SLB (Schlumberger Limited) — Q1 2024 Form 10-Q
Business context and reporting period. The filing covers the three months ended March 31, 2024. SLB provides oilfield services, equipment and technology through Digital & Integration, Reservoir Performance, Well Construction and Production Systems. Results are unaudited; the company cautions that quarterly results are not necessarily indicative of full-year results. Unless noted otherwise, amounts below are in U.S. dollars.
Financial performance and position
| Metric | Q1 2024 | Comparable period / change |
|---|---|---|
| Revenue | $8.707 billion | $7.736 billion; up 13% year over year |
| Net income attributable to SLB | $1.068 billion | $934 million; up 14% |
| Diluted earnings per share | $0.74 | $0.65 |
| Income before taxes | $1.357 billion | $1.161 billion |
| Operating cash flow | $327 million | $330 million |
| Free cash flow | $(222) million | $(265) million |
| Cash and short-term investments | $3.491 billion | $3.989 billion at Dec. 31, 2023 |
| Total debt | $12.170 billion | Includes $1.430 billion short-term/current and $10.740 billion long-term debt |
| Net debt | $8.679 billion | $7.976 billion at Dec. 31, 2023 |
Revenue increased 13% year over year, while net income attributable to SLB rose 14%. Approx. half of revenue growth came from the Aker Solutions subsea business acquired in Q4 2023. International revenue grew 18% (10% excluding Aker); North America revenue declined 6%. The reported effective tax rate was 19%, unchanged year over year. Cash generation was constrained by a $1.486 billion working-capital increase, chiefly reflecting lower accounts payable and accrued liabilities and higher receivables and inventories.
Revenue by division: Digital & Integration $953 million (+7% year over year); Reservoir Performance $1.725 billion (+15%); Well Construction $3.368 billion (+3%); Production Systems $2.818 billion (+28%, largely reflecting Aker). Core divisions—Reservoir Performance, Well Construction and Production Systems—grew revenue 13% and expanded pretax segment operating margin by more than 200 basis points. Production Systems margin expanded 490 basis points year over year; Reservoir Performance expanded 356 basis points. Digital & Integration margin contracted 300 basis points and Well Construction margin was essentially flat.
Sequentially, revenue declined 3% to $8.707 billion, with seasonality weighing on all divisions. Pretax segment operating income was $1.649 billion versus $1.868 billion in Q4 2023. Cash and short-term investments fell from year-end, while net debt increased by $703 million during the quarter. Capital expenditures were $399 million; APS investments were $121 million; capitalized exploration data costs were $29 million. SLB paid $357 million in dividends and repurchased $270 million of shares.
Outlook, commentary and material items
- Management remained confident in its 2024 global revenue growth outlook, expecting North American softness to be offset by international growth. It anticipated a Q2 seasonal rebound in the Northern Hemisphere and robust activity in the Middle East, Asia and Africa, supporting sequential margin expansion across divisions and geographies.
- Management expects full-year 2024 capital investment of approximately $2.6 billion, in line with 2023. In April 2024, it raised its 2024 target for shareholder returns from $2.5 billion to $3 billion and set a $4 billion target for 2025.
- Management cited international and offshore activity, production-capacity expansion, technology adoption, tight international service and equipment capacity, and operational efficiency as growth or margin drivers. It expects production investment and reservoir recovery spending to increase over time.
- On April 2, 2024, SLB announced a definitive agreement to acquire ChampionX in an all-stock transaction: ChampionX shareholders would receive 0.735 SLB shares per share and own approximately 9% of SLB after closing. ChampionX reported 2023 revenue of approximately $3.8 billion. Closing, anticipated before year-end 2024, is subject to stockholder, regulatory and other customary approvals. SLB identified completion and integration risks, including the possibility of failing to realize anticipated benefits.
- Q1 2024 included $25 million of pretax Aker-related charges: $14 million of purchase-accounting inventory amortization and $11 million of merger and integration costs. Q1 2023 included a $36 million pretax gain on the sale of Liberty shares, a nonrecurring comparison item.
- Backlog was $5.3 billion at quarter-end, with approximately 65% expected to be recognized over the next 12 months. Mexico represented 12% of net accounts receivable; SLB said receivables from its primary Mexican customer were not in dispute and it had not historically experienced material write-offs related to that customer.
- SLB reported $4.7 billion of unused committed credit facilities within $5.0 billion total and said available liquidity was sufficient for business requirements for at least the next 12 months and beyond. Legal proceedings were described as having a remote probability of material loss; management noted litigation outcomes remain uncertain. No material change in market-risk exposure was reported.
Important facts for investors to verify
- Whether international growth can offset North American softness and whether management’s 2024 growth and margin expectations are achieved.
- Underlying organic growth and profitability after separating Aker’s contribution and the prior-year Liberty gain.
- Working-capital movements, operating cash flow and the path from negative Q1 free cash flow to full-year cash generation.
- Progress on the ChampionX transaction, including approvals, timing, financing and integration or synergy risks.
- Net debt, capital-investment plans and the ability to fund increased shareholder returns while maintaining liquidity.
- Exposure to seasonal, geopolitical, foreign-exchange, customer-credit, supply-chain and oil-and-gas spending risks identified in the filing.