Halliburton Company (HAL)

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Start Time: 09:07

End Time: 10:07

Halliburton Company (HAL)

Q4 2013 Earnings Conference Call

January 21, 2014 09:00 AM ET

Executives

Dave Lesar - Chairman, President, CEO

Mark McCollum - EVP and CFO

Jeff Miller - EVP and COO

Kelly Youngblood - Investor Relations

Analysts

Jim Wicklund - Credit Suisse

Brad Handler - Jefferies & Company

Doug Becker - Bank of America Merrill Lynch

David Anderson - JPMorgan

Angie Sedita - UBS

James West - Barclays Capital

Waqar Syed - Goldman Sachs

Bill Herbert - Simmons & Company

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Halliburton Fourth Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I’d now like to introduce your host for today’s conference, Mr. Kelly Youngblood. Sir, you may begin.

Kelly Youngblood

Thank you, Sam. Good morning, and welcome to the Halliburton's fourth quarter 2013 conference call. Today’s call is being webcast and a replay will be available on Halliburton's website for seven days. The press release announcing the fourth quarter results is also available on the Halliburton website.

Joining me today are Dave Lesar, CEO, Jeff Miller, COO, and Mark McCollum, CFO. I’d like to remind our audience that some of today’s comments may include forward-looking statements reflecting Halliburton's views about future events and their potential impact on performance. These matters involve risk and uncertainties that could impact operations and financial results and 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 31, 2012, Form 10-Q for the quarter-ended September 30, 2013, recent current reports on Form 8-K and other Securities and Exchange Commission filings.

Our comments include non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in our fourth quarter press release which, as I have mentioned, can be found on our website. In our discussion today, we will be excluding the financial impact of the fourth quarter charges related to employee severance and other restructuring charges during the quarter of $28 million after-tax or $0.03 per diluted share and the third quarter charges related to employee severance and other restructuring charges during that quarter of $38 million after-tax or $0.04 per diluted share unless otherwise noted.

We will welcome questions after we complete our prepared remarks. We ask that you please limit yourself to one question and one related follow-up to allow more time for others who have questions.

Now, I will turn the call over to Dave.

Dave Lesar

Thank you, Kelly, and good morning to everyone. Let me begin with a few of our key accomplishments in 2013. First, I’m very proud to say that we delivered industry leading international revenue growth in 2013, specifically for the full year our Eastern Hemisphere grew a remarkable 17% with profit growth of 23%. That coupled with a solid year in North America resulted in a record year for the Company with revenue totaling $29.4 billion.

We also set new revenue records this year in all of our international regions and in both of our divisions. From an operating income perspective we achieved new full year records in our Middle East, Asia region and in six of our 13 product lines. I want to express my gratitude to our 77,000 employees around the globe for their hard work and dedication that helped us deliver these outstanding results.

In 2013 we also demonstrated our strong commitment to delivering superior shareholder returns. We repurchased approximately $4.4 billion or 10% of our outstanding shares. We had also increased our dividend twice during the year for a total payout increase of 67% over our 2012 dividend rate. These actions reflect our continued confidence in the strength of our business outlook. We have been and will continue to be relentlessly focused on delivering consistent execution and best-in-class returns.

Our strategy has worked well for us and we intend to stay the course. The cornerstones of our strategy remain unchanged, expanding our share within the deepwater market, helping our customers maximize recovery from mature fields and leading in global unconventional development.

We believe that these are sustainable growth segments for Halliburton which will allow us to generate superior revenue growth, margins and returns. So I think we had a really good year given what the market gave us.

Now before we delve deeper into the fourth quarter, I think I should cut right to the chase and look at how we believe 2014 will play out. I think that will help provide you with some context for the rest of today’s discussion.

So let’s start with our 2014 view for all of Halliburton Company. Let me begin by saying that we’re very optimistic about the coming year and our ability to achieve robust revenue and operating income growth for the total company.

As we look at the 2014 landscape today, we see the following. Based on customer surveys and some discussions with customers, we see total customer drilling and completion spending increasing by the mid to upper single digit percentages with higher spending percentage increases in the Eastern Hemisphere and a bit lower in North America.

However, from Halliburton revenue standpoint, we believe we will outpace the market rate of spending increases in both the Eastern Hemisphere and North America and revenue growth for the full year could approach double-digits. We also believe that overall margins will take a step higher both in Eastern Hemisphere and North America. These expectations provide to framework for our current 2014 operating plan, which reflects continued superior returns, significant higher cash generations, and solid double-digit growth in earnings per share.

Read the rest of this transcript for free on seekingalpha.com