10-QPeriod: Q3 FY2017

SLB LIMITED/NV Quarterly Report for Q3 Ended Sep 30, 2017

Filed October 25, 2017For Securities:SLB

Summary

SLB Limited/NV (SLB) reported its third quarter and nine-month results for the period ending September 29, 2017. The company demonstrated a significant recovery in revenue compared to the previous year, with total revenue increasing by 13% year-over-year for the third quarter and 8% for the first nine months. This growth was largely driven by a substantial increase in activity in North America, particularly in the Production and Drilling segments, benefiting from the accelerated land rig count. Despite revenue growth, the company faced challenges including a substantial pretax charge related to the fair value adjustment of a Venezuelan promissory note, which negatively impacted net income. The company also continued its strategic focus on cost control and operational efficiency. SLB's liquidity position remained strong, with significant cash and short-term investments, and available credit facilities, indicating a capacity to fund ongoing operations and strategic initiatives.

Financial Highlights

48 data points
Beta

Revenue

$7.91B

76.5% Gross Margin

Net Income

$545.00M

6.9% Net Margin

EPS (Diluted)

$0.39

Total Assets

$73.57B

Cash & Equivalents

$1.69B

Free Cash Flow

$1.30B

Financial Statements
Beta
Revenue$7.91B
Cost of Revenue$1.86B
Gross Profit$6.05B
R&D Expenses$189.00M
Operating Income$1.06B
Interest Expense$142.00M
Net Income$545.00M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.39B

Key Highlights

  • 1Total revenue for Q3 2017 increased by 13% to $7.9 billion compared to Q3 2016, indicating a strong market rebound.
  • 2Nine-month revenue for 2017 rose by 8% to $22.3 billion compared to the same period in 2016, with the Cameron acquisition contributing significantly.
  • 3The Production Group saw a substantial 37% year-over-year revenue increase in Q3 2017, driven by accelerated land activity growth in North America.
  • 4The company recorded a significant pretax charge of $460 million in Q2 2017 related to a financing agreement for Venezuelan receivables, impacting net income for the period.
  • 5Cash flow from operating activities for the first nine months of 2017 was $3.4 billion, a decrease from $4.2 billion in the prior year, partly due to working capital changes and delays in receivable collections.
  • 6SLB repurchased $0.8 billion of its common stock in Q3 2017 under its ongoing share repurchase program.
  • 7Research & engineering expenses decreased by $64 million in Q3 2017 and $155 million for the nine months ended September 30, 2017, reflecting cost control measures.

Frequently Asked Questions

The primary driver of revenue growth in Q3 2017 was the accelerated land activity in North America, which significantly benefited the Production and Drilling segments. This was a direct result of the increased North America land rig count compared to the previous year.

A notable charge was recorded in the second quarter of 2017 related to a financing agreement with a primary customer in Venezuela. This involved exchanging $700 million of accounts receivable for a promissory note, resulting in a $460 million charge to adjust the note to its fair value. This significantly impacted the net income for the nine-month period.

The acquisition of Cameron International Corporation, completed in April 2016, contributed to the revenue growth for the first nine months of 2017, as the full nine months of activity from Cameron were included in this period, compared to only two quarters in the prior year. However, the Cameron Group's revenue declined 3% year-over-year in Q3 2017 due to a declining backlog, and its pretax operating margin also decreased.

SLB maintained a strong liquidity position as of September 30, 2017, with $5.0 billion in cash and short-term investments. Additionally, the company had $4.2 billion available and unused under its committed debt facility agreements. Management believes these resources are sufficient to meet future business requirements for at least the next 12 months.