Weatherford International plc

Ladies and gentlemen, thank you for standing by. Welcome to the Weatherford International fourth quarter and full year 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal your conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. As a reminder, this event is being recorded. I would now like to turn the conference over to Mohamed Topawala, Director, Investor Relations in M&A. Sir, you may begin.

Welcome, everyone, to the Weatherford International fourth quarter and full year 2021 conference call. I'm joined today by Girish Saligram, President and CEO, and Keith Jennings, Executive Vice President and CFO. We will start today with our prepared remarks, then open it up for questions. You may download a copy of the presentation slides that correspond with today's call from our website investor relations section. I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to materially differ from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our fourth quarter and full year press release, which can be found on our website. With that, I'd like to turn the call over to Girish.

Thanks, Mohamed, and thank you all for joining the call today. I am pleased with the results of the fourth quarter of 2021, which build on the momentum we have generated throughout the year. We faced significant challenges, including inflationary pressure, supply chain bottlenecks, and ongoing disruptions caused by the pandemic. Despite these headwinds, the Weatherford team delivered another quarter in line with our outlook and outperformed in some instances. In the fourth quarter, we achieved overall revenue growth of 2% sequentially and 15% over the prior year, with adjusted EBITDA margins of 16%. You will recall that in our prior earnings call, we explained the impact of several one-time items in the third quarter of 2021. We therefore expected Q4 to come in with lower margins. However, the team did a great job executing, which enabled margins to come in above our guidance and over 400 basis points above the fourth quarter of 2020, a remarkable achievement in just one year. In addition, we generated $49 million of free cash flow during the quarter, and $278 million for the full year. We also achieved two consecutive years of positive free cash flow, the first time in 30 years that that has happened in Weatherford. 2021 was a significant year for us with several notable milestones, and I think it is worthwhile to reflect on how far we have come in a relatively short period. We fully returned to the public market on the NASDAQ Stock Exchange's WFRD. This move was driven by confidence in our operating posture and commercial profile to create sustainable profitability. Our return allows a broader base of investors the opportunity to participate in that value creation. We also strengthened our capital structure by using the cash generated from the business to pay down debt and concluded a series of refinancing transactions. These actions significantly reduced our interest expense and favorably positioned the company for the long term. We were careful and deliberate in our actions on our 2021 focus areas, driving outperformance across the board on North America performance, organizational simplification, variable cost management, and inventory rationalization. In North America, we completely reorganized our operating structure. In doing so, we doubled our margins and grew revenues as we undertook several actions to address our footprint, business mix, and service delivery model under a new leadership team focused on returns. These actions resulted in our exiting non-profitable business lines in the United States, such as drilling services and bell heads, and switching to a new model in our wireline services portfolio. Next, in organizational simplification, we took critical steps to de-layer our company, which created greater operational efficiency and accountability, resulting in support cost savings. In variable cost management, we galvanized cross-functional teams on several work streams, leading to improvements in diverse areas from contract management to sourcing of uniforms and telecom access. Lastly, in inventory rationalization, an area which we identified as crucial to achieving our profitability and cash flow objectives, I am pleased with the achievements made by the team as we reduced our DSI by 14 days, well ahead of our 10-day DSI reduction goal. In 2021, we also introduced our three strategic vectors, and the actions on these are yielding positive outcomes that are positioning us well for the future. We have provided more clarity on our portfolio with our new reportable segments that underscore the importance of our market-leading offerings of managed pressure drilling, or MPD, tubular running services, or TRS, cementation products, and fishing and reentry. As evidenced by our commercial successes, these product offerings are gaining greater traction and also positioning us for pulling through additional services from the portfolio. In the digital space, we accelerated the adoption of our foresight production optimization platform and reservoir monitoring solutions and received awards for performance excellence from key customers. In the fall, we held the Weatherford Enterprise Software Conference and delivered a strong testimonial to the efficacy of our digital solutions across the well life cycle. In ESG and the energy transition, I recognize that our journey has just begun, but I'm encouraged by our progress. We have affirmed our commitment to being net zero by 2050 and