Schlumberger reports 242% Net Income growth in 2018 and 7.8% Revenue growth
18 Jan 2019 • About Schlumberger (
$SCL) • By InTwits
Schlumberger reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 20.1% in 2018, 9.8% in 2017, 9.2% in 2016, 19.9% in 2015, 24.3% in 2014
- Schlumberger has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.2%. At the same time it's a lot of higher than industry average of 5.0%.
- CAPEX is quite volatile: €943m in 2018, €777m in 2017, €1,312m in 2016, €2,171m in 2015, €1,419m in 2014
- The company has potentially unprofitable business model: ROIC is 5.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.2x while industry average is -131.4x
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 increased on 7.8%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 10.3 pp from 9.8% to 20.1% in 2018. During 2014-2018 EBITDA Margin bottomed in 2016 at 9.2% and was growing since that time.
Gross Margin showed almost no change in 2018. Gross Margin stuck to a declining trend at -2.7 pp per annum in 2014-2018. SG&A as a % of Revenue showed almost no change in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2016 at 1.4% and was declining since that time.
Net Income margin surged on 11.5 pp from -4.9% to 6.5% in 2018. During 2014-2018 Net Income margin bottomed in 2016 at -6.1% and was growing since that time. The efficient tax rate was 17.3% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 6.6% in 2018. CAPEX/Revenue showed almost no change from 2015 to 2018. It's average CAPEX/Revenue for the last three years was 7.0%.
Schlumberger has spent
$292m on M&A in 2018 which accounts for 0.89% of revenue.
Return on investment
The company operates at low ROIC (5.5%) and ROE (5.9%). ROIC increased on 6.9 pp from -1.4% to 5.5% in 2018. ROE increased on 9.7 pp from -3.9% to 5.9% in 2018. During the last 5 years ROIC bottomed in 2016 at -2.6% and was growing since that time. During 2014-2018 ROE bottomed in 2016 at -4.4% and was growing since that time.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.4x Debt / EBITDA. Net Debt / EBITDA dropped on 3.3x from 5.5x to 2.2x in 2018. Debt dropped on 11.8% while cash dropped on 20.3%. During the last 5 years Net Debt/EBITDA topped in 2016 at 6.5x and was declining since that time.
Schlumberger has good short term financial stability: Interest coverage ratio (ICR) is 5.3x. Schlumberger has no short term refinancing risk: cash is higher than short term debt (101.8%).
Average interest expence paid by the company was 3.6% in 2018.
Valuation and dividends
Schlumberger's trades at EV/EBITDA 2.3x and P/E 0.3x.
The company paid 129.6% of Net Income as dividends in 2018.
Management team
CEO total compensation was
$16,199,200 in 2018 which included
$2,000,000 salary.
0.14% of the company is owned by insiders.
At the end of financial year the company had 100,000 employees. Average revenue per employee in 2018 was
$328,150.
Financial and operational results
FY ended 31 Dec 2018
Schlumberger ($SCL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 48,580 | 35,475 | 27,810 | 30,440 | 32,815 | 7.8% |
| Gross Profit | 11,182 | 7,154 | 3,700 | 3,897 | 4,337 | 11.3% |
| SG&A | 475 | 494 | 403 | 432 | 444 | 2.8% |
| EBITDA | 11,811 | 7,069 | 2,559 | 2,996 | 6,606 | 120.5% |
| EBIT | | | | | 3,050 | |
| Interest expence | | | | | 575 | |
| Tax | | | | | 447 | |
| Net Income | 5,438 | 2,072 | -1,687 | -1,505 | 2,138 | |
| Stock Based Compensation | | | | | 345 | |
Balance Sheet
|
|---|
| Cash | 3,130 | 2,793 | 2,929 | 1,799 | 1,433 | -20.3% |
| Accounts Receivable | | | | | 7,881 | |
| Inventory | | | | | 4,010 | |
| Short Term Debt | 2,765 | 4,557 | 3,153 | 3,324 | 1,407 | -57.7% |
| Long Term Debt | 10,565 | 14,442 | 16,463 | 14,875 | 14,644 | -1.6% |
Cash flow
|
|---|
| Capex | 3,976 | 2,410 | 2,055 | 2,107 | 2,160 | 2.5% |
| Dividends | | | | | 2,770 | |
| Acquisitions | | | | | 292 | |
Ratios
|
|---|
| Revenue growth | 7.3% | -27.0% | -21.6% | 9.5% | 7.8% | |
