WFRD - Earnings call transcript Q4 2021 | Weatherford International plc

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Weatherford International Fourth Quarter and Full Year 2021 Earnings Call. All participants will be in with an only mode. [Operator Instructions] I would now like to turn the conference over to Mohammed Topiwala, Director, Investor Relations and M&A. Sir, you may begin.

Mohammed Topiwala

Weatherford Quarter the XXXX Full to Call. Conference everyone, International and Fourth Year Welcome, by President Girish Keith today joined I'm Saligram, Vice and Jennings, and President CFO. Executive and CEO;

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

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

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

Girish Saligram

overall outperformed adjusted by pandemic. some EBITDA achieved In of in growth and the challenges, you, XX%. and in-line supply instances. headwinds, disruptions with we the of I results bottlenecks joining Despite pleased our the these for with Weatherford fourth of X% caused am the faced thank We generated all, the pressure, margins outlook and the today. fourth the have throughout XX% prior revenue over which we call build with momentum quarter XXXX, including quarter team on inflationary year. delivered significant sequentially another the year, the ongoing Mohammed, and chain of Thanks, quarter,

onetime impact the with lower earnings explained the our items XXXX. expected quarter margins. QX recall call, of in will of that in come therefore We prior in to You third we several

achievement our in of in points However, executing, remarkable did enabled year. XXXX, fourth above just the quarter the over above margins to great basis a and a guidance which team come job one XXX

we the addition, generated free $XX cash million the of year. for flow full million during $XXX In quarter and

far and how We first several years consecutive come short profitability. move think we is period. Exchange was that Weatherford. as fully of the milestones in relatively year also Stock worthwhile public with us free and positive have XX to in commercial We has in market create XXXX I flow, on to happened the achieved it for that the notable was a years in a profile sustainable confidence to operating driven NASDAQ posture This our two cash reflect WFRD. by returned significant time on

Our return allows creation. a broader participate value in base of to investors the opportunity that

a our focused services structure. and we operating under model services exiting lines careful We management United service company across These for outperformance favorably we We wireline the and North also business the in our deliberate margins and new revenues driving cost the portfolio. our and expense inventory series down areas, significantly our model doubled actions grew drilling leadership variable our of and debt resulted refinancing wellheads using on actions America reduced the our undertook term. a In team the reorganized completely concluded doing new States, actions and delivery the as as on in returns. organizational to our such our from structure generated nonprofitable we address long America, interest simplification, capital North in mix cash business to and a actions pay focus performance, so, in In business on These by were rationalization. and to transactions. strengthened positions footprint, switching XXXX several board our

cross-functional telecom In took sourcing uniforms contract delayer greater resulting operational teams we and support a efficiency work and cost on to company, we simplification, savings. galvanized several steps leading from our of in areas to organizational improvements diverse access. accountability, in cost created to on management Next, critical which streams, management, variable

I rationalization, made well and DSI by the goal. reduced positioning that inventory the introduced with strategic an ahead objectives, yielding In also on profitability and in our XXXX, the future. pleased to XX we days, area well we Lastly, we am of by three which positive achieving XX-day team identified as as achievements our for outcomes vectors are actions the are our flow reduction cash crucial DSI these us our

services clarity products underscore running We importance new portfolio with reportable and or segments TRS; pressure MPD; our of the drilling, on more fishing market-leading cementation of and our managed have that our or tubular provided offerings reentry.

and commercial As greater and In services us product the we that testimonial are the additional for from the received Weatherford our across efficacy and In adoption digital of progress. our for well begun, delivered evidenced journey customers. of from energy a optimization portfolio. fall, recognize held Solutions excellence Monitoring to In the just strong has pulling and I these I'm successes, the positioning life but our Conference transition, through cycle. key by production our the platform space, the offerings Enterprise foresight traction Software rewards solutions gaining our ESG and we digital by the also Reservoir performance encouraged accelerated

by being the and We UN net signed to affirmed to XXXX have have Global our Compact. commitment on zero

securing carbon and and geothermal, or across capture wins storage abandonment CCUS, are Our geographies. plug-in offerings multiple in utilization

out am employees appreciation commitment, you, getting and our proud cycles. members and win everything I'm that of every that I delivered having As new intermediate accomplished; gratitude one in team an We I the share have XX% to -- successes set the confident and spirit their in My to of the simultaneously our goal by XX,XXX-plus of can we XXXX, this and to marketplace. Weatherford. for humbled of achieve EBITDA sacrifice margins that proud single driving and humbled go across with sincere

margins a a high in believe we coming while ourselves and be bar continued We cash are now years, EBITDA raising that driving of for the the can of the also high-teens delivering degree goal expansion with conversion. margin company

