WFTLF - Earnings call transcript Q1 2018 | 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 First Quarter 2018 Earnings Conference Call. [Operator Instructions].

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

Karen David-Green

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

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

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

Christoph Bausch

revenue nonrepeating quarter the North than sequential XXXX, as Revenue as year-over-year higher North The and -- seasonal was for Russia. a revenue X% Karen. Africa of result of you, to declines quarter and Eastern the was first Hemisphere. revenue accounting U.S., in sales of decrease decrease in of first the to XXXX. well as Russia reported $X.XX primarily markets offshore and was in XXXX increase in quarter in Sea compared The in by a offset billion the in Saudi product North the $X.XX This increases fourth $XX first the a year-end West loss Thank due of of activity quarter billion, the was decrease the Kuwait, Iraq, was depressed in the in Argentina and Operating and for Hemisphere Arabia Western Mexico Asia. and our partially in fourth to quarter and of XXXX Venezuela million. change due the X% Sea,

share, related million partially in The of driving annualized charges; company. fair overall million sequential lines This improvements entire from or and led of to a processes the revenue and due XXXX. sales recurring to in and in loss of integrated mostly cost quarter product kwanza; and we cost up $XX and was per in Middle in quarter sequentially by warrant. pretax the $X loss up to for clear the resulting This are across transformation income million the accountability prior benefits million revenue million, Venezuela enabled $XXX XXX% premium effectiveness, adjustment $XX benefited the offset of Russia. efficiency In prior to our impairments loss value million compares and from higher headcount in charges and expenses during to million first during across $XX unusual parts support an implemented repair of the revenue to and basis. were and phase to In credits, XXXX improvement first $XX improved the process of increased and Non-GAAP rationalization loss outstanding resulting and charges, as last our $XXX optimized are cash the activity and charges by and all quarters. after and quarter result million share. the with or approach the of to and or estimated change transformation, in quarter write-downs. $XXX We're accounting from the on the Results credits, sales Excluding enhanced per and due and currency asset million, in decline million share. partially quarter $XXX the quarter. prior loss asset growth reduction or now product by well segment and smaller for quarter Kuwait, million per construction $X.XX devaluation in America, $X.XX the of net operating loss several XXXX margins by of $XXX $XXX organization production XXXX, in favorable a the net non-GAAP transformation first improved a other our number, and basis. related other the primarily recorded the service for other recognition was was was initiated restructuring as non-GAAP bond Latin also quarter. an revenue timing depreciation related lower or reduction a which $X.XX improvement excluding quality costs, fourth quarter projects adjustment charges of million These in and remaining and facility XXXX, maintenance related tender in a services offset $XX dock $XX early East redemption million net as million the structure $XX in this Angolan the Year-over-year lower fourth was were and for lower quarter, year-over-year. asset standard improvement to The benefiting Out $XX the deliveries or and first million combined of recorded impairments includes in XXX% credit million personnel year in to the $XX of in costs; depreciation related mix, implementation U.S. the a

process. quarter combined by or benefits, of severance, flow costs These benefits for exits. assets, cash the sale the advisory onetime million, in our In the Transformation contributed onetime were and to did to and country our collection addition, impact driven quarter during we operating in nonstrategic achieved $XX including improved restructuring fees an not million provisions surplus but income. with $XX costs related

We second in the transformation quarter compared be benefit the we higher expect XX% quarter the to to to momentum. to as first XX% continue gain

to outlook. greater quarter, in press which our website. be supplemented disclosures presentation you with by provides release This can have our the presentation additional we financial that unit of section results, encourage about earnings within hemisphere. includes transformation The this an each Presentation related our business presentation, accompanying found We revenue detail review to and Investor

in nonrepeating the our the in part completion for the million year-end increases offset quarter, the hemisphere, down by accounting Drilling sales pressure in a year-over-year. growing integrated revenue by pumping prior and benefits for prior services Venezuela Western and increased of revenue the and pumping pressure from quarter quarter. U.S. drilling In project units the of from by activity Year-over-year pumping during million and of in $XXX and million for product revenue Moving results and the integrated to $XX in and activity first to hemisphere. increased Sequentially, in utilization managed lower services Mexico. offset partially managed the in improved higher X% primarily greater drilling was result up basis a perforating in pump-down pressure demand incremental revenue These revenue on sale Mexico or U.S.; to adoption assets of Argentina; and activity only of were change $X Argentina. the production Tools increased due as of services projects cash in our

were sequentially lower in decline up expenses revenue amortization First dock from a from partially Eastern the up to activity quarter gains was impairments due Asia in The increased million the as The offset Middle year-over-year. at income Sea, partially to our integrated sequentially, improvements gains sales a in projects nonrepeating costs were lower activity as primarily revenue offset the revenue was basis. to increased the the rig West the for were change growth and subdued. sequential by Venezuela offset remain revenue and the $XX margins to North to These by due lower down lower increased services and These Middle revenue Year-over-year quarter. In after and across of accounting product and recognized East. primarily X% by and first well personnel or in million up due lower in million favorable and operating seasonally lower due East the Russia was offshore mix, depreciation cash improved Hemisphere, These Africa $XXX after year-over-year. as million activity. operating markets partially and production million prior increased decrease North in U.S. in quarter Year-over-year in $XX segment factors $XX Sea Russia. in $XX levels sequential and revenue and X% or and contract results increase $XX depreciation. product was the million construction, resulting

