NEW YORK–(BUSINESS WIRE)–SLB (NYSE: SLB) today announced results for the third-quarter 2023.
Third-Quarter Results
(Stated in millions, except per share amounts) | |||||||||
Three Months Ended | Change | ||||||||
Sept. 30, 2023 |
| Jun. 30, 2023 |
| Sept. 30, 2022 |
| Sequential |
| Year-on-year | |
Revenue | $8,310 | $8,099 | $7,477 | 3% |
| 11% | |||
Income before taxes – GAAP basis | $1,395 | $1,293 | $1,134 | 8% |
| 23% | |||
Income before taxes margin – GAAP basis | 16.8% | 16.0% | 15.2% | 82 bps |
| 161 bps | |||
Net income attributable to SLB – GAAP basis | $1,123 | $1,033 | $907 | 9% |
| 24% | |||
Diluted EPS – GAAP basis | $0.78 | $0.72 | $0.63 | 8% |
| 24% | |||
|
|
| |||||||
Adjusted EBITDA* | $2,081 | $1,962 | $1,756 | 6% |
| 18% | |||
Adjusted EBITDA margin* | 25.0% | 24.2% | 23.5% | 82 bps |
| 155 bps | |||
Pretax segment operating income* | $1,683 | $1,581 | $1,400 | 6% |
| 20% | |||
Pretax segment operating margin* | 20.3% | 19.5% | 18.7% | 73 bps |
| 153 bps | |||
Net income attributable to SLB, excluding charges & credits* | $1,123 | $1,033 | $907 | 9% |
| 24% | |||
Diluted EPS, excluding charges & credits* | $0.78 | $0.72 | $0.63 | 8% |
| 24% | |||
|
|
| |||||||
Revenue by Geography |
|
|
| ||||||
International | $6,614 | $6,297 | $5,881 | 5% |
| 12% | |||
North America | 1,643 | 1,746 | 1,543 | -6% |
| 6% | |||
Other | 53 | 56 | 53 | n/m |
| n/m | |||
$8,310 | $8,099 | $7,477 | 3% |
| 11% | ||||
*These are non-GAAP financial measures. See sections titled “Divisions” and “Supplementary Information” for details. | |||||||||
n/m = not meaningful |
(Stated in millions) | |||||||||
Three Months Ended | Change | ||||||||
Sept. 30, 2023 |
| Jun. 30, 2023 |
| Sept. 30, 2022 |
| Sequential |
| Year-on-year | |
Revenue by Division |
|
|
| ||||||
Digital & Integration | $982 | $947 | $900 | 4% |
| 9% | |||
Reservoir Performance | 1,680 | 1,643 | 1,456 | 2% |
| 15% | |||
Well Construction | 3,430 | 3,362 | 3,084 | 2% |
| 11% | |||
Production Systems | 2,367 | 2,313 | 2,150 | 2% |
| 10% | |||
Other | (149) | (166) | (113) | n/m |
| n/m | |||
$8,310 | $8,099 | $7,477 | 3% |
| 11% | ||||
|
|
| |||||||
Pretax Operating Income by Division |
|
|
| ||||||
Digital & Integration | $314 | $322 | $305 | -2% |
| 3% | |||
Reservoir Performance | 344 | 306 | 244 | 13% |
| 41% | |||
Well Construction | 759 | 731 | 664 | 4% |
| 14% | |||
Production Systems | 319 | 278 | 224 | 15% |
| 42% | |||
Other | (53) | (56) | (37) | n/m |
| n/m | |||
$1,683 | $1,581 | $1,400 | 6% |
| 20% | ||||
|
|
| |||||||
Pretax Operating Margin by Division |
|
|
| ||||||
Digital & Integration | 32.0% | 34.0% | 33.9% | -200 bps |
| -186 bps | |||
Reservoir Performance | 20.5% | 18.6% | 16.7% | 190 bps |
| 376 bps | |||
Well Construction | 22.1% | 21.7% | 21.5% | 38 bps |
| 58 bps | |||
Production Systems | 13.5% | 12.0% | 10.4% | 147 bps |
| 305 bps | |||
Other | n/m | n/m | n/m | n/m |
| n/m | |||
20.3% | 19.5% | 18.7% | 73 bps |
| 153 bps | ||||
|
|
| |||||||
n/m = not meaningful |
International Markets Driving Profitable Growth
SLB CEO Olivier Le Peuch commented, “Our third-quarter results continue to reflect strong year-to-date performance with revenue and adjusted EBITDA growth of 19% and 28%, respectively. These results, which reinforce our full-year financial ambitions, were driven by sustained growth in the international markets, where we posted our ninth consecutive quarter of double-digit year-on-year growth.
