10-QPeriod: Q3 FY2021

SLB LIMITED/NV Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 27, 2021For Securities:SLB

Summary

SLB Limited/NV (SLB) reported solid financial results for the third quarter of 2021, demonstrating a notable recovery from the challenging prior year. Total revenue for the quarter reached $5.85 billion, an increase from $5.26 billion in Q3 2020. Net income attributable to Schlumberger was $550 million, a significant improvement from a net loss of $82 million in the same period last year. This turnaround is driven by a resurgence in global energy demand and pricing, benefiting SLB's diverse service and product offerings across its segments, particularly in Well Construction and Reservoir Performance. The nine-month period ending September 30, 2021, also shows substantial improvement with total revenue at $16.7 billion, compared to $18.1 billion in the prior year, with net income attributable to Schlumberger at $1.28 billion versus a net loss of $10.9 billion in the comparable period. The company's strategic focus on portfolio optimization, cost management, and operational efficiency, alongside favorable industry macro fundamentals, positions SLB for continued growth and multi-year capital spending expansion in the energy sector.

Financial Highlights

47 data points
Beta

Revenue

$5.85B

Net Income

$550.00M

9.4% Net Margin

EPS (Diluted)

$0.39

Total Assets

$41.04B

Cash & Equivalents

$1.57B

Free Cash Flow

$797.00M

Financial Statements
Beta
Revenue$5.85B
R&D Expenses$140.00M
Operating Income$908.00M
Interest Expense$130.00M
Net Income$550.00M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)1.40B
Shares Outstanding (Diluted)1.42B

Key Highlights

  • 1Total revenue for Q3 2021 was $5.85 billion, up from $5.26 billion in Q3 2020, indicating a strong recovery.
  • 2Net income attributable to Schlumberger in Q3 2021 was $550 million, a significant improvement from a net loss of $82 million in Q3 2020.
  • 3Nine-month revenue of $16.7 billion for 2021 shows a decrease from $18.1 billion in 2020, but net income of $1.28 billion in 2021 is a dramatic improvement from a net loss of $10.9 billion in 2020.
  • 4The company experienced a substantial reduction in 'Impairments & other' charges, which significantly impacted the prior year's results ($0 in Q3 2021 vs. $350 million in Q3 2020, and $0 in nine months 2021 vs. $12.6 billion in nine months 2020).
  • 5Consolidated Balance Sheet shows a decrease in total assets from $42.4 billion at Dec 31, 2020, to $41.0 billion at Sept 30, 2021, and a decrease in total liabilities from $29.9 billion to $27.4 billion.
  • 6Cash flow from operations for the nine months ended Sept 30, 2021, was $2.72 billion, a significant increase from $2.07 billion in the same period of 2020.
  • 7The company's outlook for Q4 2021 is positive, with expectations of strong momentum carrying into 2022, driven by strengthening industry fundamentals, including higher oil and gas prices and increased investment.

Frequently Asked Questions

The significant increase in net income for the third quarter and nine months of 2021 compared to 2020 is primarily driven by a substantial reduction in 'Impairments & other' charges. In 2020, these charges amounted to $350 million for the third quarter and $12.6 billion for the nine-month period, largely due to asset impairments and restructuring costs related to the COVID-19 pandemic and oil price collapse. In contrast, these charges were minimal or non-existent in the comparable periods of 2021. Additionally, the overall recovery in the energy sector, leading to higher revenues and improved operating margins across segments, contributed to the improved profitability.

Schlumberger has actively managed its debt, reducing long-term debt from $16.0 billion at the end of 2020 to $14.4 billion by September 30, 2021. The company also decreased its short-term borrowings and current portion of long-term debt. As of September 30, 2021, the company had $1.57 billion in cash and $1.37 billion in short-term investments, totaling $2.94 billion in cash and short-term investments. With available and unused committed debt facilities of $6.63 billion, Schlumberger believes it has sufficient liquidity to meet its business requirements for at least the next 12 months.

The company anticipates that the fourth quarter of 2021 will continue its growth trajectory, and it expects to close the year with strong momentum. Schlumberger sees significant strengthening in industry macro fundamentals, including recovering demand, high oil and gas commodity prices, and low inventory levels. These favorable conditions are expected to drive substantial investment over the next few years, particularly internationally, leading to an exceptional multi-year capital spending growth cycle for the energy sector.

In terms of segments, Well Construction and Reservoir Performance showed strong sequential revenue growth in Q3 2021. While Digital & Integration and Production Systems revenue was relatively flat, the company noted that Production Systems were impacted by global supply and logistics constraints. Geographically, international revenue grew sequentially and year-on-year, led by Latin America, and is on track for double-digit growth in the second half of 2021. North America revenue also saw sequential growth, driven by seasonal rebounds and increased drilling activity. For the nine-month period, revenue declined primarily in North America, influenced by the divestitures of the OneStim pressure pumping and low-flow artificial lift businesses, which the company stated were strategic moves to focus on higher-margin, more capital-efficient businesses.