Year-over-year nonrepeating quarter to income cost cost resulting and activity mix, service Russia of and greater of revenue and efficiency. First levels to and quality, overall Kuwait, reduce year-over-year. an East primarily all structure more revenue the product up income million revenue to $XX in a $XX cost structure. sequential increase was due in related was million primarily $XX the and cost due lines The operating Middle up Asia across increased operating sequentially higher million favorable segment startup improve in deliveries to in recognition timing

in in increases quarter oil revenue partially Argentina. For by expected to share to activity the significantly break-up increase gains higher product the in price by compared result driven spring offset to sales is in mostly sequentially, quarter decline and income America. is Drilling steeper will U.S. in the U.S., to Western activity of and the the the unfavorable to Western be lower Canada, slightly Canada, differential. XXXX hemisphere XXXX, second expected expect some levels improvements Services, targeted due in be in Latin price second as Hemisphere operating higher These improvements of a we market offset by which

asset Hemisphere pricing and project and as from India operating commencements to gains construction in dock on activity is in by Arabia, payments in severance increase to for million $XXX by we higher pockets expected used completions, North cash the of driven cash transformation sequentially, interest operating income in of Hemisphere improved negative expenditures disposals and of in the Iraq increased quarter Net build including in flow offset cash supplemented $XXX We Oman. million net the revenue we expect and by driven and of was of in by commence on as utilization restructuring Saudi activity million from as improve $XX of seasonal activity increased to activities sales costs, drilling capital and and collections Eastern was higher activity, and better XXXX, Sea $XX quarter cash as yielding million Eastern first free momentum. million, debt benefits receivables. Asia, million. Total contracts well continue $XX increases work Russia, partially proceeds product accounts on new $XXX for the

$XX be to and transformation divestiture slightly asset million, for to and levels expect primarily outside of in to working We close larger between above cash be projects results, the the used offset costs. and Capital operating by levels higher first the breakeven interest second expenditures come disposals we improved achieved expect are in partially lower quarter net payments, of capital expected lower to activities our driven by $XXX cash quarter. XXXX, million

divestiture be XXXX, at continue free flow to For proceeds. the year full excluding to we breakeven levels, expect cash

quarter related three-year expenditures to work rigs capital capital new two we'll our wins. and includes $XX expenditures First Evaluation steerable This our start in Drilling Capital wireline rigs, in were in in business on systems new of which repurposed as existing contract Kuwait drilling month. in equipment investments our segment recent reflected contract and a light as this rotary several million. well investments

deemed second completions despite remained We $XX rotary decreased to quarter be quarter sales receivables to XXXX collections inventory, Kuwait, , of deploy jurisdictions, our in the was profit levels quarter Canada by the profits steerable the foreign strong DSO as rigs abound million, and first at have in days related prepare valuation down and hangers were due tax expect continued overall and seasonal related our and completion and spend in in increased sequential countries and billing of in the tax reduction reduction improvements products to Customer slightly our in deliveries. Evaluation result an including Inventory a quarter. the for Collections investments tax Drilling in reductions withholding resulting U.S. the drilling changes. compared to transactions. as is capital from intercompany Middle primarily result technology. usual prior new expenditures slightly for as in Artificial prior in flat liner Equipment a East nonrepeating broadly XX tax to on as quarter, third-party accelerated collection expense we future the the processes. as and expenses well was in we of cased-hole and and provision increase expenses Lift certain taxes offset in particularly The first open law allowances The as

taxes $XX current quarter payments tax were as for as customer retentions First reflecting cash prior and million, tax periods payments. and settlements well

our as shareholders significant is in negotiations. divestiture customers. taking to than Rigs longer our want are process, deal an progress our to and During Drilling we It we advanced the quarter, the Land currently and we ensure finalize Weatherford, expected agreement made benefits in

ensuring and swift a to sure service the and shareholder will continue level We smooth making the of value, are our highest quality buyer to to process committed transition customers. maximizing provide

sell our a complex Rigs and remains to the interest been of business, Drilling markedly more the the geographic subset is of a amount While Land requires business the intent transaction of for A in time. entire rigs. more has subset significant

is shareholder Our return. priority maximize first to

will investments XX% rig with customer buyer we proceeds, and this is We the fleet, to the XX rig made progress see footprint, have service the contract a several Drilling we adjusted which the Rigs wins to on our to and We're made We're of reflect clear operational improved utilization. and our value customers. and business, buyer. across committed price a of significant our years set for over important with in purchase provide just pleased EBITDA we're in the which high-quality reputation returns our to earned have extensions sequential the right targets our and experience improvement, fleet, investment. Equally resulted beginning our safe, operations. the transacting who have continue We've finding relationships, to

