- Revenue of $7.7 billion increased 30% year on year
- GAAP EPS of $0.65 increased 81% year on year
- EPS, excluding charges and credits, of $0.63 increased 85% year on year
- Net income attributable to SLB of $934 million increased 83% year on year
- Adjusted EBITDA of $1.8 billion increased 43% year on year
- Cash flow from operations was $330 million
- Board approved quarterly cash dividend of $0.25 per share
According to the company’s website press release on April 21, 2023, SLB (NYSE: SLB) announced results for the first-quarter 2023.
Strong Growth and Broad-Based Attributes
SLB CEO Olivier Le Peuch commented, "I am very pleased with our start to 2023. We delivered strong year-over-year revenue growth and margin expansion at a scale that instills further confidence in our full-year financial ambition. The quarter was defined by strong activity dynamics offshore and in the broader international basins, most notably in Well Construction and Production Systems.
"Compared to the same period last year, revenue grew 30%; adjusted EBITDA increased 43%; EPS-excluding charges and credits-increased 85%; and pretax segment operating margin expanded 298 basis points (bps). All Divisions grew, both in North America and in the international markets, reflecting the strength of our portfolio across geographies and business lines. Revenue growth surpassed rig count growth both in North America and internationally-representing the highest year-on-year quarterly growth in more than a decade.
"Sequentially, revenue grew 4% in North America, our eighth consecutive quarter of growth, benefiting from our exposure to the most resilient basins and market segments. Internationally, the sequential revenue decline was less pronounced than historical trends as seasonal effects were partially offset by robust activity gains.
"We continue to see positive pricing as our performance differentiates, technology adoption increases, contract terms are adjusted to offset inflation, and service capacity continues to tighten in key international markets. In this environment, our customers are more actively collaborating with us to improve their operational performance, attain decarbonization objectives, and lower overall costs through the increased use of our differentiated technologies.
"First-quarter cash flow from operations was $330 million, reflecting the seasonal first-quarter buildup of working capital that will support our anticipated growth for the year and the payment of our annual incentives. Free cash flow generation is expected to accelerate throughout the year, consistent with historical trends.
Great Start to the Year Anchored on a Very Solid Core
"Year over year, our Core Divisions collectively grew by 34% and expanded operating margins by more than 300 bps. Each of the three Core Divisions delivered very strong growth and expanded margins-driven by increased activity, pricing, and technology adoption.
"In our Core, we continue to leverage the industry's most comprehensive technology portfolio with disruptive fit-for-basin technologies, advanced digital solutions, and an unmatched ability to integrate across the entire value chain-from subsurface to midstream.
"In our Digital & Integration Division, digital sales posted strong year-on-year growth that is on track with our strategic ambition as we continue to secure new contracts and accelerate cloud and edge solutions. However, the increase in digital sales during the quarter was largely offset by a decline in Asset Performance Solutions (APS) revenue, arising from production interruptions in Ecuador and lower revenue from our Palliser asset in Canada.
A Resilient Cycle-Powered by the International and Offshore Markets
"Looking at the macro, we maintain our very constructive multiyear outlook as the upcycle attributes and key activity drivers continue to evolve very positively. The international and offshore markets continue to experience a strong resurgence of activity driven by resilient long-cycle development and capacity expansion projects. In contrast, the North American land market, which has led this upcycle in the early innings, could potentially result in an activity plateau in 2023 due to lower gas prices and capital restraint by private E&P operators.
"On balance, the global activity outlook for the full year remains very solid. Through the first quarter, the resilience, breadth, and durability of this upcycle have become more evident, particularly in the international markets. These attributes are highlighted by the following factors.
"First, there is broader recognition of the positive long-term demand outlook for oil and gas and the potential for a stronger demand rebound in the second half of the year. In addition, recent OPEC+ decisions continue to keep commodity prices at supportive levels-providing operators increased confidence to execute their projects.
"Second, broad-based investments to expand oil capacity and diversify gas supply have been reinforced by the capex plans recently announced by major IOCS and NOCS. Most of the announced budgets highlight a significant increase in spending that supports multiyear activity
growth in key resource basins all over the world. In fact, we expect investments will become even more extensive internationally as the pursuit of supply diversity remains a global priority and gathers greater urgency.
"And third, the durability of the current cycle is underscored by the nature of the ongoing. investments with the emergence of gas as a long-term energy transition fuel and enabler of energy security, the prominence of long-cycle projects, and the pivot to the Middle East and offshore basins as the anchors of supply growth. Finally, the return of global exploration and appraisal will likely extend this cycle of investment for a number of years.
"Taken together, these market dynamics play to our strengths and create an advantaged position for SLB. Our strategy, global footprint, unique integration capabilities, and portfolio actions have strengthened our ability to support our customers.
Sequential Revenue Growth and Margin Expansion Ahead
"Looking ahead to the second quarter, we expect strong growth with seasonal recovery in the Northern Hemisphere, capacity expansion projects in the Middle East that are in various stages of ramp-up, and robust activity in Asia and Sub-Sahara Africa. This growth scenario provides support for broad sequential margin expansion across the Divisions and geographies.
"I am excited about our start to the year, which gives us even further confidence in our full-year 2023 and through-cycle targets. We are laser-focused on execution, supporting our customers, and delivering on our goals for the year.
"I would like to thank our team for delivering these strong results and performing for our customers and stakeholders."
Other Events
During the quarter, SLB repurchased approximately 4.4 million shares of its common stock at an average price of $52.65 per share for a total purchase price of $230 million.
On February 3, 2023, SLB completed the acquisition of Gyrodata Incorporated, a global company specializing in gyroscopic wellbore positioning and survey technology. The transaction incorporates Gyrodata's wellbore placement and surveying technologies within SLB's Well Construction business, further enhancing its ability to deliver innovative drilling solutions to customers.
On April 20, 2023, SLB's Board of Directors approved a quarterly cash dividend of $0.25 per share of outstanding common stock, payable on July 13, 2023, to stockholders of record on June 7, 2023.
About SLB
SLB (NYSE: SLB) is a global technology company driving energy innovation for a balanced planet. With a global presence in more than 100 countries and employees representing almost twice as many nationalities, we work each day on innovating oil and gas, delivering digital at scale, decarbonizing industries, and developing and scaling new energy systems that accelerate the energy transition. Find out more at slb.com.
Conference Call Information
SLB will hold a conference call to discuss the earnings press release and business outlook on Friday, April 21, 2023. The call is scheduled to begin at 9:30 a.m. US Eastern Time. To access the call, which is open to the public, please contact the conference call operator at +1 (844) 721- 7241 within North America, or +1 (409) 207-6955 outside North America, approximately 10 minutes prior to the call's scheduled start time, and provide the access code 8858313. At the conclusion of the conference call, an audio replay will be available until May 21, 2023, by dialing +1 (866) 207-1041 within North America, or +1 (402) 970-0847 outside North America, and providing the access code 1502942. The conference call will be webcast simultaneously at www.slb.com/irwebcast on a listen-only basis. A replay of the webcast will also be available at the same website until May 21, 2023.
Investor Relations Contacts:
Ndubuisi Maduemezia - Vice President of Investor Relations Joy V. Domingo - Director of Investor Relations
Office +1 (713) 375-3535
Media Contacts:
Josh Byerly - Vice President of Communications Moira Duff - Director of External Communications Office +1 (713) 375-3407
