REG-Schlumberger Limited Schlumberger Announces First-Quarter 2016 Results <Origin Href="QuoteRef">SLB.N</Origin> - Part 2
26/04/2016 18:04
- Part 2: For the preceding part double click ID:nBw4WfhVXa
182
(1,044 ) (95 )
Business acquisitions and investments, net of cash acquired plus debt assumed (81 ) (79 )
Other 18 74
Increase in Net Debt (1,107 ) (100 )
Net Debt, beginning of period (5,547 ) (5,387 )
Net Debt $ (6,654 ) $ (5,487 )
Components of Net Debt Mar. 31, Dec. 31, Mar. 31,
2016 2015 2015
Cash and short-term investments $ 14,432 $ 13,034 $ 6,803
Fixed income investments, held to maturity 401 418 436
Short-term borrowings and current portion of long-term debt (4,254 ) (4,557 ) (3,828 )
Long-term debt (17,233 ) (14,442 ) (8,898 )
$ (6,654 ) $ (5,547 ) $ (5,487 )
(1) Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments.
(2) Includes severance payments of approximately $260 million and $245 million during the three months ended March 31, 2016 and March 31, 2015, respectively.
(3) "Free cash flow" represents cash flow from operations less capital expenditures, SPM investments and multiclient seismic data capitalized. Management believes that this is an important measure because it represents funds available to reduce debt and pursue opportunities that enhance shareholder value such as making acquisitions, and returning cash to shareholders through stock repurchases and dividends.
Charges & Credits
In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this First-Quarter Earnings Release and Supplemental Information also include non-GAAP financial measures (as defined under the SEC`s Regulation G). The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures:
(Stated in millions, except per share amounts)
Fourth Quarter 2015
Pretax Tax Noncont. Net Diluted
Interest EPS
Schlumberger net income, excluding charges & credits $ 1,034 $ 188 $ 27 $ 819 $ 0.65
Fixed asset impairments (776 ) (141 ) - (635 )
Workforce reduction (530 ) (51 ) - (479 )
Inventory write-downs (269 ) (27 ) - (242 )
Impairment of SPM project in Colombia (182 ) (36 ) - (146 )
Facility closures (177 ) (37 ) - (140 )
Geopolitical events (77 ) - - (77 )
Contract terminations (41 ) (2 ) - (39 )
Other (84 ) (7 ) - (77 )
Schlumberger net loss, as reported $ (1,102 ) $ (113 ) $ 27 $ (1,016 ) $ (0.81 )
First Quarter 2015
Pretax Tax Noncont. Net Diluted
Interest EPS
Schlumberger net income, excluding charges & credits $ 1,733 $ 362 $ 13 $ 1,358 $ 1.06
Workforce reduction (390 ) (56 ) - (334 )
Currency devaluation loss in Venezuela (49 ) - - (49 )
Schlumberger net income, as reported $ 1,294 $ 306 $ 13 $ 975 $ 0.76
There were no charges or credits during the first quarter of 2016.
Product Groups
(Stated in millions)
Three Months Ended
Mar. 31, 2016 Dec. 31, 2015 Mar. 31, 2015
Revenue Income Revenue Income Revenue Income
Before Before Before
Taxes Taxes Taxes
Reservoir Characterization $ 1,747 $ 331 $ 2,193 $ 521 $ 2,655 $ 672
Drilling 2,493 371 2,953 494 3,922 778
Production 2,348 208 2,632 302 3,705 544
Eliminations & other (68 ) (9 ) (34 ) (29 ) (34 ) (1 )
Pretax operating income 901 1,288 1,993
Corporate & other - (172 ) - (179 ) - (192 )
Interest income(1) - 13 - 8 - 8
Interest expense(1) - (120 ) - (83 ) - (76 )
Charges & credits - - - (2,136 ) - (439 )
$ 6,520 $ 622 $ 7,744 $ (1,102 ) $ 10,248 $ 1,294
Geographic Areas
(Stated in millions)
Three Months Ended
Mar. 31, 2016 Dec. 31, 2015 Mar. 31, 2015
Revenue Income Revenue Income Revenue Income
Before Before Before
Taxes Taxes Taxes
North America $ 1,464 ($10 ) $ 1,955 $ 139 $ 3,222 $ 416
Latin America 1,280 296 1,407 324 1,648 354
Europe/CIS/Africa 1,698 320 2,059 428 2,538 532
Middle East & Asia 2,002 446 2,248 507 2,703 774
Eliminations & other 76 (151 ) 75 (110 ) 137 (83 )
Pretax operating income 901 1,288 1,993
Corporate & other - (172 ) - (179 ) - (192 )
Interest income(1) - 13 - 8 - 8
Interest expense(1) - (120 ) - (83 ) - (76 )
Charges & credits - - - (2,136 ) - (439 )
$ 6,520 $ 622 $ 7,744 $ (1,102 ) $ 10,248 $ 1,294
(1) Excludes interest included in the Product Groups and Geographic Areas results.
