July 19, 2024 / 1:30PM UTC, Q2 2024 Schlumberger NV Earnings Call
Our comments today also include non-GAP financial measures.
Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our second-quarter press release, which is on our website.
And finally, in conjunction with our proposed acquisition, SLB and ChampionX have filed materials with the SEC, including the registration statement with a
proxy statement and prospectuses. These materials can be found on the SECs website or from the partys websites.
With that, I will turn the
call over to Olivier.
Olivier Le Peuch Schlumberger NV - CEO & Director
Thank you, James. Ladies and gentlemen, thank you for joining us on the call. This was a very strong second quarter for SLB, showcasing our ability to
harness the ongoing growth cycle while driving efficiencies throughout our business.
During todays call, I will cover three topics. First, I will
review our second-quarter results. Then I will describe the dynamics of the cycle and how we are positioning our business for further growth and margin expansion. And finally, I will share our updated outlook for the full year and discuss our
ongoing commitment to returns to shareholders. Stephane will then provide additional details on our financial results, and we will open the line for your questions.
Lets begin. Im very pleased with our strong second-quarter performance. Sequentially, revenue increased 5%. Adjusted EBITDA grew 11%. Adjusted
EBITDA margin expanded 142 basis points, and we generated $776 million of free cash flow. These results were driven by continued growth momentum in international markets, with more than half of our international GeoUnits posting the highest
revenue quarter of the cycle.
Overall, international revenue grew 6% sequentially, led by the Middle East and Asia, which continued to set new records
with two-thirds, 8 out of 12, of the GeoUnits in the area posting record-high quarterly revenue. This was fueled by capacity expansion projects, new gas developments, and production recovery investments across the region.
Additionally, the ongoing strength of the offshore markets supported further growth in Europe and Africa, as well as Latin America. This was particularly
pronounced in deepwater basins, including Brazil, West Africa, and Norway, where we continue to benefit from strong backlog conversion in OneSubsea. We also benefited from new projects on land, notably in Argentina and North Africa.
Meanwhile, in North America, revenue increased 3% sequentially. This was led by the Gulf of Mexico, where we saw increased drilling and higher digital revenue
from sales of exploration data licenses. However, this sequential growth was partially offset by lower drilling in US land, as the market continues to be constrained by weaker gas prices, capital discipline, and ongoing market consolidation.
Next, let me describe how this growth played out across the divisions. In our core divisions, we continue to harness the cycle, with revenue growing 4%
sequentially and pre-tax segment operating margins expanding by 120 basis points. Growth was led by our production systems and reservoir performance divisions, which visibly expanded margins due to the
favorable conversion of backlog, as well as many business lines operating and record activity levels.
Demand for services and equipment is being further
reinforced by the combination of long-cycle development activity and the acceleration of production recovery investments, particularly in the Middle East and Asia and Latin America. Well construction also grew sequentially, supported by offshore
developments, although this was partially offset by weaker land activity in North America.
Overall, the core divisions continue to deliver margin
expansion, combining to post their 14th consecutive quarter of year-on-year pre-tax segment operating margin expansion.
Meanwhile, in digital and integration, I was very pleased to see highly accretive sequential growth, highlighted by our digital business reaching a new quarterly high and supporting visible sequential margin expansion. This puts us on track to
achieve our full-year ambition of digital revenue growth in the high teens.
We have opportunities to build on this momentum as customers are increasingly
choosing to partner with SLB to modernize their digital infrastructures, as you have seen in a number of announcements included in todays release. At the end of the second quarter, we had 6,900 users on the Delfi platform, an increase of 28% year-on-year. Additionally, the number of connected assets increased by 57%, and trailing 12-month compute hours increased by 43%.
Combined with our first-quarter results, SLB first-half adjusted EBITDA grew in the mid-teens compared to the same
period last year, in line with our full-year ambition. Moving forward, we will remain focused on driving quality revenue growth and leveraging operational efficiency to grow EBITDA, expand operating margins, generate robust cash flows, and meet our
commitment to return to shareholders.
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