IQ Deployment
    up to 1/3 of our ZEUS electric fleets
    medium materiality
    High
    Corporate Expenses
    increase by about $5 million
    low materiality
    High
    SAP Expenses
    about flat
    low materiality
    High
    Net Interest Expense
    approximately flat
    low materiality
    High
    Other Net Expense
    about $45 million
    low materiality
    High
    Effective Tax Rate
    approximately 23.5%
    low materiality
    High
    Capital Expenditures
    about 6% of revenue
    medium materiality
    High
    Tariffs Impact
    about $35 million, or about $0.04 per share
    low materiality
    High
    Completion and Production Revenue
    decrease 1% to 3%
    medium materiality
    High
    Completion and Production Margins
    decrease 150 to 200 basis points
    medium materiality
    High
    Drilling and Evaluation Revenue
    decline 1% to 3%
    medium materiality
    High
    Drilling and Evaluation Margins
    improve 125 to 175 basis points
    medium materiality
    High
    Free Cash Flow
    $1.8 billion and $2 billion
    high materiality
    High
    C&P Margins
    hold above double digits
    medium materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Total Company
    Total company revenue increased sequentially.
    		$5.5 billion—2%$727 million operating income (13% margin)
    Completion and Production
    Revenue increased largely due to seasonal improvement in pressure pumping activity in the Western Hemisphere. Operating income decreased primarily driven by lower pricing for stimulation services in US Land and reduced Saudi activity.
    		$3.2 billion—2%$513 million operating income (16% margin)
    Drilling and Evaluation
    Revenue increased due to higher drilling-related services globally. Operating income decreased due to seasonal roll-off of software sales and increased startup and mobilization costs across multiple product service lines.
    		$2.3 billion—2%$312 million operating income (13% margin)
    International
    Activity increases in Latin America and Europe/Africa, offset by activity reduction in Saudi Arabia.
    		$3.3 billion—2%—
    North America
    Slightly higher well construction activity, completion tool sales, and stimulation activity were offset by lower artificial lift activity and software sales.
    		$2.3 billion—flat—
    Europe/Africa
    Primarily driven by higher activity across multiple product service lines in Norway.
    		$820 million—6%—
    Middle East/Asia
    Primarily due to lower activity across multiple product service lines in Saudi Arabia and Kuwait.
    		$1.5 billion—-4%—
    Latin America
    Primarily due to improved activity across multiple product service lines in Mexico and Brazil and increased well intervention services in Argentina.
    		$977 million—9%—

    Operational metrics

    19
    Net Income per diluted share
    $0.55
    Q2 FY25

    Reported net income per diluted share.

    Stock repurchases
    $250 million
    Q2 FY25

    Amount of common stock repurchased during the quarter.

    Corporate and other expense
    $66 million
    Q2 FY25

    Company-wide corporate and other expense.

    SAP S/4 migration spend
    $32 million
    Q2 FY25

    Included in Q2 results.

    Net interest expense
    $92 million
    Q2 FY25

    Company-wide net interest expense.

    Other net expense
    $24 million
    Q2 FY25

    Company-wide other net expense.

    Effective tax rate
    21.4%
    Q2 FY25

    Company-wide effective tax rate.

    Capital expenditures
    $354 million
    Q2 FY25

    Company-wide capital expenditures.

    Tariffs impact
    $27 million
    Q2 FY25

    Negative impact on business.

    LOGIX closed-loop automation
    0.5 million
    Cumulative

    Surpassed 0.5 million feet drilled with LOGIX closed-loop automation globally.

    Argentina unconventional stage count
    record
    Q2 FY25

    Achieved a record quarterly stage count in Argentina.

    Australia Beetaloo Basin stimulation
    67
    Q2 FY25

    Largest job to date in the Beetaloo Basin.

    Norway well measured depth
    10 kilometers
    Q2 FY25

    Longest well drilled in the Norwegian Continental Shelf using iCruise and LOGIX.

    International frac business growth
    double digits
    Year-on-year

    Solid growth year-on-year for non-U.S. frac business.

    North America drilling services revenue growth
    double-digit
    Q2 FY25

    Driven by rapid growth in US Land rotary steerable business, even amid rig count declines.

    International artificial lift installed base (Intelevate)
    double
    FY25

    Plan to double the installed base of the remote operations and automation platform.

    International artificial lift growth
    strong
    Year-on-year

    Strong year-on-year growth achieved in Latin America and Europe/Africa.

    International LSTK and collaborative work
    20%
    Current

    Represents more than 20% of international business.

    Cost reduction target
    1%
    Next couple of quarters

    Targeted range for cost reductions as the company rightsizes to market conditions.

    Industry KPIs

    1
    MetricValueDetails
    FCF CAPEX leverageFCF $582 million (Q2 FY25), $1.8 billion - $2 billion (FY25 guide); Capex $354 million (Q2 FY25), ~6% of revenue (FY25 guide)USD

    Deals & partnerships

    2
    Customer in BrazilLargest integrated well intervention contract

    Began operations on the largest integrated well intervention contract, highlighting expansion of collaborative model from well construction to production.

    Middle East NOCLargest international ESP contract

    Secured its largest international ESP contract to date from a Middle East NOC.

    Risks & headwinds

    6
    Commodity Market VolatilityQ2 FY25, near-term

    Commodity markets were volatile, driven by trade and tariff uncertainty, geopolitical unrest and the accelerated return of OPEC+ production cuts.

    Mitigation: Strategic alignment with long-term demand fundamentals for oil and gas.

