10-QPeriod: Q3 FY2015

SLB LIMITED/NV Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 21, 2015For Securities:SLB

Summary

SLB LIMITED/NV (SLB) reported a significant decline in revenue and net income for the third quarter and first nine months of 2015 compared to the same periods in 2014. This downturn is attributed to the prevailing low oil prices, which have led to customer budget cuts and reduced activity across key geographical segments and product lines. Despite the challenging market conditions, the company highlighted strategic initiatives, including the announced merger agreement with Cameron and ongoing efforts to manage costs and streamline operations. The company's financial statements reveal a substantial drop in revenue, down 33% year-over-year for the third quarter and 22% for the first nine months. Net income followed a similar trend, reflecting the adverse impact of reduced operational demand. SLB has also incurred significant charges related to workforce reductions and currency devaluation in Venezuela, impacting profitability. However, the company continues to generate positive operating cash flow and maintain a strong liquidity position, supported by its cash reserves and available credit facilities, as it navigates a difficult industry environment and prepares for the potential integration of Cameron.

Financial Highlights

50 data points
Beta

Revenue

$8.47B

19.8% Gross Margin

Net Income

$989.00M

11.7% Net Margin

EPS (Diluted)

$0.78

Total Assets

$63.34B

Cash & Equivalents

$3.17B

Free Cash Flow

$1.95B

Financial Statements
Beta
Revenue$8.47B
Cost of Revenue$6.80B
Gross Profit$1.67B
R&D Expenses$273.00M
Operating Income$1.52B
Interest Expense$86.00M
Net Income$989.00M
EPS (Basic)$0.78
EPS (Diluted)$0.78
Shares Outstanding (Basic)1.26B
Shares Outstanding (Diluted)1.27B

Key Highlights

  • 1Revenue for the third quarter of 2015 decreased by 33% to $8.47 billion compared to $12.65 billion in the third quarter of 2014.
  • 2Net income attributable to Schlumberger for the third quarter of 2015 was $989 million, a significant decrease from $1.95 billion in the same period of 2014.
  • 3The company announced a definitive merger agreement with Cameron on August 26, 2015, a stock and cash transaction expected to close in Q1 2016.
  • 4Restructuring and other charges totaling $439 million were recorded in the first nine months of 2015, primarily related to workforce reductions ($390 million) and currency devaluation in Venezuela ($49 million).
  • 5Operating cash flow for the nine months ended September 30, 2015, was $6.63 billion, a decrease from $7.28 billion in the prior year period.
  • 6Capital expenditures were reduced to $1.78 billion for the nine months ended September 30, 2015, down from $2.77 billion in the same period of 2014.
  • 7As of September 30, 2015, SLB held $3.17 billion in cash and equivalents and had $3.3 billion available under committed debt facilities.

Frequently Asked Questions

The primary reason for the significant decline in revenue and net income is the sustained low oil prices throughout 2015. This has led to substantial reductions in customer spending and exploration/production activity, particularly in North America and key international markets, directly impacting SLB's service demand and pricing.

The announced merger with Cameron is a significant strategic move by SLB to create a more integrated oilfield equipment and services company. It aims to enhance scale, offer a broader portfolio of technologies and services, achieve cost synergies, and better serve customers across the entire oilfield lifecycle, especially in a challenging market environment.

SLB has implemented cost management measures, including significant headcount reductions totaling $390 million in charges in Q1 2015. The company also noted proactive cost and resource management across its segments and plans further restructuring of its manufacturing and distribution network, which will likely result in additional charges in Q4 2015.

SLB maintains a strong liquidity position with $3.17 billion in cash and short-term investments as of September 30, 2015, and $3.3 billion available under committed debt facilities. While operating cash flow has decreased year-over-year, it remains substantial. Capital expenditures have been reduced, indicating a focus on preserving cash amidst the challenging industry outlook.