425: SLB Reports Solid 2024 Results, Announces Increased Shareholder Returns and Provides 2025 Outlook

SLB reported strong full-year 2024 results, driven by growth in Production Systems and Digital, and announced increased shareholder returns while providing a steady outlook for 2025.

Summary

• SLB's full-year 2024 revenue reached $36.3 billion, a 10% increase year-over-year, with half of the growth attributed to the Aker Subsea acquisition.
• Organic revenue grew by 5%, driven entirely by international markets, particularly the Middle East, which saw a 19% increase.
• The company achieved its full-year adjusted EBITDA margin target of 25%, the highest level since 2015.
• Free cash flow for the year was $4.0 billion, and $3.3 billion was returned to shareholders through dividends and share repurchases.
• Production Systems led growth with a 24% increase in revenue and margin expansion of almost 300 bps.
• Digital revenue grew by 20% for the full year, exceeding the target of high-teens growth, with cloud, AI, and edge technology growing by 35%.
• Revenue from low-carbon markets and data center infrastructure solutions exceeded $850 million in 2024 and is expected to increase significantly in 2025.
• For the fourth quarter, revenue was $9.3 billion, a 1% sequential increase, with a record-high Digital revenue.
• Fourth-quarter free cash flow was $1.63 billion.
• The company expects global upstream investment to be steady in 2025 compared to 2024.
• SLB anticipates a steady revenue outlook for 2025, excluding the impact of the ChampionX acquisition, with adjusted EBITDA dollars and margins at or above 2024 levels.
• The company expects to reduce capital investments in 2025 to approximately $2.3 billion, excluding the impact of ChampionX.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, growth in key areas, and a commitment to shareholder returns. While there are some challenges mentioned, the overall tone is optimistic and confident.

Positives

• SLB achieved record-high revenue in the Middle East.
• The company's Digital business is experiencing strong growth and is accretive to overall margins.
• SLB is expanding its presence in low-carbon markets and data center infrastructure.
• The company is committed to increasing returns to shareholders through dividends and share repurchases.
• SLB has reduced its net debt to the lowest level since the first quarter of 2016.
• The company's diversified portfolio provides resilience against market fluctuations.
• SLB is focused on cost optimization and process enhancement, leveraging digital transformation to become a more efficient organization.

Negatives

• North America full-year 2024 revenue declined 1% compared to the previous year.
• Well Construction revenue was flat year-on-year.
• The company expects a muted environment in offshore markets in 2025.
• Oil and gas activity is expected to decline in North America due to lower capex and higher drilling efficiencies.
• There are expected declines in spending in Saudi Arabia, Egypt, Australia, Mexico, and Guyana.
• The company expects a decline in APS revenue due to the Palliser divestiture.

Risks

• Concerns about an oversupplied oil market may impact customer spending.
• Geopolitical disruptions could affect the global oil supply.
• The ongoing focus on capital discipline by operators may limit near-term supply growth in the U.S.
• There is a risk of delays in the closing of the ChampionX transaction.
• The company faces risks related to integrating the ChampionX business and achieving anticipated synergies.
• There are risks associated with the divestiture of the Palliser APS project.
• The company faces risks related to cyber-attacks, information security and data privacy.
• The company faces risks related to litigation and regulatory proceedings.

Future Outlook

SLB expects a steady revenue outlook for 2025, excluding the impact of the ChampionX acquisition, with adjusted EBITDA dollars and margins at or above 2024 levels. The company anticipates an activity rebound in the second quarter, particularly in international markets.

Management Comments

• Olivier Le Peuch stated that SLB's diverse portfolio is uniquely positioned to continue delivering strong financial results in 2025 and beyond.
• Olivier Le Peuch highlighted the company's technology leadership, domain expertise, and scale as enabling them to innovate tailored solutions for customers.
• Olivier Le Peuch expressed confidence in the company's strategy and ability to continue creating value for customers, partners, and shareholders.
• Stephane Biguet emphasized the company's commitment to increasing returns to shareholders in 2025.
• Stephane Biguet noted that the company's stock is undervalued relative to the strength of its business.

Industry Context

This announcement reflects a broader trend in the oilfield services industry where companies are focusing on digital transformation, cost optimization, and diversification into low-carbon and other growth markets. The emphasis on shareholder returns and capital discipline is also consistent with current industry trends.

Comparison to Industry Standards

• SLB's 25% adjusted EBITDA margin is a strong result, indicating efficient operations and cost management, and is comparable to other large oilfield service companies such as Halliburton and Baker Hughes.
• The 20% growth in Digital revenue is a significant achievement, outpacing many competitors in the industry and demonstrating SLB's leadership in digital transformation.
• The company's focus on low-carbon markets and data center infrastructure solutions positions it well for future growth, similar to other companies diversifying their portfolios.
• The return of $3.3 billion to shareholders in 2024 and the target of $4 billion in 2025 demonstrates a commitment to shareholder value, which is a key focus for investors in the oilfield services sector.
• The reduction in net debt to $7.4 billion is a positive sign of financial health and is in line with industry trends of deleveraging.

Stakeholder Impact

• Shareholders will benefit from increased dividends and share repurchases.
• Employees may benefit from the company's growth and success.
• Customers will benefit from the company's technology leadership and tailored solutions.
• Suppliers may benefit from the company's continued operations and growth.
• Creditors will benefit from the company's reduced net debt and strong cash flow generation.

Next Steps

• The company will continue to work towards closing the ChampionX transaction before the end of the first quarter.
• The company expects the divestiture of its interest in the Palliser APS project to close in the next few months.
• SLB will continue to focus on cost optimization and process enhancement.
• The company will continue to increase returns to shareholders through dividends and share repurchases.

Key Dates

Keywords

oilfield services, digital transformation, production systems, reservoir performance, digital, EBITDA, free cash flow, share repurchases, capital investments, low-carbon, data center infrastructure, ChampionX, Aker Subsea