WFTLF - Earnings call transcript Q3 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 Third Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question answer session. reminder gentlemen, a being call As recorded. Instructions] ladies today's and is [Operator like conference Communications. turn David-Green, would to I now the of Relations, Vice Investor over Marketing and President Karen to Ma'am, begin you your may conference.

Karen David-Green

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

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

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

Christoph Bausch

in Completions of a levels Continental of Canada, offset America than hangers Sequentially, the quarter liner in $XXX by billion although On activity States in Canada revenue expanded, loss activity transformation quarter were was third and XXXX XXXX, Results million $XXX loss segments essentially loss in per result impacted excluding year-over-year. drilling income or of Latin our rigs, compared income net costs second charges second margins the Operating higher $X.XX flat you, exchange XXXX, the as by $X.XX and quarter, share, third $XXX were of $XX crude across recorded Of a non-cash million, United of and unusual transformation. Production and non-GAAP in more than non-GAAP to majority adverse basis, write-downs, loss seasonal pre-tax for rate demand million million currency of credit $XX for a levels changes loss in and $XX share. activity net negatively in America with per in third during the $X integrated divestiture for third and of to reduced weak for in related net we of foreign improvements quarter million. per increases in expenses sequentially or result $XX offset deliveries the reduced related quarter efforts. Latin was diluted differentials third services a levels Canada $XX products. foreign loss third of restructuring efficiencies year-over-year the and prior XXXX in loss outstanding was higher charges were driven asset operating seasonal improvements million the $X.XX the fair billion, offset Russia due revenues or were of remained adjusting and Significant activity solid also million $X.XX impairments broadly transformation, as improvement lower projects to slightly lower Segment quarter Canada. to This Non-GAAP were related million warrant. by related services Karen. Latin to effects, this which associated and diluted reducing a efficiencies on Higher charges delayed and all quarter the in the up to XXXX sequential adjustment improved million, our the improved and of quarter reported Thank Revenue exchange from credits up America. Europe impacts year-over-year an margins, of XXXX and million diluted in the revenues offset year and XXXX. the in XX%, group activity was $XXX share. and million. produced previous results Angola. for devaluation mainly million changes These value following the an the incremental of quarter, the to or flat. by was operating were additional the oil land of by several compares $XXX quarter lower were the $XX relatively operating $X.XX The In partially increases amount, of as which for quarter

related offset Canada lower integrated the down and in in grew exchange Latin of of activity increasing In market in breakup topline were result by a quarter offset crude were by improvements States Hemisphere, constraints. million revenues oil contributions spring the our takeaway capacity driven year-over-year were as foreign revenues both Canada Western a lower Moving on and America Compared levels to in revenue sequentially, United impacts services X%, as on by but in count the quarter rig the pipeline the America. basis. third increases $XXX activity following by differentials XXXX, Latin to of Hemisphere. and Year-over-year negative seasonally to results second increased projects

million sequentially drilling pressure Mediterranean managed India system million a East. were Arabian drilling geozone and lower Mexico, positive drilling and higher were $XXX second which of operating overcame impact sequentially exchange X%, United of land year-over-year. liner year-over-year The basis, higher year-over-year the by activity the decreased of a Middle the Latin benefited Europe in hanger million eastern in up $XX in increase lower Sea Third the in and quarter with and rates quarter sequential the the expenses western On and third driven from offset or the quarter Emirates, America. transformation. adverse by combined in hemisphere up efficiencies higher improvements were million segment and lower lower up offset completion by and $XX $XX was associated from Canada $X revenues rig deliveries foreign adverse Arab in in completion Compared improved operating activity Iraq, in Argentina and transformation by levels our mainly from but million Continental about income combination of revenues initiatives, operating million The rig impacts activity the XXXX, sales year-over-year. hemisphere, In $XX revenues in results to and with sales exchange Russia. and were

and sequentially to of contributed Net as XXXX, across operating was impacts Third variance. the segment during hemisphere cash resulted $XX quarter net revenue mix was from in by and transformation positive of cash a segment capital Compared the $XX flow Russia million initiatives. and million associated for margins million a million of $XX quarter transformation the income. of of activities severance, the CapEx flow cash to The third quarter cash Total for of free by $XXX and transformation million. of and restructuring, in of offset sequential by costs various up Higher improvements efforts. $XX interest in $XX approximately international up was $XX $XX expenditures hemisphere costs a adjusted proceeds the the with the million, million eastern use of million our $XX result XXXX, million were an well impacted operating excluding implementation Asia also for third On severance, down the including from combined restructuring, $XX quarter, drilling asset seasonally the was operating negative favorable positive disposals cash million of year-over-year. free used operating completions cash construction income payments transformation with basis, and and and our rigs. East eastern Middle debt third quarter

processes. The compared our capital Third $XX Apart result about at average overall drilling $XX drilling slightly receivables the of offset DSO in hemisphere of eastern collection and western drilling business. by the highlighted previous by included quarter. Inventory the quarter in levels hemisphere of compared overall were directional manage outlays evaluation rigs stayed and for DSO $XX to slower XX during and times quarter largest improved to million our quarter. drilling Customer to previous the as the tools. initiatives investments in wireline days a with decreased from in manufacturing capital million decreased rigs, by new the investments better was flat and inventory the times collection segment, $XX expenditures million million, our by

