SLB Limited M&A announcement

Good morning, and welcome to our conference call following SLB's announced agreement to acquire Kelvion earlier today. Joining us on the call are Olivier Le Peuch, Chief Executive Officer, and Stéphane Biguet, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. For more information, please refer to our latest 10-K filing and other SEC filings, which can be found on our website. With that, I will turn the call over to Olivier.

Thank you, James. Good morning, ladies and gentlemen. Thank you for joining us. Earlier today, SLB announced an agreement to acquire Kelvion, a global provider of thermal management and heat exchange technologies. This transaction marks an important milestone for SLB and accelerates our ambition to become an industrial technology partner to the data center industry. Kelvion adds scalable, energy efficient, and reliable thermal management technologies to our rapidly growing data center solution business, addressing critical heat dissipation challenges and next-generation infrastructure. The combination will deepen our technology portfolio, expand our addressable market, and strengthen our position across the physical infrastructure required to scale AI. Over the next few minutes, I will discuss the market opportunity we are pursuing. Our Kelvion advance our path toward more integrated data center infrastructure solutions, and how this acquisition will enable us to continue scaling both offerings and the global reach of this business.

Stéphane will then discuss the financial profile of the transaction, and we will open the line for your questions. Let's begin. AI is driving the most significant infrastructure investment cycle in our lifetime. Demand for the computing capacity required to scale AI continues to accelerate with clear visibility to continue growth. This investment cycle is being fueled by hyperscalers, AI companies, cloud provider enterprises, and governments building sovereign AI capabilities. But converting this demand into operating capacity is increasingly shaped by the physical requirements of AI infrastructure. As computing architectures become more powerful, they concentrate greater capacity within each rack, creating larger and more consolidated heat loads. Thermal management is therefore becoming a critical enabling technology for next-generation computing infrastructure, including high-density data center and AI factories.

Increasingly, the ability to bring new capacity online depends on cooling technologies and the broader systems required to move heat through and ultimately out of the facility. This has resulted in cooling technologies becoming one of the fastest-growing markets in the build-out of AI infrastructure. In this context, our customers require a partner who can integrate and optimize these critical infrastructure systems. By combining our specialized engineering with high-value manufacturing adjacencies, we can industrialize complex technology and deploy them reliably at scale. That is the strategic driver behind this acquisition. Over the past few years, SLB has established a differentiated data center solution business by applying our strengths in engineering, modular manufacturing, supply chain execution, and project delivery. We initially entered this market by providing manufacturing services of site fabrication and modular infrastructure to hyperscale customers, building on relationships established through our digital business.

Since then, we have expanded our offering into data center design, engineering, and system integration, and broadened both our customer base and geographic reach. The key element of our differentiation is our modular approach, which enables infrastructure to be manufactured, assembled, and tested before it reaches the customer site. This modular approach can reduce on-site construction complexity and accelerate time to operation by up to 40%. In less than three years, we have established a right of play in this industry. Our cumulative deliveries are expected to exceed 2 gigawatts globally by the end of 2026, with revenue increasing at a compound annual growth rate, CAGR, exceeding 90% between 2024 and 2026. This is only accelerating, with our data center solution business on track to exceed 2027 at an annualized revenue run rate exceeding $2 billion.

As we move forward, our expanded role in design and system integration creates a scalable modular platform for adding critical technologies and delivering more integrated infrastructure solutions. Thermal management is the natural next step on our path to being recognized as an industrial technology partner to the data center industry. This acquisition of Kelvion significantly advanced this strategy by adding critical thermal management technologies to our modular infrastructure offering, increasing our content per megawatt, and unlocking higher margin growth globally. This broadens our high-value portfolio, creates efficiency and integration capability for customers, and directly expands our total addressable market across this fast-growing infrastructure market. For more than a century, Kelvion has developed heat exchange and thermal management technologies, which are key for modern energy and industrial applications. Technologies perform critical function across the data center cooling system, transferring heat through and ultimately out of the facility.

