Weatherford Announces Second-Quarter 2021 Results

HOUSTON, July 28, 2021 /PRNewswire/ -- Weatherford International plc (NASDAQ: WFRD) ("Weatherford" or the "Company") announced today its results for the second quarter of 2021.

Revenues for the second quarter of 2021 were $903 million, an increase of 9% sequentially and 10% year-on-year.  Reported operating income was $25 million in the second quarter of 2021, compared to an operating loss of $13 million in the first quarter of 2021 and an operating loss of $497 million in the second quarter of 2020. The Company's second-quarter 2021 net loss was $78 million, compared to a net loss of $116 million in the first quarter of 2021 and a net loss of $581 million in the second quarter of 2020.

Second-quarter 2021 cash flows provided by operations were $46 million, compared to $74 million in the first quarter of 2021 and $31 million in the second quarter of 2020. Capital expenditures were $9 million in the second quarter of 2021, compared to $15 million in the first quarter of 2021 and $35 million in the second quarter of 2020.

• Second-quarter 2021
• Adjusted EBITDA^[1] of $136 million, an increase of 33% sequentially and 72% year-over-year
• Unlevered free cash flow^[1] of $165 million, an increase of $71 million sequentially and $57 million year-over-year
• Free cash flow of $48 million, a decline of only $22 million sequentially, despite $117 million in interest payments, representing an improvement of $50 million year-on-year

Girish Saligram, President and Chief Executive Officer, commented, "I am pleased with our second quarter results, as we delivered another quarter of positive operating performance. We made further progress on our strategic initiatives by driving improvements across all focus areas, including North American profitability and global inventory utilization.

"Our results from the second quarter of 2021 clearly demonstrate that efforts to streamline the business over the last several quarters have begun to take hold. We capitalized on activity improvements to grow revenue and capture significant fall-through from cost control, which led to expanded margins and positive free cash flow. We also saw increased traction of the commercialization of our field-proven technologies led by market-leading MPD and TRS as evidenced in the Middle East and Latin America, where we secured new contracts. These awards are a testament to our abilities in challenging environments and support our reputation as the preferred global provider within these product lines.

"Our most recent results also indicate growing momentum for two of our Company's strategic vectors, digitalization and the energy transition, as we secured multiple contracts to supply production automation solutions for operators in Europe and the Middle East. Additionally, we added to our successful track record for the Firma™ plug & abandonment solution in Europe by replacing a competitor and delivering the entire scope of work early.

"We exited the second quarter of 2021 with a strong liquidity position by generating $48 million of positive free cash flow, despite $117 million in interest payments. This achievement resulted from improved operating performance, disciplined capital allocation and expenditures, and reduced working capital.

"Lastly, I am also pleased to share that we recently completed the listing of our shares on the NASDAQ stock exchange and the results from this quarter further validate our decision to relist. I am incredibly proud of our team's efforts that build upon our history of innovation and customer focus. While we forge our path as the new Weatherford, I believe our best days are ahead."

Notes:
^[1] EBITDA represents income before income tax, depreciation and amortization expense. Adjusted EBITDA excludes, among other items, impairments of long-lived assets and goodwill, restructuring expense, share-based compensation expense, as well as write-offs of property plant and equipment, right-of-use assets, and inventory. Free cash flow is calculated as cash flows provided by (used in) operating activities, less capital expenditures plus proceeds from the disposition of assets. Unlevered free cash flow is calculated as free cash flow plus cash paid for interest. EBITDA, adjusted EBITDA, free cash flow and unlevered free cash flow are non-GAAP measures. Each measure is defined and reconciled to the most directly comparable GAAP measure in the tables below.

Operational Highlights

• Weatherford received the Kuwait Oil Company ("KOC") CEO HSSE Award for logging and perforation services. The award recognizes outstanding health, safety, security and environment achievements.
• As a further testament of the Company's digital capabilities, Weatherford officially launched the first phase of a contract for rigsite data management and visualization services with KOC and completed the implementation of the Centro™ drilling optimization software platform and helped to establish KOC's real-time drilling decision center.
• Weatherford signed a five-year well screens contract with bp in Azerbaijan. This agreement directly follows the safety-valve contract win during the prior quarter, which makes two concurrent, multiyear contracts with a major operator.
• A major national oil company in the Middle East awarded Weatherford a five-year completion contract to provide OptiPkr™ production packers, completion accessories, and other items for 80 wells. Under a previous contract for the same scope of work, Weatherford delivered reliable products and excellent service quality in the field, which drove the current award with increased share.
• In collaboration with a major drilling contractor, Weatherford secured a five-year contract to provide tubular running services that leverage digital capabilities for crew integration and personnel optimization in offshore Russia. This long-term, strategic contract displaces the incumbent and positions the Company for future expansion of the scope of work.
• In Continental Europe, Weatherford provided an integrated drilling solution featuring the Magnus® rotary steerable system to finish a drilling campaign 70% faster than planned. This success enables the continued expansion of RSS technology in that market.
• Operators in Continental Europe awarded Weatherford two contracts for de-liquification equipment and services in more than 100 wells and ForeSite® ecosystems in more than 200 gas wells. These awards are a continuation of previous de-liquification services that increased production, extended the productive life of wells, reduced operational costs, and minimized the carbon footprint.

