Weatherford International Plc ((WFRD)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Weatherford International’s latest earnings call presented a mixed sentiment, characterized by strong achievements in EBITDA margins and free cash flow, yet overshadowed by revenue declines in key regions and a challenging outlook for 2025.
Strong Full-Year Adjusted EBITDA Margins
Weatherford reported exceptional performance in its EBITDA margins for 2024, achieving over 25% for the year. This marks the highest full-year margin for the company in more than 15 years, highlighting Weatherford’s operational efficiency and cost management strategies.
Significant Free Cash Flow Generation
The company successfully generated $524 million in adjusted free cash flow for 2024, with a notable conversion rate of 37.9%. This financial strength underscores Weatherford’s ability to generate liquidity and invest in future growth opportunities.
Middle East, North Africa, and Asia Growth
Weatherford’s international business flourished in 2024, particularly in the Middle East, North Africa, and Asia. This region experienced a 17% year-on-year growth, showcasing the company’s robust presence and market penetration in these key areas.
Successful Dividend and Share Repurchase Program
Weatherford demonstrated its commitment to returning value to shareholders by distributing two quarterly dividends of $0.25 per share and repurchasing approximately $99 million of shares in the latter half of 2024.
Wealth Services Product Line Growth
The Wealth Services product line has shown remarkable potential, with over 50% growth over three years. This rapid expansion highlights Weatherford’s ability to innovate and meet evolving customer demands.
Revenue Decline in Key Regions
Despite successes in certain areas, Weatherford faced challenges in others, with North America revenue down 2% sequentially and international business down 6% sequentially. These declines were mainly due to reduced activities in Latin America, especially Mexico.
Projected 2025 Revenue Decline
Looking ahead, Weatherford anticipates a mid-single-digit decline in total international revenues for 2025, driven by expected downturns in Mexico and Russia. These projections reflect ongoing geopolitical and operational challenges in these regions.
Challenges in Mexico and Russia
Significant activity declines in Mexico, with potential revenue drops between 30% to 50%, and continued reductions in Russia due to geopolitical factors, pose substantial challenges for Weatherford’s future growth and stability.
Uncertain Market Outlook
While some regions show positive performance, the overall market outlook for 2025 remains uncertain, with a negative bias due to difficulties in Mexico and Russia, which could offset other regional gains.
Forward-Looking Guidance
Weatherford’s guidance for 2025 includes a revenue projection between $5.1 billion and $5.35 billion, with adjusted EBITDA expected to range from $1.2 billion to $1.35 billion. Despite challenges, the company remains focused on its strategic objectives and growth in areas excluding Mexico and Russia.
In conclusion, Weatherford’s earnings call highlighted a mixed sentiment with key achievements in financial metrics but also underscored challenges in specific regions. The company’s strategic focus on growth and innovation provides a foundation for navigating the anticipated market headwinds in 2025.
