10-QPeriod: Q2 FY2021

SLB LIMITED/NV Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 28, 2021For Securities:SLB

Summary

SLB LIMITED/NV (SLB) reported a significant turnaround in its financial performance for the second quarter and first six months of 2021 compared to the same periods in 2020. The company achieved profitability in Q2 2021 with a net income of $431 million, a stark contrast to the $3,434 million net loss in Q2 2020. This improvement is largely attributed to the absence of the substantial impairment and restructuring charges that plagued the prior year, alongside a recovery in global energy demand and SLB's strategic adjustments. Total revenue for the second quarter of 2021 was $5.63 billion, up from $5.36 billion in the prior year's quarter. For the first six months of 2021, revenue stood at $10.86 billion, a decrease from $12.81 billion in the same period of 2020, reflecting the lingering impact of the 2020 downturn, partially offset by recent market recovery and strategic divestitures. The company's improved operational performance and a cleaner cost structure are key takeaways for investors.

Financial Highlights

47 data points
Beta

Revenue

$5.63B

Net Income

$431.00M

7.6% Net Margin

EPS (Diluted)

$0.30

Total Assets

$40.91B

Cash & Equivalents

$1.44B

Free Cash Flow

$977.00M

Financial Statements
Beta
Revenue$5.63B
R&D Expenses$134.00M
Operating Income$807.00M
Interest Expense$136.00M
Net Income$431.00M
EPS (Basic)$0.31
EPS (Diluted)$0.30
Shares Outstanding (Basic)1.40B
Shares Outstanding (Diluted)1.42B

Key Highlights

  • 1Returned to profitability in Q2 2021 with $431 million net income, a significant recovery from a $3,434 million net loss in Q2 2020.
  • 2Total revenue increased to $5.63 billion in Q2 2021 from $5.36 billion in Q2 2020, indicating a positive revenue trend.
  • 3First six months revenue decreased 15% year-over-year to $10.86 billion, primarily due to the lasting effects of the 2020 market downturn and strategic divestitures.
  • 4Absence of significant impairment and restructuring charges ($12.2 billion in H1 2020) was a major driver of the improved profitability in H1 2021.
  • 5Operating margin expanded significantly, with the pretax segment operating margin reaching 14% in Q2 2021, the highest since 2015.
  • 6SLB anticipates continued international revenue growth in the second half of 2021, projecting double-digit growth compared to the prior year's second half.
  • 7Cash flow from operations was robust at $1.65 billion for the first six months of 2021, demonstrating strong operational cash generation.

Frequently Asked Questions

The primary driver for the significant improvement in net income was the absence of substantial impairment and restructuring charges that occurred in the first half of 2020. In the first six months of 2020, SLB recorded approximately $12.2 billion in such charges. The return to profitability in 2021 reflects a recovery in the energy market and the positive impact of cost-saving measures implemented previously.

For the second quarter of 2021, total revenue increased to $5.63 billion, up from $5.36 billion in the same quarter of 2020. However, for the first six months of 2021, total revenue decreased by 15% year-over-year to $10.86 billion. This decrease is attributed to the lingering effects of the 2020 market downturn, as well as strategic divestitures, particularly in North America.

SLB expects the momentum of international activity growth experienced in the second quarter to continue in the second half of 2021, projecting double-digit revenue growth compared to the second half of 2020. While the North America growth rate is anticipated to moderate, drilling activity could still exceed expectations. The company's outlook suggests a positive trend as the energy market recovery unfolds.

SLB's net debt (gross debt less cash and short-term investments) decreased to $13.04 billion as of June 30, 2021, from $13.88 billion at the beginning of the year. The company generated $1.65 billion in cash flow from operations in the first six months of 2021 and reported $1.03 billion in free cash flow for the same period. At June 30, 2021, SLB had $2.68 billion in cash and short-term investments and approximately $6.45 billion available and unused under its committed credit facilities, indicating a sufficient liquidity position.