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Schlumberger Net Income dropped on 574% and EBITDA Margin dropped on 39.3 pp from 20.1% to -19.2%

17 Jan 2020 • About Schlumberger ($SCL) • By InTwits

Schlumberger reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
  • EBITDA Margin is quite volatile: -19.2% in FY2019, 20.1% in FY2018, 9.8% in FY2017, 9.2% in FY2016, 19.9% in FY2015
  • Schlumberger has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's in pair with industry average of 9.5%
  • CAPEX is quite volatile: 114 ZMWm in FY2019, 150 ZMWm in FY2018, 155 ZMWm in FY2017, 50 ZMWm in FY2016, 247 ZMWm in FY2015
  • The company has unprofitable business model: ROIC is -20.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Schlumberger's Revenue showed almost no change in FY2019. During the last 5 years Revenue growth topped in FY2017 at 9.5% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.9 pp from 8.2% to 10.1% in FY2019.

Gross Margin showed almost no change in FY2019. SG&A as a % of Revenue showed almost no change in FY2019.

Net Income margin dropped on 37.3 pp from 6.5% to -30.8% in FY2019.

Investments (CAPEX, working capital and M&A)

Schlumberger's CAPEX/Revenue was 5.2% in FY2019. The company's CAPEX/Revenue decreased on 2.2 pp from 7.4% in FY2016 to 5.2% in FY2019. Average CAPEX/Revenue for the last three years was 6.2%. During FY2015-FY2019 CAPEX as a % of Revenue topped in FY2016 at 7.4% and was declining since that time.

Return on investment

The company operates at negative ROIC (-20.9%) and ROE (-33.6%). ROIC dropped on 26.4 pp from 5.5% to -20.9% in FY2019. ROE dropped on 39.5 pp from 5.9% to -33.6% in FY2019.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.7x and Debt / EBITDA is . Net Debt / EBITDA dropped on 2.2x from 2.2x to in FY2019. Debt decreased on 4.7% while cash surged on 51.2%.

Schlumberger has no short term refinancing risk: cash is higher than short term debt (413.5%).

Financial and operational results

FY ended 30 Nov -0001

Schlumberger ($SCL) key annual financial indicators

mln. $201520162017201820192019/2018
Gross Profit7,1543,7003,8974,3374,197-3.2%
Interest expence575
Net Income2,072-1,687-1,5052,138-10,137-574.1%
Stock Based Compensation345
Balance Sheet
Accounts Receivable7,881
Short Term Debt4,5573,1533,3241,407524-62.8%
Long Term Debt14,44216,46314,87514,64414,7700.9%
Cash flow
Revenue growth-27.0%-21.6%9.5%7.8%0.3%
EBITDA growth-40.1%-63.8%17.1%120.5%-195.5%

Gross Margin20.2%13.3%12.8%13.2%12.8%-0.5%
EBITDA Margin19.9%9.2%9.8%20.1%-19.2%-39.3%
EBIT Margin9.3%
SG&A, % of revenue1.4%1.4%1.4%1.4%1.4%0.1%
SBC, % of revenue1.1%
Net Income Margin5.8%-6.1%-4.9%6.5%-30.8%-37.3%
CAPEX, % of revenue6.8%7.4%6.9%6.6%5.2%-1.3%

Net Debt/EBITDA2.3x6.5x5.5x2.2x
Interest coverage ratio (ICR)5.3x
Interest expence / Average debt3.4%
Insider ownership0.1%
Revenue/Employee, th. $328

Peers in Oil Equipment, Services & Distribution

Below you can find Schlumberger benchmarking vs. other companies in Oil Equipment, Services & Distribution industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
Development Securities(Investments) ($36JS)156.8%18.9%-48.8%40.1%
Corus Finance ($BD84)-99.5%13,313.3%10.4%12.9%
Bld Property Hldgs ($09GE)39.3%6.1%-0.2%8.5%
Sanctuary Housing ($BB21)5.3%7.2%0.3%5.5%
Housing Finance Corp ($68HB)9.1%10.9%8.2%3.0%
Median (14 companies)1.0%1.5%2.1%3.0%

Top companies by Gross margin, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
Sanctuary Housing ($BB21)97.6%97.1%97.4%98.1%
Glh Hotels Ltd ($97KI)57.6%57.8%60.1%59.0%
Lewis(John)Partnership ($BD32)33.8%33.9%33.8%33.0%
Lewis(John) ($BC32)33.8%33.9%33.8%33.0%
Ashpol ($BC24)0.0%0.0%
Median (8 companies)33.8%32.7%31.9%16.5%

Top companies by EBITDA margin, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
T.H.F.C.(Indexed 2) ($90IL)97.9%97.1%96.2%96.4%
Housing Finance Corp ($68HB)97.9%97.1%96.2%96.4%
T.H.F.C.(Indexed) ($96JS)97.9%97.1%96.2%96.4%
T.H.F.C.(Social Housing Finance) ($96JP)97.9%97.1%96.2%96.4%
Bld Property Hldgs ($09GE)215.1%165.3%36.3%87.6%
Median (13 companies)44.3%39.7%29.2%52.7%

Top companies by CAPEX/Revenue, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
Bld Property Hldgs ($09GE)59.2%84.6%53.0%55.6%
Sanctuary Housing ($BB21)60.0%31.0%33.3%42.3%
Mid Kent Water ($48HO)37.7%41.2%38.1%41.7%
Glh Hotels Ltd ($97KI)13.1%4.9%4.6%9.0%
Corus Finance ($BD84)9.6%6.6%5.7%
Median (13 companies)3.8%3.3%3.0%2.2%

Top companies by ROIC, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
Corus Finance ($BD84)-19.6%2.1%8.4%10.7%
Lewis(John) ($BC32)18.6%19.8%22.0%8.2%
Lewis(John)Partnership ($BD32)18.6%19.8%22.0%8.2%
Glh Hotels Ltd ($97KI)4.9%5.7%5.6%7.5%
Development Securities(Investments) ($36JS)7.4%5.1%0.2%6.1%
Median (43 companies)3.2%3.9%2.6%1.0%

Top companies by Net Debt / EBITDA

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
T.H.F.C.(Indexed 2) ($90IL)20.3x22.6x24.3x28.0x
T.H.F.C.(Indexed) ($96JS)20.3x22.6x24.3x28.0x
T.H.F.C.(Social Housing Finance) ($96JP)20.3x22.6x24.3x28.0x
Housing Finance Corp ($68HB)20.3x22.6x24.3x28.0x
West Bromwich B.S. ($WBS)2.3x4.9x10.5x12.7x
Median (13 companies)3.1x4.0x4.6x8.6x