Wednesday, April 24, 2013

Halliburton (HAL) Q1 2013 Earnings

            Halliburton Co. (HAL) reported Q1 2013 earnings premarket on April 22, 2013.  They reported income from continuing operations for the first quarter of $624 million, or $.67 per diluted share.  This value excludes a $637 million charge, after-tax or $.68 per diluted share, which is a result of an increase in the reserve for settlement payments from the Macondo litigation.  With this litigation expense added in the reported loss from continuing operations was $13 million, or -$.01 per diluted share.
            Halliburton’s $.67 per diluted share, beat consensus estimates of $.58 for the quarter, which makes this the 4 quarter of the last 5 that Halliburton has outperformed their estimates.  This news resulted in a price increase of 5.59% to a closing price of $39.29.
            Halliburton’s reported revenue for the first quarter was $7.0 billion, which came in higher than 2012’s revenue of $6.9 billion.  The expanding international business was easily able to offset the reduction in rig counts we saw during the first quarter within the North America.  As rig counts dropped 3% within North America, sequential revenues declined 1%, while operating income increased 30% as we saw margins improve by nearly 400 basis points due to lower guar costs. Over the coming quarters we expect to see margins continue to improve as customer activity increases, and modest price increases take hold. 
            International revenues for the firm grew by 21% in comparison to Q1 2012, which means the company has shown the best year-over-year international growth for the past 4 quarters in comparison to competitors. Middle East/Asia region saw great improvement due to increases in services provided within China, Australia, and Saudi Arabia. Europe/Africa/CIS improved as drilling offshore of West Africa continued and North Sea operations picked up.  Latin America saw revenues increase 21%, but operating income declined 11% due to increased movement of rigs in Brazil and a reduction in the rig count of Mexico.  

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