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SLB 8-K Report, Financial Results (Apr 19, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed April 19, 2024
Period End
April 19, 2024
Security
SLB
In the record · 2016–202610-K1110-Q338-K144

SLB filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 144 current reports (8-K) between 2016 and 2026.

  1. Impairment8-K · Dec ’16Dec ’16
  2. Restructuring8-K · Jun ’20Jun ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K filed April 19, 2024. Cited figures are marked; the original filing is the authoritative source.

SLB reported first-quarter 2024 results with revenue of $8.71 billiona, up 13% year on year but down 3% sequentially.

GAAP diluted EPS was $0.74b (up 14% YoY), and EPS excluding charges and credits was $0.75 (up 19% YoY). Adjusted EBITDA reached $2.06 billion, up 15% YoY, and adjusted EBITDA margin expanded for the 13th consecutive quarter, though it fell sequentially from 25.3% to 23.6%. Growth was led by international markets (up 18% YoY, with Middle East & Asia up 29%), while North America declined 6%.

Roughly half of the year-on-year revenue increase came from the Aker subsea business added through the OneSubsea joint venture in Q4 2023. Management affirmed its full-year 2024 guidance for mid-teens EBITDA growth and expects a seasonal rebound in the second quarter. SLB also set a target of returning $7 billionc to shareholders over 2024–2025 ($3 billion in 2024 and $4 billion in 2025), and declared a quarterly dividend of $0.275 per share.

Cash flow from operations was weak at $327 milliond, and free cash flow was negative $222 million, largely due to a $1.49 billion working capital build. Net debt improved to $8.68 billion from $7.98 billion at year-end 2023 (the filing shows a decrease in net debt of $703 million; the balance is presented as a net debt figure, which management reports as an improvement in leverage).

The quarter was also dominated by two pending transactions: the all-stock acquisition of ChampionX (ChampionX holders to receive 0.735 SLB shares per share, giving them about 9% of SLB post-close, with an expected $400 million in annual pretax synergies within three years, closing expected before year-end 2024), and the combination of SLB's carbon capture business with Aker Carbon Capture, in which SLB will own 80% of the combined entity. Investors should weigh strong earnings momentum and shareholder returns against the working capital drag, the dilution from the ChampionX deal, and the execution risk of both transactions.

02—Key points

Key Highlights

  1. Revenue of $8.71B rose 13% YoY but fell 3% sequentially; International revenue grew 18% YoY while North America declined 6%.
  2. GAAP diluted EPS of $0.74 (+14% YoY); EPS excluding charges and credits of $0.75 (+19% YoY).
  3. Adjusted EBITDA of $2.06B (+15% YoY), with margin of 23.6%, up 51 bps YoY but down 171 bps sequentially.
  4. Cash flow from operations of $327M and free cash flow of negative $222M, reflecting a $1.49B working capital outflow.
  5. Shareholder returns target of $7B over 2024–2025 ($3B in 2024, $4B in 2025); quarterly dividend held at $0.275 per share; $270M of buybacks in the quarter.
  6. Pending all-stock acquisition of ChampionX (0.735 SLB shares per CHX share; ~9% SLB ownership to CHX holders; ~$400M annual pretax synergies targeted), expected to close before end-2024.
  7. Carbon capture business to combine with Aker Carbon Capture, with SLB holding 80% of the combined business, expected to close in Q2 2024.

03—Questions

Frequently Asked Questions

  1. How did SLB perform financially in the first quarter of 2024?

    SLB generated revenue of $8.71 billion, up 13% year on year, with GAAP diluted EPS of $0.74 and EPS excluding charges and credits of $0.75, up 19% year on year. Adjusted EBITDA was $2.06 billion, up 15% year on year. Sequentially, revenue and profitability declined on seasonality.

  2. What is SLB's outlook for 2024?

    Management affirmed its full-year 2024 guidance for mid-teens adjusted EBITDA growth and expects a seasonal rebound in Northern Hemisphere activity in the second quarter, with broad sequential margin expansion across Divisions and geographies. It also expects softness in North America to be offset by international strength.

  3. What is the ChampionX acquisition and how will it affect shareholders?

    SLB agreed to acquire ChampionX in an all-stock deal in which each ChampionX share converts into 0.735 SLB shares. ChampionX shareholders would own about 9% of SLB after closing. SLB expects about $400 million in annual pretax synergies within three years. The deal requires ChampionX shareholder approval and regulatory clearance and is expected to close before the end of 2024. Existing SLB shareholders would experience dilution in exchange for the expanded production chemicals and artificial lift portfolio.

  4. How much cash is SLB returning to shareholders?

    SLB is targeting $7 billion in shareholder returns over 2024–2025, including $3 billion in 2024 and $4 billion in 2025. In the quarter, it paid $357 million in dividends and repurchased 5.4 million shares for $270 million, and the board declared a quarterly dividend of $0.275 per share payable July 11, 2024.

  5. Why was free cash flow negative in the quarter?

    Cash flow from operations was $327 million, but capital expenditures, APS investments, and capitalized exploration data totaled about $549 million, producing negative free cash flow of $222 million. Working capital absorbed $1.49 billion during the quarter, which is typical for SLB's seasonal first-quarter pattern and reflects the growth in activity and receivables.

04—Continue

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