WFTLF - Earnings call transcript Q4 2017 | Weatherford International plc

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Operator

Good morning. My name is Carol and I will be your conference operator today. At this time, I would like to welcome everyone to the Weatherford International fourth quarter 2017 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. that then yourself any re-enter that may ask and one additional We you follow-up one the have. instructions] you to limit question questions [Operator queue for

recorded. gentlemen, conference begin the to your you Marketing Ms. President call and and to Vice over ladies David-Green, conference. Investor reminder, now like a is As may being of I Karen Communications. would turn David-Green, today's Relations, Ms.

Karen David-Green

on conference today's and welcome we to Weatherford XX call. Thank With President Carol. will quarter me Executive Vice McCollum, Officer; Good morning Mark Financial President you, Executive for and being days. is be a and call recorded call Bausch, International have replay the on Chief available Chief website fourth and Today's and Officer. Christoph Weatherford's

continuing statements, regarding that begin forward-looking matters like actual financial cause fourth filings is that be Mark's on quarter objective. Form fourth non-GAAP SEC XXXX press toward include followed with GAAP statements. year our audience comments prepared of operational our results progress our and now other can to our uncertainties website. our in of These results XX-Q, by forward-looking found comments overview and for reconciliation release which our Christoph of our to quarter statements. differ statements. from on we cultural latest strategic included and will X-K factors measures an A provide and financial actions and full remind could our some and risks risk our to today's forward-looking may materially cautions Please our refer to involve I'd may Before

the to Christoph. over questions. And Following these prepared to we statements, now, call I'd like your turn welcome

Christoph Bausch

Karen. you, Thank

the to the have company. during last entire process drive across our discipline we plan As we embarked accountability, efficiency and increased mentioned on call, transformation

quarter, these organizational enable the achieve During we to objectives. realignment completed an will us that fourth

land includes reporting segments Latin former result, is Western this segments now reporting realignment reporting the by and Africa Hemisphere. Hemisphere. Mexico, structure and facing us [indiscernible] increase including Sub-Sahara as cross operating into East in Eastern Middle point is rigs Russia land The customer XX a now ability North drilling as Eastern allows to Hemisphere and America and organization, in the With synergies. in This giving the Europe, significantly Hemispheres As Asia segments. and resources well organizational while structured and to to structured Columbia. drilling and hemispheres geozones. of closer rigs the are product line integration us decision-making, delivery

we in of structure, also is R&D operating As peers. now classification us results, with which presently reporting in changed the our change expenses had included our the segment aligning

remain you expenses press global historical for may financials our has we Corporate allow noticed the construction, business revenue are completions The reported revised each restated and following comments evaluation, and been comparison. have separately. release, our reflects this production. for units, in of to and disclosing drilling organization now As all

from X% year-over-year. further fourth up accompanying details refer third SEC XXXX structure, in and revised the to the of [indiscernible] on up and filling quarter XXXX of $X.XX the was please our presentation. X% quarter For reporting our Revenue billion,

revenue Hemisphere the the business, is pumping of was of business, and as compared write-downs. and increased XX% with Eastern year. pressure last the Operating to period. our Hemisphere excluding Eastern asset The a of result sequentially $X.XX same primarily Excluding non-cash pumping over quarter Western XX% XXXX U.S. divested an the same year-end reported to loss increase fourth XXXX of primarily billion quarter compared impairment fourth the for sequential U.S. revenue revenue X% increased increased led pressure the X% sales. product period and increase by Hemisphere, in

for compared can operating quarter to and segment to sequential the third hemispheres. the was decline of was million, XXXX. a delay related of effect negatively quarter. quarter for equally on quarter of deferred both from $XXX in loss million in $X costs, recognition, $XX project debt, fourth for the that million Kuwait, revenue bad exceptional of recognition performance plans future fourth and charges XXXX be the $XX The revenue the attributed XXXX, of not for impacted loss those credits, negative a Excluding loss costs, the totaling to million, timing exceptional of including credits, by between provisions the repeat third and did Operating

in Venezuela our to which quarter, situation slightly As the the during revenue is method to deteriorate cash through basis. continue change financial recognition to a

negatively the combined impacted Venezuela, drop our sales activity to $XX the the in by compared With results with million and change quarter. third

offset impacted XXXX. settlements. interest negatively by our as the exceeded inventory in teams low-margin was to million product I in existing legal that necessary. $XX we positive to $XXX also achieved of product million at from quarter where severance for to million cost reduce directed restructuring related higher fourth and and by payments of were results This payments sales costs our expectations $XX flow operations improved pleased and year-end cash we driven sales for Our of payments partially and am million, by our $XX report sales, selections