XXXX, EBITDA the of on with were provided Our $XXX $XX the delivered half recurring with goal. rate conference year us first the sequential of call. with an In improvements XX% line associated guidance initiatives during third million, the in approximately that which the quarter transformation annualized about of were the previous put million benefits run overall transformation or recurring of our combined about realized amounts the at

targets of continue initiatives, streams, we is over product commercial and of and respectively. two its traction, manufacturing we quarter stream third total beginning start as work our half the benefits, Procurement closed are the $X sales market the operational recorded and facilities. target. to adapt plans XX% progress steady lines representing their execute EBITDA gain in These we The and the see During with work together environment. recurring our to first billion and from as streams, of largest segment individual XX% EBITDA work consolidated which and line reached to

the and positive $XX Adjusted continued and for for versus free CapEx XXXX. of versus capital source steady progress was of of during our from results we quarter. excluding trend rig to positive short quarter, a end year cash experienced our expect of during last the this million, the quarter, cash the see cash conversion all We Net quarter. cash the improvement transformation of work was as to negative cash flow fourth goal compared land the the at half of inventory streams first flow, from a costs working significant but severance, the

to fourth days typical decrease severance the during quarter for costs the Weatherford million, as including overall expect adviser quarter during Transformation XXXX, historically. were fees. We and is of restructuring sales provisions and outstanding for $XX

deal to this our strategic new our Current with of us financial of have laboratory our the incremental Recently next transformation the the lines opportunity end and through specific the ongoing ownership $XXX coming rate debt consideration the while our combined Closing pleased can down We represent our were initiatives timing on This terms. recurring benefits of specific sale This exceed our $XXX conducive providing XXXX. and step not by and It run provide for million fits probably for divestiture Weatherford, funding best from benefits transactions. proceeds large certain that business. the targets over recurring The of our more business plans gross EBITDA to of date, will transaction benefits goals. for at in to that $XXX sales these provide rate on company. that leverage sale setting international should grow almost proceeds long-term for the a us rigs We focus XX% of targets conditions to completed of quarter. another for expect in our of process initiatives to create we undertaken significant quickly the announce million a we action the this remaining long-term we moves or opportunity To sales to drilling for transaction this previous overall paying are run efforts the approximately who million. transformation the our value will to product focus improve will cash have deal fully laboratories market with debt announced overall business long-term an metrics. represents represents rationale core closer quarters. for

have delevering our Although to our sell businesses small objectives. That to we and to to are further not individual will structure. businesses. lines, strategic work focusing that said, other non-core terms we with deals and market remaining company our and we core announced We product plant on assets our will into capital largest being transactions rigs enter sales inconsistent impact divest of our committed land that at and continue remain positively these continue

to year subject and to completed customary closings other announced substantially regulatory We consents to transactions continue previously of expect conditions. by the end, approvals, our be

operating at relatively where the our United Moving the the end Latin E&P States in Russia XXXX expect sales declines foreign to exchange some fourth total flat the weather in of factors will the offset the a to year related to in be uplift and progress Further, are in America activity result quarter quarter. Growth seasonality to and third are and from end in year we These on inflationary expected expect negatively pressures efforts. In budgets on outlook. product despite likely typical the impact to remaining EBITDA sequential typical by and holiday likely our in we delays. results to continued of compared stalling fourth revenues be levels quarter. transformation the lower

flow quarter. to cash factors the We during between quarter. fourth single expected digits cash by quarter, $XX a to are of improvements. low Cash for mid be cash sequentially million working similar result expenditures Despite improvement These the anticipate a are $XX the fourth the forecasting EBITDA flow and to interest decrease and these decrease headwinds, positive quarter. quarter expense suggest to in are taxes fourth capital million we free during as fourth of estimated fourth mainly the during XXXX. sequential Capital during free

Our top processes improving continues I flow With the be call will the primary on to with priority internal Mark. cash to that, our over generation. turn focus

