WFRD - Earnings call transcript Q2 2021 | Weatherford International plc

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Weatherford International Second Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] As a reminder, this event is being recorded. to Investor conference Relations like Topiwala, to now of Director and would turn over the Mohammed I M&A. Sir, you may begin.

Mohammed Topiwala

the today President Welcome call. and CFO. Jennings, to Weatherford quarter President second everyone XXXX Executive I'm Vice joined CEO, by and Saligram, Girish and Keith International conference

We today prepared with remarks, up open it will questions. start for our then

and of Relations statements. actual filings that today's our everyone Commission risks expectation call from latest materially today's many expressed uncertainties You a to any forward-looking may with Exchange remind statements. and for to that forward-looking risk copy could download our include from to to website, comments Securities of section. Investor results factors cause These correspond herein. that and subject want refer the some Please presentation regarding differ slides are I cautions our statements

measures. press include reconciliation second are call also quarter today turn of comments With our the can that, I'd to over website. non-GAAP included non-GAAP GAAP a like Our underlying measures to release, found be financial financial Girish. details on to and our which in The

Girish Saligram

Mohammed, you and joining for call Thanks, all today. our thank

flow $XX of maintain. in paying margin of we efforts a in priorities. into driving create start we momentum our and second quarter highlights industry in expansion which We flow quarter. a last carrying Overall, cost the Slide this cash players our generating an to kept business with our diversified for laser capable million outlined cash and team call, on quarter profitability free our performance our We delivered while delivering and made exceptional on will the sustainable focus I'm all to X cash very testament interest of pace significant significant came the on with in headway good is the free proud and and more expectations larger forward generation, above

to results our our strategy. provide and take plan outcome or and in that positive then improvements, approach the flat past talked being advantage QX the of demonstrate have We through, about which fall of activity activity greater

In in safety, the is operating addition remarkable our culture. core to had several at financial we the achievements results, which of

reduce recordables incidents achieved zero We and continue June. in total our to

the overcame of we with pleased operations Canada. EBITDA safety, our with operations I'd activity We logging across all for slowdown Company XXX like incidents we and without Kuwait XX%, perforation sequential As America geo Oil delivered lost-time as our second commitment East major of North our years quarter XX delivered completion our saw are operation, basis example receive points any performance to EBITDA Middle services. zones an seasonal an drove years national award zone highlight outstanding honored the geo we to XX liner-hanger growth. I of to of am for an company. HSSE increases in which includes in of and Separately, improvement quarter oil a CEO margins This that our particularly sequentially. where

achievement. track our generating for we full fairly be significantly was of and free XX-plus million Most EBITDA us up while and EBITDA a the another flow, ensure highlighted on without the sustainability. year our We cash quarters, the its performance but We of which have ambition. generating that quarter $XX picked terrific with our feasibility is sustainably are XX% free still that us a we cash cash for on flow, in positive next it did work achieving We one-time over the putting those have importantly, even goal several would items margins to do have this during some to margins. previously way company remarkable percent proves recognize quarter, to

and of to we our aware, trade As recently complete are journey as Stock WFRD. this the listing Exchange, are we on excited NASDAQ completed you shares and the

to like team a One This game and further customer consistent and validate focus. our all their gratitude our I plan. to members performance take for commitment overall our ability moment to Weatherford deliver to contributions, quarter's demonstrate would results convey my

foundation people performance our I potential Our the within That we about is in excited this potential unleashing organization. of for quarter. are our operational the of evident some the and are from am highlights

offered as It continues capabilities continuing X, Turning terms market-leading and solutions course MPD and interest which automation and There overall of well enhancing of started technologies automated the algorithms to a the with portfolio expertise lead combine push is to our traction what integrity. in we and control achieve risers. Slide automated of it smart next-generation Weatherford definitively growing a of our rotating discipline drilling area such the in domain first managed is boundaries commercial lowering our MPD services with or with MPD customers industry. our device and intelligent control an and Victus, can important costs to over of a counting. MPD, years gain has in pressure field-proven XX

