Schlumberger Net Income dropped on 181% in 2016 and Revenue dropped on 21.6%
20 Jan 2017 • About Schlumberger (
$SCL) • By InTwits
Schlumberger reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Schlumberger is a company in decline: 2016 revenue growth was -21.6%, 5 years revenue CAGR was -5.5%
- EBITDA Margin is declining: 9.2% in 2016 vs. 19.9% in 2015 vs. 25.5% in 2012
- EBITDA Margin is quite volatile: 9.2% in 2016, 19.9% in 2015, 24.3% in 2014, 28.3% in 2013, 25.5% in 2012
- Schlumberger has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.5%. At the same time it's a lot of higher than industry average of 5.0%.
- CAPEX is quite volatile: 885 in 2016, 961 in 2015, 2,258 in 2014, 2,255 in 2013, 2,267 in 2012
- The company has unprofitable business model: ROIC is at -2.6%
- It operates with high leverage: Net Debt/EBITDA is 6.5x while industry average is 2.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Schlumberger ($SCL) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 41,731 | 45,266 | 48,580 | 35,475 | 27,810 | -21.6% |
| Gross Profit | 8,846 | 9,935 | 11,182 | 7,154 | 3,700 | -48.3% |
| SG&A | 405 | 416 | 475 | 494 | 403 | -18.4% |
| EBITDA | 10,627 | 12,796 | 11,811 | 7,069 | 2,559 | -63.8% |
| Net Income | 5,490 | 6,732 | 5,438 | 2,072 | -1,687 | -181.4% |
Balance Sheet
|
|---|
| Cash | 1,905 | 3,472 | 3,130 | 2,793 | 2,929 | 4.9% |
| Short Term Debt | 2,121 | 2,783 | 2,765 | 4,557 | 3,153 | -30.8% |
| Long Term Debt | 9,509 | 10,393 | 10,565 | 14,442 | 16,463 | 14.0% |
Cash flow
|
|---|
| Capex | 4,694 | 3,943 | 3,976 | 2,410 | 2,055 | -14.7% |
Ratios
|
|---|
| Revenue growth | 12.9% | 8.5% | 7.3% | -27.0% | -21.6% | |
| EBITDA growth | 9.8% | 20.4% | -7.7% | -40.1% | -63.8% | |
| Gross Margin | 21.2% | 21.9% | 23.0% | 20.2% | 13.3% | -6.9% |
| EBITDA Margin | 25.5% | 28.3% | 24.3% | 19.9% | 9.2% | -10.7% |
| Net Income Margin | 13.2% | 14.9% | 11.2% | 5.8% | -6.1% | -11.9% |
| SG&A, % of revenue | 1.0% | 0.9% | 1.0% | 1.4% | 1.4% | 0.1% |
| CAPEX, % of revenue | 11.2% | 8.7% | 8.2% | 6.8% | 7.4% | 0.6% |
| ROIC | 15.7% | 17.3% | 14.3% | 5.4% | -2.6% | -8.0% |
| ROE | 16.6% | 18.1% | 14.1% | 5.6% | -4.4% | -10.0% |
| Net Debt/EBITDA | 0.9x | 0.8x | 0.9x | 2.3x | 6.5x | 4.2x |
Revenue and profitability
Schlumberger's Revenue dropped on 21.6% in 2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.90 pp from 8.4% to 9.3% in FY2016.
Gross Margin decreased on 6.9 pp from 20.2% to 13.3% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign dropped on 11.9 pp from 5.8% to -6.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
Schlumberger's CAPEX/Revenue was 7.4% in 2016. The company's CAPEX/Revenue decreased slightly on 1.3 pp from 8.7% in 2013 to 7.4% in 2016. It's average level of CAPEX/Revenue for the last three years was 7.5%.Schlumberger invested a big chunk of EBITDA (80.3%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-2.60%) and ROE (-4.40%). ROIC decreased on 8.0 pp from 5.4% to -2.6% in 2016. ROE dropped on 10.0 pp from 5.6% to -4.4% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 6.5x and Debt / EBITDA is 7.7x. Net Debt / EBITDA jumped on 4.2x from 2.3x to 6.5x in 2016. Debt increased on 3.2% in 2016 while cash increased on 4.9% in 2016.