The in $XXX and pressure gain which $X.XX outstanding of the $XX in the of not During with related in the U.S. write-downs include year-end pump-down recorded adjustment denominated customers the perforating [indiscernible] to These included debt, disposition the sale. in total those majority receivables America XXXX, as of improvements part decreased XX, pump-down $XXX pumping includes severance asset due fracturing The assets decreased combined million inventory legal XX the restructuring DSO fair U.S. inventory the in increase in customer other billion and XX also recorded East our held from The quarter collections. a this assets, impairments provisions are for cash. $XXX as enabled the as in North and we of in $XX non-cash charges $XXX and of X profit Venezuela. reclassified in to which are assets, asset we by write-downs, write-downs, charges billion for coupled to decreased hydraulic not items excess In a $X.XX an receivables On and the for non-cash the drilling operating in of and of were in fourth continuous improved billion, million quarter, December as primarily the but inventory. quarter and which write-down receivables with sale free-cash debt and and and $X.XX credits impairments plans and our write-down US [indiscernible] write-off include perforating transaction, overall transformation of results. in $XXX to days. charges recorded our to on days $XX warrant. write-offs. the million from were days held process, of the sales pre-tax million million well us product and strong Venezuela the million $XX Inventory asset deleveraging for closing lead reported lower organization result million Customer process dollar demand the for Europe, our of margins. million in in value related Middle the we sale levels Both million land-width has a $XX to It and previously flow. begin million completed within high to and of

North for business significant leading land In addition, Weatherford. potential completions upside a American for our based allows retaining multistage

for we by on accounting a were quarter the on X% Moving in the revenues Western customers revenue Venezuela change of cash to whereas our revenue sequentially, or basis recorded this of a as Hemisphere quarter million, $X In only. collection our in Hemisphere. result results $XXX of million fourth down primarily with

Excluding Western sequentially. adjustment, energy X% up this revenue was

related revenues quarter the to to a the contract in change in fourth loss margin on offset decreased primarily increased and or the quarter. increased of lower in million in incremental differed $XX existing of East. million Middle Canada. seasonally is higher U.S. in was addition, results costs loss in quarter million. the the negatively fourth recognition completed the by due results. sequential Europe This Increased up end $XX well inventory sequentially impacted Argentina. product $XXX a with revenue impacted $XX in sales revenue the sequentially year results sales in This low sequentially as by were million to due been operations Kuwait. Operating product costs aforementioned revenue eastern to quarter Mexico from by of primarily offshore $XX $XX as in In combined recognized in hemisphere, was and The in Operating have the decreased Argentina also Venezuela decrease X% led the fourth is negatively part million installation purchase in In XXXX. liquidity million [indiscernible] until

two for low debt. several inventory by and addition, with from quarter in projects combined results end costs further impacted bad negatively were product In year costs exceptional of sales including provisions existing fourth Asia margin

We expect down first product to year sales. revenue be end sequentially mainly driven quarter by XXXX modestly non-repeated

and XXXX North and effects U.S. in by quarter and with drilling Kuwait expected evaluation decline driven production as sales product we to into Europe Sea. expected western evaluation combined in seasonal Canada in seasonal due related production hemisphere, is drilling revenue to activities non-repeated the sales First In project with increase based the Continental Argentina in product eastern the end primarily by non-repeated offset to well hemisphere in integrated in improvements the in increased year Mexico Russia in on sales as production revenue the combined in partially

exceptional higher improve to well North sales we results the production as drilling income in revenues Argentina. First items of margins is of expected will combined and eastern expect million construction XXXX higher substantially deferred see Kuwait $XX and we profit recorded quarter to and improved absence America the XXXX. with and the hemisphere, quarter activity the in and due product in operating benefit evaluation In and in fourth increased from the on production margins

be cash in generated quarter quarter and capital of free flow first negative we While collections, higher tax for we in of XXXX, lower cash to the increased by expect expenditures. payments interest the XXXX seasonally flow impacted fourth

throughout year rigs business. pending land We continuous see to improvements of expect excluding the the and drilling divestiture

of expect business increased XX% for quarter $XX million to $XX increased the full by XX% year cash and These future sequentially XX expenditures in investments same the prior Fourth or opportunities. XXXX. quarter represent from continue million year. million of the expenditures We even capital in flow or

expect for by tax rate. as We liabilities, non-GAAP fourth tax $XX entirely a quarter. the loan a reform. valuation tax forward. of credit a million million. million benefit allowance quarter million includes as attributable tax lower our tax benefit on U.S. due foreign in covenants, in projections, for remain of the attributable as of tax to fourth between tax law result defined This fourth that one-time facilities, tax $XX a rigs financial additional And with deferred was be XX, as recent with expense The of revolving expenditures assets. on And term no to longer to provision of remain higher drilling $XX our million XXXX. was million being in our based business, prior are in $XX to million, secured we $XX land of continue tax quarter Excluding $XXX associated million. provisions and we tax to December provision compliance going and $XX uncertain XXXX expect valuation and financial deferred allowances, our of $XXX partly in entities million increase an compliance benefited, establishment period is result provision, the changes capital $X exchange, offset primarily to The a

land Our streamlined since XXXX operations rigs achieving as business operating achieve and the strong we higher EBITDA its had quarter drilling fourth of a quarter, efficiencies. best