Brazil, major technology. extensions generation campaign second Our and MPD in marks the this our and we operator's global showcase award our deepwater new awards, automated consecutive contract for operational drilling first our In won system. leadership next successes riser this for a

there. depth, and customer MPD XX additional for target feet. IOC depth. total of XXXX other drill to drill days with offshore XXXX In reach an enabled us another not addition, falling two but we section to attempting Asia, also short whole feet for an contacted contractors ahead only are In systems after MPD for conventionally mobilizing drilling the

to exploration MPD In drilling intelligent delivering to including production awarded window. package. depth enabling us us than compared extensions we save contract Sea. We nitrogen rig capabilities in also of MPD a with full operator gas allows drilling deepwater of well customer, Africa, of automated North high wells. spectrum the a from This a MPD swamp time, for pressure deployed deepwater variant a Mediterranean Victus XX% expand services planned and solution to to to riser field a in the improvement, days narrow barge offset for an for more the operator while XX an our MPD another reach first And the Victus also time used a cap

As traditional of the the successes MPD validation operators value brings across challenges beyond drilling the of it scope similar drilling applications. technology and world, these faced addressing offer challenges by powerful

Now lift Slide service wireline, services turning and to our quarter. MPD, X, core that and success delivering oilfield to technologies lines. this products in several are services, within other drilling artificial product addition continued These include there

ForeSite customer, wins we but competitive are not in in our are demonstrate to our operator our the another a additional highly zones saved a product the then only new awarded us to leading record for We of solution displacing core to major in of up field. drilling in rig Our complete an deliver presence These market in pumping eight pilot a capital Edge services, services program two-year being rod operator eight work multiple core hours incumbent leading customer integrated Rotaflex lift, for contract area, also wells. rigs to Basin. wins. In adds other lines drilling teams to East, accumulated expenses. field from in for us and a expands with savings long-stroke In customer of notable rate in achievements Continuous an XX production achieved Permian that the and units, to leading new XX lift Rod Russia artificial wells US us operating time, and which awarded the scope system the the leading And including displaced in with awarded geo Middle the Magnus by technology fully offshore introduces the steerable COROD areas. in competitors contract work a our penetration rotary our to and recommending

management energy According year that of with we to a implementing digitalization real the central aligns phase strategic visualization time and by software of and solution in launched and a see the also decision KOC transition. installing drilling center. last contract our We site platform progress rig a first Kuwait, vectors to signed data

supply Asia Middle We for Europe, and solutions in production operators also to contracts secured the automation East. multiple

with operator on exclusively lift wells equipped an automation systems East fact, the In controllers Edge in across ForeSite fields. deploy will Middle its multiple production

continue a of competitor solution. replaced and Firma successful XX we technologies our delivering from Additionally, plug our we abandonment Firma design leveraging Europe, schedule. successfully a for wells ahead build solution, a and track to custom portfolio to record In

as abandonment As plug the service greater enable activity company ourselves and will a ensure solution grows activity this a of with in complete growth positioning important sustainability believe in we abandoned wells. coming to and that years, traction

we the like will market, for to players, seen industry we've the a most second for Slide the quarter in Turning industry. activity cycle believe broader up the translate increase view into our on X

variants. increase growth now work increases outlook. virus With focus area services margin already lines activity of the pace differences rebound in growth and to will However, of are confident cases, about talk our driven economic we the there face following be of in in the the believe significant half in we geographically that moderate continued our Keith second vaccinations and relation more scenario, growing In an toward on partially incidence that profitable the offset drilling are Canada. delivering but product will in US, by in XXXX where us US more we the improvement, we was America during in the decline seeing second the as in North the seasonal quarter, activity our in remains activity North America, and by on up exiting wellhead improvements. Despite

increase plans and in Africa primarily gear major coming focused international countries over tendering of the North we with East, business Latin as on up production our On they increases. we an for in XX% activity, geo and their are observing Middle America are zones. very With customers side, our supporting our internationally,

out, As translate plus drilling that will campaigns. hopeful more phase increased the are the we OPEC into production cuts

activity to seeing financial let strong Additionally it update. me to have in turn With an Keith that, we where uptick prices, current commodity over offshore with we technological provide differentiation. are our