“Compared to the same quarter a year ago, international revenue grew 12%, outpacing North America, which increased 6%. Year on year, global third-quarter revenue grew 11% and pretax segment operating margin expanded 153 basis points (bps) to 20%. We have also increased our year-on-year pretax segment operating margin for the 11th consecutive quarter.
“I am very pleased with these results, which demonstrate how SLB is continuing to seize this multiyear growth cycle. Our differentiated technology and service offerings, combined with our focus on the quality of our revenue, enabled profitable growth and drove our adjusted EBITDA margin to a new cycle high of 25%.”
Strong Sequential Performance Led by the Middle East & Asia
“Third-quarter revenue increased 3% sequentially—by more than $200 million—driven by the Middle East & Asia, which increased 8% in the quarter and continues to demonstrate positive investment momentum. Our strong quarterly performance was propelled by broad-based growth across Saudi Arabia, the United Arab Emirates, Indonesia, China, Malaysia, Kuwait, and Oman.
“Similarly, revenue in our offshore business grew as our activity continues to benefit from operators working to renew supply, accelerate cycle times, and increase the productivity of their assets. This was particularly notable in offshore Africa, Brazil, and Scandinavia.
“Overall, our third-quarter pretax segment operating margin expanded 73 bps sequentially. We also generated strong cash flow from operations of $1.68 billion and free cash flow of $1.04 billion.
“I want to thank the SLB team for delivering these impressive results.”
Growth Powered by the Core
“Looking ahead, we believe the market fundamentals remain very compelling for our business. The oil and gas industry continues to benefit from a multiyear growth cycle that has shifted to the international and offshore markets where we are the clear leader. Concurrently, upstream spending is accelerating as operators continue to invest in long-cycle developments, production capacity expansions, exploration and appraisal, and enhanced gas production. The long-term nature of these global investments underscores the breadth, durability, and resilience of this cycle, and we expect these market dynamics to continue to drive profitable growth in the years ahead.
“SLB’s Core business has been primed for this opportunity. On a year-to-date basis, the Core business—comprising Reservoir Performance, Well Construction, and Production Systems—grew revenue by 22% and expanded pretax segment operating margin by 295 bps. Customers continue to make SLB their partner of choice for delivering enhanced value through our unmatched technology offerings, and our international and offshore leadership is perfectly aligned with the cycle’s activity trends. In the international market, we continue to benefit from our leading exposure to the Middle East, and we have further bolstered our unparalleled offshore offering with the formation of our OneSubsea joint venture with Aker Solutions and Subsea7. This joint venture offers a combined technology portfolio that will drive innovation and efficiency in subsea production, helping customers to unlock reserves and reduce cycle time.”
Strong Close to the Year
“In the fourth quarter, we expect continued sequential revenue growth driven by year-end sales in Digital & Integration and seasonal product and equipment sales in Production Systems. In addition, the fourth quarter will reflect the results of the OneSubsea joint venture.
“I remain highly confident in our business and look forward to the exciting opportunities ahead. We will remain focused on driving financial outperformance, and our teams will continue delivering strong results for our customers and stakeholders in the quarter ahead.”
Other Events
During the quarter, SLB repurchased 2.6 million shares of its common stock at an average price of $57.46 per share for a total purchase price of $151 million.
On October 2, 2023, SLB, Aker Solutions, and Subsea7 closed their previously-announced joint venture. The new business, OneSubsea, will drive innovation and efficiency in subsea production by helping customers unlock reserves and reduce cycle time. OneSubsea now comprises SLB’s and Aker Solutions’ subsea businesses, which include an extensive complementary subsea production and processing technology portfolio, world-class manufacturing scale and capacity, access to industry-leading reservoir and digital domain expertise, unique pore-to-process integration capabilities, and strengthened R&D capabilities.
On October 19, 2023, SLB’s Board of Directors approved a quarterly cash dividend of $0.25 per share of outstanding common stock, payable on January 11, 2024, to stockholders of record on December 6, 2023.
