GuruFocus -
- Fourth Quarter Revenue: $9.3 billion, increased 1% sequentially.
- Full Year Revenue: $36.3 billion, grew 10% year on year.
- Free Cash Flow (Q4): $1.63 billion.
- Full Year Free Cash Flow: $4 billion.
- Adjusted EBITDA Margin (Q4): 25.7%, cycle high.
- Full Year Adjusted EBITDA Margin: 25%, increased by 52 basis points year on year.
- Digital Revenue (Full Year): $2.44 billion, grew 20% year on year.
- Net Debt (End of Q4): Reduced by $1.1 billion to $7.4 billion.
- Capital Investments (Full Year): $2.6 billion.
- Shareholder Returns (Full Year): $3.3 billion in dividends and stock repurchases.
- Planned Shareholder Returns (2025): Minimum of $4 billion.
- Accelerated Share Repurchase: $2.3 billion of common stock.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Schlumberger Ltd (NYSE:SLB) achieved solid earnings and free cash flow, with a strong performance in the Middle East and North America.
- The company reported a new record high for international revenue in the fourth quarter, demonstrating the strength of its diversified portfolio.
- Digital revenue grew by 20% for the full year, exceeding targets, driven by strategic partnerships and increased demand for cloud computing and AI.
- SLB's Production Systems division led growth with a 24% increase, supported by double-digit revenue increases in surface systems, completions, and artificial lift.
- The company is expanding its exposure beyond oil and gas, with significant growth momentum in low-carbon markets and data center infrastructure solutions, generating over $850 million in revenue in 2024.
- The rate of upstream investment growth continued to moderate, with declines in Saudi Arabia and Mexico impacting overall performance.
- North American revenue declined by 1% year-on-year, with pricing pressure affecting margins despite higher digital revenues.
- The offshore market is expected to experience a muted environment in 2025 due to white space in deepwater activity.
- SLB's revenue in Russia continues to decline, accounting for only 4% of global revenue in 2024.
- The company anticipates flat revenue growth for 2025, with some regions experiencing reduced spending, such as Saudi Arabia, Egypt, and Australia.
A: The Middle East remains a bright spot despite a decline in Saudi Arabia, with growth in UAE, Iraq, and Kuwait. Gas production is expected to expand significantly. Deepwater activity has a gap this year but is expected to pick up in 2026. The international gas market will continue to drive long-term investments.
Q: How do you view the growth trajectory of the production-driven business, especially with the integration of Aker and ChampionX?
A: Production Systems will see positive growth driven by production recovery. Investments in technology and integration opportunities are resulting in visible growth, particularly in the Middle East. This segment is expected to become a significant part of our long-term earnings potential.
Q: Do you expect a normal sequential improvement in international activities, or will the second half of the year be more weighted?
A: We anticipate a typical pattern with a low first quarter, followed by a rebound in the second half. The second half will likely see higher activity, particularly in some resource plays and potential deepwater upside.
Q: Can you provide clarity on the updated outlook for 2025, specifically regarding revenue and adjusted EBITDA?
A: We expect a flat revenue outlook globally, with adjusted EBITDA dollars at or above 2024 levels, excluding ChampionX. The mix of international and US activities will result in this steady outlook.
Q: How do you plan to accelerate the share repurchase program, and what factors might influence increasing returns to shareholders?
A: We initiated an accelerated share repurchase transaction, buying $2.3 billion worth of shares. This represents about 80% of the total shares to be bought under the program. We may increase returns beyond $4 billion depending on free cash flow performance and potential M&A opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.