Keith Jennings

Consolidated products year-on-year, in XX% to increased summary energy in The for zones, Slide oriented Girish. sequential X% a output which X% Product except for operating improvement with service earnings revenues. seasonally X increase levels. revenues our pace all sequential revenues improvements driven with our was by our geo turn ongoing in you, by performance seen primarily production results, reflect XX% and liquidity. Thank as million, $XXX Please business quarter activity. better and lower across kept Canada the better second sequentially were of

services in Europe, integrated and activity from increased completion and product second in in and and production Asia resulted all lines activity projects The increased Russia. topline in performance across or Mexico, in East Africa the activity C&P Middle product Sub-Saharan quarter the lines primarily and

income or X; $XX and of of Slide We portion geographical revenues year-over-year. for at in million in points are intervention breakup. million of quarter basis Hemisphere. contracted helped cash in The positive the to evaluation was an EBITDA X% margin of XX%, solid million. income substantial of $XXX operating basis our headwinds the pleased due Canada, primarily a the now the to Hemisphere with adjusted services. report starting activity pulling quarter was is items, result obligations. $XXX customers still business by discrete operating due million burdened activity by margins second cash lower $XXX points of America seasonally onetime let's improvement to approximately spring sequentially performance interest with which in Western look quarter million EBITDA States forward one-time X% sequentially and Western XXX the revenues to EBITDA XX% credits DEI, from of million United of quarter larger $XX $XX with year-on-year. our the Adjusted North $XX XX%, a delivered XXX sequentially, Without million adjusted free drilling, the We of of second and a increased increased flow breakdown increased equates improvement. our discrete and despite

Adjusted increased million increased Second call-off $XXX quarter Eastern and million decreased Project America quarter improved Middle in sales XX revenues and line XXXX to million segment segment basis quarter due lockdowns XX% growth Africa US the associated points $XXX of all second in was Sub-Saharan pace X% the sequentially, segment XX product by year. of in of adjusted revenues $XXX product by of in driven revenues sequential activity and Mexico. margins prior points sequentially in of primarily in and increased and basis favorable increased increased growth primarily segment increased decline Europe, lines. driven is The the basis line. the of the increased growth X% in Adjusted decreased sales $XXX and of EBITDA Russia, XX% increase EBITDA points was sequentially million Latin million America. the year-on-year. The of Russia year-over-year EBITDA revenues due services sequentially, the $XX and almost and year-on-year. related C&P North the was a in improved with activity basis to a X% sequentially in of in Integrated margins and in million points and in of X% sequentially million Services product revenues timing Latin Africa delayed $X XXX across Africa Slide East to adjusted and year-on-year. X; increased increased XX% increased The and improved Hemisphere associated activity East, second sequentially the XX% Asia. and Middle Europe, of sales product EBITDA $XX primarily Asia DEI mix

improvement results a free the cost our from continue In increase of Slide liquidity; million, the second generating our a to XX improvement Free $XX initiatives. million million, disciplined being year-on-year flow. $XXX through was flow of EBITDA. on an is the Turning million the we mindset to cash cash the $XX interest we business XXXX Free expenditures unlevered in This quarter maintain $XX of underlying focus with by XX% increase cash million $XXX $XX second in of flow $XXX of and for half an million $XXX of which delivered quarter and in XXXX. payments. had year-on-year the compared the improved of operating of of of million quarter summary of only flow adjusted of the demonstrated improvement in was down total $XX in quarter million cash million billion. the an We $X after XXXX. million $XX compared first and $X.X a quarter of first cash million to with in to $XX million, half in approximately Capital XXXX second sequentially were and XXXX, prior

remain redeployment, our Our expenditures relatively re-prioritizing capital on increasing asset utilization quarter agenda. as and capital were low focused this growth we

capital to expenditures return second of the more XXXX of in to technologies. prioritizing We market-leading expect and normalized our levels half products

to have have sized note was it discussed, base activity for important an is previously levels. we that As that significantly higher asset we