Liquidity 

The Company maintained its disciplined focus on liquidity during the second quarter of 2021. Unlevered free cash flow of $165 million in the second quarter of 2021 improved by $57 million versus the second quarter of 2020, on a 72% increase in adjusted EBITDA. This improvement is a result of the Company's efforts to control costs and optimize net working capital and capital expenditures. Second-quarter 2021 free cash flow of $48 million improved by $50 million year-on-year and was only down $22 million sequentially, despite $117 million in interest payments in the second quarter. Total cash of approximately $1.4 billion as of June 30, 2021, was up $44 million from the prior quarter.

Results by Operating Segment

Western Hemisphere

Second-quarter 2021 Western Hemisphere revenues of $425 million increased 9% sequentially and 37% year-on-year. North America revenues of $220 million increased by 3% sequentially primarily due to increased activity in the Drilling, Evaluation & Intervention ("DEI") product line in the United States, partially offset by seasonally lower activity in Canada. Latin America revenues of $205 million increased 16% sequentially, driven by increased Integrated Service Project activity in Mexico.

Adjusted segment EBITDA of $58 million increased $6 million and associated margins of 14% improved 30 basis points, sequentially, and improved 1,170 basis points year-on-year. The growth in adjusted segment EBITDA was primarily driven by increased activity and sales in Latin America.

Eastern Hemisphere

Second-quarter 2021 Eastern Hemisphere revenues of $478 million increased 8% sequentially and decreased 6% year-on-year. Middle East, North Africa, and Asia revenues of $289 million increased 8% sequentially, with increased sales in both the Completion and Production ("C&P") and the DEI product lines. Europe, Sub Saharan Africa, and Russia revenues of $189 million increased 8% sequentially, primarily due to increased activity in both the C&P and DEI product lines.

Adjusted segment EBITDA of $93 million increased $27 million and associated margins of 20% improved 460 basis points, sequentially, and decreased 10 basis points year-on-year. The growth in adjusted segment EBITDA was primarily due to increased activity and sales in Middle East and Asia.

About Weatherford 

Weatherford is a leading global energy services company. Operating in approximately 75 countries, the Company answers the challenges of the energy industry with its global talent network of approximately 17,000 team members and approximately 365 operating locations, including manufacturing, research and development, service, and training facilities. Visit https://www.weatherford.com/ for more information or connect on LinkedIn, Facebook, Twitter, Instagram, or YouTube.

Conference Call Details

Weatherford will host a conference call on Thursday, July 29, 2021, to discuss the results for the second quarter ended June 30, 2021. The conference call will begin at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

Listeners are encouraged to download the accompanying presentation slides which will be available in the investor relations section of the Company's website.

Listeners can participate in the conference call via a live webcast at https://www.weatherford.com/en/investor-relations/investor-news-and-events/events/, or by dialing +1 877-328-5344 (within the U.S.) or +1 412-902-6762 (outside of the U.S.) and asking for the Weatherford conference call. Listeners should log in or dial in approximately 10 minutes prior to the start of the call.

A telephonic replay of the conference call will be available until August 12, 2021, at 5:00 p.m. Eastern Time. To access the replay, please dial +1 877-344-7529 (within the U.S.) or +1 412-317-0088 (outside of the U.S.) and reference conference number 10157213. A replay and transcript of the earnings call will also be available in the investor relations section of the Company's website.

Contacts
For Investors:
Mohammed Topiwala
Director, Investor Relations and M&A

+1 713-836-7777
[email protected]

For Media:
Kelley Hughes
Director, Global Communications

+1 713-836-4193
[email protected]

Forward-Looking Statements

This news release contains forward-looking statements concerning, among other things, the Company's quarterly and full-year revenues, operating income and losses, adjusted EBITDA, unlevered free cash flow, forecasts or expectations regarding business outlook, cost savings plans, and capital expenditures, and are also generally identified by the words "believe," "project," "expect," "anticipate," "estimate," "outlook," "budget," "intend," "strategy," "plan," "guidance," "may," "should," "could," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. Such statements are based upon the current beliefs of Weatherford's management and are subject to significant risks, assumptions, and uncertainties. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those indicated in our forward-looking statements. Readers are cautioned that forward-looking statements are only predictions and may differ materially from actual future events or results, including the price and price volatility of oil and natural gas; the extent or duration of business interruptions, demand for oil and gas and fluctuations in commodity prices associated with COVID-19 pandemic; general global economic repercussions related to COVID-19 pandemic; the macroeconomic outlook for the oil and gas industry; and operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the COVID-19 virus and COVID-19 variants, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; our ability to generate cash flow from operations to fund our operations; and the realization of additional cost savings and operational efficiencies. Forward-looking statements are also affected by the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and those set forth from time-to-time in the Company's other filings with the Securities and Exchange Commission. We undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws.

We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, Weatherford's management believes that certain non-GAAP financial measures (as defined under the SEC's Regulation G and Item 10(e) of Regulation S-K) may provide users of this financial information additional meaningful comparisons between current results and results of prior periods and comparisons with peer companies. The non-GAAP amounts shown in the following tables should not be considered as substitutes for operating income, provision for income taxes, net income or other data prepared and reported in accordance with GAAP, but should be viewed in addition to the Company's reported results prepared in accordance with GAAP.

SOURCE Weatherford International plc

Related Links

http://www.weatherford.com