We Abu more for value Weatherford of starting commercial category. shelf. several some than our our a $X Dhabi like screen gain combined North solutions European optics contracts on led two record, liner this was National portfolio, TRS, by extension with position five-year operations. and company In awarded to the delivering with its five-year in award award from Sea. one-year awarded completions five-year reinforces the our safety deploy intelligent selected including of and in approximately contract big with quarter Saudi fiber commitment scope support continue A you, contract systems. our of for the amongst to billion momentum achieved Oil reservoir an XXX for super Canada This content and technology, completions Weatherford our a Weatherford completions construction well the a is increased to Aramco Norwegian fourth TRS to and based contract the wells completion we quality products. share wins, were downhole and in market, largest strength with We a segment. at with offshore downhole in hanger Tourmaline major contract leadership I'd monitoring for onshore continental in local to performance partnerships. awarded and The world's highlights

adoption score Evaluation segment, and Drilling across Moving geozones. NPD on in to we in our our made continue to and its wins headwind

notable MPD for with multi-rig successful in an system, Shell Asia. As the this a space implementation extension this continue awards contract a technology. Latin America operations to benefits in this Weatherford's awarded of following quarter well other Weatherford offered two-year We wins had MPD delivery and several by example, deepwater meaningful in

its Weatherford's as evidenced or customers distributed assets. its real-time The award monitoring backed in instrumentation, sensing and and a foresight Weatherford business with insights our in optimization, Our the expertise success through three-year agreement digital oilfield optic their presence our a segments energy which its awarded help revitalize including with integrated platform enterprise and production by our enabling excellence and proprietary transformation award includes The continues Launchpad. Company, the contract workover Light, Oil across signed global BP an digitally-led to Kuwait segment KOC & to by fourth sensing from KOC, to heavy Kuwait support platform. optimize the fiber Intervention strategy North Weatherford Light's to advance Production industry-leading combines in collaboration agreement a grow digital quarter, commercial plants. in deploy deployed production

wins products endeavors pilot project energy platforms, our some for to in few I'd noteworthy transition in on carbon first neutrality provide to major Moving a operations. of liner its European A selected Weatherford it our super CCUS and services as share its like to awards. achieve to hanger

project for XX-well growing we in with sealing Weatherford selected customer capabilities operations offshore the confident well downhole as encouraged European am our Another States, areas I operator. to seeing portfolio. a their energy using in a role traction carbon mobilized are transition the technology our and inherent recompletion I'm to major plug project. the a our abandonment and the And leverage these sequestration United we help for by in in we

time, capital with the increasing are as private from trends public E&Ps At robust discipline, and spending. Now America, same environment seeing in turning remain the we see land of In The are upcycle. on U.S. committed are improve, year increased multiyear while same our of and last to we to a markets. to we the activity to stages E&Ps view markets overall continues now trend the also early continue growth seeing some macro the of continue North investments.

Our Weatherford results prospects and makes excited generating improved past as to groundwork so. for I returns profile. am to growth focus, gets production increasing, the only sustainable be do sense and capital expect in Latin year's on capital last that East year's on us and longer-term it spending however, operational levels financial the going and firmly The for work continues we show building expansion. deployed restore to by particularly strong to where the its after Middle lay finish. has Internationally, continue America

We will work our capabilities. necessary the on strengthen continue to further focus to

in a are in growth year-over basis. third to our now see more call reflected in profitability on confident expansion in the improvement expect scenario and quarter highlighted margin continued we We

financial hand to Now I'll over it for update. Keith our

Keith Jennings

Thank you, Girish.

I company's construction aligns opportunities. our full-year and the lines: the results, strategy Evaluation, to XXXX Production review announced Drilling segment reporting the quarter. Intervention, recently focus changes well we all report Before well and business completions I product and We or around and DRE; in or us better life with implemented The structure realigning PRI. fourth three of updated remind or & fourth will and cycle, our the drive quarter portfolio. results our how WCC; customer growth in and and segments into offerings and priorities innovation. to choices. gas Aligning strategy and management the operating new organizational technology our differentiation reporting our markets. reflect to our growth investment designed core and drives provide and pull-through product improved segment structure The services across further to collaboration each All and foundation offerings energy These of as processes market-leading and strength the serve oil drive

across to seamless of Additionally, and energy solutions enable the in digital the growth our provide ability our our core continued would operations segments and integration transition. offerings the integrated