Third-Quarter Revenue by Geographical Area
(Stated in millions) | |||||||||
Three Months Ended | Change | ||||||||
Sept. 30, 2023 |
| Jun. 30, 2023 |
| Sept. 30, 2022 |
| Sequential |
| Year-on-year | |
North America | $1,643 | $1,746 | $1,543 | -6% |
| 6% | |||
Latin America | 1,681 | 1,624 | 1,508 | 4% |
| 11% | |||
Europe & Africa* | 2,091 | 2,031 | 2,039 | 3% |
| 3% | |||
Middle East & Asia | 2,842 | 2,642 | 2,334 | 8% |
| 22% | |||
Eliminations & other | 53 | 56 | 53 | n/m |
| n/m | |||
$8,310 | $8,099 | $7,477 | 3% |
| 11% | ||||
|
|
| |||||||
International | $6,614 | $6,297 | $5,881 | 5% |
| 12% | |||
North America | $1,643 | $1,746 | $1,543 | -6% |
| 6% | |||
|
|
| |||||||
*Includes Russia and the Caspian region | |||||||||
n/m = not meaningful |
International
Revenue in Latin America of $1.68 billion increased 4% sequentially due to higher sales of production systems offshore Brazil, partially offset by lower revenue in Guyana. Year on year, revenue grew 11%, led by higher sales of production systems and increased drilling in Brazil and increased intervention, stimulation, and drilling activity in Argentina.
Europe & Africa revenue of $2.09 billion increased 3% sequentially due to higher exploration, drilling, and production activity offshore Angola, Namibia, the Republic of the Congo, and Uganda and higher sales of production systems in Scandinavia and Angola. Year on year, revenue grew 3% resulting from increased exploration, drilling, and production activity offshore Africa.
Revenue in the Middle East & Asia of $2.84 billion increased 8% sequentially driven by strong growth in Saudi Arabia, the United Arab Emirates, Indonesia, China, Malaysia, Kuwait, and Oman. This was a result of higher drilling, intervention, stimulation, and evaluation activity, both on land and offshore. Year on year, revenue increased 22%, driven by significant growth across Saudi Arabia, the United Arab Emirates, Kuwait, and Egypt.
North America
North America revenue of $1.64 billion decreased 6% sequentially due to reduced drilling activity in US land and in the US Gulf of Mexico. Offshore revenue declined as a result of lower subsea sales and decreased drilling activity. Year on year, North America revenue grew 6% led by strong land and offshore sales of production systems and higher drilling activity, partially offset by lower APS project revenue in Canada stemming from lower commodity prices.
Third-Quarter Results by Division
Digital & Integration
(Stated in millions) | |||||||||
Three Months Ended | Change | ||||||||
Sept. 30, 2023 |
| Jun. 30, 2023 |
| Sept. 30, 2022 |
| Sequential |
| Year-on-year | |
Revenue |
|
|
| ||||||
International | $737 | $712 | $671 | 3% |
| 10% | |||
North America | 242 | 234 | 229 | 4% |
| 6% | |||
Other | 3 | 1 | – | n/m |
| n/m | |||
$982 | $947 | $900 | 4% |
| 9% | ||||
|
|
| |||||||
Pretax operating income | $314 | $322 | $305 | -2% |
| 3% | |||
Pretax operating margin | 32.0% | 34.0% | 33.9% | -200 bps |
| -186 bps | |||
n/m = not meaningful |
Digital & Integration revenue of $982 million increased 4% sequentially due to increased APS revenue in Ecuador and increased digital revenue, which includes higher exploration data sales in Angola, the US Gulf of Mexico, and Malaysia. Year on year, revenue increased 9% due to strong growth in digital revenue, partially offset by lower APS revenue in Canada.
Digital & Integration pretax operating margin of 32% contracted 200 bps sequentially due to lower profitability in APS, more than offsetting improved digital margins. Year on year, pretax operating margin decreased 186 bps due to reduced profitability in APS, which was impacted by lower commodity prices in Canada.
Reservoir Performance
(Stated in millions) | |||||||||
Three Months Ended | Change | ||||||||
Sept. 30, 2023 |
| Jun. 30, 2023 |
| Sept. 30, 2022 |
| Sequential |
| Year-on-year | |
Revenue |
|
|
| ||||||
International | $1,554 | $1,512 | $1,335 | 3% |
| 16% | |||
North America | 125 | 130 | 119 | -4% |
| 5% | |||
Other | 1 | 1 | 2 | n/m |
| n/m | |||
$1,680 | $1,643 | $1,456 | 2% |
| 15% | ||||
|
|
| |||||||
Pretax operating income | $344 | $306 | $244 | 13% |
| 41% | |||
Pretax operating margin | 20.5% | 18.6% | 16.7% | 190 bps |
| 376 bps | |||
n/m = not meaningful |
Reservoir Performance revenue of $1.68 billion grew 2% sequentially primarily due to increased evaluation and stimulation activity internationally. More than 70% of the revenue growth came from Europe & Africa, mainly in offshore Angola, Namibia, and the United Kingdom. Strong growth was also achieved in Saudi Arabia from robust stimulation activity, offset by lower revenue in India. Year on year, revenue grew 15% driven by double-digit growth across all international areas, led by the Middle East & Asia supported by higher intervention and stimulation activity.
