Weatherford International plc Q4 FY2024 earnings call

• Performance overview: Fourth quarter activity reduction in Latin America, North Sea, etc. led to revenue shortfall vs guidance, but full-year adjusted EBITDA margins were 25.1% (highest in over 15 years) and $524M adjusted free cash flow generated. - Market outlook: Immediate term market has negative bias, Mexico activity to drop, but rest of world (Canada, Brazil, Kuwait, etc.) to partially offset decline. - Cost control: Launched cost control plans in fourth quarter to manage costs while preserving long-term investments. - Capital return: Paid two quarterly dividends of $0.25 per share and repurchased ~$99M of shares in second half of 2024. - Strategic priorities: Five strategic priorities around organization vitality, creating the future, etc., with 2025 focus on structural cost, networking capital efficiency, and identifying growth vectors like Modus, MPD, and Wealth Services.

In the fourth quarter, North America revenue was down 2% sequentially, primarily due to a continued reduction in U.S. land activity, partially offset by improved performance in North America offshore. International business was down 6% sequentially and 3% year-over-year, driven mainly by Latin America and Mexico, but had 10% full-year growth led by the Middle East, North Africa, and Asia region (17% YOY top-line growth). Within product segments, DRE major product lines exhibited significant growth, WCC completions grew in the mid-double digits in 2024 (following mid-20% growth in 2023), and Wealth Services product line grew over 50% in three years. Revenue contribution details: North America and International had respective sequential and YOY changes, with International's full-year growth from key regions.

• Q1 2025: Expected revenue $1.17 billion to $1.21 billion, adjusted EBITDA $245 million to $265 million. Free cash flow more second half weighted. - 2025 full-year: Expect revenues $5.1 billion to $5.35 billion, adjusted EBITDA $1.2 billion to $1.35 billion, free cash flow conversion to increase 100 to 200 basis points year on year. Depreciation and amortization expected to decline ~$100 million full year, CapEx to remain at 5% of revenues.

• Significant activity reduction in Mexico, with activity anticipated to drop significantly compared to first half of 2024. - FX challenges and volatility. - Sanctions pressure in Russia, leading to expected significant decline in Russia's contribution to revenues.

Q: Saurabh Pant from Bank of America asked about Saudi Arabia's growth offsetting declines in Mexico and Russia, and details on Russia's expected performance in 2025.

A: Girish Saligram said Saudi will aid rest of world growth but not fully offset Mexico and Russia declines; Russia is expected to have a significant decline contributing to international revenue drop.

Q: Kurt Hallead from Benchmark asked about Mexico's activity outlook and Russia's sanctions impact.

A: Girish Saligram said Mexico activity decline is conservatively sized with no dramatic second half ramp-up; Russia's business has declined as a percentage of total company and will continue to decline due to sanctions and FX.

Q: Jim Rollyson from Raymond James asked about Mexico's potential recovery and capital return program.

A: Girish Saligram said Weatherford is well-positioned to take advantage of Mexico's recovery with prudent approach; Arun Mitra said capital return program is ahead of commitments with holistic approach including debt paydown and M&A.

Q: Joshua Chan from Daniel Energy Partners asked about MPD awards and offshore market activity.

A: Girish Saligram said MPD is a growing product line with continued adoption and Modus deployment; offshore market has mixed dynamics with some regions positive like Brazil, Azerbaijan, and others like U.K. challenging.

Q: Doug Becker from Capital One asked about three-year targets and Wealth Services business.

A: Girish Saligram said high 20s margin goal intact though possibly pushed out, and Wealth Services grew via engineering, digital capability, and tubing regular intervention driving over 50% growth in three years.

Q: Derek Podhaizer from Piper Sandler asked about North America margins and Europe/Sub-Saharan Africa recovery.

A: Girish Saligram said North America margins improved via cost base addressing, pricing, and market penetration; Europe and Sub-Saharan Africa expected to see a ramp starting in Q2 with contract starts and mobilization plans.