Mark McCollum

Thank morning of trajectory accelerating our I'm pleased transformation good especially third quarter you, results, and with the everyone. our path. Christoph

all that the on million you have stakeholders. our stream. add have three first Thousands forward. XXXX work the EBITDA deliver of initiatives come of quarters some progress financial Because Our our our the to carrying for in I'll compared of first total approximately in value quarters transformation XXXX baseline. will long-term their together This details of approximately – to few cumulative commitment, give across transformation out revisit represents the a and transformation to of we’re results added a versus drive these organization efforts behind continue initiatives for amount the minutes three EBITDA to $XXX each XXXX. improved and the increase incremental XX%

the not Revenue quarter come in Our growth. flat versus progress sequentially without digit this our was in has single road. expectation bumps some mid

transitory our own as that during of variance in when Adjusted topline were But Some experienced revenues unprofitable for the mane by chain and down decreased issues $XX supply was contracts. started free at million decreased goal inefficiencies of quarter. when breakeven cash we the flow created the choices, below manufacturing quarter. about also such results turning we our

on fell short we sequentially made in year-over-year basis. of significant target, Although our both a we've and improvements this metric

Make using transformation organization to used moving each capital and the cash on and out expected mostly this the rectify to focus drive all before. muscles Continued have In systemic to Transformation direction. massive issues to must hard working blame it's and causing successful, we each work the inefficiencies sales no a on. be is for process the is to one From are solve order program to than small department, we historical in time not the mistake, item, waste we're then be challenges have move time evaluated converting and to money. integration in to way these laser issues. working are cash us for designed the organization The lower place payroll never flow to initiatives results. problems initiatives us keep right

every However, I day. see the firsthand results

progress even we're positive I'm results. solving issues deliver process for intensify quickly our scope. we This trends additional that more is beyond in As finding stronger these to opportunities an original improvement and ongoing performance will confident

with year the year Christoph as for on XX% talked Based EBITDA about rate the transformation an first where responsible of peer the billion our or Well over are transformation to we three $XXX run almost increase process? by quarters added in expect for we of outpacing we annualized quarter, EBITDA over XX%, an our plan, about the approximately our approximately of the quarters of So two have fourth the XXXX group well overall three for last improvement. guidance XXXX EBITDA. increase our through

by of have we $XXX nearly working a completed a to recurring of of improvements. with complete work $X today, necessary EBITDA value We're million initiatives billion for quarter next As against year. the first timeline the in

today a P&L that takes to improvements it few statement. for Our suggests actually hit quarters experience the these

rate end As impact in XXXX. our promised on confident the we'll ensuring remain line. the our that We're initiatives to run positive of such, of it each the delivers by see I focused bottom

the to dedicated streams. our work through like generating executing groups I’d value, initiatives take Now to you and

work the in to and that show manufacturing anticipate we results. stream overall our the progress year-to-date made Our compared quarter contribution quarter largest will it increase significant this fourth a to

larger, scales customers. from capabilities As support in a appropriately and to facilities our global provider, footprint it's manufacturing critical stream locations. best-in-class efficient and fewer manufacturing has an consolidated that engine, operations our is with footprint operates initiative, To this the four purpose-built currently work as rationalizing offers facilities our

our we’re technologies, before Pumping our outpaced manufacturing Rods remain at capacity. focused such on committed we we of our some and as our end. deliveries to manufacturing, year new The and chain, full While continuity for supply maintaining Long-Stroke has optimize while Sucker even near service demand improving producing Rotaflex Units

As to more we in manner. forward, a cost efficient our implementing better customers serve initiatives and help will us move transformation effective

and stream Our substantial distribution work logistics amount also of realized has savings. a

example, to auditing centralized stream of with trucking has the approximately started implementing one is traction $X pay North is The annual proposal United work benefit freight requests also $XXX of for to released and We've spend. procurement the as in implementing annual America recurring well. been States purchase in starting vendors. for parts million. recurring benefit million. the works a for annual As and a consolidate representing It of stream same of similar working $X gain million our We've materials

value to impacting P&L into them next. and year expect the delivering start the this We and

resulted should of of have work since process. recurring the services to a rate of result initiatives advancement. represents we in rest The undertaken G&A savings the we our Within of should are beginning we've million. at This work transformation see cost streams IT benefit the to completing initiatives see $XX work and steady transformation continue stream, the related streamlining annualized -

many get increasing times our that work establishing solid before our going accomplishing foundation we a reap done, stated As sooner forward. the the company our critical for initiatives to these recurring the will benefits. EBITDA is self-help and sooner stakeholders The

we daily our customers. on remain for focused As our execute delivering transformation we initiatives, also

between service This as embracing one flawless core our profitable exceptional toward as value working of values, safety and every organization quarter positive exception, and execution we're is The is day. newly customer a that correlation standard articulated growth. no quality, delivering the

this year-to-date our performance to commitment principle. reflects Our

has to type our add to in we've continued time lost without activity we reduced from This XX% customers. market relationship, is of portfolio. for product surpassed As results consistent customer trusting operate. United completed no a for performance seen XXXX. increase, we've we the time To our work goal have across non-productive matter promising where a that, incident In of key to commercializations States, our

