10-QPeriod: Q1 FY2017

SLB LIMITED/NV Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 26, 2017For Securities:SLB

Summary

SLB LIMITED/NV (SLB) reported a notable revenue increase of 6% to $6.9 billion in the first quarter of 2017 compared to the same period in 2016. This growth was largely driven by the full-quarter inclusion of the Cameron acquisition, which contributed $1.2 billion in revenue. However, excluding the impact of Cameron, the company's underlying revenue saw a 13% decline year-over-year, reflecting challenging market conditions in the oil and gas sector, particularly in international and offshore segments. Despite the top-line growth, profitability faced pressure. Net income attributable to Schlumberger declined to $279 million from $501 million in the prior year, translating to a diluted EPS of $0.20 compared to $0.40. This was influenced by lower overall activity levels, pricing pressure in international markets, and specific charges related to merger and integration costs from the Cameron acquisition. The company is actively managing costs, with Research & Engineering and General & Administrative expenses decreasing as a percentage of revenue.

Financial Highlights

48 data points
Beta

Revenue

$6.89B

72.5% Gross Margin

Net Income

$279.00M

4.0% Net Margin

EPS (Diluted)

$0.20

Total Assets

$76.17B

Cash & Equivalents

$1.90B

Free Cash Flow

$275.00M

Financial Statements
Beta
Revenue$6.89B
Cost of Revenue$1.90B
Gross Profit$5.00B
R&D Expenses$211.00M
Operating Income$757.00M
Interest Expense$139.00M
Net Income$279.00M
EPS (Basic)$0.20
EPS (Diluted)$0.20
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.40B

Key Highlights

  • 1Total revenue increased by 6% to $6.9 billion, primarily due to the full quarter inclusion of the Cameron acquisition.
  • 2Excluding the Cameron acquisition, underlying revenue decreased by 13% year-over-year, indicating ongoing industry headwinds.
  • 3Net income attributable to Schlumberger decreased to $279 million from $501 million in Q1 2016, with diluted EPS falling to $0.20 from $0.40.
  • 4The company recorded $82 million in pretax merger and integration charges related to the Cameron acquisition.
  • 5Operating margins across most segments (Drilling, Production, Reservoir Characterization) declined year-over-year due to reduced activity and pricing pressures.
  • 6The North America land market showed signs of recovery, with increased hydraulic fracturing activity and pricing recovery in the Production Group.
  • 7SLB generated $656 million in net cash from operating activities, but invested significantly in capital expenditures and acquisitions, resulting in a decrease in cash and short-term investments.

Frequently Asked Questions

The primary driver of the revenue increase was the full-quarter contribution from the acquisition of Cameron, which closed on April 1, 2016. Cameron contributed $1.2 billion in revenue during the first quarter of 2017.

While the Cameron acquisition boosted revenue, it also resulted in $82 million in pretax merger and integration charges. Furthermore, the overall decline in oilfield activity and pricing pressures impacted segment profitability, leading to a year-over-year decrease in net income attributable to Schlumberger.

SLB generated $656 million in net cash from operating activities in Q1 2017. The company had $7.4 billion in cash and short-term investments and $3.7 billion of available unused committed debt facilities, which it believes are sufficient to meet business requirements for at least the next 12 months. However, free cash flow was minimal, and significant investments were made in capital expenditures and business development.

The key challenges included a significant decline in underlying revenue (excluding Cameron) due to reduced oil and gas exploration and production spending, particularly in international and offshore markets. This led to lower operating margins across several segments. Additionally, the company is managing significant outstanding receivables in countries like Venezuela and Ecuador, impacting liquidity and operations.