10-QPeriod: Q3 FY2019

SLB LIMITED/NV Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 23, 2019For Securities:SLB

Summary

SLB Limited/NV (SLB) reported its third quarter and nine-month results for the period ending September 29, 2019. The company experienced a significant net loss of $11.38 billion for the third quarter, primarily driven by a substantial goodwill impairment charge of $8.83 billion. This impairment was triggered by deteriorating market conditions, a decline in Schlumberger's market capitalization, and broader industry challenges, particularly in North America. Despite the substantial one-time charges, total revenue for the third quarter remained relatively flat year-over-year at $8.54 billion, indicating resilience in its core operations. International revenue showed growth, offsetting a decline in North America due to customer budget constraints and reduced activity. The company also highlighted strategic debt management activities, including debt issuances and repurchases, and maintained a solid liquidity position with significant cash and available credit facilities.

Financial Highlights

48 data points
Beta

Revenue

$8.54B

Net Income

-$11.38B

-133.3% Net Margin

EPS (Diluted)

$-8.22

Total Assets

$57.99B

Cash & Equivalents

$1.18B

Free Cash Flow

$1.33B

Financial Statements
Beta
Revenue$8.54B
R&D Expenses$176.00M
Operating Income$1.10B
Interest Expense$160.00M
Net Income-$11.38B
EPS (Basic)$-8.22
EPS (Diluted)$-8.22
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.39B

Key Highlights

  • 1Recorded a substantial goodwill impairment charge of $8.83 billion in Q3 2019, leading to a reported net loss of $11.38 billion for the quarter. This impairment reflects significant deterioration in market conditions.
  • 2Total revenue for Q3 2019 was $8.54 billion, largely flat compared to $8.50 billion in Q3 2018, demonstrating revenue stability despite market headwinds.
  • 3North America revenue declined 11% year-over-year in Q3 2019, impacted by customer budget constraints and reduced drilling and frac activity.
  • 4International revenue increased 8% year-over-year in Q3 2019, driven by increased investment levels, offsetting the North American decline.
  • 5The company executed several debt management activities, including issuing new notes and repurchasing existing ones, to optimize its capital structure.
  • 6SLB reported cash flow from operations of $3.18 billion for the nine months ended September 30, 2019, and free cash flow of $1.24 billion.
  • 7The company maintained a strong liquidity position, with $2.3 billion in cash and short-term investments and $4.1 billion in available and unused credit facilities as of September 30, 2019.

Frequently Asked Questions

The significant net loss of $11.38 billion in the third quarter of 2019 was primarily due to a substantial goodwill impairment charge of $8.83 billion. This charge was triggered by deteriorating market conditions, a significant drop in Schlumberger's market capitalization, and unfavorable industry trends, particularly in North America.

Total revenue for the third quarter of 2019 was $8.54 billion, which was essentially flat compared to $8.50 billion in the third quarter of 2018. While North America revenue saw a decline, international revenue experienced growth, indicating a mixed performance across regions.

The outlook for North America operations appears challenging. The report indicates that North America revenue declined 11% year-over-year in Q3 2019 due to customers reducing spending because of budget constraints and a general slowdown in drilling and frac activity. This trend is expected to continue as operators maintain capital discipline.

SLB has been actively managing its debt and liquidity. During the nine months ended September 30, 2019, the company issued new debt, repurchased existing notes, and continued its share repurchase program. As of September 30, 2019, SLB maintained a strong liquidity position with $2.3 billion in cash and short-term investments and had $4.1 billion in available credit facilities, which management believes are sufficient to meet future business requirements.