with lifting improved expectations. energized fourth pumping unit by demand and our Rotaflex production of of For are next the enables unit. earlier of our of of and than value long-stroke surpassing and in It example, launched quarter the production maintenance increases our streamlines of year transition is fewer control out the sold our customers strokes, the quarter the is for the Likewise, new lift plan effective be ever. the cost year. reduces schedules. commercialization in this costs, short, rod In the second on for increasing remainder deliveries XXXX to XXXX new system We the PressurePro in quarter of exceeding expect first

meet rates North to America. our in doubling are demand We manufacturing

which year. other is earlier steerable our with you know this system, Magnus Another high we launched technology customer rotary demand as

undergone and penetration of basin, over the than the September month of hours customer’s is unconventional rate next profile. in the where mobilization higher In offer swing. not context we're significant the the Rotaflex a drilled tools and the degree used our to for other XX last and revenue competitors to unit from RSS In disappoint. drilled XX% our the frontier Middle challenging in and tool. And value an of revenue competitor footage well demand. the with job integrated we itself a such of by keep In one capabilities technical our offer fact, could a is but a and increased to achieving in the Magnus tools with has we we XX% customers increase. the previous Magnus a The by case, with customers. not totals as the footage booked received two reviews we fast the also an wells with process. with building some sections PressurePro our our deepest the The it August. the alone, it technology and high mobilized In RSS, is increased drilled year-to-date the new drilled along can one deploy such also reamed we tools, and working, flawlessly, thing, the by and as up did least depth full definitely system, has them provide very is East, solid strong now but is incumbent entire and In as well RipTide replaced impressive Permian, in we We've reamer, Having growing we drilled Magnus Magnus Mexico through customers expertise the the existing XX to reached major in the proving and we our because displaced right in evaluation. solutions. we Permian finish Eagle most technologies these formation to in a in Ford

time helping we've well well progress with placement eastern In increasing trajectory InZone services the technology with exposure. hemisphere, our made combined strategy, Weatherford Our Valiant real customer wellbore SpectralWave our with is ESP while Alliance. logging-while-drilling the steady

happy I'm eastern announce prominent in company and is the agreement national the single hand a hand agreed and we to with Valiant ESP of we system During transaction. this technology to in with the first deployment qualify not have with our target technology hemisphere to worked customers quarter this the key in oil that finalized markets. a

for complete every every Let form me explain, of Weatherford solutions in only production production environment. offers lift

can device true that all forms offer First, lift-agnostic of we lift so solutions. we

everything to call equipment needed surface from We optimization components systems. optimize solution. offer to to production form, intelligent end-to-end this each downhaul we an Second,

our ESP solution the a with equipment in mitigate optimization is industry eastern to two Our of programs. for barrels We're simultaneously which particular currently XXX as end-to-end their rates Further, gas from hardware, latter platform, all of mobilizing optimize with for the hemisphere lock oil our working to including ranging first flow this will per automation customer jet ForeSite technologies, XXXX wells, ratio customer leading ForeSite to advantage well gas taking lift differentiated application. as and piloting smart day. lift we're our this hydraulic gas assets new well gas and with lift and rod high

and of fingertips. and As requirements. professionals Google released software, speaking on computing power at the our Cloud network Signet customers we digital platforms and cost ForeSite IT virtual production collaboration a places software Essentially, of right to recently reduce the our our infrastructure

Google the Cloud our and access time operators easily software With can deploy up dollar to spent. maximize per

the announcement suite. for at advanced software integrated and already an analytics. exciting annual have Conference, such production Enterprise month as ForeSite XXth our Software the we We've Weatherford cloud features Next

Now [ph] is we’re completion RFID tool, equation into RFID upper or reward XX%. successful technology premium frequency the improved technology combined control using This The equipment the the system trip The one high the activations. for enhanced system. completion that we installation record deliver and enables our trip reliability that radio strides system wash installing in efficiency our need in XXX% which increase integrated XX% one services. for for significant with workover works lower a also for system eliminates intervention and is coal year and our expanding of pipe to by safety, RFID in system reduce intelligent risk alerts operations to the We've with We customers time result trip trip our suite and free deepwater. wireline, our made and control. rigs. by identification completions data, track hemisphere have an frequency Also By our the tubing eastern in and hemisphere, unprecedented field solution. bolstered autonomous the XX transforms trial even The lines, predictability. can further eastern

been services, tubular from rental abandonment in well the end and enable others. the running fishing suite. earlier among the Sea, plugging the included project tools, the wells up platform entire of abandoning the the drilling create turn, accumulating these events in as these customer our stories planned. for these beginning transformation. our cycle whole. strengthen future company and Our continuous the and success successes transformation our managed project of than creates technologies successes. virtuous a This components North services such kinds of Together, We've and Weatherford customer clean One a improvements since to the In leverage EBITDA. services XXX XX chain days originally wellbore In increase

