SLB Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

Earnings Per Share (EPS): $0.52, down $0.20 year-over-year.
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.
Cash Flow: Generated $487 million from operations; free cash flow was slightly negative at $23 million.
Net Debt: Increased by $797 million to $8.2 billion.
Capital Investments: $510 million in Q1; full-year expectations remain at approximately $2.5 billion.
Stock Repurchases: $451 million in Q1, with a target of $2.4 billion for the full year.

2. Strategic Updates and Business Highlights

Operational Challenges: Disruptions in the Middle East significantly impacted revenue and earnings, particularly in Qatar and Iraq.
Divisional Performance:
- Production Systems: Revenue increased 23% year-over-year due to the ChampionX acquisition.
- Digital: Revenue grew 9%, driven by strong adoption of digital operations and AI solutions.
- Reservoir Performance and Well Construction: Both divisions saw declines primarily due to Middle East disruptions.
ChampionX Integration: Progressing well, contributing positively to revenue and margin growth.
Data Center Solutions: Achieved 45% year-on-year growth, with expectations to reach a $1 billion run rate by year-end.

3. Forward Guidance and Outlook

Second Quarter Outlook:
- Anticipates a sequential decline in earnings per share by $0.06 to $0.08 due to ongoing Middle East disruptions, offset by growth in other international markets.
- Digital and Production Systems expected to grow, while Reservoir Performance and Well Construction may decline.
Long-Term Outlook: Positive sentiment for 2027 and 2028, driven by expected higher oil prices and increased investment in offshore and deepwater projects.

4. Bad News, Challenges, or Points of Concern

Middle East Disruptions: Significant operational shutdowns due to geopolitical conflicts led to revenue and earnings declines.
Margin Pressure: Increased logistics and procurement costs, alongside unfavorable project mix and pricing headwinds, negatively impacted margins.
Revenue Decline: The company experienced a $1 billion (10.5%) decline in revenue compared to Q4 2025, exceeding previous expectations.
Operational Risks: Uncertainty regarding the duration of geopolitical disruptions and their impact on recovery efforts.

5. Notable Q&A Insights

Investment Cycle Changes: CEO Olivier Le Peuch indicated that the investment cycle is expected to strengthen due to higher oil prices and the need for energy security.
Customer Needs Post-Conflict: Customers are looking for support in production recovery, with varying timelines for resuming operations based on the severity of disruptions.
Digital Business Resilience: The digital portfolio is expected to continue growing, supported by increased adoption of AI and data solutions.
Competitive Positioning of OneSubsea: The company remains confident in its competitive edge, particularly in deepwater projects, with expectations for increased bookings and improved margins in the coming years.
Cost Recovery Strategies: SLB is actively negotiating with suppliers and customers to mitigate the impacts of rising costs due to supply chain disruptions.

Overall, SLB's Q1 2026 results reflect a challenging environment primarily influenced by geopolitical tensions, but the company is positioned for recovery and growth through strategic initiatives in production recovery, digital solutions, and data centers.

SLB — SLB N.V.