have signed on to the UN Global Compact. Our offerings in geothermal, plug-in abandonment, and carbon capture utilization and storage, or CCUS, are securing wins across multiple geographies. As I share this with you, I am simultaneously proud and humbled. Proud of everything our 17,000 plus team members have accomplished, and humbled by their commitment, sacrifice, and spirit to win in the marketplace. My sincere gratitude and appreciation go out to every single one of our employees for driving the successes of the new Weatherford. We set an intermediate goal of getting to 15% EBITDA margins. And having delivered that in 2021, I'm confident that we can achieve that across cycles. We are now raising the bar for ourselves with the goal of continued margin expansion and believe that in the coming years, we can be a company delivering high-teens EBITDA margins while also driving a high degree of cash conversion. We continue to gain momentum in the market, led by the strength of our portfolio, and I'd like to share some of our fourth quarter commercial highlights with you, starting with our well construction and completion segment. We were awarded two five-year contracts with Abu Dhabi National Oil Company with a combined value of more than $1 billion for downhole completions and liner hanger systems. The downhole completions contract is amongst the world's largest in this category. Tourmaline in Canada awarded Weatherford a one-year contract extension for approximately 200 wells with increased scope for our completion products. A European supermajor awarded Weatherford a five-year contract to deploy fiber optics and intelligent screen solutions in the North Sea. This award reinforces our leadership position in delivering reservoir monitoring at the Norwegian continental shelf. In TRS, we achieved several big wins, including an award from Saudi Aramco for a five-year TRS contract to support onshore and offshore operations. Weatherford was selected based on its technology, safety record, quality performance, and commitment to local content and partnerships. Moving on to our drilling and evaluation segment, we continued to score wins in MPD and made headway in its adoption across our geozones. As an example, following a successful implementation of Weatherford's MPD system, Shell awarded Weatherford a two-year multi-rig contract extension for MPD operations in deep water to continue the well-delivery benefits offered by this technology. We had several other meaningful wins in this space this quarter, with notable awards in Latin America and Asia. Our digital presence continues to grow across our segments, as evidenced by the commercial success in our production and intervention segment in the fourth quarter, including an award from Kuwait Oil Company, or KOC, which awarded Weatherford a three-year contract to support its digital transformation strategy in the North Kuwait heavy oil field and deploy its integrated enterprise excellence platform. The award includes instrumentation, real-time monitoring, and production optimization, enabling KOC to advance its production and work over plans. Weatherford signed a global collaboration agreement with Light, a digitally-led business backed by BP Launchpad. The agreement combined Light's proprietary sensing insights with Weatherford's expertise in distributed fiber optic sensing, deployed through our industry-leading foresight platform to help customers revitalize and optimize their energy assets. Moving on to some of our wins in our energy transition platforms, I'd like to share a few noteworthy awards. A European super major selected Weatherford to provide liner hanger products and services in its first CCUS pilot project as it endeavors to achieve carbon neutrality for its operations. Another European customer selected Weatherford to help with their carbon sequestration operations using our downhole sealing technology for a well recompletion project. And in the United States, we mobilized a 50-well offshore plug-in abandonment project for a major operator. I am encouraged by the traction we are seeing in these areas and am confident in our growing role in the energy transition as we leverage the capabilities inherent to our portfolio. Now, turning to our view on the markets, the overall macro environment continues to improve, and we are now in the early stages of a multi-year up cycle. In North America, U.S. land markets continue to see the trend of robust growth with increased activity and spending. At the same time, we are also seeing some of the same trends from last year continue as public E&Ps remain committed to capital discipline, while we are seeing private E&Ps increasing investments. Our focus, however, continues to be on generating sustainable returns and going after work only where it makes sense for us to do so. Internationally, we expect capital spending to continue increasing, building on last year's strong finish. I am particularly excited by the growth prospects in the Middle East and Latin America as capital gets deployed to restore production levels and lay the groundwork for longer-term expansion. The past year's results show that Weatherford has firmly improved its financial and operational profile. We will continue to focus on the work necessary to further strengthen our capabilities. We are now more confident in the growth scenario we highlighted in our third quarter call and expect to see continued improvement in profitability reflected in margin expansion on a year-over basis. Now I'll hand it over to Keith for our financial update.