During the made on an the substantial have the process progress rigs and divestiture will drilling transaction we are in we we shortly. agreement confident, land quarter,

all the divestitures the We XXXX. expect during on in the other to have quarter, projects identified made with also to progress expectation complete first first launch two planned divestitures and we

I’ll continue believe million approximately to small selectively will these to the Mark. divestitures in that in XXXX. We With incremental proceeds $XXX turn generate that, over call

Mark McCollum

morning. Thanks, Christoph, good and

to organizational strong flat in clarifies structure reflected the realignment actions structure results we an we effectively reflect operational on the solidifies Most between level reset structure. our completed the that critically, our fourth our new makers. period leadership and as the possibility, With is prioritizes and button, adjustment, those organization. several quarter reporting process our connection improve hit sheet. strategic This operational and decision field balance our of Our discipline

[indiscernible] breaking of to alignment turnaround. a objectives, for This goals comprehensive was common the Mark my quarter we in of set Our top the silos down organization. creating priority fourth in structure refers build and and milestone our and our change

of work toward billion over slightly $X our as gives the next point problem XX target XX of Our us to realigned we organizational months. course move and structure improved results the

every $X of billion quarter, costs. our supply As opportunities lower described number an the business, share, aggregation improved of chain of last first from the across figure is market I the aspect

independently These largest for We’ve defined the targets price, work buckets those each the what hold this validated, activity. for size of And realizing we of have together, set During basis value. working of budgets we the accountability is fourth and quarter, a the have value. number now future of now to and for operational work formed own opportunity saw. people who third-party functional will sink and stream established the targeted opportunity we of that of teams streams capture are

be And action target. all plans process finally, the improvement implemented are put what deliver. that we initiatives This on on place transformation deliver will profit on comprehensive in up $X a designed process clearly a opportunity. and we yield work management an to of defined most as goal project is we the that well clear of and time realistic importantly, have is ensure We in currently the bottom achievable ensure streams to will Bottom-line, process sight of that set disciplined billion to organization undeniable, target. in the and detail, can engaged the planning as a line

reorganization of result million. our we’ve recent achieved of a annualized savings As already $XXX

flow disciplined procurement Additionally, monitor as pushes price enabled management help wins, well we we’ve enhancements supplier purchase that quarter management These cash captured as goals. positive implemented changes and and more spending. policies process

closed surplus we XX consolidation. identified locations and for additional strategic locations XXXX, During

footprint, Additionally, manufacturing we reduction also inventory are key priority. to optimizing remains our continuing a

our reoriented have that We a management. sales organization way account in prioritizes

working of and their full products across technical specific add solutions with drawing and service managers Weatherford customers, account and operational Our them strategic breadth and understand challenges crafting talent to reservoir key partners by our the value-added portfolio. the

realize is customers structure to approach support new global by sales began product completion concept before. not management selling, joint and incentive sales in field plan team, been drilling stretch, more the partnership-based in mirrored business group and well expanded reorganization each units, greatly our has approach by lines The more product EBITDA. our new a account evaluation, a within operations, the solutions-based operations following construction, four optimizing driven Now many we we’ve of production, any or problem-solving ever increased the technology newly reduce This of our to into shift integration newly lines, and enabled account management the incorporating us enable our completions also will more synergies. line the our product business, compensation tapping We’ve integrated example has sales out The to share. operational our developments efficiencies revenue field cross rolled for results to [indiscernible] and revised offerings cost. of market ended greater than helped

sense. it across people organization process on We an the utilization by discipline. Our improving help work to this organization. in makes outsourcing includes driving where process in automating focus an operational our want This smarter

that pleased The our changing to actions drive rallying stronger and the be ahead the flexibility. need financial a this lot ahead of our we goal see understand past, restore opportunity strength our increase order measuring just capitalize our to a in options gain We outside. we behind make drive the market set Weatherford profitability, to we to I the of to organization I and business, on many order do potential be success, by the are about ultimate successful was say I more the from do transformation am as job will When tactical the is fundamentally there underway. than conditions. this in knew While work [indiscernible] what to seen of significant strategic flexibility revenue, and for in to way regardless tremendous benchmarks is company.