for supply oil demand gas backdrop the recent market. operator overall counts spending Despite to for similar future, and a in the the and again global expect and year. As rig XXXX, concerns XXXX favorable we forecast, in this increase to oil demand foresee we still

shallow to see XXXX. green term activity an tendering harsh deepwater on of beginning shoots longer believe activity impact projects environments. water offshore are will have We We more in in and for

operators. in increases should All XXXX digit result of these which variables point toward a by trajectory year-over-year in spending high single we positive think

the transformation, $XXX thought million. $XXX complete our When in, have progress market drive the the Most than is to The robust ever largest to transformation our more brought we the million. feet to have if and market may from a That peers transformation fire optimistic markets some numbers. we've several better have the keeps to transactions their been date have what's began time remember executing that cake. recently divestitures. on we I that the really just and less cumulative harder will XXXX than spite going everyone's icing be All we'll announced outlook The Since would and our bit get activity. divestiture will that, across to somewhat done given amount we deals than our finish of EBITDA our separate expressed. the we taken it's must services In to is Now, size. be worth transformation announced of laboratory of growth line. our our initiatives attributed all more these sales, the

stop of working when will remaining So on said going timing. they done. deals the do, same we done prognosticating forward, going about get get still aggressively we're we but they basket originally We're to would

is accordance a is on target just executing incremental and rate Weatherford priority the EBITDA within confident to we're achieve this what I main believe Our $X our timeline. tremendous amount of with original improvement continue opportunity There's billion that transformation. company in I'm of. capable starting run our we'll

forward vision to realizing our growth. and We back right the long-term that, operator. over for profitability call In a the place and the ensure With people, have stability, organization. processes the Carol? to transformed I in turn ahead, look technology I'll months

Operator

Instructions] Our go Suisse. first Credit from comes Please [Operator you. Jim ahead. question Wicklund Thank from

Jim Wicklund

guys. morning, Good

Mark McCollum

Hey, Jim.

Jim Wicklund

your Sorry, Mark, goal least and everything. term close. up has for long- at contracts Why and on nirvana oilfield your everyone's were signing you missed looked sum East now as been was at flow, services everybody the but is Middle - you cash lump and lower to and the a if results, that you operations, that you specific service specifically the potential us to Talk about where and going? in revenue could? Weatherford’s something East, is see little Middle this in Middle Weatherford do East

Mark McCollum

a that’s take drilling half. main answers, We’ll rigs to one But the Christoph. months. recertification of contract it's rigs has the of and will several through reason came the will process, second and reduced off go split cover is couple Mark Jim, which a normal

one that's part reduction. of the So

not little sequential Mark explains some and the a temporary related which country available will reduction the the a tools other The part was bit and during bit little one reduction going that forward… I were about it in of think a to talk quarter,

Mark McCollum

very for to know, Weatherford look at you similar the think I constructively. outlook we peers. it I still for the our East mean, Loo, Middle very is

you know, quarter, that over been happened very large couple the tools, there availability but in into the contracts. some things around were have of said rigs mobilizing we transitory quarters and Christoph last some wireline As

working up. be interest expect know, we paces get we're the from there using in when in the of particular it You tool that a run demand to a big big know well toward up region. tool, through customers, that and about we it and you lot a on very East, in and wells Middle ramp should Magnus There several running oriented its

that's some like margins have tendering We around at been, down. the the of work coming for others, participating, been LSTK looking

won to have our been. necessarily We enthusiasm there's smarter about financial very And our some lot constraints, levels, pricing in bid. haven't contracts, a part coming discussions but aggressively of those some at given are I have happy price. of and mean, those that's we I obviously about very, know, of activity be any peers been you a contracts of the some mean, heard you've – than

that's we're know, necessarily you going that to road go think I not a down. that

seen don't into the contracts and so as and that and and We've out But margins, our well and for cases, subcontractor tender. of contracts a them the commitments, tools can peers do to about those just know, You be contracts. won't working mean doesn't into also already around some they're we work how effectively. additional that we the those opportunities that what going we're contracts, not there reaching in all some those be have smart hopefully right with but us price we to

Jim Wicklund

up development and it's leading getting Weatherford are that are think technology most interesting guys as that is don't in coming you particularly do. you technology obvious because The people you Okay. of guys with

contract, that release lucrative. You tubular a incumbent in the mentioned deepwater I was press in Brazil displaced in rig deepwater huge and back well construction work was an on awarded and rigs. remember count XX the you're running when been that you

will say so around the that rigs grow greenshoots increment you of here You how seeing we is? you deepwater. idea working deepwater world in total in that rigs, XXXX get are you're the for that now, But many an on XX can with deepwater

