425: SLB Announces Strong Second-Quarter 2024 Results Driven by International Growth

SLB reports a 13% year-on-year increase in revenue, reaching $9.14 billion in the second quarter of 2024, fueled by robust international market performance.

Summary

• SLB's second-quarter 2024 revenue reached $9.14 billion, a 13% increase year-on-year and a 5% increase sequentially.
• GAAP EPS was $0.77, up 7% year-on-year and 4% sequentially.
• EPS, excluding charges and credits, was $0.85, an 18% increase year-on-year and a 13% increase sequentially.
• Net income attributable to SLB was $1.11 billion, an 8% increase year-on-year and a 4% increase sequentially.
• Adjusted EBITDA was $2.29 billion, a 17% increase year-on-year and an 11% increase sequentially.
• Cash flow from operations was $1.44 billion, and free cash flow was $776 million.
• The board approved a quarterly cash dividend of $0.275 per share.
• International revenue increased by 18% year-on-year, while North America revenue decreased by 6%.
• Production Systems revenue increased by 31% year-on-year, driven by the Aker subsea business acquisition.
• SLB repurchased 9.9 million shares of its common stock for $465 million during the quarter.
• The company expects ongoing momentum in international markets and strong digital sales to drive margin expansion in the second half of the year.
• SLB anticipates full-year adjusted EBITDA growth in the mid-teens.

Sentiment

Score: 9

Explanation: The document presents a highly positive outlook with strong financial results, strategic acquisitions, and a clear focus on future growth and sustainability. The management's comments are optimistic, and the company is actively returning capital to shareholders.

Positives

• Strong revenue growth driven by international markets.
• Significant increase in adjusted EBITDA and EPS.
• Growth in Digital & Integration division, driven by cloud, AI, and edge technology platforms.
• Successful contract awards in various regions and sectors.
• Focus on decarbonization with successful deployment of low-carbon technologies.
• Commitment to returning capital to shareholders through dividends and stock repurchases.
• Margin expansion across all divisions.

Negatives

• North America revenue declined by 6% year-on-year due to lower drilling in US land and reduced sales of production systems in the US Gulf of Mexico.
• Digital & Integration pretax operating margin contracted 304 bps year on year due to lower profitability in APS from the effects of higher APS amortization expense and lower gas prices.

Risks

• Changing global economic and geopolitical conditions could impact business.
• Fluctuations in oil and natural gas prices may affect customer spending.
• The ongoing conflict in Ukraine could disrupt global energy supply.
• Foreign currency risk and inflation could impact financial results.
• Challenges in the supply chain could lead to operational delays.
• The inability to achieve net-zero carbon emissions goals or interim emissions reduction goals.

Future Outlook

SLB expects ongoing momentum in the international markets, strong digital sales, and cost efficiency programs to enable margin expansion and deliver full-year adjusted EBITDA growth in the mid-teens. The company anticipates a long tailwind of growth opportunities beyond 2024, including long-cycle gas and deepwater projects, production and recovery activity, and the secular trends of digital and decarbonization.

Management Comments

• SLB CEO Olivier Le Peuch commented, 'We achieved solid second-quarter results, with broad-based international revenue growth and margin expansion across all Divisions.'
• Le Peuch stated that the results demonstrate SLB's strong position in key, resilient markets and benefit from elevated activity in the Middle East & Asia and increased client investments in deepwater basins, exploration, and digital.
• Le Peuch looks forward to building on these positive results throughout the rest of the year.

Industry Context

SLB's strong performance reflects the broader recovery in the oil and gas industry, particularly in international markets and offshore basins. The company's focus on digital solutions and decarbonization aligns with industry trends towards efficiency and sustainability. The acquisition of Aker subsea business and the formation of the OneSubsea joint venture position SLB to capitalize on the growing demand for subsea production systems.

Comparison to Industry Standards

• SLB's adjusted EBITDA margin expanded 142 bps sequentially, indicating strong operational efficiency compared to its peers.
• The company's focus on digital solutions aligns with industry leaders like Halliburton and Baker Hughes, who are also investing heavily in digital transformation.
• SLB's commitment to decarbonization initiatives, such as carbon capture and storage projects, positions it favorably compared to companies with less emphasis on sustainability.
• The growth in international markets, particularly in the Middle East & Asia, is a common trend among major oilfield service companies, reflecting increased investment in these regions.

Stakeholder Impact

• Shareholders will benefit from increased dividends and stock repurchases.
• Employees will have opportunities for growth and development in a company focused on innovation and sustainability.
• Customers will benefit from SLB's advanced technologies and solutions.
• Suppliers will have opportunities to partner with SLB on various projects.
• Creditors will be reassured by SLB's strong financial performance and commitment to capital discipline.

Next Steps

• SLB will continue to focus on international markets and digital sales to drive margin expansion.
• The company will continue to execute its strategy across its three engines of growth: Core, Digital, and New Energy.
• SLB will continue to emphasize capital discipline and cost efficiency.
• SLB will work towards completing the acquisition of ChampionX.
• SLB will continue to develop and implement technologies that can reduce emissions and environmental impact.

Key Dates