Supplemental Information
1) What is the definition of decremental operating margin?
Decremental operating margin is equal to the ratio of the change in pretax operating income over the change in revenue.
2) What were the pretax operating income margin and decremental operating margin for the first quarter of 2016?
For the first quarter of 2016, the pretax operating income margin was 13.8%. The year-over-year decremental operating margin was 29% and the sequential decremental operating margin was 32%.
3) What was the free cash flow for the first quarter of 2016?
Free cash flow, was -$103 million for the first quarter of 2016 and included approximately $260 million of severance payments, $597 million of SPM investments, $549 million of capex, and $167 million of multiclient seismic data.
4) What is the capex guidance for the full year 2016?
Capex (excluding multiclient, SPM investments and Cameron) is expected to be $2.0 billion for 2016. Cameron capex in the first quarter of 2016 was $37 million and is expected to be $200 million for 2016.
5) What was included in "Interest and other income" for the first quarter of 2016?
"Interest and other income" for the first quarter of 2016 was $45 million. This amount consisted of earnings of equity method investments of $25 million and interest income of $20 million.
6) How did interest income and interest expense change during the first quarter of 2016?
Interest income of $20 million increased $6 million sequentially. Interest expense of $133 million increased $42 million sequentially.
7) What is the difference between pretax operating income and Schlumberger`s consolidated income before taxes?
The difference principally consists of corporate items (including charges and credits) and interest income and interest expense not allocated to the segments as well as stock-based compensation expense, amortization expense associated with certain intangible assets, certain centrally managed initiatives and other nonoperating items.
8) What was the effective tax rate (ETR), excluding charges and credits, for the first quarter of 2016? The ETR for the first quarter of 2016, excluding charges and credits, was 15.9% as compared to 18.2% for the fourth quarter of 2015.
The ETR for the fourth quarter of 2015, including charges and credits, was 10.2%.
9) How many shares of common stock were outstanding as at March 31, 2016 and how did this change from the end of the previous quarter?
There were 1.252 billion shares of common stock outstanding as of March 31, 2016. The following table shows the change in the number of shares outstanding from December 31, 2015 to March 31, 2016.
(Stated in millions)
Shares outstanding at December 31, 2015 1,256
Shares sold to optionees, less shares exchanged 1
Vesting of restricted stock -
Shares issued under employee stock purchase plan 2
Stock repurchase program (7 )
Shares outstanding at March 31, 2016 1,252
10) What was the weighted average number of shares outstanding during the first quarter of 2016 and fourth quarter of 2015 and how does this reconcile to the average number of shares outstanding, assuming dilution used in the calculation of diluted earnings per share, excluding charges and credits?
The weighted average number of shares outstanding during the first quarter of 2016 and fourth quarter of 2015 was 1.254 billion and 1.259 billion, respectively. The following is a reconciliation of the weighted average shares outstanding to the average number of shares outstanding, assuming dilution.
(Stated in millions)
First Quarter Fourth Quarter
2016 2015
Weighted average shares outstanding 1,254 1,259
Assumed exercise of stock options 1 2
Unvested restricted stock 4 3
Average shares outstanding, assuming dilution 1,259 1,264
11) What were multiclient sales in the first quarter of 2016?
Multiclient sales, including transfer fees, were $77 million in the first quarter of 2016 and $117 million in the fourth quarter of 2015.
12) What was the WesternGeco backlog at the end of the first quarter of 2016?