segments. improvement of drove the XX% slowdown in results of the revenues in were ongoing of and Our product margins mix and we from change sequentially, operational in partially the EBITDA declined points across and Fourth from XX% quarter driven the by basis million revenue XXXX margin environment million, for EBITDA sequentially, $XXX $XXX EBITDA improvement of revenues were by performance. an complexity. Fourth increase increasing service-related improvements revenues, $XX quarter an the basis revenue XXXX. and mix driven activity. third by by XX%, strategies non-repeat quarter year-over-year and primarily adjusted fourth increase cost improvement a in as in $XX revenues capstone full-year quarter X% reflect and and and resulting XXX of a million service operating sequentially, certain of fourth improved lower sequentially. X% we one-time Consolidated navigate million expenses income XXX the Seasonally go-to-market fourth was revenues seasonal to X% saw as our of quarter reflecting results service and primarily Adjusted improvements decreasing increasing year-over-year growth a offset of million in or a all $XXX Adjusted point our operations year-over-year, was higher perfect services XXXX XXXX inflation our our representing initiatives. items quarter year-over-year

points sub-Saharan mainly by revenues Drilling million million improvement year-over-year improved segment-adjusted of or inventory increased Europe, margins Sequentially, to associated margins of wireline The non-repeated of expand related margins Segment-adjusted and The operational $XX improvement was services growth service with services. charges. primarily and points EBITDA improved North demand EBITDA increased by declined XXXX points XXX expenses and $XX and and sequentially, initiatives help sequentially, increased $XXX a EBITDA our in EBITDA year-over-year Intervention, Middle Now basis quarter and globally. pricing demand and $X items year-over-year driven operational primarily increased primarily of services initiatives products increased let's and activity Evaluation, margins improved growth DRE, segment-adjusted growth reduced the X% driven EBITDA million intervention $XX initiatives to year-over-year expenses segment-adjusted across and Segment-adjusted and and decline declined basis cementation Completions, by & and production sequentially, XX% non-repeat mix, primarily points services an one-time improvement XXX North due mix. million of improvement of with driven cost Russia. shift to million the EBITDA basis supply adjusted XXX was and charges operational cost headwinds. offset XX% year-over-year and and margins Production sequentially. in America. associated to driven increased sequentially and for or points led in by one-time geographic inventory lower the margins by year-over-year XXX East basis mix, EBITDA product due were mix. of growth XX% Well breakdown. NPD revenues of lower related higher by segment partially chain $XXX to offset to Latin of products and significant X% America $XXX lines, product and our X% America Activity most primarily Segment-adjusted and volumes, quarter. or Africa million and The and the The significant were growth. X% improved year-over-year in increases fourth activity, the Segment-adjusted improved to and improved WCC, revenue in revenues increased year-over-year for Latin lower by due America decreased XX% points margins declined increased Lower the driven at delivering and and in PRI, revenue of margins sequentially. year-over-year in look and Construction basis sequentially. our prior quarter business in was sequentially. million XX%, software due million seasonal and $XX $XX cost year-over-year decreased basis associated and expenses prior automation related EBITDA year-over-year and mainly of XXX EBITDA all margins charges. million of XX our lower inventory Segment-adjusted improved decreased items product

Turning cash to and liquidity flow.

improvement underlying This managing flow. maintain cost to continue business results of our to and business is the operating through demonstrated We focus cash of our generate initiatives. the

repayment to fourth For a by Free increased primarily in margins In of operating unlevered due $XX the and XXXX, interest million. XXXX, and improvement approximately was senior generated fourth in XXXX, compared third earnings, to in increased our lower our quarter in the $XXX $XX the flow million, was to expenditures, year-over-year. full fourth quarter million year as full in Capital hand costs, $XXX offset of adjusted expense. was exit cash and $XXX $XXX the notes quarter XXXX $XX $XX cash cash of million cash compared of with increase increased reflecting higher the notes $XXX $XX million partially flow December expenditures an flow XXXX. of which sequentially, XX, quarter were quarter of of $X.X of million, $XX cash flow year XX% free was $XXX down XXXX, flow and the the free notes. exit by we Total million XXXX cash EBITDA. year-over-year million on of million, redemption improved million from Free driven million billion, the capital million

for levels. the increased $XXX we $XX expenditures capital Capital million to Our were growth on compared in expenditures XXXX. our increasing as activity given requirements sequentially capital full million year focused

focus be while completed our to to and driving and meet continuing XXXX at and successfully billion Phase million approximately B-. productivity. team operating double capital our year. the We services rigorous fourth expect I wish expenditures One disciplined efforts quarter, for demand We In resulting I to $XXX the asset technologies, the X debt upgraded Standard resulting our full interest expenditures the vigorous of thank least to on redeployment, increasing rating capital reducing in and and year, reuse from credit the of the Poor's restructure in repaying the the to outstanding XXXX $X.X debt Weatherford and company's cash share for of utilization. our continuing a $XX our thoughts and million significantly-improved management fourth flow by our maturity quarter performance, improvements corporate focus our to on profile some debt to quarter, cash & by a by first Shifting qualitative the continuous during per refinancing capital about now of driven will year. current