    North America Activity ReductionsH2 FY25, Full Year FY25

    Multiple operators are planning meaningful schedule gaps in the second half of 2025. Full-year North America revenue forecast to decline low double digits year-over-year.

    Mitigation: Reduce variable and fixed cash costs, reallocate or stack underperforming assets, focus on free cash flow and returns.

    International Activity ReductionsFull Year FY25

    Reductions in activity and lower discretionary spend in Saudi Arabia and Mexico. Full-year 2025 international revenue expected to contract by mid-single digits year-on-year.

    Mitigation: Focus on growth in Brazil, Norway, offshore frontier basins, and unconventionals; disciplined tendering process.

    Pricing Headwinds in US LandQ2 FY25, ongoing

    Lower service pricing and reduced artificial lift activity in North America. Contributed to C&P operating income decrease of 3% sequentially.

    Mitigation: Will not work equipment at uneconomic levels; focus on technology and service execution to maximize value.

    Tariff ImpactQ2 FY25, Q3 FY25, ongoing

    $27 million impact in Q2 FY25, expected $35 million (about $0.04 per share) in Q3 FY25. Artificial lift is the largest component.

    Mitigation: Supply chain team working to rewire supply chain around China sourcing.

    Seasonal Software Sales Roll-off & Startup CostsQ2 FY25

    Contributed to D&E operating income decrease of 11% sequentially.

    Mitigation: Mobilization costs eliminated in Q3, software sales expected to pick up in Q4.

    What to watch in Q3 FY25

    5

    North America Activity Levels

    Q1 FY26
    CurrentExpected to decline in H2 FY25 due to schedule gaps and frac fleet stacking
    TargetPick up earlier in 2026

    Why it matters

    Indicates recovery in a key market, impacting revenue and profitability.

    As I look out to '26, it's really early with the volatility that we see and just what precisely they're going to do for 2026 is sort of on hold. But what I would expect is that we would see activity earlier in the year picked up above what it is in certainly Q3 and 4.

    Q&A highlights

    7

    Can you elaborate on the softer C&P margins in Q2 and the Q3 guide, and what factors are contributing to this trend?

    Eric Carre explained Q2 softness was due to lower US Land pricing and reduced Saudi frac activity, partially offset by other product lines. For Q3, he cited continued North America pressure pumping softness, reduced completion tool deliveries internationally, and ongoing Saudi frac activity reduction.

    “The reduction in Saudi is actually a reduction in frac, but also on the related services as a lot of the frac in Jafurah was slowed down ahead of the award of the new tender.”

    asked by Neil Mehta · answered by Eric Carre

    2 min read6 chapters

    Detailed Narrative

    01

    Market Outlook and Strategic Response

    Jeff Miller highlighted a significant shift in the oilfield services market, now softer than previously expected due to commodity volatility, OPEC+ production cuts, and customer reorganizations. In response, Halliburton plans to reduce variable and fixed cash costs, reallocate or stack underperforming assets, and maintain focus on free cash flow and returns. Despite near-term challenges, the company remains confident in long-term demand fundamentals and its strategic alignment with unconventionals, production-related services, and complex drilling.

    02

    International Performance and Growth Drivers

    International revenue grew 2% sequentially to $3.3 billion, with strong activity in Latin America and Europe/Africa offsetting reductions in Saudi Arabia. Halliburton's international strategy focuses on unconventionals (e.g., Argentina, Australia, Middle East), advanced drilling services (iCruise, LOGIX, EarthStar 3DX), and production services including artificial lift. The company secured its largest international ESP contract and expects international artificial lift revenue to grow over 20% this year, planning to double the Intelevate installed base.

    03

    North America Headwinds and Technology Differentiation

    North America revenue was flat sequentially at $2.3 billion, with seasonal improvements in completions offset by lower service pricing and reduced artificial lift activity. The company forecasts a low double-digit YoY decline for full-year North America revenue due to anticipated schedule gaps and frac fleet stacking. Halliburton emphasizes its technology, such as the ZEUS IQ closed-loop fracturing system and iCruise/LOGIX for drilling, as key differentiators to deliver outperformance in this challenging environment.

    04

    Divisional Performance and Q3 Outlook

    The Completion and Production (C&P) division saw revenue increase 2% sequentially to $3.2 billion, but operating income declined 3% to $513 million due to pricing headwinds in US Land and reduced Saudi frac activity. The Drilling and Evaluation (D&E) division also grew revenue 2% sequentially to $2.3 billion, but operating income decreased 11% to $312 million due to seasonal software sales roll-off and startup costs. For Q3, C&P revenue and margins are expected to decrease, while D&E revenue is also expected to decrease, but margins are projected to improve.

    05

    Capital Allocation and Free Cash Flow

    Halliburton repurchased approximately $250 million of common stock in Q2. The company reiterated its commitment to its cash returns framework, aiming to return over 50% of free cash flow to shareholders. Full-year 2025 free cash flow guidance was revised to $1.8 billion to $2 billion. The ZEUS fleet expansion program is demand-driven, and CapEx is expected to be around 6% of revenue for FY25, with potential for further reductions if demand for new equipment slows.

    06

    Portfolio Management and Market Share Discipline

    Management highlighted a disciplined approach to portfolio management, investing in areas with the best returns and growth opportunities, such as ESP lift, and pruning others. In competitive markets like Saudi Arabia, the company prioritizes returns over volume or market share, applying a highly disciplined tendering process for LSTK (Lump Sum Turn Key) projects, where it has strong capabilities.

    AI-generated summary of the company’s earnings call. Not investment advice.