Schlumberger ((SLB)) has held its Q3 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, Schlumberger expressed a generally positive sentiment, highlighting strong sequential revenue growth, particularly in its digital and North American segments. The successful integration of Champagnex was also a key positive point. However, the company acknowledged challenges such as pipeline disruptions in Ecuador and flat performance in its core divisions. Overall, the positive aspects slightly outweighed the negative challenges, painting an optimistic picture for the company’s future.
Sequential Revenue Growth
Schlumberger reported a 4% sequential increase in revenue, reaching $8.9 billion. This growth was primarily driven by the addition of Champagnex and the resilient performance of its core operations. The company’s ability to maintain growth momentum despite market challenges is a testament to its strategic initiatives and operational efficiency.
Digital Division Performance
The digital division was a standout performer, with revenue increasing by 11% sequentially. Digital operations saw a remarkable 39% growth, and the division’s EBITDA margin reached an impressive 32.7%. This underscores the company’s focus on digital transformation as a key growth driver.
North America Revenue Increase
Revenue in North America surged by 17% sequentially, bolstered by Champagnex’s contribution and heightened offshore activity. This growth reflects the robust demand in the region and Schlumberger’s strong market position.
Data Center Business Growth
The data center business experienced significant growth, with revenue more than doubling year-on-year. The company plans to expand beyond the U.S. and onboard new customers, indicating a strong growth trajectory for this segment.
Champagnex Integration Success
The integration of Champagnex was a success, contributing $579 million in revenue and $108 million in pre-tax income. Positive customer feedback highlights the strategic value of this acquisition and its seamless integration into Schlumberger’s operations.
Pipeline Disruption in Ecuador
A pipeline disruption in Ecuador resulted in a loss of approximately $100 million in APS revenue. This challenge highlights the operational risks in certain regions, which the company must navigate carefully.
Flat Core Division Performance
Excluding Champagnex, Schlumberger’s core divisions experienced flat performance sequentially. This reflects challenges in regional market conditions, which the company is actively addressing to drive future growth.
Earnings Per Share Decline
Earnings per share, excluding charges and credits, stood at $0.69, marking a decrease of $0.05 sequentially and $0.20 year-on-year. This decline is a point of concern that the company aims to address through strategic initiatives.
Forward-Looking Guidance
Looking ahead, Schlumberger anticipates a sequential step-up in fourth-quarter results, with high single-digit top-line growth. The company expects second-half revenue to fall within the midpoint of the previous guidance range of $18.2 billion to $18.8 billion. Additionally, the fourth-quarter adjusted EBITDA margin is forecasted to expand by 50 to 150 basis points sequentially, driven by increased digital and Production Systems earnings. The digital division is expected to significantly outperform global upstream spending, with potential fourth-quarter digital EBITDA margins reaching 35% on a full-year basis.
In conclusion, Schlumberger’s earnings call reflected a generally positive sentiment, with strong growth in digital and North American segments and successful integration of Champagnex. While challenges such as pipeline disruptions and flat core division performance were noted, the company’s forward-looking guidance suggests continued growth and strategic focus on digital transformation. Investors and market watchers will be keenly observing how these strategies unfold in the coming quarters.