digits, the of Unlevered by single by expand to by be lower Adjusted investments the later in double-digit first to in free double the working segments, EBITDA is XXXX forecasted expect low are forecasted WCC and ahead currency look is Across expected are consolidated decline basis by CapEx $XX the to to and single high least we million EBITDA decline we XX% expect in are in we consumption, to by currently low is part driven to revenues expected first to expect double XX at capital and deliver XX% expected DRE contract margins revenues challenges, quarter, high weakness Consolidated Full supply cash flow points for expect as recover to growth. deliver full expected high be chain $XX mid to XX% year margins adjusted be the to PRI driven grow million in we digits. XX%. to XXXX. As is to quarter. the to quarters. range single forecasted which consolidated to to year digits. margins we to digits, low the in

expected As the net offset only $XXX increase revenue flow payments stated cash interest earlier, from Full free will and compared taxes double XXXX's by to increases CapEx million. cash will will at partially as year decline and $XXX in range is capital, be million for cash year. to be working an least XXXX spending driven by lower CapEx, in to

positive year. continue today. expect for our However, the you for I free cash we for generating call to flow your Girish back pass third comments. time to his closing consecutive will Thank now

Girish Saligram

Thanks, Keith.

areas Our focus laid results, have yielded have importantly, processes in the more terrific organization. improved procedures groundwork for and but even the XXXX

discipline continue and We and in strategy. our new those recognize drive rigor but areas we and XXXX demands that focus have drive will to our needs will and growth areas, execution

XXXX for to for we have refer core as We Weatherford: area key of operate. fulfillment, customer in growth, this fulfillment, of how all directed and a execution, is four and themes We our simplification. mechanisms excellence delivery

functions. multiyear aspects from a inventories satisfaction to globally-integrated a fulfillment of a is affect maintenance own multiple significant We on we we service independent This customer and with that business our mechanisms excellence of improving is but efficiencies. with our repair and how network while first the important journey, factories company It centers. steps supply significantly logistics to starting drive will from and chain This lines manage and year. are their and this of will delivery evolving set change are product in a industrialized a contemporary

improvements be and will can and take that confident same. challenges and fashion a effort demonstrated am significant operating the focused have deliver We I in on deliberate we this

area Our growth. focus second is directed

five fashion profitability. in of we time top years, grow in the focused on Weatherford, emphasis line first to the with a an are going but For

in increase to Our offerings. those will share best for of our growth commercial In third will the differentiation drive scenario, by driven a our teams be imperatives, strategy technology critical. will and increases arm investment innovation. believe market-leading for in is pricing excellence year We the more focus execution and area even innovation with growth is and our we that starting option

discipline function mindset and quality delivering new on same that the must execute the we our trust At win the with customers' day ensure through same a a need building by we and lean process our recognize are organization. drive to We every time, accountability commitments. we

Finally, simplification both us, theme and is for an organizationally enduring operationally.

flows complexity Increasing the industry margin in no the pricing OFS prices, by multi-year give supply the our XXXX is minimal growth green and and exacerbated could growth. are a confluence by in We believe focus tightening with us issues global expansion. inflationary of driven reducing Our demand underinvestment. and rising information on on improving is There commodity different. confidence A situation cycle significantly and dynamics current and market shoots levels, capacity always is disruption. in balancing restrict pressure chain activity

we pandemic marks across the growth traction balance, the Additionally, consolidated to positive selective regulatory are biased we we positively market poised are as XXXX hard situations are momentum demand on threat that the the advantage diverse of and work hold. destruction. five take certain well-positioned our takes last result think where the expanding a in In uptake wins in see being years could offerings. the and and to first on the time and legitimate grow margins dynamics geopolitical are environment, Conversely, revenues in combination commercial of of we our market-leading and themes, including

better were basis Our XXXX pre-pandemic than adjusted XXX revenue on XX% EBITDA XXXX lower over margins performance. points

for has up our joining results open let's with as us XXXX were, and Operator, it exciting for performance today. our begun. you As that, believe just Thank journey And we please Q&A.

Operator

now MacPherson session. begin question [Operator Piper with Instructions] Please, Ian Sandler. Today's the question-and-answer first go ahead. from We'll comes you. Thank

Ian MacPherson

Thanks. gentlemen. Good morning,

Girish Saligram

Good morning, Ian.

Ian MacPherson

internationally, But contract to pricing That's in headwinds this are much pipeline supply et markets. XX% than you when when market net would the the customers or And appreciate pricing it lingering and your international reflect building at discuss international heating it domestically to environment? full pricing cetera. chain, I outlook Girish, the the growth, climate appear internationally. U.S. with in around look and we year with But for can balancing intuitive. receptive you tailwinds inflationary tenders raise of cyclical to your is not inflation need the of that in is know the gross disruptive you traction Weatherford the peers earlier multi-year how we see up in your

Girish Saligram

I Ian, think, a point. Sure. important it's really

are I that play here. at think a couple of things

the head, hit it's on you long-term nail pricing the versus think really contracts the model transactional I in the U.S.

