Weatherford International Plc ((WFRD)) has held its Q1 earnings call. Read on for the main highlights of the call.
Weatherford International’s recent earnings call painted a picture of mixed sentiment, balancing notable achievements with significant challenges. The company highlighted strong free cash flow and successful technology deployments, yet faced revenue declines in key regions and uncertainties due to global trade tensions. Weatherford’s strategic portfolio optimization and robust capital return program were emphasized, though tempered by a cautious outlook and ongoing restructuring efforts.
Strong Free Cash Flow
Weatherford reported an impressive adjusted free cash flow of $66 million for the first quarter of 2025, marking a free cash flow conversion rate of 26.1%, up from 24.4% in the same period last year. This improvement was largely driven by strong collections, showcasing the company’s effective financial management.
Middle East and Asia Growth
The company experienced year-on-year growth in the Middle East and Asia, demonstrating resilience and stability. These regions contributed positively to Weatherford’s overall performance, offsetting some of the declines seen in other areas.
Successful Technology Deployments
Weatherford made significant strides in technology adoption, including the installation of the first OptiROSS RFID Multi-Cycle Sliding Sleeve Valve for Petrobras in Brazil. Additionally, there was a strong uptake of the ForeSite Power Regenerative variable speed drive in North America, highlighting the company’s innovation capabilities.
Portfolio Optimization
Strategic divestitures in Argentina, particularly in the Pressure Pumping and Wireline businesses, are expected to enhance portfolio quality. This move aims to focus on differentiated product lines, aligning with Weatherford’s long-term strategic goals.
Capital Return Program
Weatherford has demonstrated a commitment to returning capital to shareholders, having paid three quarterly dividends of $0.25 per share and repurchased approximately $152 million worth of shares over the past three quarters. This reflects the company’s strong financial position and shareholder-friendly policies.
Significant Revenue Decline in Key Regions
The company faced a notable revenue decline in key regions, with activity levels in Mexico dropping around 60% year-over-year. North America continued its downward trend by 4% sequentially, and Europe softened due to operator cutbacks in the UK amidst an unfavorable policy environment.
Uncertain Market Outlook
Weatherford expressed a cautious outlook due to a softened international market, substantial drops in Mexico, and reduced U.S. land activity levels. These challenges are compounded by lower commodity prices and increased global trade uncertainties.
Impact of Divestitures
While the divestiture of Argentina’s Pressure Pumping and Wireline businesses is expected to improve portfolio quality, it results in revenue and EBITDA reductions in Weatherford’s financial results, posing a short-term challenge.
Potential Global Trade and Tariff Impacts
Recent U.S. tariffs and retaliatory measures have introduced significant uncertainty into the market, potentially causing demand destruction in the short- to mid-term. Weatherford is closely monitoring these developments.
Headcount Reductions and Restructuring Charges
Weatherford has undertaken significant restructuring efforts, reducing headcount by over 1,000 since the third quarter of 2024. This has resulted in additional restructuring and severance charges of $29 million in the first quarter of 2025.
Forward-Looking Guidance
In its forward-looking guidance, Weatherford International projected a cautious outlook amid market uncertainties. For the second quarter, the company anticipates revenues between $1.165 billion and $1.195 billion, with adjusted EBITDA ranging from $245 million to $265 million. For the full year, revenues are expected to be between $4.6 billion and $5 billion, with adjusted EBITDA between $975 million and $1.1 billion. The company plans to maintain a free cash flow conversion increase of 100 to 200 basis points year-on-year.
In summary, Weatherford International’s earnings call highlighted a balanced narrative of achievements and challenges. While the company reported strong free cash flow and successful technology deployments, it also faced significant revenue declines and market uncertainties. Weatherford’s strategic initiatives, including portfolio optimization and capital return programs, position it for future resilience, albeit with a cautious outlook in the face of global economic challenges.