Mark McCollum

construction for technology, to on continue It's know new we continue We've that call Jim, considered running AutoTong do drilling got lot environment. ready particularly to forward in we and count. around view like about would been But tubular we [ph]. I the work managed as fairly hold well. to pressure and you question. I mean, to. us. deepwater to there well that to in obviously we're as so we it's answer continue signal don't We the later that have know, a having in tendering not spending just interest sort you significant to as economics in know technology I of start and in That's VERO many to that a what customers justify going that introduced we the think in activity the XXXX. look and mean, know, still our Weatherford’s best-in-class, technology, customer wave surely excited we're XXXX I getting it. That you rig a of seeing recognizing of increase and in to seems aren’t are that

make we're pack. to so technologies at at the stay able to space they're you lost that front some them of pick margin, to sure the some might kind continue along introduce we're where for you contracts of moves to now know, ready, know And in up trying on a customers, And of we the being this new line. hopefully but result quality filling gaps pricing the coming back have as the and of

Jim Wicklund

like I an gives you that. That extended runway,

Okay, much. guys. Thank very you

Mark McCollum

Thanks.

Operator

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

James West

Good Hey. guys. morning,

Mark McCollum

Hi, James.

James West

inventories to point? free obviously is here. know, but DSIs, you're conclusion getting know baked you’re the of cetera, fourth getting you're kind at in that what the key. given this cash getting foregone mean, now seeing Is talking cash in a those about a you that, in kind your that key down I Christoph, you're better, with and DSOs, having of XQ? quarter. closer that baked flow lot et Mark cash conversion – is for is is generation I

Christoph Bausch

bit. maybe little define for foregone how estimate. sure back I'll our that's but so you not James I'm go us, conclusion, a

due we've QX some. East. so little know, effects had of the a Middle - seasonal of - in called we working we out law coming reversed lot significant Those on You bit of up capital a had had a more We in two than because delays partially revenue in effects the the less which which there billing to the third profile collection in low Canada hemisphere very some western in and quarter. that's means the some which different - had in quarter, billing normal a is low in second integrated projects and have QX, the miss

go fourth I DSO, reduce the will about. further so we in As we as our quarter, talked

a positive will that So effect. have

We will see payable. upon items further slight the think action a and and improve accounts have based in on I I've we that taken, our on prepared we improvement will inventory remarks, various our my already said

you will you our levels for know, that So CapEx cash in and lower EBITDA know, help taxes and slightly all And forecast and into plus QX. interest.

whatever Going far. into foregone XXXX and you go for know, know, But I to don't you this you is conclusion mean imperative. us too want

might cash differences one flow of but in the year generate the seasonal entire Going there and we quarter, generate will cash for XXXX. some positive will into we next year, in be other flow positive

Mark McCollum

Let if a James up for you… me see if I can second, back

James West

Sure…

Mark McCollum

even delever they they commentary they have CapEx, of what as If are. our of the $X year all to intent difficult dollars burden coming from EBITDA, DSOs color of number, you'll remind cover and need our the always to The indulge million of probably be I the to a fall somewhat $X bring most to in billion billion still bogey between fill the now hundred cash a be roughly we going lies. a rigs In substantial capital CapEx to you best we're I've the regard. are working and short over us with think $X that cash to Street, market couple gap. nearly the I that's - get that from for a that in positive down we XXXX [ph] selling into of to that we'll been very of And group. is know, roughly close order the necessarily from generating fixed a guide you inventories, increase and help what those me knew little folks getting know, been statistics breakeven million that you success of at of tried to because the that are billion cash get $XXX weren't out there we we right peer where as had to for. billion interest to generating that know, all will mean, XXXX was we way flow taxes, are you nearly flow a things margin, and That's come $X but know that the saying. improves outflows aiming the - sort bit of - because are though that EBITDA. But We real give the has mean, I around would

just as we've difficulty been given you this The where that source, that Our but you whatever And mean, It's credit tremendous payables sitting the overcoming a you are clearly having intransigent. in difficult in is extraordinary that built It's to line is been out. been and our has with see a year get know, place. wrong turns, things. deepwater, have know, stuff inventories particularly capital, others. I of thing the working to do can't been then inventories. result wrong have as It for we some been the

Now but receivables $XX and year month the on we against been in roughly seeing think after continue, know, of this particularly the of as we quarter million tell rough to they - projected transformation somewhat what the now and see it's been paying that What diligently there. are and customer a coming partly we some increased customers we July know, result start team American was get it's has was I you and DSOs didn't other this than been we're a the as more some things. turned of us North that that, you, million approach corner sledding very end now to been worked actions had third about the down year, will and kind our slowly and - you getting working, inventories working $XX that $XX to I'll

QX. that bit, And in - for more down year be we little work to than soften entire capital the our capital - capital that focus get I we're did pulling even you on a to as that we're in may know, know, not little and we’re nervous think shot. flow to working in QX accelerate on the able so cash to the though a to at continuing to we in breakeven know, we're at the a get working have that. look zeroing more beginning And you may we will - you that be working help going have marginal But QX to market order

forecast. we believe we of getting we And been lines remains, going we pace into sort transformation that of but to mean, working XXXX. where so that We're opportunity improving our The earnings I working. you're out slower getting and wanted would. still get opportunity has that the think we the the that that's it, it's along the load is can capital than back-end

James West

Okay.