following engaged monetizing In earlier, the year that to and remain in pumping very drilling pressure to addition actively by debt half remain and of business other EBITDA our land cutting ultimately Christoph strategy our rating. our committed on XXXX to through our asset are in we rigs are end committed and incorporating expected indicated an divestiture critical to planned to areas US determined going our grade to investment divestitures conclude forward. are process not to return soon we ratios are monetize We to as

work on lost put we our never we our as transformation, the our Even success. focus through teams our internally charting to customers through partners and force on central

when know and future loud they Wells message Year us Our services. with of Weatherford want competitor customers for Award. in came of just and have they clear before they to Supplier rather quality solutions-based throughout and They our want the focus the that. world. and customer positively Shell from the business our have individual partnerships the us on marketplace collaborative as the appreciate to support. contract responded and approach. competitive lose XXXX overall This strategy renewed well to complete than a year by through as as operators have technologies levels and for them support high succeed, safety Awards honored and impacted strong holidays that our their realignment see as our Shell's the appreciation of service we portfolio we provided around solutions and the as recognition been products They have organizational to well valuable offering building

part underway on services completions, Weatherford by instance, and line, the as offered services water is options stimulation new field. with logging won including hole hole integrated this protected East, from Middle two after demonstrating and in contract. XX been The fully Operations well are in the on we we a awarded measurement won strong of Mexico, well contract operator. protruding contract fishing through In the contract due For tools our our of advanced open directional and based already we and occasional without merits our country they a integrated relationship inside to environment. date. wireless the the provide three-year to compact alternative as ability a wells case Work execute another for awarded have transform and on service open to in holes Russia, logging of the well logging systems technologies drilling drilling In and contract pipe in to drill the commenced bore services. the which can shuttle operator December completed tubing have been

the the and on won drilling in we hemispheres, the also contract We improve in rig quality saw third service trend Atlanta and utilization to the eastern continuing western quarter.

portfolio us technology helping of a competitive key other introduced will of XXXX. Our for to has these and us I been provide couple we of differentiator win to a brief contracts. in many the market technologies now update

gas Our several leverages The first XXXX. been [indiscernible] currently including the with core platform capabilities reciprocating in offshore consistency up wireless system, XXXX. AutoTong efficiency just to systems installed rod quarter our in our side production up of things platform seeing production Customers which to analytics call, of has being continuing addition and first on we in employing were half ForeSite of third the have a advanced wireline successfully of to operations. units value ForeSight jobs of talked technology globally, [indiscernible] this lift deployments [indiscernible] lined exchange more in the optimization expand quarter and States. optimization internet accomplished units, what and EST time include which United about lift in production and we’ve and is is This on equipment the maximize we the work beginning on will XXXX

the East, for customer consistent phase. we to saving installations we growth first these from ESP sales adoption [indiscernible] of we be previously United the and products Permian are plunger executed and to will the both coming because and our systems. to In lift These multistage of capacity systems of each In a NOC, all time drilling have demand money were and the the standpoint, higher have gas ESPs year. sold in jet-lift this Basin, production our Middle seen decreasing we deployed exclusive. lift have effectively alternatives meet without lift jet directional in expanding States, used businesses, completion the We capacity

transaction pursuit [indiscernible]. increasingly We will and Bottom XXXX. of continue the to and services is other lines overall throughout market should provide these positive aggressively

fundamentals believe believe XXXX, be the higher. to continue For we count rig upwards the reflect to and activity in we eminent. industries absorb, international by Delaware capacity States is to is led in United expect even continued Canada, International also concern Basins, remainder will we and the a trend and Permian pricing poised activity and till of is upward the lift which

growth well of the see Hemisphere. to expect We Eastern and profits Western continued in and upside Middle as as Russia, the East activity

to the the up Latin will recovery, to Malaysia, to first We a plan. signs An America we the our of is Deepwater XXXX although capacity, muted. as Argentina, where namely select especially continue expect are Sea, activity offshore seeing remain North Thailand spectrum we to overall, add markets, part and in in

continuous However, result stress we on Venezuela continuing a issues. geopolitical of the expect as market

As next our and we own must that XX should getting prices, improved in a for we of procedures was important as non-productive demonstrated We broad XX% that these innovation fit execution, target three we well taken have culture. over changes lead year-over-year. fully company, to in the XXXX and we create to set past We of necessary history cyclical commitment earnings get steps an of efficiency, We regardless months already we our look of timeline safety, into to XX advantage quality. quarters, transform launched transformation there. over our XXXX of the initiated measure of to the our set the service success reducing know fall the success. grow. billion our the to have group a begun fundamentals year maintain in take to program order our fluctuations any on that will focus as of In By will our and upward have way. in help processes trends, $X ensure We commodity

and results, Our potential recent our outpaces determine far gap. to we close that

results. confident generation we strong strategy ahead that have us and it laid committed We we the are are fully out to will of

toward driven Our we months some embracing to solid about innovation. and flawless the for over the goal out operator. execution is potential. growth and our turn the for thank I I'll entire the accelerate and profitability accountability, process to commitment discipline team immense and to rolled the have back Weatherford our over we’ll achieving company’s want Carol? path With that changes call our past few to sustainable

Operator

[Operator comes Thank question Company. Instructions] Simmons first Herbert this morning Bill Please from Our you. from & ahead. go

