10-QPeriod: Q1 FY2015

SLB LIMITED/NV Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 22, 2015For Securities:SLB

Summary

SLB LIMITED/NV (SLB) reported first-quarter 2015 results marked by a significant decline in revenue and net income compared to the prior year, reflecting the challenging operating environment driven by lower oil prices and customer budget cuts. Revenue for the quarter was $10.25 billion, down 9% year-over-year, while net income attributable to Schlumberger fell sharply to $975 million from $1.59 billion in the first quarter of 2014. This performance was impacted by a substantial $439 million charge related to workforce reductions and currency devaluation in Venezuela. Despite the revenue headwinds, the company demonstrated resilience in managing costs and maintaining its strategic investments. Operating expenses were reduced, and the company continued its share repurchase program and dividend payments. The report highlights the impact of the North America market slowdown, which saw a significant revenue decrease, while international markets also experienced softness but showed more stable operating margins due to proactive cost management. Investors should note the ongoing efforts to navigate the volatile oilfield services market and the company's focus on efficiency and strategic capital allocation.

Financial Highlights

50 data points
Beta

Revenue

$10.25B

21.0% Gross Margin

Net Income

$975.00M

9.5% Net Margin

EPS (Diluted)

$0.76

Total Assets

$65.41B

Cash & Equivalents

$2.12B

Free Cash Flow

$1.16B

Financial Statements
Beta
Revenue$10.25B
Cost of Revenue$8.10B
Gross Profit$2.15B
R&D Expenses$267.00M
Operating Income$1.99B
Interest Expense$82.00M
Net Income$975.00M
EPS (Basic)$0.76
EPS (Diluted)$0.76
Shares Outstanding (Basic)1.28B
Shares Outstanding (Diluted)1.28B

Key Highlights

  • 1Revenue for Q1 2015 was $10.25 billion, a 9% decrease compared to $11.24 billion in Q1 2014.
  • 2Net income attributable to Schlumberger decreased to $975 million in Q1 2015, down from $1.59 billion in Q1 2014, resulting in diluted EPS of $0.76 compared to $1.21.
  • 3The company recorded a significant $439 million pretax charge in Q1 2015, primarily for workforce reductions ($390 million) and Venezuela currency devaluation ($49 million).
  • 4North America revenue declined by 13% year-over-year, driven by lower activity and pricing pressure, especially in the land segment.
  • 5International revenue decreased by 8% year-over-year, impacted by customer budget cuts due to lower oil prices and unfavorable currency movements.
  • 6The company continued its share repurchase program, buying back $719 million worth of shares in Q1 2015, and paid $512 million in dividends.
  • 7Free cash flow for Q1 2015 was $954 million, demonstrating the company's ability to generate cash despite the challenging market conditions.

Frequently Asked Questions

The primary drivers for the revenue decline were a significant decrease in customer spending due to lower oil prices, leading to reduced activity and pricing pressure, particularly in the North America land market. Additionally, unfavorable currency exchange rates in regions like Russia and Venezuela impacted reported international revenues.

The $439 million in charges, mainly for workforce reductions and Venezuela currency devaluation, directly reduced pretax income and net income. These charges also impacted the company's effective tax rate. While these are non-recurring items, they highlight the significant restructuring and market adjustments the company was undertaking.

While this specific filing doesn't provide a forward-looking outlook in detail, the company's actions like significant cost management, workforce reductions, and maintaining capital discipline (e.g., lower capital expenditures) suggest a focus on efficiency and resilience. The continued share repurchases and dividend payments indicate a commitment to returning value to shareholders despite the challenging environment.

North America experienced the most significant year-over-year revenue decline (13%) due to severe drops in activity and pricing. International markets also saw revenue decreases (8%), but pretax operating margins were more stable due to proactive cost management. The Middle East & Asia and Latin America regions showed some resilience, while Europe/CIS/Africa faced headwinds from currency weakness and reduced exploration spending.