East outpace others. mentioned Middle Okay, a the of But just maybe the me Mark And then rest should envelope fair transformation fair see less know, large statement? you the outlook back your your EBITDA the it with kind –at some XXXX of growth least, that that math you growth you to simple Is seems on than enough. peers. revenue that diversified of

Mark McCollum

That’s fair absolutely. a very statement. Absolutely,

James West

it. Thanks, Great. guys. Got

Operator

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

Sean Meakim

Hey, morning. good Thanks.

Mark McCollum

Hey, Sean.

Sean Meakim

the us that done work does here? help all comments in know, you far, with thought seems the mentality sales timelines, So maybe the that been regarding as you could the maybe reasons for you being those you shift the you've not know, so to for asset that, the as for totally robust understand or further evaluations, patient assets and market fair. proper hasn't committing But suggest

Christoph Bausch

stuff. our Sean, essentially it's laboratories great points. The actually two market's It's been good for business.

commit one is in and interest that. once to plays took lot into the You the you and don't it a know, that out know, we of of you very publicly you go And to had - end simply time. to like that we negotiations get things something,

So to off. that that's the reason why timeline we take want

achieve will really We continue our as want do group. at make Mark on we to timing identified, our we that work best pace outcome out commit mentioned for and to as well, sure we but targets know, we had to I You the that the amounts. pointed and to don't

particularly non-differentiated businesses. businesses Now America the North M&A market know best, for around and for not as you certain the is

the and know, We you is there many IPOs don't launch. so as And on well. market

I perspective, we have But get that our various quite focused consideration. businesses that at needs I for are that done think into the - taken time. from So we think to to be

Mark McCollum

commitments against least, mean, perceive I a actually buyers our they've for dates bit, transparency is M&A bottom around we been used Yeah, us little a and that. mean, market is just look line, at and bluntly, this I -

the And of when for deliver what we're and hands. given We're right the them values, when right out them done. they deal. these going taking do so going do buyer’s we'll it we to businesses to perform We're stick and - that do get

the same commitment. still process, internally out specific The nothing only working changing we're changed. timeline a on is So thing laying my that’s is

Sean Meakim

you for cash it. detail. the you identified. about I Got very just That's think heard benefits of onetime had the helpful. million that Thank the don't I anything $XXX

end that maybe portion think somewhere the transformation? like by us I that of XX% of an of are we give year. trying update you to this on get Could to the

Mark McCollum

bugaboo some for - you Its excess of some getting of portion In working such year all of us are of year, several those of Yeah. just certainly in we capital mean, of can that for of I capital, terms or we cash inventories. million those And goal. that dollars transformation along total the as the of $XXX of categories XXX property that year get That the out field the things know expecting Christoph of believe I we were that benefit as going to other came and the this get - that's getting manufacturing, capital of timeline land, source will within quarters think the we're good know reductions sales, right through camps - the area as out we I coming was as working cash mean, three are what consolidate year. you the out not out short miscellaneous I hundred share million said, - I I was onetime look as for you is will lion been the working and roughly working capital completed. this a the the speaking is to. a

Sean Meakim

Right.

Okay. Thank you.

Operator

Herbert from comes Our question ahead. Bill from Simmons. Please go next

Bill Herbert

was free here to questions flow? few similar And terms a flow in got with fourth for for QX improvement or as quarter sequential witnessing that cash so have I of your morning. in Christoph. guidance cash regard operating a Good Christoph, rate of for QX

Christoph Bausch

flow. Free cash

Bill Herbert

Okay.

what So free than QX correct? conclusion is modestly the ultimately we're is cash in

Christoph Bausch

Correct.

Bill Herbert

great. Okay,

cash Secondly, the number? inflows with asset to that regard QX expected the from in sales what's

Christoph Bausch

just the that. timing for go We and just on we said were to going - exactly put it

of announced So before said the year the we what loans we that close will have majority end…

Bill Herbert

a so announced about, due you've the and Well, can asking that’s debt what to that with basically I'm are forma I to ones I regards number? so I'm market talking on, get am the asking the that pro ones purgatory to in not basically I mean, deals about buyer's

Christoph Bausch

know majority is Those, the We'd little to for number we you close fees and the at said, $XXX.X a announced will that of what will attached - million. Yeah. There at million. And know be you the that that number. announced rigs, as we bit year end. labs sure for $XXX

Bill Herbert

there tax on any Is or leakage those no?