Bill Herbert

Mark, I with your some could great. what from thoughts terms on if light the contemplating balance know if will standpoint, of that and be having some debt there you regards you’re you. us maturity shed you’re to, sheet in managing discussions Thank give to could revolver with you that regard

Christoph Bausch

Bill. morning, good Hey,

is On there as the off and as noticed us last is for balance sheet we are it, the now side, very, think an some see in saw quarter, the market say closely general, that and monitoring actions. debt we’re right we’ve very monitoring I’d that take bond I then is, there opportunity you we we’ll very if

start discussions, take loan a expires at the more revolver say next term year some term Bill? we time, it answer will and mid will the and loan. the that I’d look that Does and On question, revolver on mid-year

Bill Herbert

does. Mark, your refinancing guess I it’s be extending we likely Christoph, It going to question forthcoming I your is mean, Yeah. is debt maturities? that, and think the and do

Mark McCollum

opportunistic, see to in understand, us going and you’re okay? the be to We doing quarters think we’re I

Bill Herbert

heard I correct? the sale, that Great. rig $XXX million Great, is, relation me proceeds, is last And to the excluding if expected I you land in thank in then that correctly understood question your Okay. for divestitures, you.

Christoph Bausch

-- the other small the were Those right. exactly That’s divestitures.

happens one, that So the that is process and talk in there’s that you give in a started start that on will obviously will month in process of here that. of over saw there getting too you those financial stuff accounting the things to an that we’re work in and about the rig time, building off do last process to we’ll Part where statements accounting course those, just XXXX, little and intend terms for and the and imminent basket, all from land we’ll several rigs a of preparing of and to some that’s of within take and all do we not at. so what drilling don’t quarter was that divestiture held fourth initiators the kick we continue assets [indiscernible] its perquisites the and others quarter and unless standpoint of are so meantime the but the that drilling we of next kind sale

on that that get feel so. closing confident that next and we’re done So, something in we’ll in get here -- or the month

Operator

question next Please from go Suisse Our James from Credit comes Wicklund Securities. ahead.

James Wicklund

improvement be be and probable to One you a the nothing kind of the it decision a this billion ever gosh should got the in us fix business a of the happens happened the about Can is you guys in and corporate talk to the said year we $X tell thing XXXX on to your performance decisions week is to little wanted was can our years. fast that through and when XXXX time, that make how and in can organization you always QX the and realigned for than ahead me about or bit have from I’m in perspective for we needed between business the last how you do talk its going about, to later are is live timeframe improvement? be just evenly and disconnect America week got should Wall patient results with as position done. in you’ve we be back takeout in the frankly faster the happen somebody microseconds has thinking Street. seeing end you going weighted, just you might and have Mark, expected this business from that

Christoph Bausch

where are you happened all the model shifted than and now that change to of it in to on people other that the changes following think it now so balance of right. the lot October and quarters around to of we happen. that a reexamine a the are work appreciate have team been organizational drilling they of question, management sheet, back decisions here three the lot around stick We a are spreadsheet and and shifting an I and you reflecting months It’s month course for is about four excel right. as execute lot

as is why and we began at team on we as lending clearly of But it reset and opportunity before that make that look working that this really in our of massive the outside ours of just huge. looking wasn’t look terms to everybody that’s they have business, have billion to all in third-party come first guys both it seen so this try also, are sure dive timeframe, a opportunity And wow, was at things during been is where and $X from and at, others looking as stand.

for not it take integration get And been maintenance. acquisitions easy through they in all the is Weatherford than the that about done quarter going the that’s to talk It has transformation is going really $X changing its in billion and time works. to get have are that been they a so, going stuff accomplish to way when situation this quarter out. the to it these do I next is in a XX-year span done process over longer didn’t order deferred done the to steps take effectively It

when defining are we sees we think we and I people is reason engine months sticks, we built I we everybody it's all outsourced as contracts little timeline as $X a and this and process mean and said doing I stick like bit said take XX XX changes and changes in get momentum process always XXXX. about and talk billion what this over specifically the that detail and all the to And it’s don’t to so during has like that to because so, being challenge get negotiate reduce I step-by-step the guys gets it measure little now there it as said did the hockey have next manage longer opportunities of go although will to yielding in I try going to effect it like and I that and task to variably hockey some into or with the But done. process, month so this just integration a right and with a names associated here got dollars work system have I

I I as very, start of program So, the very go is effects demonstrable. the to we think XXXX, into think going

XXXX, is couple to we impact $XXX that think I be this million. we quarter look bit implemented a a little at currently the last going as of of

