SLB LIMITED/NV Q1 FY2025 earnings call

• Olivier discussed first quarter performance, noting soft start to the year with upstream investments constrained by oversupplied oil markets. Mentioned division performances, with Production System leading, Digital Integration growing, and others facing challenges. - Stephane provided details on financial results, including EPS, revenue by region, adjusted EBITDA margins, and M&A progress, such as ChampionX and Aker subsea transactions. - Emphasized cost discipline, alignment of resources with activity levels, and proactive steps to mitigate tariff impacts.

Core Production System: Continued to lead with steady revenue growth and margin expansion. Customers showed strong demand for surface production systems, completions, and artificial lift; subsea margins expanded due to strong execution and cost synergies. Digital Integration: Revenue grew 17% year on year driven by customers embracing digital technologies. Reservoir Performance: Revenue slightly down year on year, margins impacted by challenges on new projects. Well Construction: Revenue down year on year, margins affected by lower drilling activity. North America: Positive results from offshore market, digital and subsea production systems, but lower drilling revenue in US land. International: Revenue down due to Mexico, Saudi Arabia, Russia; however, some markets like UAE, North Africa, etc., grew. First quarter revenue decreased 3% year on year, with North America up 8% and international down 5%. Company-wide adjusted EBITDA margins were 23.8%, up 18 basis points year on year.

• Second quarter: Assuming no further tariff escalation and oil prices at current levels, revenue expected flat sequentially (excluding ChampionX) with adjusted EBITDA margin expansion 50-100 basis points. - Full year: Assuming oil prices similar to current levels, flat to mid-single-digit revenue growth in second half (excluding ChampionX) with further margin expansion. - Committed to returning at least $4 billion in returns to shareholders in 2025.

• Uncertainty from OPEC+ supply raises, tariff announcements, and economic uncertainty. - Tariffs introducing uncertainty, potential impact on operations, especially imports of raw materials into the US in Production Systems division and exports from the US subject to retaliatory tariffs.

Q: How does Schlumberger see North America and international markets moving forward?

A: Olivier stated North America has more downside exposure than international, but Schlumberger is positioned with offshore, digital, and data center solutions. International has less decline proportionally due to resilience in Middle East and Asia.

Q: Talk about Saudi Arabia's performance and outlook?

A: Olivier said Saudi had a slow start due to adjustment in ambition, but gas ambition and commitment to long-term gas will lead to uptick in activity going forward.

Q: EBITDA margin level defense in weaker market?

A: Olivier aims for 25% margin excluding tariff impact, but tariffs are a question mark.

Q: Cadence of digital growth?

A: Olivier believes digital growth remains at high teens, with secular trend of digital adoption accelerating.

Q: Diversification beyond oil and gas?

A: Olivier mentioned CCS, geothermal, lithium direct lithium extraction, and data center solutions as areas of growth, on pace to exceed $1 billion in 2025.

Q: ChampionX acquisition status?

A: Olivier said progress made with UK CMA and Norwegian authorities, expecting closure end of quarter or early next quarter.

Q: Macro supply side and activity dial back?

A: Olivier said long term oil and gas demand intact, short term short cycle activity like US land most exposed, but international has resilience.

Q: Production segment resiliency?

A: Olivier said production system division has market share gain due to technology, and is resilient against market uncertainty.

Q: Free cash flow confidence?

A: Olivier confident in free cash flow generation, committed to returning $4 billion to shareholders.

Q: Tariffs and guidance?

A: Stephane said guidance assumes continuation of existing tariffs, but tariff impact is uncertain.

Q: New energy pillars and growth?

A: Olivier said CCS, geothermal, lithium, evogene, energy storage, and data center solutions are growth areas, with data center solution growing significantly.