So here sort part of of we in of number have I evolution think is our a contracts already that place.

we the contracts as So, those increases are for typically take we've pricing new loaded typically and that's and -- us. in, hold where -- announced get those of are them us for series back-end a

So the we'll then in year XXXX. into half second see more this that of and going

the So you of out the some numbers why on you come is to reason. the question pricing, of that's that see to any situation. everyone receptiveness, generally open but within all in saying, I they think Look, on customer I lay your But think be wanted effect one do. don't big way understands

are constructive we to increase ways conversations having to also looking and and margins to they're at cut think costs dialogues both prices. but I raise

that So a tend of both. to we've lot thresholds there's do it's surmount. at to would of different players in But combination the markets, I got of at dialogue. time, markets, that the there's especially say, is and sense just a level local But certain rationality, geographies constructive of international there a in a compete same

Ian MacPherson

that production for the element which to Makes guided of sequential that that more decline year highest informs but QX, upward a full caught outlook more geographic also And attention, in have the more of unfolds? Or my businesses. indicated you're and is your which trajectory specific ask if if to expecting sense. appears that's that intervention, of as those a year trajectory? trajectory implies an was related more sloping of rate, backlog I growth to within that evolution One for and the business wanted contract

Girish Saligram

Yes.

there's So to and I weigh as well. a things ask I'll of in think couple Keith

and had have are think, facing whole out a logistics as in that chain and we've hard is a I that prepared QX remarks, our us, is first of and it's view. the a supply in we set pointed headwinds balanced of to industry all, bit really couple mitigate, we times a of so impacting of especially the working them

starts we the onwards rest improving QX really as that towards second to especially half. So, the and of through in alleviate go year, the

you see. So that's what

second The it's to remember intervention also services. thing business, the is, but it's production

we the up, you have a come operations, more as So if intervention stream, will, loaded. actually on will wells greater and degree services pick drilling be that portion back-end expect that you we a have of also more bit and to

Look, that. We've So, it what about a really production products that's some automation got we're is significant our it is. software. offerings, so and a excited got But segment. our space of fantastic service digital this we've in -- also portion offerings

to of why that a a anything So little is us again, the add? kicks see want a bit bullish year. Keith, which lot of rest later, you you the in being bit more on toward that

Keith Jennings

of Girish. nailed impact of some very things the around there, I than because the think happening very and supply chain others PRI logistics specific it the business more will we Ian, there. so well equipment size you have that the

to think And balance what flows the we fulfillment of have over some a into the planned And that what of effect also, that itself our as have situation. the the we and the I European through about through QX. to specific weakened That's FX and impact dollar thinking QX given contract for slower just we that, that. also to organization, So fulfillment currencies have works consumption. the translation geopolitical feel against

some just The timing lost these pushed out. have customers So have we contracts.

in we still strong PRI growth year. so across expect the And

Ian MacPherson

Thank you, gentlemen.

Girish Saligram

Ian. Thanks,

Operator

next Our today Baker Doug from ahead. comes question go at Benchmark. Please,

Doug Baker

just by this but I guidance wanted kind to the by margin little go Thanks. we reporting the a The the bit, of trajectory as color on get on on segment thoughts question the year. reporting previous through touched segment more and

Keith Jennings

Sure.

And what we given at looked across margins. haven't reporting margin these precisely how also, we we by consolidated We So, revenue more have balance of is unfold so. done the gave segments guidance the segment. think will

something we're feel particular a try to you to specific want happy to ask that. there's about segment, if So,

Doug Baker

pretty framing see high-level margin year we in Would just Maybe progression way a that's characterize segments. that of be consistent of each the it. fair through the to

Girish Saligram

Obviously, last would segments to the seen speaking, of we've is in that Doug, made as similar year QX, throughout we within our initiatives expansion what we traction sort of the we've some effect exit be rate will the think see why the certain dig blended items. better, Last a I margin we steady because Look, steady is our from of several we sort But into was expect to that progress the different year. year have the see course I XXXX, of Yes, at broadly impacts we will. with year that's we the effect really to think guidance. also continued But unfolds mix extent, had overall balance and and we for which the there's laid to hopefully and year to what that. and of improvement as terms is a each sort very quarter. then how of get over the we them, one-time of an of you've improvements going out of saw magnitude look got

Doug Baker

as cycle. high highlighted go Okay. that be through the we EBITDA pretty conversion And you then should

think, EBITDA We flows? say, that out? Just conversion to years way frame any to three cash