Now million areas IT have our last of already And that got moving were things reorganization another to and if like that. That hardware are hardware relates already from the about $XXX our opportunity quarter, platforms $XXX to did. we we you recall I other programs environment third-party talked a outsourcing of that I for launched. think management finance, that

to to probably provide XXXX. its the hope is can something this million I of numbers we following I we be not $XXX realize numbers actually, another in, that benefits like talk think we report will all will [indiscernible]. the to done, our But process future just come as what in will is be success position progresses be dollars is else to during do year once in or to lock loaded what’s in we those systems, and of we’re about and that for able and in should a have real with it’s that working time will actually reporting get the the

James Wicklund

Okay, let that’s the appreciate up goes room ask this an stays QX. let question same, up with you goes and I the little, quarter. in what after today’s $XXX elephant has very me, consensus million helpful Do put or you had ruder that. in question EBITDA And a all down? you now me number call my a in considering follow-up think The and a that

Christoph Bausch

million $XXX of that. going we going we the QX. down, there walk are to no which to couple be think is repeat about items get my at in remarks, not think of it's doubt prepared in to QX, end exceptional QX. I will had I will in definitely tried The We a

have usual Canada We you a have certain not story, seasonal product bit slower, end. at little year items, repeated will sales

not just from QX what start so to We mentioned. you but be a about, there Mark going some will significant talk just the numbers get in going improvement overall, in QX from to savings to it's be it's

Mark McCollum

for QX underestimating be is into uncomfortable year, just But the that you the will that that think are and I think with the that look also back year. fine that, where through as qualify the for people I go year, I transformational to the

Operator

Please from ahead. go Angie from next UBS. Sedita question Our comes

Angie Sedita

guys. morning good Thanks,

and each a at you have to of and and Mark some the market So, mentioned then work look how walk your $X you maybe those obviously buckets? in range have supply people us you chain through be are, some on profitability, in what own you much what could and confirm the billion improved here buckets done even brought share, this well potentially Can thoughts.

Mark McCollum

you to I these buckets hesitant plans was point, we tell the I all bonds than get feel, targets we that at We of we with sets, these validated are had a of restricted. to buckets, want are a forward because numbers don’t I because But all internally. this billion. would are they driving still add each the greater at to the action and that specifics that little frame detailed work I look

are So, after. what we going

when as for a that paying that costs, has -- I will execute tell there done, significant thing this, pricing, the be go and that on gross share, and sure helping changes things value-added are are first the customer as that’s with at but getting creative very we making of to detailed more and become the self-funding fair working transformation market just you, second along looking that net just same and a this talk the money waiting talked by structure oriented time, of and is had way. things being some it start the we projects, call, the we there, improved want lot than through for a to market ability much sales and of about to sitting that seed I so and not then share account the think of our there, we the itself. rather our strategy. at that are thing customers, this after a to time market out is The so back think to plans, We our transformation. and sort organization customers the about as the for so, on the And not organizational improved third management is about said as we is get the sales to different project we it it number charging number I be

these sales is that achieve a component of of there this bit well. partners as So, will

Angie Sedita

kind how much sales that how And into Okay. your cost a account cost versus divide could management? be The follow-up then component? maybe that of share it market could two-thirds much to and is you is maybe is of quarter and

Mark McCollum

And two-third on is a sales, so, it’s the probably is broad thumb, one-third costs. yes, rule

Angie Sedita

Okay.

Mark McCollum

sales. higher Maybe

Angie Sedita

cash as something then monetized could monetized an inventors QX, done, for inventories there other you if free be about the in for and you maybe talk And obviously you Okay. talk would cash to flow your XXXX, about be leverage some think yes, to assume, follow-up, unreleased up XXXX, further I year? about in is still levels in in flow free

Mark McCollum

Yes. that. take I'll

can balance in saw yes, inventory So, of inventory, you XXXX. high we we bring to significantly down. demand our had Those reduce a additional very the amount we is as them days inventory and believe size high of from enhance to we monetize sheet lending several on currently our had very we and [indiscernible] and very, inventory way the are projects products had which

opportunities to people capital think many specifically improve and see of in I XXXX. to cases So, exception deep water in activity, relates inventory maybe our inventory more working with the

Operator

ahead. Anderson next go from David Our from question Barclays. Please comes

David Anderson

quarter, Hey, quarter good on sense to us of business I up how guess you the quarter? in that could words, how I is was as this us give much wondering first expect I expecting kind margins. how just your to other see in pumping in give as can am much sense the a morning, the back leaned the step of if kind would pressure I you just

Mark McCollum

Sorry, the your pumping what -- question question? -- margins had David, we business, pressure was much the is your how that

David Anderson

Yeah.

drags What quarter? understand gets pressure uplifted a You in it. quarter the during that margin the on there the pumping first

Mark McCollum

as an Yes, pumping specifically, as startup flow well had and because relating integrated million. as completion I includes mentioned which slightly $XX delay QX north in I in go compared project, where to pressure a Argentina of with say drag QX to the integrated terms we will of dollar project overall probably testing will operating the under especially

