Analyst Note| Preston Caldwell |
Halliburton's revenue took a 37% sequential plunge in the second quarter along with industrywide activity due to the impact of COVID-19 on oil demand. Surprisingly, though, adjusted operating margin only fell to 7.4% from 10% in the prior quarter. This is a far better performance on the profitability side than during the 2016 downturn, when adjusted operating margins hit a low of just 1.6% in the second quarter of 2016 (despite revenue being 15% higher than in the second quarter of 2020). The impressive bottom-line performance was due to aggressive cost-cutting, which has been executed ahead of schedule.