Importantly, Kelvion is already a leader in this area. Data centers are its largest and fastest-growing end market. Revenue expected to reach between $1.2 billion and $1.3 billion in 2026, representing more than half of the company's total revenue. Beyond data center, Kelvion has established position in key energy and industrial markets, including heat pumps, renewable carbon capture and processing solutions, where thermal management plays an increasingly important role in efficiency, reliability, and performance. Underpinning these positions are scaled manufacturing capabilities, deep engineering and application expertise, and established customer relationships across Europe and the U.S. These capabilities are highly complementary to what SLB has already built. Together, they expand our addressable market, strengthen our position across the physical infrastructure required to scale AI, and advance our ability to deliver more integrated solutions to meet customers' needs across the data center infrastructure value chain.

This combined platform also creates a natural pathway into several attractive adjacencies. This includes expanded access to the power market through partnerships for behind the meter generation, as well as opportunities across geothermal and decarbonized power, building on established carbon solutions offering and digital asset management software capabilities. Ultimately, this positions SLB to participate in a total addressable market expected to exceed $150 billion by the end of the decade, representing more than 20% of the broader data center market, excluding IT and semiconductor. Let me now describe four key areas of strategic fit that make this transaction compelling for our company and our customers. First, the acquisition expands our technology portfolio, strengthens our position across the data center infrastructure value chain. Kelvion heat exchanger, air cooling equipment, and heat rejection technology give us a broader position across the data center cooling system.

This critical technology works in tandem with both traditional and direct-to-chip liquid cooling to meet the increasing thermal management challenges of data centers. Modern GPUs are already pushing high loads beyond 100 kilowatts, while recently announced chip architecture are expected to approach 1,000 kilowatts. These higher density workloads will require cooling technology at a greater scale, making thermal management a critical enabler of next generation AI infrastructure. By combining Kelvion's thermal management expertise with SLB engineering and digital capabilities, we can deliver more integrated cooling solutions, accelerate innovation, and improve thermal efficiency across the facility, leading to higher throughputs of compute cycles or tokens to be processed per unit of energy. Second, this transaction gives us the ability to embed thermal management more directly into our modular infrastructure offering.

Rather than treating cooling as a separate system to be added later, we can bring Kelvion's technology and application expertise into the design phase alongside SLB's engineering and modular manufacturing capabilities. This creates a more current infrastructure architecture with better alignment across performance requirements, configuration choices, and deployment timing. For customers, that means faster execution, improved efficiency, and greater confidence in system reliability as AI workloads continue to scale. This is particularly relevant to engineering design work for next generation modular AI factory architecture. A key example is our collaboration with NVIDIA, where SLB will serve as the modular design partner for NVIDIA DGX AI factories. Through this work, we are applying our engineering and industrialization capabilities at the design stage to improve quality and reliability, reduce cost and lead times, and enable rapid and flexible scaling.

Bringing Kelvion's thermal management technologies and application expertise into this process will allow us to optimize not only how the infrastructure is modularized and fabricated, but also how cooling is integrated into the architecture from the outset. Third, this transaction creates significant opportunity to scale the combined offering globally and establish a larger and more durable growth platform to meet customers' evolving needs. Kelvion's proven technology capabilities and market position complement SLB's existing data center solution portfolio, strengthening our high-value technology stack in the AI infrastructure value chain and broadening our participation across customers and geographies. Strategically, Kelvion accelerates our organic growth, significantly expands our addressable market, and has the potential to more than double our revenue opportunity per gigawatt of delivered capacity.

Finally, Kelvion brings an established position across energy and industrial applications, which are benefiting from structural tailwinds and where thermal management is critical to performance, efficiency, and reliability. This market provides a diversified earnings base while creating opportunity to expand Kelvion's technology through SLB global customer relationships and operating footprint. Based on its strategic fits and capabilities, Kelvion will become part of our New Energy and Industrial business led by Gavin Rennick, President of New Energy and Industrial. This is where our data center solution business is managed, as well as other related offerings, including carbon capture and storage and geothermal solutions. Overall, this transaction represents an exciting and deliberate next step in our data center strategy, opening new growth opportunity for SLB and our stakeholders. Before I hand the call to Stéphane, I want to recognize the Kelvion team and what they have built.

Kelvion's culture is rooted on technology and innovation, values that SLB shares. We look forward to welcoming our new team members to SLB following the completion of the transaction. I will now turn the call over to Stéphane, who will discuss the financial profile and transaction details.