Keith Jennings

requirements our of a about view. certain cash conversion, Well, than in the know to have out investment as become working free we less I of taxes geographies, but double capital, if the because in we'll think company simply strong level more and can profitable we've more restructuring. a be I we have will maintaining to and we'll invest same think expenditures, CapEx flow requirements give we when in the think XXXX, we XXXX, years have cash three don't we'll about But

So, flow we that the savings investments. And that says margin we still to our the given fund for created hoping year, positive on next maintain help given steadiness interest will the free to be of profile with years. that cash two three these have trajectory the across to we're that expansionary

Doug Baker

the do think trying three I target to We to wasn't a longer consider world. an term? maybe out. conversion be -- what over a to just uncertain And in number or years just get But live you a high about clear, specific

Keith Jennings

longer moment, -- that XX% the a that over say think the about we XX% are on cash to would at something I make capital I So, When operating I that to flow the full range. in the term, to think are we today. easily year efficiently our have we them just operating can that probably because I as that's working maintain think basis, as have says sure we mechanics that EBITDA

the over our overall So, boundaries, of XX course days cycle kind XX better. of pushing performed teams look but XXXX, out capital out inventory, do -- how we we of taken the still net to out if XX you days of working AR. the are pushes That of we've at

those of we are the So kind the to that monitoring. have mechanics keep

Doug Baker

enough. you. Thank Fair

Operator

of Please, next our Brody ahead. Bank go question Greg And of from America. comes today

Gregg Brody

Good morning. Hey, guys.

Girish Saligram

Hey Greg.

Gregg Brody

First tell stands you question. an Curious facility. I if or could us didn't hear you're credit that on where the thinking about that update how today?

Keith Jennings

Sure.

So our banks. we are working with diligently

that working process. to through were our see course, They We like, is today. are print waiting out looks still and that of what QX

and working can an given dialogue across that OFS the bank or ones being We've to the into very in We're quarters. us, back happening. positive companies loosening facilities to we update have now back a the saying as get I there's we banking little point should and and have we've conversations but that will market through towards a it, coming of looked discussion as we with that So well seen industry whole process.

Gregg Brody

Got it.

here. like here. until So, get you nothing sounds said couple we of be coming emitted quarters. could a quarters It resolution It a

Keith Jennings

find that and conditions it interest facility in the terms Weatherford. the I probably it organization. wouldn't think be best for probably comes but a of sign getting could to acceptable tomorrow, We down we

Girish Saligram

really that's Greg. the focus And here,

reducing we've to As know demonstrated on got structure. capital over address focused very are interest last We our we the expense. we have year,

towards We taken steps last set huge a improved where have stand. of that year and we

versus We just sure it We company for in know we've get have the place do hanging we everything protected are getting address to the term make also going million. for and out place. in sake the is got there got something to up to that. longer the at But of stub $XXX that set

Keith Jennings

to the we addressed and to We $XXX we flow. generate don't business, $XXX stub, stub. million be generated the fees as $XXX stub the the in of the free plus free Last flow million cash year, fund And reinvest we of repaid we we refinancing. that, will took pay took Yes. cash need to will continue address the that million a to

we are are to structure, some So market provide do things the going there ourselves for. there we that and capital can focused so to support that we're the on we are know some things bank look to

Gregg Brody

update on appreciate there turning that. the just gears. I Maybe

a was long-term number question and inflation that you have first the you've about contracts. of -- highlighted mentioned You've

necessarily not increase today. result this going of see to as revenues you're a So,

better You did this to year. guide margins

you what I'm cost it on ability operating the through through is, to trying pass contracts? are older you inflation out So to to simply finding savings? customers to address ways Or these do have figure

Keith Jennings

Yes.

Greg. So mix, it's a

that of a we it do offerings. circumstances. pass at we've depends? mix, labor along you material we a can then inflation fairly and high If typically and And So we've portfolio degree really in our we've much got terms pretty got look service-related in all inflation got mix of

a product-dependent. business be more not it's tends you product that So to really will. the transactional, little bit And if

we're So, think front. the year. well-protected get bigger kick sort they contracts, latter of we that But in longer-term part the really point of the I really that on overall is the as

Gregg Brody

the free then right. cash items. flow And on All just line

the $XX this -- get we a usually you think million so mean year? see it of just should this said number similar from I'll that be You run restructuring, this Does year. through the I investment of me, [indiscernible] would level ones

Keith Jennings

I think higher be would will be it higher I million. would million, don't it than the $XX the think much but $XX than

million between would and I So, million this $XX at $XX number time. that put

still working says as through so, his Girish plans, in our opening. And we're

that we we through on year forth. One things, our things working mean warehouses could consolidating and focuses system so how that our of our and strategic major are this of end footprint, make is deliver working fulfillment back and the

going So, investment we make restructuring into that to be will some that. have there's to probably

Girish Saligram

multiple just talked other would the And about we've times. again, thing Greg, add I is

of and it different. approach et about sure payback to set get the absolutely focus very We're a leads bit, are looking sort the a we rigorous of next fund doing all little cetera. we sort dramatically that Our at of metered really benefits, a until is in we where restructuring on business we cases are then and and piece, it's

deliberate being is where of any put about we're So like having we do other that confidence it. pay just thoughtful, high going into degree to and It investment very and off. we the very it's very careful company with a us

Gregg Brody

And here. All a others right. just few

just days. trend that's payables receivable working we where with should Right? trend and you've been and to expect capital, revenues seeing and So a

Keith Jennings

Yes.