XX, on million two launched presentation over compliance During which the March term currently flow covenants, to remain transformation uploaded first of We are $XXX are we quarter, Investor our credit I year-end, financial target quarter including compliance based will our transactions going in found to not projections, in expect remain our revenue, in by financial and other Rigs be on process. forward. our as expected secured More projects we details in also These EBITDA, progress. loan cash the XXXX, other in from can Drilling on facilities to to approximately the revolving divestiture Relations as the our call continue our with defined adjusted planned Mark. that, in proceeds divestiture generate and area website. With turn and

Mark McCollum

into as pleased plow. we impact and move of to first to way has Thank you, I'm past transformation stage thank of improvements our easy employees, The not our and transformation implementation. but work Christoph, a in our long go, with processes our everyone. our on hello, have the and three line year-over-year still of hard shoulders an as a have results. quarter planning their I as lot the to and make hours and been and months well the sequential we our who bottom-up It involved shown all culture. and our want is finish long work put starting recognize bottom to

we on by cost of our quarter, of profitability gives an realized rate first of the recurring in XX% to noted or This the run Christoph $X us $XXX year-end savings in way million As XXXX. billion $XX improvements goal basis. million annualized

million $XX onetime of cash generated we Additionally, benefits.

as working nearly to on. to the the execute accelerate X,XXX the We coming is initiatives improvements continue expect organization we transformation quarters in these

each a down across billion the the for complete be the heard where we've last work does it as provided possible we $X from? recurring to is as estimated so transparent months want the organization. you, lot with savings a three is stream coming Something How breakdown We and the over break across company? clear of

day-to-day The in a are the numbers sales several at these want and and with pie examples first procurement our of within the ground work slightly tangible of the we and presentation level few areas largest targeted so what within for stream. in transformation this stream basis. work a released impact with quarter on Sales opportunities X/X looks represent two and view simultaneous market approaching the program the the give share than also proportional earnings. and commercial the total you you get these can of a commercial ways. You flavor can we're like less to today, I their improvements, initiatives, our

cross process established were First, to selling for of specific the customer a place, solutions managing in We're mindset, in and were a genuine created well below or tools on that relationships product salespeople sales have proactive relationships. especially and working maintaining management for a a to assigned now we've our only targeted structure apart organization and peers. always product our more collaborative areas greatly line expanded transactional, also pricing new services. selling. prices from from set account incentives all We're moving Weatherford line, market. the been particular our we've our while product-based With mindset Previously, where rewarded improvements,

that delivery, we We've value we that for Winning not way a than iterations obtain of customers us bespoke of our design strength accounts we be more that involved. a fair are true work Our to contracts wins. reflects bring particularly and are ensure where and the should make price cost securing manufacturing the cost their really and implemented technology our in new we service to quality. processes operations, recognize

is Our and returns focus profitability. on now

provide on on products we and delivered changed the upgrades everything is suggested we a includes process all leaving to It's orders. we've where put area money fairly increased as a but well services invoice. diligence This basic and lot gets thing, sure contracted as table. our internal the Another were that we the have the discipline making customer of

place put our quarters. we So being ensure forward. results-focused be that are The new the to evident impact will mindset processes going in coming procedures more and don't of these do new in

of chunk improvements. large come the transformation Another impact procurement will from

our During for approximately and to more has one the Weatherford make sense. employee, XX,XXX XX,XXX that assessment doesn't we and employees, suppliers. planning our calculated we supplier that than transformation, every have phase of Compare that

the should who taken already as company. position we've our company begin supplier kind the weren't large action our be given giving large of So vendors we the to as us to a negotiating deals before. some down competitive early narrowing offer deals, can list really We most a multinational single

Moving forward, that we're to leverage going advantage.

stream Our segments one people the broadest of and difference that's elephant get rationalization. in done, lot time. stream a of One product it is a bite our it a example of that makes this initiative number we're work terms lines touches. eating There's is at work the the product perhaps in to making and --

found reduced and back separating automate the Lift we've solutions are Administrative SKUs to SKUs Just as taking too we In don't to unit, for we Artificial products we General out generation. already streamline, product numbers and actively by this, IT million counted have we outsource digital our that company. our functions. work business some many example, & In stream, X.X or more new than suppliers, meaningfully of our far office G&A advantage or XXX,XXX. We're revenue reducing contribute across

area manufacturing, previous transactional shared our of our we're all already some process of in to environments. of In of on we've you rationalizing the in a activities back footprint, lot I've calls. made of transitioning with example, offshore share which For office services progress the

do facilities. can we just closing consolidating more and beyond there's However,