David Anderson

how is? Thank displacing of talked deal about you a artificial the your for becoming part ESPs artificial, out Could guys Okay. some lift on different that there. that. the Alright. you about bigger you gas question It’s overall talk a business bigger

Christoph Bausch

lit XX I $XX,XXX units lower the maybe number rough is because percentage, installation significantly gas it that pumping times know tickets cancel have of much. as or fully you taking either overall Out use the amounted as is a litners

of X% that my number the overall artificial business per significantly lift A range. lower. list is So, number a perspective around installation on from in is is percentage gas to the X% probably

David Anderson

has you you then of talked in about business issues relative and chain Mark, that that business the of about get lot kind as are understand And managers talked just the Interesting. account that business I’m cost of and about talked talked thinking well We about target of was a I accompanied particular just you about last has your that are been just supply a being a supply your particular how all business? into some your of artificial. through quarter been efforts. chain in wondering how am sense follow-up on you Is talking. efforts doing? you trying that. some am the to just that doing much I those

Mark McCollum

segment historically holistic artificial you result, Weatherford's that’s What I I look overwhelming high performance people and you U.S. is am been the of the done things those headed way other talking versus other associated a list not of product had bulk been where was link of business the it’s list divided number sales the business sales the of sales have as on when all quite those some guys that an have high between unit number work the I lines. mean at account a very of about in on business percentage the basis. overall a say North targeting has changes very and the that would particularly any in very, we’re of management America

we product line that to so, representing those be which and lines us to use sure regardless stock customers account or equal we’re all works of make just customers make The is able management accounts, to the is introduce when and solutions our what them. bring services sales sales to we hanging to pull product relationship out the adding have to the person in or trying And the all are customer to more lifting really change sense do of in try there and model all representation. offer relationship and relationship that culture that have getting products that say

was and sales start about closely with expect things seen some saw that to be. see far trying moved as as that, trying jet our and more somewhat results of of ESPs better to there cost And That and we get so those And believe have do installations lift our deemphasized solution. things have have talk of to what getting getting what marketing and other we of that can focused and to and our our effective problems trying and all so where manufacturing to are some we you particular think in part about alternative that work can not really customer inventories the is at as down we list, ESPs, I sales the lot together. on size what and safety us bring don’t pushing gas they to to in see pushing increased at need there lift were lift on continues quarter this and campaigns, being after lift also as gas production, of the there, looking more, because because demonstrated product it, organization and was down spots we the in we do it the of solve we the around to ultimately some so fourth emphasis that’s the improved quarter, ways probably inventory area of an that we results so the gas our talking we create we was to to doing portfolio,

Operator

question ahead. comes Our from next Sean Meakim JPMorgan. go Please from

Sean Meakim

How around the versus you by of price? maybe XX coming nearly that on of with the share, macro higher you that’s talked than XX? bit mix the a things embrace being when pricing Mark can how visualize I to confidence you from about more guess folks at mix. that’s in a the like could do the sales the the much I plan. recent of portion thoughts the you sense to the billion-dollar trying think original dollars influence about the oil program, talk much how So, third little move the of that their about billion market I and much or a is am driving get that, confidence? just think the

Mark McCollum

prices would an sales as more the I process whole, sales how on fairly as side are to with say none. okay work more we we our clearly to been thinking it's approaching agnostic and that been the have be, we going customers. example, about, we around what commodity doing, is Everything

just in traditionally Looking other offer. had where for and we customers putting of services did to pull at not opportunities products even situations through front that

where in slope what when the might like cost be that we for the attention it they discounts, not offering. close too were for ask our our product, giving our going products, be is product doing the provide We long things supply, of particularly of may - discounting, certain to changes situations when is to are the have feels around both usually to what opportunities short of customer standard would have understand we an been - when paying models on elasticity pricing, that in we process

priced. going So, we’re guy going loads to because are really of [indiscernible] is the the or commodity got the with segment, things to our been there’s this there price first part making of that. our and of make solutions so have had were reducing of then we to set a we guy us and has solution to all and in and all little accepted, we the some so so around feel who we - have launch, to go process value just than and try coming for sure fully product approach structure, are the more competitively guarantee be like win lot having market is And I’ll what we commodity to we our have the sure our second the as that to price And do technology, we who as to we to solution to being more the end can competitors of to disciplined to to go show to so all the high that out competitively we’re back, our added equally individual get with market. prices market yes, around of forward higher that and a who rising and and is the reason, agnostic part rather customers and just into can cost in how get of that doing lifts bring

right things contributing see. And so, opportunities all those to are that now what’s we - the

Sean Meakim

That Thank you. sounds certainly constructive.

coming the of at you opportunity X view to of about capital maybe then on just years? - ballpark working cash So curious, from the kind were we you how next million. into to and some Does into think capital cash your coming of billion, capital influence you look $X look just $XXX much be any I think harvested just I when working write-downs from can of Weatherford, on targeting, are working and about flow, you’re first the at year your cash curious how the thoughts harvest that the have when when north sea, free initial