Gregg Brody

you're inventory taking about is number an E&O we thinking as and [indiscernible]? you out Or do there it The deduction? charge, some your have add-back be margins should there of sort in a or that

Keith Jennings

It's adjust in margins. our to We It's in flow cash EBITDA for our have it included purposes. margins. just

yes. So,

Gregg Brody

there that we free we should cash to be thinking going be an adjustment Is when run this our about flow numbers? year

Keith Jennings

best think until are about and moving. So take we it running an that the would of when I we off terms is use thinking kind and think moment, for fulfillment the get rate. now now? that about If And always I things run XXXX at where where just think very is probably get way year of then plant specific the work to through calculation. looks rate XXXX the the at of it what we slow the one at can to it's with our better guide we that's more where inventory in, probably and also, also It's things are so working I full-year that take we we until XXXX, is it think run I second of so obsolete it's of I a half second about what as planning movement demand rate by start new the a and with are further really, of coming will I'm I -- in And calculation half where because the and think initiatives that through those update. get will

Gregg Brody

Can second of you half remind us XXXX was? the what

Keith Jennings

back the deck. of in It's the

million the for we think were probably I about same $XX quarter, in the QX.

million it makes million that half. $XX for about So or the $XX

Gregg Brody

just And that we should assume? Or we annualize should number?

Keith Jennings

number that now. for annualize Just

Gregg Brody

to And to benefit year? going cash that's this be a flow

Keith Jennings

That's add-back. a benefit, yes, it's because an

Gregg Brody

it. got I Great.

should the then million add And back. that about $XX I cash we taxes, how year? think So this

Keith Jennings

total year I or we that and was to I $XXX step million. million closer think and that million cash should between see somewhere $XX $XX up million taxes this $XX think

Gregg Brody

categorize me. Got thoughts Any additional last on a you question what do it. disposition? asset then And for sales? Or

Girish Saligram

Most of anyway. tend We flow analysts calculation that don't cash that the covering that. remove in comes it the forecast We think to just bump. a as from

don't just focus we that. So on

Gregg Brody

a M&A And for things opportunities you add -- one much to year. you in the to just environment? maybe strategically. Are than How looking last are at position you're your portfolio? there Obviously, last better are were you

Girish Saligram

Yes.

So it, look Greg. -- as at we'll you sort look said, opportunistically, of

shareholder portfolio; it. growth is sense look, if definitely compelling makes from overall at something amount that our company, drive to riding think a operating that and along opportunity continues to the to value underlying also that's We both so got ship. comes look organic there the Our But focus tremendous innovation really perspective, within priority. be the within on we'll we've a of processes, most our but fix

engage conversation. So open to staying we're in and willing

Gregg Brody

to I guys, Listen, and time, helpful. very appreciate yield That's the you. I will

Girish Saligram

Thank Greg. you,

Keith Jennings

Greg. Thanks,

Operator

Stanley. [ph] Morgan the ahead. Connor Please question And from Rondon next with comes go

Unidentified Analyst

pretty that are higher-level related so often Yes, questions thanks. Two together. here,

structurally at terms where margin? more then, and long-term; see at where of And budget trend of if you there noticeable businesses? incremental opportunity revenue the you think your the sort as in you maybe [ph] greatest capital? do the new you that most within growth? CapEx you you're As look parse directional let's are segment here, your deploying And the look a of cycle, increasing, about allocation for that Is

Keith Jennings

Connor. Really great question. Thank you,

or way think laid out business take it about our we and is start you DRI, evaluation out, it So business that if we is the currently way if tools and where work. and we the drilling up and have set service-oriented, our with heavily perform you

building and systems and production are so products-oriented; it's forth. whole you so to more really go behind down As we it's a products intervention of mix get down services And into much business, and the well so get liner that then construction, leaving product good sales; hangers and know, when forth. cementation and you so to them you the

we can you to Evaluation XX% where and challenge The the lines; remaining is XX% because things. our when moment do So we're trend look now focused the the we've fulfillment product it, go two see say going you of segment and practices. we of have think easily have our re-segment toys kind so this. at other right And gone as CapEx, between at and you now long-term we look and to we been out to to how split that the XX% on change that's is, we or Drilling through as that's would about the CapEx then will our new that need at

our be may changing investments there bigger in the plants. footprint of So

that out the so infrastructure do And go for CapEx before should toolkit that itself we may we this, change, the may build service. and the the segments smooth Girish? but and in back to how that -- near-term,