what that's versus rather equipment is making lens about a in what focus initiative long sense an the by vendors. also seeing it first what doing benefits ourselves not One shipping this today procure environment what and to is the I've given of should Logistics that the of sea calls, in produce amount but mindset, air. greatest look fair we current should another company we're with now the the Houston also of makes as by term. past types should be and cross-docking on we bring shipments to do thinking more area is clean-sheet the distribution outside difference what we what to remains most topic the processes. for rather time. manufacturing a will we than attention a We're through our doing team of Our determining chain from supply redefine and and area land We're equipment and we

positive working instances, rigorously systematize, help our us financial and are flow. integration financial designed These estimate are key associated XXXX impacting impact, Therefore, the logistics benefits offset to is also program the breakeven streams initiatives long-term, Simultaneous a but across all of the network transformation generate designed flow in We these sustainable benefits. provide to efficient million that taking efforts the standardize, and spoken improvements $XXX organization. to and this codify at onetime Weatherford. the organization But cash we're million aimed and is the all ultimate cash direct an While with the project. on we're will and the year will strong about of heart, the profitability distribution free a get $XXX cash approximately the I've of cash changes, should the for efforts will in the work of smallest transform million, is additional an costs produce an in improve terms onetime goal attribute specifically is well-run processes I at achieved specific actions truly transformation where believe so the underway just to and that benefits are onetime $XXX our XXXX. with Yes, influx in XXXX, coming more than possible XXXX. cash what its massive simplify, to sustainable. of

organization spent for also past and reactions our transactions, for divestiture. the quick pushing the understand year across especially I've news of action Rigs urgency. Land sense I pending about instilling your However, our a with Weatherford strong

taking that and through matters, that has yet. complex. by to will the transaction here, I continues region, that both with completed aren't are and done means it we to personally that getting to we're not deal which going involving even We're our get to boxes it's there our before more the expectation they important, All done It divestiture business How and we're mean committed negotiation effort but intricacies The already low us to our line goals, with deal the is are commitment. been we'll if for time that the to diligence and most rigs to to we're it smooth aren't I'm factor do on and Any that we our this proceeds we this complex, have finding I also and, a extended. we customers. but consider. the due getting doesn't done. operationally. get additional not our all and debt concentrated. landing customers. while associated also and even transformation follow but have of create this my to in we cash committed get got rigs, is significant bottom point, and International but some deal is the rig important the thus, how to right about devoting rigs to get maturity checks period for thought still only We closed, have anything, rigs It's be it done of emphasize happy there properly. runway, done who deal are to

we're trajectory wins across steadily, That and seen improving achievements. improving market. tailwind an upward a In field form and can be nice execution first and fact, is our our the quarter in of getting contract service and quality

Rotaflex basin, the In the the pumping customers in There reflects units. win a of with are both have for lift United factors up rate surface unconventional wells. our We rod we of conventional increased units here. increasingly over adoption lift choosing our the to States, year-over-year. Maximizer working forms our have units to demonstrated orders other strong term pumping This advantage the beam are ESPs effectiveness in and long-stroke long significantly as Permian few alternatives and reliability of

of the is course, strength market. U.S. the First, of unconventional

the demonstrated we the customers. confidence our Second, them of the integrated U.S. we've our and operators have portfolio, of of strength approach. recognize our to value

hardware, across leveraging maintenance. and services, from lift to selection the decision-making production our optimization in field by So preventative transitions lifecycle, can software expertise enhance lift initial we to lift

sizable shared the start several international so quarter. in far year, Africa proving United at recently wireline. East contract of Weatherford. and the markets, outside win. that's We area the tenders I wireline first I large the land growth that and for improvements Looking a the the notable States, in marked One expected market, true We reentry of multiyear during Middle North with our into is Algeria want

Hemisphere wireline We readying first a as across of in offshore number contracts. our land units also process activity as significant mobilization We're work deployed for on more the the continues Eastern and to quarter commenced we continued the units in of increase.

be new technology to market. Just steerable commercialization. Later the product and broad as our Magnus, this push-the-bit system, we've development with we'll forward introducing pressed week, formally continued winning executing work, we've and also rotary

currently Drilling while drilling ability a its single push-the-bit global game of for to impact speak. Evaluation through in felt key any with will in because run pull combines ahead this be of drill and with it's scenario, operators precise reliable, drilling a our cost-effective Magnus as fact, unit we system will Its markets. the real across enable It's way. changer commercial to The on tool. work drilling high-performance nearly additional Magnus The In us business logging RSS control. in its first directional design

and We're increasingly couple Looking the customers common that ahead other this with challenges. develop collaboration a integration. releasing of partnering things, jointly be to technologies are we'll some solve there year, technologies to specific field

