Summary
SLB LIMITED/NV (SLB) filed an 8-K on March 8, 2022, providing an update on their first quarter 2022 outlook based on a webcast by CEO Olivier Le Peuch. While the company is generally pleased with the quarter's progression, they are experiencing a slower start in their Production Systems Division due to persistent global supply and logistics constraints, which are impacting product deliveries and earnings. Additionally, recent geopolitical events, particularly the depreciation of the ruble, are expected to have some impact. Despite these headwinds, SLB anticipates overall global revenue growth in the low-to-mid-teens year-on-year for the first quarter, with pretax segment operating margin expanding by approximately 150-200 basis points and adjusted EBITDA margin increasing by 50-100 basis points year-on-year. The company believes that recent global events will exacerbate an already tight oil and gas market, likely necessitating increased global investment. Russia currently accounts for approximately 5% of SLB's global revenue. Based on current visibility, SLB reaffirms its expectation for double-digit revenue growth both internationally and in North America, leading to an overall 2022 revenue growth in the mid-teens. The company's ambition remains to expand full-year operating and adjusted EBITDA margins, targeting at least a 200 basis point increase in adjusted EBITDA margins exiting 2022 compared to Q4 2021.
Key Highlights
- 1First quarter 2022 revenue growth for Well Construction and Reservoir Performance Divisions expected at ~20% year-on-year, driven by North America and international offshore activity.
- 2Production Systems Division experiencing a slower start to Q1 2022 due to global supply and logistics constraints impacting product deliveries.
- 3Geopolitical events are expected to have a limited impact on Q1 results, primarily through ruble depreciation, as Russia represents only ~5% of global revenue.
- 4Projected Q1 2022 global revenue growth to be in the low-to-mid-teens year-on-year.
- 5Expected Q1 2022 pretax segment operating margin expansion of approximately 150-200 basis points year-on-year.
- 6Expected Q1 2022 adjusted EBITDA margin increase of approximately 50-100 basis points year-on-year.
- 7Full-year 2022 revenue growth is projected to reach the mid-teens, with double-digit growth expected in both international and North American markets.