Reservoir Performance pretax operating margin of 20% expanded 190 bps sequentially and 376 bps year on year, the highest level of pretax operating margin in this cycle. These increases were primarily driven by higher activity, pricing, and improved operating leverage across evaluation and stimulation. New technology deployment also contributed to the margin expansion, particularly in the Middle East and West Africa.
Well Construction
(Stated in millions) | |||||||||
Three Months Ended | Change | ||||||||
Sept. 30, 2023 |
| Jun. 30, 2023 |
| Sept. 30, 2022 |
| Sequential |
| Year-on-year | |
Revenue |
|
|
| ||||||
International | $2,707 | $2,582 | $2,406 | 5% |
| 13% | |||
North America | 663 | 721 | 621 | -8% |
| 7% | |||
Other | 60 | 59 | 57 | n/m |
| n/m | |||
$3,430 | $3,362 | $3,084 | 2% |
| 11% | ||||
|
|
| |||||||
Pretax operating income | $759 | $731 | $664 | 4% |
| 14% | |||
Pretax operating margin | 22.1% | 21.7% | 21.5% | 38 bps |
| 58 bps | |||
n/m = not meaningful |
Well Construction revenue of $3.43 billion increased 2% sequentially led by strong growth in the Middle East & Asia, which was partially offset by lower revenue in North America. Year on year, revenue increased 11%, driven by 25% growth in Middle East & Asia due to very strong activity. This year-on-year increase was driven mainly by strong measurements, fluids, and equipment sales.
Well Construction pretax operating margin of 22% expanded 38 bps sequentially driven by the international markets, mainly in Europe & Africa and the Middle East & Asia. Year on year, pretax operating margin expanded 58 bps with profitability improving in measurements, fluids, and equipment sales as a result of higher activity.
Production Systems
(Stated in millions) | |||||||||
Three Months Ended | Change | ||||||||
Sept. 30, 2023 |
| Jun. 30, 2023 |
| Sept. 30, 2022 |
| Sequential |
| Year-on-year | |
Revenue |
|
|
| ||||||
International | $1,740 | $1,628 | $1,569 | 7% |
| 11% | |||
North America | 626 | 679 | 578 | -8% |
| 8% | |||
Other | 1 | 6 | 3 | n/m |
| n/m | |||
$2,367 | $2,313 | $2,150 | 2% |
| 10% | ||||
|
|
| |||||||
Pretax operating income | $319 | $278 | $224 | 15% |
| 42% | |||
Pretax operating margin | 13.5% | 12.0% | 10.4% | 147 bps |
| 305 bps | |||
n/m = not meaningful |
Production Systems revenue of $2.37 billion increased 2% sequentially driven by strong sales of completions, artificial lift, and surface production systems, partially offset by reduced sales of midstream production systems. The strong international sequential revenue growth was led by the Middle East & Asia, with double-digit growth, followed by Latin America. North America revenue declined due to lower subsea activity. Year on year, revenue grew 10% due to strong activity in the Middle East & Asia and Latin America, partially offset by a decline in Europe & Africa.
Production Systems pretax operating margin expanded 147 bps sequentially to 13%, its highest level in this cycle. The expansion was driven primarily by higher sales of completions, artificial lift, and surface production systems. Year on year, pretax operating margin expanded 305 bps led by improved profitability in completions, surface production systems, artificial lift, and subsea production systems, and driven by an improved activity mix, pricing, and the easing of supply chain constraints.
Quarterly Highlights
CORE
Contract Awards
SLB continues to win new long-cycle contract awards that align with SLB’s core strengths, particularly in the international and offshore basins. Notable highlights include the following:
Technology and Performance
Notable technology introductions and deployment in the quarter include the following:
Decarbonization and Transition Technologies™
SLB is focused on technologies that can reduce emissions and environmental impact with practical, quantifiably proven solutions in our Core operations and extending these to adjacent industries. Examples include the following:
Contacts
Investors
James R. McDonald – SVP, Investor Relations & Industry Affairs, SLB
Joy V. Domingo – Director of Investor Relations, SLB
Tel:+1 (713) 375-3535
Email: investor-relations@slb.com
Media
Josh Byerly – Vice President of Communications, SLB
Moira Duff – Director of External Communications, SLB
Tel: +1 (713) 375-3407
Email: media@slb.com
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