Weatherford International plc Q1 FY2025 earnings call

• Leadership changes: Anuj Dhruv joined as Executive Vice President and CFO, with Arun Mitra departing. - First quarter results were in-line with expectations, with adjusted free cash flow of $66 million and adjusted EBITDA margin of 21.2%. - Segment highlights included technology advancements like logging while drilling in the U.K. and North Sea, OptiROSS system installation in deepwater Brazil, and uptake of ForeSite Power Regenerative drive in North America. - Divested Argentina Pressure Pumping and Wireline businesses, with proceeds to be used for portfolio optimization and returning cash to shareholders.

Activity levels softened in key segments and geographies. Mexico saw a steeper decline than expected, with activity down around 60% year-over-year instead of the previously expected 30%-50%. North America continued its downward trend, down 4% sequentially, and Europe softened due to operator cutbacks in the U.K. Middle East and Asia showed year-on-year growth. The Argentina divestitures of Pressure Pumping and Wireline businesses impacted revenue and EBITDA, but there are no specific absolute revenue numbers per segment with revenue contribution % provided.

• Q2 revenue expected $1.165 billion - $1.195 billion, adjusted EBITDA $245 million - $265 million. - 2025 revenue expected $4.6 billion - $5 billion, adjusted EBITDA $975 million - $1.1 billion, free cash flow conversion to increase 100-200 basis points. - CapEx expected to trend down to 3%-5% of revenues for the year.

• Market softness in international markets, including deeper decline in Mexico, continued reduction in U.S. land activity, and softness in Europe. - Lower commodity prices driving caution in customer spending. - Uncertainty from U.S. tariffs and retaliatory tariffs leading to potential demand destruction. - Uncertainty in Mexico payments affecting working capital.

Q: David Anderson from Barclays asked about MENA region trends and the downturn duration.

A: Girish Saligram responded that MENA is stable, expecting a gradual slowdown with positivity on offshore for 2026-2027 and a short-lived downturn.

Q: Scott Gruber from Citigroup asked about divestitures' impact and proceeds use.

A: Girish Saligram discussed divestitures' revenue impact, proceeds adding to liquidity, and focus on Vaca Muerta in Argentina.

Q: Saurabh Pant from Bank of America asked about Mexico's impact and free cash flow.

A: Girish Saligram talked about Mexico's activity level assumptions and free cash flow generation remaining healthy.

Q: Jim Rollyson from Daniel Energy Partners asked about cost reduction progress.

A: Girish Saligram discussed ongoing cost reduction efforts and future margin improvement potential.

Q: Sean Mitchell from Daniel Energy Partners asked about P&A services outlook.

A: Girish Saligram highlighted P&A services' growth prospects in various regions.

Q: Doug Becker from Capital One asked about portfolio optimization and acquisitions.

A: Girish Saligram talked about portfolio optimization, recent acquisitions, and future acquisition approach.

Q: Derek Podhaizer from Capital One asked about tariff impact and digital spending.

A: Girish Saligram discussed tariff uncertainty impact and digital spending's potential insulation based on value proposition.

Q: Atidrip Modak from Goldman Sachs asked about guidance conservatism and Anuj Dhruv on capital allocation.

A: Girish Saligram on guidance conservatism and Anuj Dhruv on sacrosanct dividend and strong balance sheet