One which focus our in of needing a performance, team stable to As and capability notes continuing Weatherford on CapEx. invest this improvements, credit improved credit a and the X, the capital revenues this in the on this our by results by the improved to thank priority on notes ratings credit result, upgraded the & also Standard with a single recognize for operating asset and of increase assets I existing stable first using senior July significantly without to or driven flow are challenges capital letter disciplined on our expenditures us. of utilization. senior outlook. working a capital to S&P we wish to We cash secured new S&P On remains Poor's The of capitalized with addressing a inflows, structure secured rating exit was triple our upgraded agreement service over outlook. C-plus was half for B year

in declared services for are the the potential our to On filed backdrop tone of markets improved capital they changes. macro we and reporting to statement that previously current now reflecting the June are approved and constructive subject application, Exchange our the for effective are banking Act. beginning We encouraged NASDAQ improving X and oilfield the registration became SEC provide requirements by the believe the

Market XXXX, Select Our the the began symbol under WFRD. ticker ordinary NASDAQ on Global on trading shares June X,

to was We believe list that time value. will to so pleased return long-term markets. fully shareholder doing We and enhance are right the to the this public

both a XX; few Slide I XXXX. thoughts half third to of the on the quarter second share and qualitative Turning will

management between the from half by experienced business expansion variable half half maintain to the for XXX to simplification. Adjusted and we cost our to the results. environment margins and points above half XXXX digits drive XXXX are XXXX XXX levels from the focus increase of our EBITDA half further first margin of organization basis to first in the expect activity improve points now revenues forecasting basis continued with should the to second first second We high-single mid

we As growth may capital working be demand of a to experience recoveries. growth, outflow seasonal activity net receivables approach particularly investment material we revenue XXXX, begin in required. as to increase half in of second activity in pass-through net be products, the capital level levels for reflect the expect supporting improve of and we an If working

For XXXX, is cash expected slightly our unlevered free year-on-year. flow to improve

full million the through year capital we reinvest $XXX For of to business expect XXXX, million into $XXX our approximately expenditures. to

increase June. in the into we revenues sequentially XXXX single XXXX of third digits We quarter acceleration quarter the above low consolidated reflecting experienced to second the by quarter second some expect of

adjusted to discrete pressures, second the XXXX expected we one-time quarter million to levels line impact in inflation $XX manage As with margin still credits. EBITDA continue is be excluding of

cash activity consecutive expenditures capital to to Third quarter his I closing we this sequentially, Girish investments. you pickup the in positive continues, Thank for will due of over second capital will largely anticipate year flow your today. now call comments. unlevered to and free is required If expected working cash a deliver for decline time the flow. of hand level we back

Girish Saligram

Thanks, Keith.

results the the we the quarter of were and in on terrific, work future firmly second Our but focused ahead us. are

related an American I acknowledgment and performance to XXXX. key on area North is provide focus that Despite increase activity North revenues an the the overall in seasonal Canada, want update saw an America of XX; areas Turning to you Slide for slowdown with expanding this four to quarter, we margins. margin. especially deserves in

to and that our are bottom management see of momentum line. our to spend is we reduce gaining as variable positive beginning on, to impacts find cost continue variable Moving opportunities to

labor other network, efficiencies global are We improvement, costs and focused and opportunities. repair maintenance significant utilization our across our on procurement

years Company's area of by sequentially for driven we made a have improvement We revenue SG&A DSI decrease In market see should made improved simplification, as days Regarding continue our our believe conditions. progress as still rationalization, by topline percentage inventory of we both we the structure XX of simplification. aligning opportunities to days. again coming we XXXX incredible meaningful further our have seven over to days sales improving organizational progress that structural increase goal and by inventory of the on as

a as to is plans cash a second is and Once on EBITDA specifically taking growing serve quarter follow results, yield positive this free generating the in from strategy of increasing We for and flow, is their the our we thank and achievements success previously to hold beginning evidence Our shared through quarter a revenue. to to truly employees That us for determination our actualizing I destination. execute. want ability again, testament not our a goals. journey, that said,

pride the for enormous recognize And open please quarter institutionalized. process Weatherford of Q&A. potential. up improvements learning, a work is that that improving do reach Thank in full It take we our joining let's its growing and to us operator, it we While results, you through ensure still have second we to will with that, are for that today.

