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How Halliburton Beat 2Q16 Estimates Despite Revenue Declines

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Nov. 20 2020, Updated 5:30 p.m. ET

Halliburton’s 2Q16 revenue

Halliburton (HAL) released its fiscal 2Q16 financial results on July 20, 2016. The company recorded total revenues of $3.4 billion, a decline of 43% from ~$5.9 billion in fiscal 2Q15.

Halliburton’s revenues for the quarter decreased, mostly due to the fall in US rig count, a slowdown in North American drilling operations, and pricing pressures on HAL’s products and services.

Compared to fiscal 1Q16, Halliburton’s revenues decreased ~19%. In comparison, fiscal 1Q16 revenue for McDermott International (MDR), HAL’s smaller market-cap peer, decreased 32% year-over-year.

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Halliburton’s 2Q16 earnings

Halliburton’s fiscal 2Q16 adjusted net loss per share is $0.14. This beat the consensus sell-side analysts’ earnings estimate of -$0.19. The company had weak performance in North America, but resilient performance in the Middle East and Asia helped its earnings exceed analysts’ estimates.

Compared to fiscal 2Q15, HAL’s adjusted earnings switched to negative in fiscal 2Q16. On average, adjusted EPS (earnings per share) has exceeded consensus EPS by ~10% in the past 13 quarters.

Halliburton makes up 14.9% of the VanEck Vectors Oil Services ETF (OIH), a fund that tracks an index of 25 OFS (oilfield service) companies.

What affected Halliburton’s reported earnings in 2Q16?

In fiscal 2Q16, HAL’s reported net loss was ~$3.2 billion. This is a steep decline compared to fiscal 2Q15 when it reported $54 million in net income. Compared to fiscal 1Q16, Halliburton’s net loss declined a further 33%. Its fiscal 2Q16 net income declined mostly due to the following:

  • $3.5 billion Baker Hughes merger termination related fee – Read Market Realist’s Baker Hughes–Halliburton Merger Falls Through: Impact on BHI to know more on this.
  • ~$423 million pre-tax charges, related primarily to severance costs and asset impairments
  • $148 million pre-tax loss related to an exchange of outstanding trade receivables from a customer in Venezuela for an interest-bearing promissory note

Next, we’ll take a look at Haliburton’s growth drivers.

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