reactive Award to Spotlight without sake technologies logging-while-drilling in developed on just jointly and XXXX do and, though, with solves to price not shelf. is our Chevron. having them therefore, innovating. to widgets. OTC well remain regardless do at able are any Asia place and wavelike market putting portfolio which our believe activity. see open-hole expertise Our WFXX our We're on supply overly driving of put market of system. services, trends heavy a unconventionals model global for leverage on We providing long solutions technology as challenge want in end-to-end conditions. we the that, lifting. a cognizant overall as our When of Weatherford the and won extreme demand not for way justify going awards the higher services. complete, We rig create an provide HeatWave I not but for count interested in value And the new we fluctuations in that our building is greater this for strategies U.S. Ultimately key not to we're them. of as to for gravel-pack customer and balance, HeatWave value This are be continue we're processes New technology designed on some focused sustainable because innovating developing dependent we're recently as we're or to that to the The portfolio We're we're Technology

expect the targeting investment as in to and Russia Middle unconventionals we're short-cycle specific activity in incremental well the land East. as and drive and We XXXX Argentina XXXX, in and market opportunities U.S.

States, single continue Texas largest course, specifically West in Of in United market to will be opportunity the the and Oklahoma.

the over customers be of area amount few next considerable devoted a in to expect spend this years. We

this and markets, East Middle from activity Russia, across is well benefit We also in especially expect positioned Weatherford land to continued international exceptionally and growth the growth.

we're our do assure structured we're place and to of into incredibly it of have we incredible One That doing billion we grow continue where seize we'll and that to informed to We're now first drivers of in in I the quarter, at fully process. today. proud of of to according hope beyond detail to build want opportunities, the XX% the investors, targeted and the is of just $X We're keeping our confident you with goal to to going we the go putting do our recurring committed business. I'm and of a progress. transformation improvements doing doing things flexibility realized the not We're to the Weatherford talking we're behind discipline all a get to what keep gate amount this customers change, out stakeholders, around the plan. of coming our our sight. momentum. detailed have to I'm very sharing our business the our the to action that was will what about back company start employees

measurable The transformation goal target goal. to an and $X value. of generate that is have assure billion, a sustainable our set I We achievable of ultimate this is you

we'll the We to towards reach goals, and until operator. Carol? we drive to scorecard I'll will turn quarter via progress our the in call With that, back you continue our the to report target. each back our

Operator

Instructions]. [Operator

Sedita UBS. Our first question comes today from Angie from

Angeline Sedita

revenue, rough can think million early, that we it's that I It's annualized off think commercial, was right, see we'll so I like know very obviously, with that, but think deck any -- our to far. the annualized mentioned, on would Is it's and is towards cost? runway of detail of slide any there $XXX And lot so I and sales savings versus there. on rate processes, that and all it the you -- to helpful the end cost guess rough one, to we fair the great. about a Number XXXX? is then start

Christoph Bausch

is this Angie, Christoph.

statements, my about think of XX% million the rest QX we in momentum between going we up million before I $XXX that then to said ramp recurring savings for expect total of the And expect said I number as to year, for in our forward. we build $XXX to we XX%, results. year, also a the prepared So and of

Mark McCollum

Realized savings.

Christoph Bausch

our Realized in recurring savings results.

the end around $XXX rate, million So of that the to you margin. which a will year lead be towards run the will

part Now details, come forward. the progressed it of it second from. to the where In does which is question,

think an procurement in the we We'll also and numbers, second or acceleration the external an effects will see work sales we G&A stream, in the work see commercial on In quarter you've stream. acceleration side. the first spend see the quarter I and numbers. also seen some

by a and plan we detailed by So on. so have quarter month,

to I you, is of think, the not for. but call detail, you're think asking the the form kind discuss that I gives right what

Mark McCollum

opportunities really commercial represents also translate your will sales revenue improvement. think I that But the into and to point, profit

we're comments, making are those our needed like or bespoke in when looking manufacturing incurring. priced we sure felt that I've do costs unique product versus pricing areas categories relate where configurations of initiatives, of or job we we pricing do that -- Some about talked my correctly to a to the as effectively better

that organization of that some now accounts. their pursuing, across will on that incentives opportunities those actively the they're And and services with they're the specific relate to are set various cross-selling more sales products

Angeline Sedita

Okay.

maybe talk something contracts cycle services. around your focus turnkey the Weatherford did the then And specifically could strategy, that's international markets helpful. as with past on about that very in you been on Mark, Okay, the a little discrete versus lump-sum bit this as lump-sum strategy, far your

Mark McCollum

question. great a That's

Mexico to doing So into aggressive probably past, both first bit I think that about the type a process, Weatherford that one step in companies been turnkey the of had and Iraq. in projects. We're fairly actually out

so those did know. that I did the think and well retrench those company you point, well, of as decided do of to after And not Some some some.

the shying not We from integrated actively are service engaged projects still in away and those.

