Weatherford International plc Q4 FY2025 earnings call

• Sequential revenue growth in Q4 2025, with operating income higher sequentially and year-on-year, adjusted EBITDA margins well above 22%, and free cash flow conversion of 76%.
• Balance sheet fortified with net leverage at 0.42x, returning $173 million to shareholders via dividends and share repurchases in 2025.
• Cost optimization efforts included a $58 million restructuring and severance charge in 2025, rightsizing headcount, real estate, and supply chain, and leveraging shared services, digital platforms, and AI to enhance efficiency.
• Product line successes: Completions grew significantly due to technology advancements, artificial lift benefited from strong customer relationships and international footprint. Wins in product lines like wireline in Romania, completions in Kuwait, and over 25 installations of plug-and-play liner systems in Norway.
• Strategic plans for 2026 and beyond focused on driving cost and CapEx to optimal levels, focusing on each business unit as the intersection of product line and country, and transformational changes including infrastructure program overhaul, product innovations like MARS and Modus, and partnership agreements.

In Q4 2025, Weatherford had sequential revenue growth. Latin America saw 16% sequential growth, led by Mexico and Brazil. North America had modest growth with higher Canadian activity and U.S. offshore partially offset by U.S. land decline. Europe Sub-Sahara Africa and Russia declined 2% sequentially. Middle East, North Africa and Asia region had 4% sequential growth. WCC and PRI were the largest contributors to top line growth. For full year 2025, Mexico revenues declined over 50%, but stabilized. Completions, a low capital intensity business, became the largest product line, and artificial lift benefited from strong installed base and international footprint. Adjusted EBITDA margins in Q4 2025 were 22.6%, and full year 2025 adjusted free cash flow totaled $466 million with a 43.7% conversion ratio.

• 2026 Q1 revenues expected to be $1.125 billion to $1.165 billion, adjusted EBITDA $230 million to $240 million.
• Full year 2026 revenues expected $4.6 billion to $5.05 billion, adjusted EBITDA $980 million to $1.12 billion, adjusted free cash flow conversion in low to mid-40% range.
• 2026 CapEx expected $190 million to $230 million, with mix different from 2025, including decline in service tools CapEx and increase in IT-related spend on ERP.
• 2026 to have slight revenue declines but improving margins and strong free cash flow generation, with second half expected to show growth similar to 2025's second half over first half.

• Geopolitical conflicts, trade policy impacts, and commodity price volatility could affect international activity.
• Payment uncertainties in Mexico initially impacted net working capital, though trends have improved.
• For Venezuela, need for stable governance, regulatory environment, operational stability, and approval of brownfield redevelopment with strong payment plan for potential business to materialize.

Q: Could you give more detail on how you see Saudi playing out this year?

A: Hopeful of healthy recovery in second half of 2026, strong opportunity as still underrepresented, collaborative approach to pricing to drive total cost of ownership solution.

Q: What's your view on the broader Middle East and North Africa region?

A: Region is largest for Weatherford, with strong historical performance, variability in some countries, continued momentum in UAE, Kuwait, but decline in Qatar, large integrated service contract ending in Oman but offset by other opportunities, and growth expected in Egypt in second half.

Q: How did Mexico's business trend in 2025 and outlook for 2026?

A: 2025 Mexico revenues declined over 50%, but 3 consecutive quarters of sequential improvements, stability reached, slight growth expected in 2026, and continuing to do more in Mexico outside of one large customer.

Q: What needs to happen for Weatherford in Venezuela and which product lines benefit?

A: Need clear view on governance, laws, safety/security, regulatory environment, and line of sight to payment. Initially, interventions, well services, artificial lift will benefit.

Q: Expand on offshore outlook for Weatherford?

A: Early signs of improvement in offshore deepwater activity, MPD and TRS businesses natural for offshore, excited about other product lines like completions, interventions, well positioned as market rebounds.

Q: How is Weatherford positioned in North America with activity outlook down mid- to high single digits in 2026?

A: North America business, especially U.S. land, production-oriented with artificial lift as big product line, focusing on optimizing footprint, driving differentiation and innovation, to keep margins intact and drive growth through innovation in products like well construction and digital business.

Q: Dig into first quarter guidance, impact of seasonality and orders pulled in?

A: Q1 to Q4 seasonality, orders pulled in from Q1 to Q4 in Brazil and Gulf of America, weather impact in Texas, Q1 2026 compared to Q1 2025 with Argentina divestiture impact and tariff impact, but expecting second half 2026 ramp-up.

Q: Talk about CapEx focus and business mix in 2026?

A: CapEx within 3%-5% range, evaluating spend, doubling ERP spend in 2026, focusing on asset utilization, trading CapEx to OpEx, and optimizing return on invested capital.

Q: Talk about cost cuts and margin outlook for 2026?

A: 2025 cost cuts included reducing ~2,000 workforce, resulting in $150 million run rate margin improvement, continuing to rightsize and evaluate organizational structure, using ERP for continuous improvement, expecting margin improvement in 2026 despite revenue headwinds.

Q: Talk about transformational changes and new initiatives?

A: Transformation includes new ERP system for automation and efficiency, portfolio changes focusing on new products and technologies in lower capital intensity businesses, maintaining focus on operating model for daily improvement, planning for flat market to achieve margin improvement, and product innovations like Modus MPD solution with 70 jobs in 2025.

Q: Follow up on Modus Managed Pressure Wells Solution success and growth outlook?

A: Modus is a breakthrough technology accessing new market tiers, enabling foray into shallow water markets, with growth potential as extended to different applications like cementing and setting liner hangers, expecting greater growth in 2026 and beyond.