Operator

you. Thank

We first Please comes will the question Our now Piper Macpherson Ian Instructions] Sandler. from question-and-answer ahead. go [Operator from begin session.

Ian Macpherson

kicked in excited qualitative discussion, surprise back for off well well. your possibly on ask areas I more maybe Good congratulations really color half from think morning, sort and I to and for what know just the are performance to we, sensitivities you quarter. wanted for conservative relative of the that for bridges for beneficial as the and other you're margin a XX.X% if but Even that of little maybe the the as the business clarity on and MPD areas one-offs strong about? then XX% Keith, where Girish that QX better on the ask guidance quarter to

Keith Jennings

Good questions. Okay. Ian. Great morning,

at settlement then some large two lost a amounts one-time go through some that beyond things, because best can main into XXX% so in a America, down -- to comp So, beyond significant North hole through. first We they repair we fall it were in came still but customers of and credits And with amount, be into that thought and the we levels ongoing above was those hole and some lost repair the amount. these secondly, broken workers' $XX settled parts. had are it damage revenues, into damage -- -- because million the disputes normal also

forward. thought it baseline as we we exclude so, And from best the move to that

Girish Saligram

Hi, Ian.

little Let bit part a the in. can second join me on then take and Keith

what's your we First increased generally comments. activity planning for in in again, happening, of and and have past appreciate higher we talked in take are morning we've give to Look, through. terms but fall that we all, are flat, the I of just does good I poised think us always of activity said advantage and

that's fully in just we'll what the So potential bit seeing we Where translates. of little -- of it second see happened. sort what really a have half to are how and

some First of and that talked MPD the about of stuff we is all, TRS.

us we more we more to to opportunity us that and think But share bit focus a address. potentially businesses market-leading and in we tubular businesses still lot So, services, take gain running operating a of will we production to are because elements we products, see on have cementation and that fishing on hold be businesses really intervention the tempered drilling, a give as our we managed positions reentry want need core these we and with lift. increases, lot that then our they campaigns talked about, have have really greater more give an little drilling pressure as some

as So, the as geography couple From we as perspective, we're continues swings by well we Middle encouraged firmly highest probably a activity are area are of but East focused that of tendering seeing. regions on mentioned, be internationally. other activity to that, really the a we

up. that bit taper certain growth little hope economy expect general North just vaccinations and a pace of pace seeing We really rebound, keeps extent, to a again and opening keeps but to the America the off a

Ian Macpherson

like forward also to fourth assumption. going between the exiting just quarter year just wanted in XX% guidance XX.X% I both. margins that maybe check you, if margins to comparable the sanity seems -- net trajectory the XX%, according is going then leverage, to that the based what that you year, doing your maybe we And on, and next possibility into think leverage ambition pricing math and to if closer to sort so great. of puts that into earlier volumetric plan, margins your of back for this any margins thinking maybe just probably year you're pulled were recast XX% at XX% like assuming what excluding be we've That's could? to leverage but relative QX, or half it next It just we just Thank sounds in about year we've

Keith Jennings

in of the that's at XX.X%, think algorithm assumptions And we your year. and where terms I works. So, the exit are exit targeting to

through, terms of of terms In say as that. fall how it's in think hard we always, about to

in mix the where than is we ground. then already certain it through we we've contracted think we that the comes good fall how seeing of in depends different through scale the beneath If comes but control practice we the have the business, geographies from So, fall geography comes. all have on up, where new been that, service much it people side if cost to on business as and

us for viewpoint give that hard it's So XXXX. to on

looking we XXXX exit second it way is at modest we from as we step-up to of going the So, are the half moment, at where are at a looking XXXX. are

closer And come for back and into contracts the better what and seeing so where QX, give activities are of we go a through view as we XXXX. are and it, we'll get QX get to

Ian Macpherson

I'll Girish. Thank Keith. pass over. great. Thanks, it you, That's

Girish Saligram

Thanks, Great. Ian.