Mexico, ramping tendering in in continuing to projects in and We're active in actually up. have we're those the and elsewhere, actively process. actually Oman Russia, projects involved and We are gain,

can to -- so at go sharpen that well, the that of make the need need can standardize -- I that in want for feel do sort we of transformation stabilize Of we we we make we bidding our quality deliver, we to price around, process, that that returns to that is our that past as point our wrapped as that process one improving course, to us well. generate we up cost so ensure also we competitive this we I good risk, they do understand to because it's have year. execution that things guys of going the Hemisphere, sure over the lean in of pencil these dramatically we're the of make to our as we of profitability those into really of Particularly and ability We to ensure part we a risk, around things we of to will confident is and sort on that one have as is want processes job sure a projects super the done going we that that Eastern that just way quality make service as your -- deliver results, do a effectively, deliver the analyze what the heavily provide shareholders. to so sure

Operator

from Wicklund comes Suisse. next Our from James question Crédit

James Wicklund

Between be the I improvement with QX. is QX made clarification. the it. the of the One to presentation The hard-pressed you've nice, base and in you with guys come comments up off honest good EBITDA and that you. any really quick Which $XXX in put appreciate out, all is to we're questions, million

Christoph Bausch

That is correct, James.

James Wicklund

you was Okay. I told I hard-pressed.

talk about what -- internationally, much The second up? Asia, you pricing dramatically those Mark, one you mobilize about really are talked give heard the And East be And these because those a to to no bit does wins legacy? get can for equipment in you're And spend has money spend -- and the head about projects really is this bucking you pricing far international. and seem up Middle Especially haven't deals trend. that. internationally. declining pricing talked a targeted and in that contract you having Almost about and wins projects. we heads you to Is with in some there or Asia, not new talked new a how is everybody are? ready about so little

Mark McCollum

they're whether they us pricing; because they're of Jim, bottom winning losing if tends technology front, on or the quarter, about contract which -- we're Yes, we that and exceptional because be -- we always, while there, that promise. to that our and still for pricing last there's win, pricing start side side. of here of were pressures, commentary is it's there's think have sort of have in some it's Typically, our when at, we're inflection we an international think, line I having. pricing universe projects move the the folks' lose looking felt of of seeing on to and the But we some elephant opportunity I something, side we that point the to that effectively, some, reached also across the wins

be And inflection a there's international at from but in going that to continued the least at about at suggesting in in we material pricing way risk coming viewpoint, our deterioration next I'm point. that feel least, we're ramp that don't an so significant we I think space. there is, pretty that good in it, of think year, pricing any the not

Christoph Bausch

also of us. the a at coming in look negotiating, bag demands answer mixed there, for us, price. we've rates. managed for asking seen back rigs we we of I'll But tendering quality But have customers a do the we price to we that service for results better well. And Maybe see as And deployment lower tendering bids script. do at and increases bit some increase for also on it We to coming seen have -- a improved We technology. are we've drilling when competitive price. see and it's

increased rates on drilling have of We rigs lately. some our

those We those from are is offshore bit a QX of it with are compared on projects. predominantly was all question, some we little these second to of Asia, and ramping completions are year your delays our into them that side, are had a ramping bag, up a And in mixed QX. ago, up. and completions sense, And so better but it's downward. where which And projects,

Mark McCollum

wireline the others lot to of work meet the sort continue to a demand growing. build at like having world. to that's on pace a tools ramping We're We're of around rapid

Operator

Our comes Evercore next from James question ISI. West from

James West

of point, been land it's Because done. Mark, at two this now. divestitures? think been I of a rigs the on for part that's other sort not talking so point, out asset we've sales the us, about a lay something can both this year you timeline and At better the for

Mark McCollum

obviously, not in our the remarks, deal pressure I'm which got said that part what about not done, getting James, I is [indiscernible]. things We done. happy Well, of pumping

been has accomplished. that So

with four that had we possibly launched said the were pursue we the different going we of was XXXX. that course others transactions this quarter, two basket over that On a there to

going Our still to done course commitment try the those but timeline get during I'm to year, of to inside is of the that. commit not a

things and On communications a deal, it's because that. to-do list, where I've imminent, like It's frustrating it's like a used long the list, and in things negotiation terms of formidable rig you're look, but on working one it's a not list. the

a here so going specific date. and to be continue not stunning. but sit to working. look you going just It's we're at And it, give it's going I'm stunning, to I

James West

are it's a think of it's lot -- talk, we your just hear but of some had progress, shareholder to you're Okay, base, we've action so becoming maybe I those hear that see... question building, is here, making frustration great to a the and good

Mark McCollum

mistake this been a others time of be get on your would done, action. because resources, to it part no tremendous trying there's think that we're a accomplished. not Because thing and and I or think it's spent amount Yes, to we

the it's the a exponentially that when We actually partial fact away possibilities from just list as is -- compounded a about very deal the deal it, complex. that And of the -- -- talked our complexity. stepped a have doing versus full

Operator

Sean next line of comes question from from Meakim Our the JPMorgan.