Appendix 1: 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Greka Drilling Ltd ($GDL) | 39.0% | -49.9% | -20.0% | 22.5% | |
| Thalassa Hldgs Ltd ($THAL) | 476.9% | 118.1% | -49.2% | 21.6% | |
| Mycelx Technologies Corp ($MYX) | 96.5% | 73.9% | -36.5% | 0.1% | |
| Wood Group(John) ($WG.) | 8.0% | -6.0% | 14.3% | -23.9% | |
| Enteq Upstream ($NTQ) | | | 59.8% | -24.6% | -66.1% |
| |
|---|
| Median (6 companies) | 39.0% | 7.4% | -17.2% | -11.9% | -66.1% |
|---|
| Schlumberger ($SCL) | | 8.5% | 7.3% | -27.0% | -21.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mycelx Technologies Corp ($MYX) | 53.3% | 56.9% | 52.3% | 53.3% | |
| Thalassa Hldgs Ltd ($THAL) | 35.3% | 30.4% | 42.6% | 50.1% | |
| Enteq Upstream ($NTQ) | | 42.8% | 40.0% | 37.3% | 65.0% |
| Eurasia Drilling Co Ltd ($EDCL) | 33.5% | 24.6% | 24.3% | 22.3% | |
| Greka Drilling Ltd ($GDL) | 20.5% | 28.4% | 25.7% | 19.9% | |
| |
|---|
| Median (6 companies) | 33.5% | 29.4% | 32.9% | 29.8% | 65.0% |
|---|
| Schlumberger ($SCL) | 21.2% | 21.9% | 23.0% | 20.2% | 13.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 24.6% | 25.6% | 28.0% | 21.7% | |
| Greka Drilling Ltd ($GDL) | 22.5% | 17.8% | 7.3% | 9.3% | |
| Wood Group(John) ($WG.) | 7.6% | 8.9% | 9.4% | 5.8% | |
| Enteq Upstream ($NTQ) | | 35.8% | 33.4% | -6.1% | -54.1% |
| Thalassa Hldgs Ltd ($THAL) | 13.2% | 16.1% | 4.3% | -9.2% | |
| |
|---|
| Median (6 companies) | 13.2% | 17.0% | 8.3% | -0.2% | -54.1% |
|---|
| Schlumberger ($SCL) | 25.5% | 28.3% | 24.3% | 19.9% | 9.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enteq Upstream ($NTQ) | | 2.1% | 6.5% | 12.4% | 1.0% |
| Eurasia Drilling Co Ltd ($EDCL) | 19.0% | 15.9% | 17.8% | 12.3% | |
| Thalassa Hldgs Ltd ($THAL) | 10.0% | 3.1% | 63.9% | 6.6% | |
| Mycelx Technologies Corp ($MYX) | 25.3% | 35.7% | 22.3% | 5.9% | |
| Greka Drilling Ltd ($GDL) | 56.8% | 2.5% | 5.1% | 1.2% | |
| |
|---|
| Median (6 companies) | 19.0% | 2.8% | 12.2% | 6.3% | 1.0% |
|---|
| Schlumberger ($SCL) | 11.2% | 8.7% | 8.2% | 6.8% | 7.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 23.8% | 22.8% | 20.9% | 9.0% | |
| Wood Group(John) ($WG.) | 14.0% | 13.3% | 16.0% | 4.5% | |
| Greka Drilling Ltd ($GDL) | 5.2% | -0.3% | -2.9% | -3.7% | |
| Mycelx Technologies Corp ($MYX) | -9.4% | 7.3% | -19.3% | -11.0% | |
| Thalassa Hldgs Ltd ($THAL) | 13.4% | 13.8% | -2.4% | -12.0% | |
| |
|---|
| Median (6 companies) | 13.4% | 10.3% | -0.4% | -7.4% | -17.4% |
|---|
| Schlumberger ($SCL) | 15.7% | 17.3% | 14.3% | 5.4% | -2.6% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 0.5x | 0.3x | 0.8x | 2.8x | |
| Greka Drilling Ltd ($GDL) | 0.6x | 1.9x | 2.2x | 1.2x | |
| Wood Group(John) ($WG.) | 0.3x | 0.6x | 0.6x | 1.1x | |
| |
|---|
| Median (3 companies) | 0.4x | 0.5x | 0.6x | 1.2x | |
|---|
| Schlumberger ($SCL) | 0.9x | 0.8x | 0.9x | 2.3x | 6.5x |
