Halliburton Company (NYSE:HAL) Q2 2019 Earnings Conference Call - Final Transcript

Jul 22, 2019 • 09:00 am ET


Halliburton Company (NYSE:HAL) Q2 2019 Earnings Conference Call - Final Transcript


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Abu Zeya

Good day, ladies and gentlemen, and welcome to the Halliburton's Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Abu Zeya, Head of Investor Relations. Sir, you may begin.

Good morning, and welcome to the Halliburton's Second Quarter 2019 Conference Call. As a reminder, today's call is being webcast and a replay will be available on Halliburton's website for seven days. Joining me today are; Jeff Miller, Chairman, President and CEO; and Lance Loeffler, CFO.

Some of our comments today may include forward-looking statements reflecting Halliburton's views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31st, 2018, Form 10-Q for the quarter ended March 31st, 2019. Recent current reports on Form 8-K and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Our comments today also include non-GAAP financial measures that exclude the impact of impairments and other charges. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our second quarter press release and can be found in the Quarterly Results section of our website. [Operator Instructions]

Now I'll turn the call over to Jeff.

Jeff Miller

Thank you, Abu. Good morning, everyone. Commodity markets navigated some choppy waters during the second quarter. On the one hand, there are global oil demand concerns largely attributed to the uncertainty surrounding the outcome of the US-China trade talks. On the other hand oil prices have recently been buoyed by supply side reaction to the extension of OPEC plus production cuts, ongoing output declines in Venezuela, US sanctions on Iranian oil exports and political instability in Libya and sedan.

Against this backdrop, Halliburton's execution in the second quarter was outstanding, and I am very pleased with our results. We continue to build on the growth momentum internationally and successfully manage the market dynamics in North America.

Before we dive into the details, here are few highlights for the second quarter. Total company revenue was $5.9 billion and adjusted operating income was $550 million, representing increases of 3% and 29% respectively, compared to the first quarter of 2019.

Our Completion & Production division grew revenue 4% and operating income 28% sequentially. Improved completion activity in North America land and our solid execution globally resulted in delivering better-than-expected margins.

Our Drilling and Evaluation division grew operating income 18% quarter-over-quarter with strong improvements coming from our Sperry Drilling and Wireline and perforating product service lines. Overall D&E division incremental margin was 44%. North America demonstrated solid performance this quarter, delivering 2% revenue growth despite the dropping rig count. International revenue grew 6% sequentially led by activity increases in the Eastern Hemisphere.

And finally, we generated approximately $450 million in operating cash flow, as well as positive free cash flow in the second quarter.

Now I'd