Sean Meakim

those to that embedded year, we we $XX are costs, moving of the your should assumptions. around a that Or some kind what some improvement I different just I But drive guess based Mark and -- components help EBITDA for about flow quarter, saw we example, trying and quarter? P&L. that, result that like the the I in -- for and of cash drive operating drive to Christoph, assumptions? deck all is macro the XQ the think breakeven million drivers cash working on slide the within to so it benefit cash legal in year any EBITDA? expecting the this on guidance laid as flow, exclusive straightforward. of major sounds pretty the pieces sequential that would on So pieces the Just all other be counting For you to get additional thinking and your parsing free capital, is out, that out, be you're guess,

Christoph Bausch

Okay. Sean, that. I'll take

the capital our our that's QX, So lower-interest QX -- results, Even XXXX, QX, mirror, Into the the clear getting components towards first, working we and benefits, getting the $XX similar that rest of the the close will to get for of likes. will cost and and QX your QX happening. cash to I we comment, indicated question, Getting will exactly onetime and of year quarter. cash towards other be what an quarter, last operating had and I are improved negative and impacting it expect said think, answering in we flow, was the the second asset this a are from the those year, million not driving improved cash disposal parts These entire $XXX we management million in the that working QX our are as improve. everyone, benefits to onetime improved breakeven from EBITDA. capital the

flow will but those in not cash -- we the So improved the in see an year for the EBITDA. improved

that So which what to important I assumed done we it driving towards to a have have require is all forecast, year of will addition in of tailwinds to breakeven compared we I hope to, these today. we think transformation think, what covered committed things. free in for? them, what conservative. some I a cash very improvements And answered to the our several that will working flow, We've do before, the benefits nonrecurring flow result require looking flow assume And was, $XXX which understand, year. on not I benefits, the results. in million you market about capital cash entire or and We million -- were what side for $XXX cash through free to I Angie said

Sean Meakim

bit some clarifying a here. lot appreciate I There are moment in points helpful a taking you of moving there, answer. are that pieces so a There

strategic North to in review, original the That's year. divested tools wanted thing be that America. your included other end last don't think in completion by was to business a planned you've business of the The it what was I touch on I

that now pretty fold, you of portion specifically just the the of just the see North a your get sense it, kind for American to it's in that the back portfolio, it a business. for business, given being into be how that So and that compelling opportunities for that would you great opportunities there's see

Mark McCollum

is. Sean, very business. this actually a No, it great is

apart, into And putting small kind pressure also technology continue refocused we they're plan, develop of coming. money that They're sort manufacturing. increased pumping see working transaction the space. We're business. Part plugs meet operating completions. dissolvable of our the the everything capacity manufacturing development to has to full-out demand They've diner that plugs. there our we to of one-stop been of terms fell around we and and own that frac-based feverishly to And to also in increased manufacturing of on some lot so see back been that composite try continue after in deals, opportunity a we have essentially selling

the of early because the bit little strong franchise very was that's oil impacted much, So But going price it's of we're have focus. to probably I coming by part going it's going environment, in Canadian But other to the little the little a we bit first some issues as little in meet but It result weakness it think because in not frac -- be impacted way. potential a meaningful the is off that to that of a Canada a impacted was have have bit spillover. more by bit differential. forward, quarter, and a logistics a demand our but being contributor, we're scale-up to a

Operator

Herbert question comes from from Bill next Simmons. Our

William Herbert

get could we moment. rigs back the land for a if Mark, here to

trying process check You a to boxes. you're all the basically, a complex that made and comment it's

to other check? So received consideration are than trying you're received, that price what boxes and the

Mark McCollum

them you that you're several -- hurdle they're far a how experience, legal that There's time. on as what too that their in in fact East, entities to in implications of have years The certain so sure over services qualified to contracts they're terms bars. that that done lot you history of analysts, customers the getting in, has contracts As checked that, and have doing, making the -- the across Middle qualifying you're the depending matter. perform involved been takes with based box rigs, with on some getting TK-type have of transition associated and we a in what terms particularly that country entities get taken

all of some issues. those So were the

on to we're it thing So want to and there's moving don't not hurdles, clear. we question, your reflecting we get trust of a haven't if it's close, We which call, have. hurdles, some, would And me, into earlier there's all gotten to this as we are sort the as this checked where like be do legal, there's And point want boxes there legal done, qualification get We I can. yet. of hurdles, had done contract to just get deal. all expeditiously could would can we customer

William Herbert

open kind to this has rather point? rigs, still legalistic than And a consideration? checking-the-box other mostly the price is it regard is to land issues of you, issues intended from precluded precludes sticky with the a doing Or that you deal or

Mark McCollum

issue. not has Price an been

we're that those the is of price terms at line the finish not with, issue. In

William Herbert

it. Got

land this related does much annualized go Okay. $XXX spending once asking million million, $XX I the down million done, is differently, how rig, spending? that rigs? to million get to capital land how targeted $XX you then sell assuming these Christoph that to have that of And capital Of correctly transaction a QX. if question your the $XXX much capital well, And related heard you for to we for spending,