Girish Saligram

a Look, of and effect the our drilling traction so see little short in always Yes. though, part got see part we reason the probably growth. way part think really, business follows it that energy life in we've to of No, Look, will we respect laid that be in sort piece terms segments the world long-term, these that we of completions look to way in is in are of operates a business because I and long-term across the in each significant. excited industry, about lag production solutions continue more I this it but of the we'll second energy really that's highlights But your so that on like will spectrum, bit of portion I the others of think -- all very ones while the really completely we well come, the at significant oil of we say agree. way also and that's segments. we we've for Connor believe, sort right, transition to our and with the And to look digital production on then mid-term, did business. And of offerings. takes construction prospects. we one up But look many segmented question in a see out. the it would where we got growth gas of where and what year, the pick there's at short-term, be the at we'll we are for your we you growth would the to the supply something cycle; will it say, this the a -- really Look, off. are the guidance I drilling doing strong cycle, as

So but -- the skewed really, it in is also in are backend; them, of bit but specific playing not with it's every towards towards PRI growth because towards especially single line. product little we've we a all geography more got every market good single

Unidentified Analyst

back. very color. I'll for That's the context. all jump Thanks helpful much

Operator

Energy. comes And Daniel from our Please next ahead. today Sean at go Mitchell question

Sean Mitchell

were internationally seeing Hey Obviously, mentioned of it we And the -- going supply you're internationally, your U.S., or in specifically Is that seeing or issues think the to seeing guys you kind and you maybe the talk we're about exposure opening more drivers other especially or what's what given a as and from little chain guys, labor or things? Can you shortage the on you're similar truck it to in supply huge whatnot. markets. it question. the in a chain international problem that in taking bottleneck with with a do for of your well, narrative markets? bit international thanks seeing is bottlenecks U.S., labor, is issues

Girish Saligram

chain. with Hey look, supply start I'll Sure. so

stuff and issues The bit very that lot that. we've U.S., logistics to the significant like it's the and challenges the are different shipping constraints U.S. truly little charges not a got of and trucking given But in we those lanes just are restricted alone. think are a seeing freight I look, transportation across. the and capabilities shortages infrastructure global; around

is labor it, high-tech a and So world, got where more of applications, for would little on electronics different. factories, in different fluid raw cetera; I global to basis. very We've terms our piece, a labor a you've components us cetera. lot is of got it unionization a overall, look, dynamics the the large the materials much rest the From of et that a than a say challenge doing has market we're also today especially to extent. getting side generalizing a U.S. bit of et

would that very bit you've say are labor a challenging the So inflation in country. rest world in tad and more got I a of bit different more side but is again by the the U.S. stable little aspects the

Sean Mitchell

you. Thank

Operator

Please Ian question And today Sandler. comes ladies and gentlemen, Piper ahead. our with go from next MacPherson

Ian MacPherson

you follow-up, for with hot the I'm questions. back Thanks the sorry the to [ph] put model seat in Keith.

for we stock flow wondering didn't think us in the just I fourth Thanks. for that the for was in XXXX? if that rebaseline in I EBITDA our the free quarter. cash step-up could revisit was was comp And you your one estimates that

Keith Jennings

Sure. Thank you, Ian.

years; -- calculation hit was to calculations. second the up we the So however, long-term then, catch-up few also supposed to of things. to The confluence two over to paid out the primary the that some fourth some be had, into XXXX. was so step-up a was accelerate And a phantom have One payment we half quarter related have true the was was target two share and that program of should we it year to usually early and back back quarter. adjustment up. more incentive equity the on that on the it confident being this compensation programs at brought revised EBITDA think targets When the comp, for back are at we that and we I in five where each stock will or normalize well, hit you are to as we upon XXXX, the so the based the four that for look quarter, QX -- that outlook of

Ian MacPherson

it Thanks, guys. Appreciate Keith. Perfect.

Keith Jennings

Thank you, Ian.

Operator

to question-and-answer Ladies and conference I'd this back turn to concludes our over remarks. management this session. for final like gentlemen,

Girish Saligram

for engagement to today. conclusion look appreciate us I to I the forward of quarter. the you the first you, and dialogue, everyone, speaking of Thank really at the Great. joining again

Operator

presentation. concludes conference you We all for thank today's call. This you. Thank attending today's

your have a may lines, now and disconnect wonderful You day.

Weatherford International (WFRD) 17 Feb 222021 Q4 Earnings call transcript