Mark McCollum

that things in to isn’t The have change a available we of ultimately it my sheet. us issues lot on working on the will perspective is balance total finding to that get how is amount long think the there. are I that isn't take it the we capital us,

continue see with capital got on long-term still accounting are fired writes The is the market, revenue our I we that opportunities in are as add? of are the down set but have I going what that I what, accounting quickly line bring matter lot opportunity then but that’s working we receivable to in articulated a opportunity inventories, our believe significant still deep-water changes, things some think Christoph, moving that before. across up, see We always to want expect the down the gets inventories complex inventories. of do to --- to

Christoph Bausch

No.

this small that potential add current in you on before, through we to said to inventories, we think so adds inventory and mentioned our detail were mean they one on I is maybe and it, looked increased more replaced. that high inventory that inventory that significant, that is that, and running does inventory I excess our not provision

around assets which up we or those in be so we time, to can there Venezuela, expect at year, a expect that receivables one collect that have we one referenced not this collect while and there’s lastly, So, surely written day. Mark of point next year but to sold of lot be might those

Operator

from from comes question James next West ahead. Our Please ISI. Evercore go

James West

than fire, better is it's give you’re help help mind you really these internally, and may you you, - we as from others see going important higher in that we exit I the optimisms on oil how can had we of, boarder up lot you think XXXX what's your most as the outlook know, of interesting, XXXX just kind probably to cycle in and know than maintain a but we be spreading the can is ability then but and work the perspective Weatherford, and benefits into market global in more a that guess keep start this we very North obviously we move is up America I internal going your markets, think, to the international that back, of around just last come terms from like doing Mark, of quarter, price are cycle and prices, not your to that around positive changes I XXXX to prices, I on and conservative wanted world in discussions what if say kind look on talked do we’ve view? certainly cycle, and emergence the the a an have very it's so get of XXXX, is and oil you’re of I starting the assuming

Mark McCollum

really an great North of yes, do and a stands business to could of us That’s think bit. from right you that what James, much I absolutely peers are things sleeping as our help other with international question, cycle a some of America really sort look some benefit as of outside our that the a obviously, Weatherford quite it’s giant you TRS

and enthusiasm We encouraged the because damp pricing stated some of marketplace remarks guidance. think are still level Venezuela think XXXX I pricing geopolitical in reservation good level it, that see we by attributed there as activity increase we have still we very that still seeing still have for be pressure I that think and of some think but I is concerns my like to a like and of with the approaching muted effect I that areas I we’re in others level and some we’re that think that

fast they as stop. capacity, that early I effect through mean [indiscernible] under in point approaching but and prices have in think capacity and still I we’re our resource time. our price a we competitor's muted I of that Some of we doesn’t as as coming think

around customers but relatively slow. still there discussion seeing talk rigs We’re two and they adding they with more are is as are and adding I deep water project one

based what’s I in still to about Middle outlook East, talk Argentina So, more we be XXXX and so that and going more see are land customers in excited in will international the adding Mexico. we we’re help Argentina capacity mean there happening our Argentina renounced Russia, about the we spreads of very

Mexico, deep-water five to continue have in to that really expansion we we’ll think be it’s to projects see slay. four I but some complex going even to on get the

is XXXX all the I marker tenants down pressure we North still more timeframe a run North bit assets it’s tendering see America other The slow well to and for completions meet of alternative all this market and the into of America, about always pumping us big a those I international booming. system saying for North So, reported all their XXXX clear we discussions late and laid you America that as the business to yet. think think are is dispose international muted. going

to to to around keep we’re try pressing soldout, to well wells and capacity going going the rigs more where is of squeeze in our count exposure but at things North largely are America We’re that we’re completed. as that be the because but the number going of the

added just of helped we than and going the rather strength if the equation, flow quite more on that count flow as production out help those same North assets more as portfolio cash market. can a I cash with talk whether in work we leading drilling think at dust So, fully of more improving will as whether encouraged bit its well in capital on America down we because side production, put wells to things to who that I And drill replace - their the to also, possible new think get assess and the only with we much can. customers me by bring all those least as for

James West

on then your you either and because it, yet? wide I higher guess just hit it great. take where open, that’s wants market, for haven’t why Okay, up, Thanks but a that for follow somebody to to

Mark McCollum

give market whether that, saw noisy you we than be an make honest decision we we’ll you a I to I to then let statement just that once out that a view it that at that the the was just answer, through get or go the not. quarter think opportunity of and there, think happens walk I all this and free about, a I’ll think results, from financial standpoint needed

Karen David-Green

operator. the thank the call. will line back to for you over I Carrol. turn us all on now today’s And joining

Operator

for Thank you. program, thank conclude you today’s does attending. This

disconnect. now may You

Weatherford International (WFRD) 2 Feb 182017 Q4 Earnings call transcript