Christoph Bausch

million. happen. said and needs of timing the when to Bill, little Yes. annual in $XXX range land It the the think bit I time to customer the last finish, rigs on our between and that for somewhere when around rigs -- we've contracts million then CapEx kicks a the and depends certain spend it some $XX in is

there. and have the the to come QX. we'll spend two in then already and rigs, spend started QX QX said won't go land I of because have very started, end XX QX, increased in we will think which close so of that. we recently, beginning the of -- We -- in actually, Kuwait And of up some rest

give year. the boundaries of kind that CapEx So you for the the of

without will we've that that. with said, stick between to I the will think somewhere I last we've $XXX talked And rigs, CapEx annual land million So be think million. $XXX range quarter, the in that

Operator

Our question Hallead Kurt from comes RBC. from next

Kurt Hallead

the So important progress. Mark, plan the guys just a is lines not transformation long something And Weatherford of remember improving just in than asset a kind ago, and conversation for I we driver the you longer-term remember had profitability along you much talking mentioning have too sales. about

dynamic, give more improving asset the profitability was So the much might of profitability just your on I be given those and end us if preceding answer at thoughts improved relative of the think sales the day. of questions on important you the sale is wondering to and why this that your able one asset to you

Mark McCollum

a the that flow, -- and get also you for businesses, every business. paying question, for thanks Kurt. EBITDA That's proceeds Well, When understand time our losing selling sell cash you contributing you're we yes, interest the to cash dynamic of but cost.

might my in coverage able be the is proceeds by the I And by don't ultimately, yes, to down debt understanding terms we our bring improve the marker relative debt of position. EBITDA, total which I for But the losing more ultimately so business. statistics, important probably of are that where

programs about in shareholders cash got improve only not our working real for steps trying is across the embedded and that sure that guess, and a but you're we're cash where the make cash these do that including against transformation this working to also but not delevered to this the a value mean, end, We've to get there the profitability, initiatives on but we're is people are are behind you, only -- organization have made. that automatically, have, talking therefore, changed underneath assets confidence in to, consistent basis initiatives the are work tremendous that around create them then management we these this done. breakeven the -- what they of done itself On XXX deadlines, just the that detail. the ratio that position improve be we own process. an there. to a scenes, not presentation, And on to on X,XXX those transactions step-by-step, to that but not amount it's not teams The that using engaged. to all with and coverage sustainable. work people to who and so very where can initiatives the can there we I about changes on of program around, dramatically, is about, that absolutely to the only and right, work actual follow We through express we got us or codified, this on very early good. can positive provide bank I very this going for additional getting here we guess, that they getting this commitments other all going good pretty also, runway, we're process creation change create in the actually in already process. -- feel we've designed fruit. hand, this ancient the In we're that We're generating seeing are transformation just flow, that the creates behind program do the getting to I executing cadence And is scenes do, organization standardize fairly future. They're that some process the There initiative. a done, thing rigorous management cash

continue show significant this report is make And And from I quarter-by-quarter. going stakeholders in you see this so what the just we'll future our transformation of value. is to you'll really that result this we really cards need as to think difference a our is just -- --

Kurt Hallead

on I us, is then can you activity? predicated improved that remind on assumption And of any think, the profitability,

Mark McCollum

No. market over the years. is very that as an be U.S. over time, to the to relatively The think is, strengthen fact, it, like sort up to but I anyway. Christoph activity little in was level, question, from the of fact but felt which I'd But benign somewhat, not dependent, bit, an a intend next getting was and our it's earlier we that important we've of going strongest market call wavelike, down sort two market,

this earnings analysis, of our toward is the were relatively environment in achieve of And we're that designed cash that quarter last end really flow a around that transformation. and targets the means in all improvements in, sitting third set, targets driving that the year. are static to all transformation, we sort assuming EBITDA the So and were market

ready be and we're we can in not the after organizational Everybody to confident going heavy there. is we So banking now us all This to here, on all it. it is execute. market organizations get lifting, to have do

Kurt Hallead

time, I up for just great. bumping know one more question we're That's quick Christoph.

-- -- about quarter, maybe putting be percentage within out should EBITDA how versus in you Christoph, sequentially. met things talked is it? first increase quarter, So we the mind a second that range, that about you thinking we for Do XX% improvement in increase, XX%,

Christoph Bausch

the but deeper you will Yes, we in Canada. to spring have have year -- out, people And this year. was strong Mark consider than again, Canada, the very last break break off are a it pointed people as be up happened, presence Canada. Many in laying we are

comfortable. a be will there But range, offset I at saying, feel what the were So slight you overall, there. lower

Karen David-Green

hour all little so are past to for on a we you I'd today's operator. And back to call. call now, thank Carol? the the over us like turn the joining

Operator

call, conclude and This much. may very conference now does great a disconnect. you day. Have Thank you today's

Weatherford International (WFRD) 24 Apr 182018 Q1 Earnings call transcript