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Schlumberger's Digital Growth Leads Q4
Schlumberger (NYSE:SLB), a leading global technology company in oilfield services, reported fourth-quarter 2024 results on Friday, Jan. 17, that exceeded Wall Street's consensus expectations. Non-GAAP earnings per share reached $0.92, outperforming the projected $0.90. Revenue totaled $9.28 billion, surpassing the $9.18 billion estimate.
Overall, the quarter showed promise with robust growth in digital and integration areas, but SLB (as it is also known) also had to navigate challenges in its Well Construction and Latin American segments.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $0.92 | $0.90 | $0.86 | 7% |
| Revenue | $9.28 billion | $9.18 billion | $8.99 billion | 3.2% |
| Adjusted EBITDA | $2.38 billion | N/A | $2.28 billion | 5.1% |
| Free cash flow | $1.63 billion | N/A | $1.6 billion | 1.9% |
Source: Schlumberger. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. EBITDA = Earnings before interest, taxes, depreciation, and amortization.
Schlumberger's Business Overview
Schlumberger is a giant in the oilfield services sector, providing advanced technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. It emphasizes three growth engines: Core, Digital, and New Energy. Lately, SLB has focused on energy transition, decarbonization, and technology innovation. Success relies on the company's ability to leverage digital solutions and sustainable energy advancements.
The company aims to enhance operational efficiency through digital integration and significant strides in new energy areas like carbon capture and renewable technologies. These initiatives are vital as global energy demands shift towards sustainability.
Quarterly Highlights and Achievements
SLB reported Q4 revenue growth in its Digital & Integration division, which rose 6% sequentially and 10% year over year. This was due to increased demand for digital products and artificial intelligence (AI)-driven solutions like the Lumi platform, launched to enhance real-time data integration for the energy value chain. Despite growth in digital sectors, the company's Well Construction segment saw a 5% decline in revenue year over year. This drop was largely due to reduced drilling in regions like Mexico and Saudi Arabia.
Geographically, North America showed promise with a 4% sequential and 7% year-over-year growth, attributed to rising digital sales and activity in the Gulf of Mexico. However, Latin America reported a 3% decline in revenue, primarily influenced by reduced drilling operations in Mexico. Schlumberger's commitment to its New Energy division was evident, focusing on sustainability initiatives including carbon capture and storage.
Operationally, SLB's adjusted EBITDA grew by 5% year over year, with overall margin expansion supported by digital integration. Some areas, however, suffered margin pressures from lower profitability in subsea production systems. The company announced it would raise its quarterly dividend by 3.6% to $0.285 per share, signaling confidence in future cash flow generation. SLB also raised its share buyback authorization to a minimum of $4 billion this year, up from $3.3 billion in 2024.
Outlook and Future Guidance
Looking ahead, Schlumberger didn't offer specific guidance in its report but has said on other occasions that it expects continued momentum driven by strategic focus on digital growth and energy transition efforts. The company aims to maintain strong EBITDA margins, banking on its leadership in digital and new energy sectors. Despite challenges, the management remains optimistic about steady market conditions and international spending growth in 2025, which they project in the low to mid-single digits.
Investors should monitor trends in energy demand and geopolitical developments, as these could influence future business directions. Management is poised to address these with innovative technology strategies and further diversification in geographical markets. Future earnings will be shaped by SLB's alignment with sustainable energy practices and ongoing technological evolution.
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