10-QPeriod: Q1 FY2018

SLB LIMITED/NV Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 25, 2018For Securities:SLB

Summary

SLB LIMITED/NV (SLB) reported robust financial results for the first quarter of 2018, demonstrating significant year-over-year growth. Total revenue increased by 14% to $7.8 billion, driven by a strong rebound in global rig counts, particularly in North America, and increased activity across its Production and Drilling segments. Net income nearly doubled to $525 million from $279 million in the prior year quarter, resulting in a substantial increase in diluted earnings per share to $0.38 from $0.20. The company's operational performance was bolstered by a favorable market environment, with particular strength in North America land operations. While the Reservoir Characterization segment saw a slight revenue decline, overall profitability improved across most segments, leading to a healthier pretax operating margin. SLB maintained a strong liquidity position, with a substantial amount of cash and short-term investments, and continued its commitment to returning capital to shareholders through share repurchases and dividends. The company expressed confidence in continued market improvement throughout 2018.

Financial Highlights

48 data points
Beta

Revenue

$7.83B

75.5% Gross Margin

Net Income

$525.00M

6.7% Net Margin

EPS (Diluted)

$0.38

Total Assets

$71.48B

Cash & Equivalents

$1.86B

Free Cash Flow

$114.00M

Financial Statements
Beta
Revenue$7.83B
Cost of Revenue$1.92B
Gross Profit$5.91B
R&D Expenses$172.00M
Operating Income$974.00M
Interest Expense$143.00M
Net Income$525.00M
EPS (Basic)$0.38
EPS (Diluted)$0.38
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.39B

Key Highlights

  • 1Total revenue increased 14% year-over-year to $7.8 billion, reflecting increased global rig activity.
  • 2Net income surged to $525 million, a substantial increase from $279 million in Q1 2017, leading to a significant EPS improvement.
  • 3Diluted earnings per share (EPS) rose to $0.38 from $0.20 year-over-year.
  • 4The Production Group saw a significant 35% revenue increase, primarily driven by North American land activity and hydraulic fracturing services.
  • 5North America revenue grew substantially (51%) year-over-year, outperforming international markets.
  • 6The company maintained a strong balance sheet with $4.2 billion in cash and short-term investments and $6.5 billion in committed debt facilities.
  • 7Schlumberger continued its share repurchase program, buying back $97 million worth of stock in Q1 2018.

Frequently Asked Questions

The primary driver for the significant revenue increase was the strong recovery in global oil and gas drilling activity, reflected in a 14% year-over-year increase in the global rig count. This was particularly strong in North America, which saw a substantial rise in land rig activity, benefiting the Production and Drilling segments.

Profitability saw a substantial improvement. Net income nearly doubled to $525 million from $279 million in the first quarter of 2017. This led to a significant increase in diluted earnings per share to $0.38 from $0.20, driven by higher revenues and improved operating margins, especially in North America.

SLB expressed confidence in the market, expecting continued improvement in the second quarter and throughout 2018. They are continuing with fleet reactivation and recommissioning programs, particularly in the US land hydraulic fracturing market, anticipating improvements in both pricing and operational efficiency.

SLB maintains a strong liquidity position with $4.2 billion in cash and short-term investments as of March 31, 2018. The company also has $6.5 billion in committed debt facilities, of which $3.5 billion was unused, providing ample resources to meet future business requirements and support its operations and capital allocation strategies.