01—Abstract
Summary
Summary of the 10-K filed January 22, 2020. Cited figures are marked; the original filing is the authoritative source.
SLB LIMITED/NV (SLB) reported its 2019 fiscal year results in its 10-K filing.
The company's revenue remained largely flat year-over-year at $32.9 billiona. A key driver of this stability was strong international revenue growth (up 7%), which offset a significant decline (down 10%) in North America. This shift reflects a broader industry trend of increased investment in international exploration and production, while North American operators faced budget constraints and capital discipline.
The company faced significant headwinds in 2019, notably a substantial goodwill impairment charge of $8.8 billionb, primarily impacting the Drilling and Cameron segments, along with other impairments and restructuring charges totaling over $13 billion pre-tax. These charges significantly impacted net income, resulting in a net loss for the year. Despite these challenges, SLB continued its strategic initiatives, including the formation of the Sensia joint venture and the divestiture of certain businesses, aimed at optimizing its portfolio and improving future performance.
02—Key points
Key Highlights
- Full-year 2019 revenue was $32.9 billion, largely flat compared to 2018, driven by a 7% increase in international revenue offsetting a 10% decrease in North America.
- Significant impairments and restructuring charges totaling over $13 billion pre-tax were recorded, including an $8.8 billion goodwill impairment, leading to a net loss for the year.
- The company completed the formation of the Sensia joint venture with Rockwell Automation (SLB holding 47%) and divested its Drilling Tools business, generating net cash proceeds of $586 million.
- Free cash flow generation remained robust, totaling $2.7 billion for 2019, down slightly from $2.5 billion in 2018.
- Dividends paid remained consistent at $2.8 billion in both 2019 and 2018.
- Capital expenditures were reduced to $1.7 billion in 2019 from $2.2 billion in 2018, with expectations for similar levels in 2020.
- SLB's business is structured across four key segments: Reservoir Characterization, Drilling, Production, and Cameron.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed January 22, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $32.92B$32.81B | +0.3% |
| R&D Expenses | $717.00M$702.00M | +2.1% |
| Operating Income | $3.98B$4.19B | −5.0% |
| Interest Expense | $609.00M$575.00M | +5.9% |
| Net Income | -$10.14B$2.14B | −574.1% |
| EPS (Basic) | $-7.32$1.54 | −575.3% |
| EPS (Diluted) | $-7.32$1.53 | −578.4% |
| Shares Outstanding (Basic) | 1.39B1.39B | 0.0% |
| Shares Outstanding (Diluted) | 1.39B1.39B | −0.6% |
05—Questions
Frequently Asked Questions
What were the main drivers of SLB's financial performance in 2019?
SLB's 2019 financial performance was primarily driven by strong international revenue growth, which offset a decline in North America. This was influenced by increased operator investment in international markets versus budget constraints and capital discipline among North American customers. The company also recorded significant impairment and restructuring charges which heavily impacted net income.
What significant charges did SLB incur in 2019, and what was their impact?
In 2019, SLB recorded substantial charges, most notably an $8.8 billion goodwill impairment, along with other impairments and restructuring costs totaling over $13 billion before tax. These charges significantly impacted the company's net income, resulting in a net loss for the fiscal year. These were largely related to market conditions and strategic realignments.
How is SLB strategically positioning itself for the future, given the market conditions?
SLB is strategically focusing on scaling to fit its organization and portfolio, particularly in North America, by repurposing or exiting underperforming business units and emphasizing asset-light operations and technology access models. The formation of the Sensia joint venture and the divestiture of the Drilling Tools business are key steps in optimizing its business structure and focus.
What is SLB's outlook for 2020?
For 2020, SLB anticipates mid-single-digit revenue growth in its international portfolio, expecting international revenue growth to be weighted towards the second half of the year due to increasing offshore activity and exploration work. In North America, the company cautiously expects margin expansion and improved returns due to its portfolio high-grading efforts.
06—Continue