SLB — Slb N.V.

SLB Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): $0.52, down $0.20 year-over-year.
• Global Revenue: $8.7 billion, a 3% increase year-over-year; however, excluding the ChampionX acquisition, revenue declined by 7%.
• Adjusted EBITDA Margin: 20.3%, down 346 basis points year-over-year due to operational disruptions and higher costs.
• Division Performance:
  • Digital: Revenue of $640 million, up 9% year-over-year.
  • Reservoir Performance: Revenue of $1.6 billion, down 6% year-over-year.
  • Well Construction: Revenue of $2.8 billion, down 6% year-over-year.
  • Production Systems: Revenue of $3.5 billion, up 23% year-over-year, driven by the ChampionX acquisition.
• Free Cash Flow: Slightly negative at $23 million, impacted by employee incentives and working capital increases.

2. Strategic Updates and Business Highlights

• Middle East Operations: Significant disruptions due to ongoing conflict, particularly in Qatar and Iraq, impacting revenue and operational capacity.
• ChampionX Integration: The acquisition is contributing positively, with pro forma revenue growth and synergy realization on track.
• Digital Growth: Strong uptake in digital operations, with automated footage reading up 145% year-on-year.
• Data Center Solutions: 45% year-on-year growth, with expectations to reach a $1 billion run rate by year-end.
• Production Recovery: Emphasis on technology to enhance recovery and extend the life of mature fields, highlighted by a recent production recovery summit.

3. Forward Guidance and Outlook

• Q2 2026 Outlook: Revenue and earnings expected to be impacted by continued Middle East disruptions, with an estimated EPS decline of $0.06 to $0.08 due to lost revenue and higher costs. However, growth is anticipated in other international markets.
• Long-term Outlook: Positive investment cycle expected in 2027-2028, driven by higher oil prices and increased upstream investments, particularly in deepwater and unconventional resources.

4. Bad News, Challenges, or Points of Concern

• Operational Disruptions: Ongoing conflict in the Middle East has led to significant operational shutdowns and revenue impacts, particularly affecting Reservoir Performance and Well Construction divisions.
• Margin Compression: Increased logistics and procurement costs, along with a challenging activity mix, have negatively impacted margins across divisions.
• Debt Levels: Net debt increased to $8.2 billion, raising concerns about financial leverage amid operational challenges.

5. Notable Q&A Insights

• Investment Cycle Changes: CEO Olivier Le Peuch emphasized that the investment cycle is expected to strengthen due to a rebalancing of supply and demand, with oil prices projected to remain above pre-conflict levels.
• Customer Needs Post-Conflict: Customers in the Middle East are expected to require support for operational assessments and production recovery, indicating a gradual ramp-up of activities.
• Digital Business Resilience: The digital segment is expected to continue growing, with AI and data capabilities becoming increasingly critical for operational efficiency.
• Competitive Positioning of OneSubsea: SLB's OneSubsea division is well-positioned to benefit from the upcoming deepwater investment cycle, with expectations for increased bookings and margin recovery in the coming quarters.

This summary encapsulates SLB's financial performance, strategic initiatives, outlook, and challenges faced during Q1 2026, providing a comprehensive overview for stakeholders.