WesternGeco backlog, which is based on signed contracts with customers, was $966 million at the end of the first quarter of 2016. It was $1.13 billion at the end of the fourth quarter of 2015.
13) What were the orders and backlog for Cameron`s Subsea and Drilling segments?
Subsea and Drilling orders and backlog were as follows:
(Stated in millions)
Orders First Quarter Fourth Quarter
2016 2015
Subsea $ 305 $ 481
Drilling $ 150 $ 169
Backlog (at the end of period)
Subsea $ 2,870 $ 3,011
Drilling $ 1,308 $ 1,611
About Schlumberger
Schlumberger is the world`s leading supplier of technology, integrated project
management and information solutions to customers working in the oil and gas
industry worldwide. Employing approximately 93,000 people representing over 140
nationalities and working in more than 85 countries, Schlumberger provides the
industry`s widest range of products and services from exploration through
production.
Schlumberger Limited has principal offices in Paris, Houston, London and The
Hague, and reported revenues of $35.47 billion in 2015. For more information,
visit www.slb.com.
*Mark of Schlumberger or of Schlumberger companies.
Notes
Schlumberger will hold a conference call to discuss the above announcement and
business outlook on Friday, April 22, 2016. The call is scheduled to begin at
8:00 a.m. (US Central Time), 9:00 a.m. (Eastern Time) and 3:00 p.m. (Paris
time). To access the call, which is open to the public, please contact the
conference call operator at +1 (800) 288-8967 within North America, or +1 (612)
333-4911 outside of North America, approximately 10 minutes prior to the call`s
scheduled start time. Ask for the "Schlumberger Earnings Conference Call." At
the conclusion of the conference call an audio replay will be available until
May 22, 2016 by dialing +1 (800) 475-6701 within North America, or +1 (320)
365-3844 outside of North America, and providing the access code 385312.
The conference call will be webcast simultaneously at www.slb.com/irwebcast on a
listen-only basis. Please log in 15 minutes ahead of time to test your browser
and register for the call. A replay of the webcast will also be available at the
same web site until June 30, 2016.
This first-quarter 2016 earnings release and supplemental information, as well
as other statements we make, contain "forward-looking statements" within the
meaning of the federal securities laws, which include any statements that are
not historical facts, such as our forecasts or expectations regarding business
outlook; growth for Schlumberger as a whole and for each of its segments (and
for specified products or geographic areas within each segment); oil and natural
gas demand and production growth; oil and natural gas prices; improvements in
operating procedures and technology; capital expenditures by Schlumberger and
the oil and gas industry; the business strategies of Schlumberger`s customers;
the integration of Cameron into our business; the anticipated benefits of the
Cameron transaction; the success of Schlumberger`s joint ventures and alliances;
future global economic conditions; and future results of operations. These
statements are subject to risks and uncertainties, including, but not limited
to, global economic conditions; changes in exploration and production spending
by Schlumberger`s customers and changes in the level of oil and natural gas
exploration and development; general economic, political and business conditions
in key regions of the world; foreign currency risk; pricing erosion; weather and
seasonal factors; operational modifications, delays or cancellations; production
declines; changes in government regulations and regulatory requirements,
including those related to offshore oil and gas exploration, radioactive
sources, explosives, chemicals, hydraulic fracturing services and
climate-related initiatives; the inability of technology to meet new challenges
in exploration; the inability to successfully integrate Cameron and to realize
expected synergies; the inability to retain key employees; and other risks and
uncertainties detailed in this first-quarter 2016 earnings release and
Supplemental Information and our most recent Forms 10-K, 10-Q and 8-K filed with
or furnished to the Securities and Exchange Commission. If one or more of these
or other risks or uncertainties materialize (or the consequences of any such
development changes), or should our underlying assumptions prove incorrect,
actual outcomes may vary materially from those reflected in our forward-looking
statements. Schlumberger disclaims any intention or obligation to update
publicly or revise such statements, whether as a result of new information,
future events or otherwise.
Schlumberger Limited
Simon Farrant - Schlumberger Limited, Vice President of Investor Relations
Joy V. Domingo - Schlumberger Limited, Manager of Investor Relations
Office +1 (713) 375-3535
investor-relations@slb.com
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