Operator

question Instructions] go ahead. comes Aurelius. Please Duffner from from [Operator Next Philipp

Philipp Duffner

got the I've America was growth. two One sequential questions. on North

markets. that the there to North weak relatively overexposed stronger is or is was it know the I competitors, another three main big because you're international in in America, you your for Canada probably and comparison to were In to that? comparison explanation in So,

Keith Jennings

Philipp. Yes,

a very to is significantly from of joining. competitors. with all, thanks our some business as peers North portfolio of different well overall about We've America that couple First our it's note our and a for It's important lot as fairly talked previously things. and of

past and services people. very or we've US, of which lot a America North part in no the so, is for a Over changed in are playing in significant the our the we really portfolio of longer profile year drilling

fairly business, well. the not we of changed on so that's and out business have gotten frac a completely have as of wireline We our part the model portfolio, significantly

these we rig come an are don't drilling So play -- really in part really product lines increase a and businesses that with in in. immediate that count

So, that in very volume. Separately, of or we part chasing of sure that's also a North are our not we've focused about see you growth the, rates. us in why on just difference for fundamental really are a part America, big talked making we

we We operational set through. an of working have actions are

that improvement seeing after the bottom that going as through fall margin to and are through We result come a growth really are line.

Girish Saligram

our actually you right exposure And are to Canada. very on

So did weather, in of growth the some from the the average take brought that because US down. step did to in QX business down QX we so for we our breakup of business, a the the underlying and seasonal affected and that and blunted see

Philipp Duffner

what you obviously, guiding probably on CapEx in Got than guiding a And performed were CapEx on it, thank you recollect, and right substantial very in to pick you. my second is question you HX. now HX in the to CapEx. are I If up better

are in just why so first could mentioned a and that, for low there some we potential there you that is reasons You a guidance? and the be that will maybe outperform the but some of half, go in why more through pickup detail to

Keith Jennings

re-prioritizing We the utilization first spending that agenda. say were asset would We described at half as was I our we looking time bit redeploying focused we CapEx a fair and it. growth focused of on assets. on

want in So, place and year, fair our we bit here business where bets. of Girish understand to almost now while to and us I so it took a have a the terms a been

harvesting market leading to CapEx product growth to into as our are put we efficiencies, so we but lines. back work, some forward QX into And go we're primarily going some and now QX, behind

more as before age that example, tools have there they also certain to product where for and new so wireline, in go We are activity of have are it, you a also marketplace lines you forth. think there have standards out down-hole like and the right, about

And CapEx. so require that's going to

So, X%. X% if in somewhere CapEx range we being talked talked the you about think about how it past we to the about -- of in quarters, we

$XXX on re-racking. of that's So, reasonably we million going revenue, a through printed were million QX only But low. we in that's one, $X

I ramp I say but see towards back on over probably this business. cycle, happens So, of in you X%. what depends $X we'd the the that get not move it million, say up to would could would us all

Philipp Duffner

one on capital on Thank there maybe question just you. And any the Is the update ABL discussions then, [indiscernible]? structure. last

Girish Saligram

say Sure. in the can has tone the marketplace that improved. I

you businesses. the reflecting trading we've XXX, if that our the all look our improvements up bonds, of improving to been I in think at trading implying way the yields,

think they I the constructive continue those lot go out in The think figure if going and time, have point where I then we're more think we've been with we dialogs and we at of to I been the of think here. of banks, does also debt having what's a kind XXXX. so open the that dialog from address side, the holistic could and that tower about an or the up on and do thinking solution opportunity we're in up maybe we to putting ABL opened terms market refinance has so market back an this in

a things as we and the have a direction communicate to decision, we as are soon all So, will or dialog back these and come in Street.

Philipp Duffner

from Thank me. you. That's it

Operator

any back question-and-answer turn questions are over I'd session. concludes There Instructions] remarks. to to like for queue. closing the more our in management no This conference the [Operator

Mohammed Topiwala

to you Great. joining speaking and everyone to forward look in a Hi, you. quarter. thanks I for Thank again

Girish Saligram

you. Thank

Operator

has now The attending for today's you presentation. conference concluded. Thank

now may disconnect. You

Weatherford International (WFRD) 1 Aug 212021 Q2 Earnings call transcript