| EBITDA growth | -7.7% | -40.1% | -63.8% | 17.1% | 120.5% | |
|
|---|
| Gross Margin | 23.0% | 20.2% | 13.3% | 12.8% | 13.2% | 0.4% |
| EBITDA Margin | 24.3% | 19.9% | 9.2% | 9.8% | 20.1% | 10.3% |
| EBIT Margin | | | | | 9.3% |
| SG&A, % of revenue | 1.0% | 1.4% | 1.4% | 1.4% | 1.4% | -0.1% |
| SBC, % of revenue | | | | | 1.1% |
| Net Income Margin | 11.2% | 5.8% | -6.1% | -4.9% | 6.5% | 11.5% |
| CAPEX, % of revenue | 8.2% | 6.8% | 7.4% | 6.9% | 6.6% | -0.3% |
|
|---|
| ROIC | 14.3% | 5.4% | -2.6% | -1.4% | 5.5% | 6.9% |
| ROE | 14.1% | 5.6% | -4.4% | -3.9% | 5.9% | 9.7% |
| Net Debt/EBITDA | 0.9x | 2.3x | 6.5x | 5.5x | 2.2x | -3.3x |
| Interest coverage ratio (ICR) | | | | | 5.3x |
| Interest expence / Average debt | | | | | 3.6% | |
People
|
|---|
| Insider ownership | | | | | 0.1% | |
| Employees | | | | | 100,000 | |
| Revenue/Employee, th. $ | | | | | 328 | |
Peers in Oil Equipment, Services & Distribution
Below we provide Schlumberger benchmarking against other companies in Oil Equipment, Services & Distribution industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mycelx Technologies Corp ($MYX) | | 0.1% | -41.7% | 73.6% | |
| Greka Drilling Ltd ($GDL) | -20.0% | 22.5% | -76.1% | 61.9% | |
| Wood Group(John) ($WG.) | | -23.9% | -17.6% | 30.9% | |
| Eurasia Drilling Co Ltd ($EDCL) | -14.5% | -40.9% | -8.5% | 24.5% | |
| Enteq Upstream ($NTQ) | | -24.6% | -66.1% | -24.3% | 35.7% |
| |
|---|
| Median (5 companies) | -20.0% | -11.9% | -33.8% | 30.9% | 35.7% |
|---|
| Schlumberger ($SCL) | | -27.0% | -21.6% | 9.5% | 7.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Enteq Upstream ($NTQ) | 40.0% | 37.3% | 65.0% | 65.1% | 66.9% |
| Mycelx Technologies Corp ($MYX) | 52.3% | 53.3% | 51.8% | 54.3% | |
| Greka Drilling Ltd ($GDL) | 25.7% | 19.9% | -14.2% | 29.6% | |
| Eurasia Drilling Co Ltd ($EDCL) | 24.3% | 22.3% | 19.6% | 21.7% | |
| Wood Group(John) ($WG.) | 15.4% | 16.3% | 15.1% | 12.6% | |
| |
|---|
| Median (5 companies) | 32.9% | 29.8% | 35.7% | 29.6% | 66.9% |
|---|
| Schlumberger ($SCL) | 23.0% | 20.2% | 13.3% | 12.8% | 13.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 28.0% | 21.7% | 24.7% | 27.1% | |
| Greka Drilling Ltd ($GDL) | 7.3% | 9.3% | -65.2% | 20.5% | |
| Mycelx Technologies Corp ($MYX) | -30.3% | -11.6% | -20.2% | 3.5% | |
| Wood Group(John) ($WG.) | 9.4% | 5.8% | 5.6% | 3.5% | |
| Enteq Upstream ($NTQ) | 33.4% | -6.1% | -54.1% | -16.0% | 0.4% |
| |
|---|
| Median (5 companies) | 8.3% | -0.2% | -7.3% | 3.5% | 0.4% |
|---|
| Schlumberger ($SCL) | 24.3% | 19.9% | 9.2% | 9.8% | 20.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 17.8% | 12.3% | 6.2% | 7.3% | |
| Greka Drilling Ltd ($GDL) | 5.1% | 1.2% | 4.4% | 2.4% | |
| Wood Group(John) ($WG.) | 0.9% | 0.7% | 0.7% | 0.4% | |
| Mycelx Technologies Corp ($MYX) | 22.3% | 5.9% | 1.4% | 0.0% | |
| Enteq Upstream ($NTQ) | 6.5% | 12.4% | 1.0% | 0.0% | 3.7% |
| |
|---|
| Median (5 companies) | 12.2% | 6.3% | 1.4% | 0.4% | 3.7% |
|---|
| Schlumberger ($SCL) | 8.2% | 6.8% | 7.4% | 6.9% | 6.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 20.9% | 9.0% | 10.2% | 15.3% | |
| Wood Group(John) ($WG.) | 16.0% | 4.5% | 2.5% | 0.1% | |
| Greka Drilling Ltd ($GDL) | -2.9% | -3.7% | -10.4% | -0.8% | |
| Mycelx Technologies Corp ($MYX) | -19.3% | -11.0% | -13.2% | -3.6% | |
| Enteq Upstream ($NTQ) | 1.6% | -14.7% | -17.4% | -5.2% | -3.5% |
| |
|---|
| Median (6 companies) | -0.4% | -7.4% | -3.9% | -2.2% | -3.5% |
|---|
| Schlumberger ($SCL) | 14.3% | 5.4% | -2.6% | -1.4% | 5.5% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wood Group(John) ($WG.) | 0.6x | 1.1x | 1.5x | 8.8x | |
| Greka Drilling Ltd ($GDL) | 2.2x | 1.2x | | 5.7x | |
| Eurasia Drilling Co Ltd ($EDCL) | 0.8x | 2.8x | 1.8x | 1.1x | |
| Mycelx Technologies Corp ($MYX) | | | | -6.8x | |
| |
|---|
| Median (4 companies) | 0.6x | 1.2x | 1.5x | 3.4x | -534.5x |
|---|
| Schlumberger ($SCL) | 0.9x | 2.3x | 6.5x | 5.5x | 2.2x |