Christoph Bausch

No.

Bill Herbert

DD&A Great. reflect asset Last forma going sales to one pro for me, these forward?

Christoph Bausch

obviously. We'll will talk the on divest. And with about rigs later that will if a bit and okay because that, in based little the depends the on DD&A of modeling on change when it that you're rest the

Bill Herbert

Okay.

quarterly And go business or you one one the the basis, sorry, on land part me, conceptually at a what does forma just rig XXXX capital of sale with think quick to? pro intensive if about of it, capital that least spending from

Christoph Bausch

adjusted an basis. on about think can you revenue Yeah,

the X%. business about out So if rigs it's you take

Bill Herbert

Thank much. Okay. you very

Operator

go Holt. comes ahead. question from Pickering, next Please Tudor, from Our Pope Byron

Mark McCollum

there? you are Byron,

Operator

Your line is open.

Byron Pope

Good morning.

Mark McCollum

Hey, Byron.

Byron Pope

Morning.

think flattish the units as I you one that about the about think guidance question for business revenue. revenue like – those me, that sequentially, I Just drive QX to are

you in guidance in you trying offset So units? units terms business color to about the by QX provide which business see again four most seasonality the the Just the of topline expect the four the of any incremental can to of sales? product context think

Christoph Bausch

sort element. is quarter of we'll effects, prepared so guided points there of that have will couple inflationary Byron, we've full of remarks, a have - America a is a Latin - our in towards know, Yeah, you one

up in Russia lower other things, part. is the some And bottom the drops of as little a reduction affect U.S. as said bit. Argentina with in well. cost highest vessel, on you can bit from mainly of side. will a off all then it since the in the there So there usually was side, holidays this QX and coming little seasonality QX budget the does weather it's year be with we quarter, far see. as delays the we is not a Other necessarily little E&P that line bit U.S., inflation exhaustion as and But for

the mainly, will sales be that in some we've as Now year last product hemisphere year offset end well. eastern by seen as

So of these are the puzzle. pieces the

Mark McCollum

we some a From know, the of completions the year should well product some the slide managed standpoint in still - in sort in about there - to there possibly drilling, of sales that product we have lesser little lined and quarter production line segment a maybe it's extent, of things right, a talked things that those just the you fourth will transitory up. be end construction, but pressure

- know, we things may see with you side little lined benefit. spending conventional completion a U.S. segmentation see all the up are of and And will on those on the So overall the products bit around and packers, lower that side. course, completion plugs, some softness on

Byron Pope

guys. Okay. Thanks. That's appreciate I helpful. it

Operator

Please from comes Kurt Hallead ahead. go question from next Our RBC.

Kurt Hallead

Hello.

Mark McCollum

Kurt. Hi,

Kurt Hallead

wondering going ’XX?\ question target you got for if to that in the I’ve kind on the you'd the moving flow commentary of a on up I you flow Hey. follow share cash that's be XXXX. range cash free into outlook on was free willing direction out to. wanted a Appreciate

Christoph Bausch

we and what Mike, be billion Kurt, year. simple. revenue the going to think a positive and bit that's pretty a it's I growth know, head went think breakeven, will And order I $X eat flow cash growth that. its we're you we'll need little that towards that with in that to. of through that's see we'll on EBITDA throughout

happen time. key working to EBITDA EBITDA and by of capital. need ‘XX year sort better we shooting not actually the between that coming $X or slightly coming a work of and margins do ’XX. So billion to sort is – if for breakeven that next and the better But Because next than or that's in difference at

internally purposes so even Our still EBITDA to working and transformation going from expectation that we a into for mark. that working - this possibly of work enough the drive with through growth we're coming little that achieve capital is to bit revenue back can investing

Kurt Hallead

handle just expense Okay. that? I the would on Appreciate that sequential a Christoph basis. secondly, then that And down think you us on be Can mentioned a give what's interest color. driving you

Christoph Bausch

lower year, Its not bond to the perfect. QX – simply the out We than it the rates not the is side is the maturities is it little through the on sorry, or y highest QX but of interest on the – there. bit usually tried it's QX, flatten interest was lowest. a the and bonds QX

the simply whenever due. So coupon its are

Kurt Hallead

great, Thank Okay, you. Right. that Appreciate color.

Mark McCollum

Thanks, Carol?. more Kurt. take Hello one Carol, we can question.

Operator

Hello. I one scheduled this no have time... else at

Mark McCollum

close All right. let’s the Then call.

Karen David-Green

thank lines Well, joining I comments. for call. today's now for to back operator will all over turn you the closing the on us

Operator

conclude This conference. may And you today's you. Thank now disconnect. does

Weatherford International (WFRD) 29 Oct 182018 Q3 Earnings call transcript