Weatherford International plc

Ladies and gentlemen, thank you for standing by. Welcome to the Weatherford International Second Quarter 2022 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a 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. Please, as a reminder, this event is being recorded. I would now like to turn the conference over to Mohamed Tabawala, Director, Investor Relations, and M&A. Sir, you may begin.

Welcome, everyone, to the Weatherford International Second Quarter 2022 Conference Call. I'm joined today by Girish Sarigram, President and CEO, and Keith Jennings, Executive Vice President and CFO. We will start today with prepared remarks and then open it up for questions. You may download a copy of the presentation slides that correspond with today's call from our website's 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 filing 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 second quarter earnings press release, which can be found on our website. With that, I'd like to turn the call over to Girish.

Girish Patel- Thanks, Mohammad, and thank you all for joining the call today. The One Weatherford team delivered another terrific quarter and my gratitude and appreciation go out to all of our 17,500 team members. Our results this quarter are a testament to our focus on creating value for our customers and delivering on our promise of margin expansion and cash generation to our investors. While the overall environment was headlined by headwinds on inflation, commodity price volatility, supply chain bottlenecks, and geopolitical-driven disruptions, At a deeper level, fundamental activity levels in core oil and gas operations remained robust and buoyant. As a result, we seized opportunities, leveraged the momentum of change in our operating paradigm, and delivered well above expectations across our metrics. Our second quarter 2022 revenue of $1.06 billion was up 13% sequentially, driven by international growth of 14% sequentially, showcasing the strength of our international franchise. I am particularly pleased with our EBITDA performance as we continue to focus on delivering margin expansion. Our EBITDA margins increased to 17.5%, improving 140 basis points sequentially and 240 basis points year-on-year. We have previously highlighted our next year goal of achieving high-teens EBITDA margins over the next several years, and our results this quarter demonstrate the feasibility of that ambition. The work to drive this initiative is firmly underway, underpinned by our four key focus areas of fulfillment, directed growth, excellence in execution, and simplification. Finally, in a growth environment, with a natural build of working capital, our cash performance was terrific, with the company generating $59 million in free cash flow. This achievement enabled us to pay down $50 million of 11% senior notes as we continue improving our capital structure. Simply put, I couldn't be more pleased with our results. In past calls, you've heard me talk about the new Weatherford and how we are building it to deliver growth, margin expansion, and sustainable free cash flow. Throughout that journey, we have always been conscious of the road ahead and the work we still have to do, and I will acknowledge that again. However, I think the context of that path forward is significantly different today. We have gone from seeing the road ahead as a journey towards relevance and the challenges being somewhat existential to where the road ahead is to lead to higher multiples and underpinned by the solid foundation of operational excellence we are building. We've been diligently planning and executing to evolve from a company operating in survival mode to one performing and thriving in the market. I have always said that our results will speak for our progress, and the results from the second quarter serve as a solid scorecard of that progress. Beyond the financial results, we were excited to release our first sustainability report in May. While sustainable operations have always been at the core of how we run our business, this report had highlighted our strategic ESG focus areas. Number one, our use of existing technologies and contribution to new energy solutions to create a lower carbon economy. Number two, our goal of achieving net zero greenhouse gas emissions for scope one and two by 2050. And number three, our never-ending commitment to operating sustainably with safety, quality, and integrity. Turning to our commercial successes during the quarter, we had several significant wins across our portfolio, showing that the combination of our broad-spectrum portfolio with specialty services, both differentiated by technology, is a compelling value proposition for customers. PTT-EP in Thailand awarded us a five-year contract to deliver high-temperature directional drilling, measurement while drilling, and logging while drilling services. Our history of service excellence in the region and market-leading offerings made Bedford a preferred choice for this contract award. Our real-time remote engineering support, coupled with MPD ability to execute against an exacting pressure management plan throughout the well construction phase, helped to drill the longest well in Canada at approximately 30,000 feet for a major operator, faster and with fewer trips. Shell awarded us a three-year contractor's quarter to continue providing cementing products and casing accessories in the Gulf of Mexico because of our position as a leading provider of deep water cementing systems. We also received a five-year well services agreement from ADNOC Offshore for the provision of through-tubing equipment and services. Our leading expertise in field-proven technology helped customers consume fewer resources, reduce carbon footprint, and maximize the economic life of existing infrastructure. And again in Thailand, Chevron awarded us a six-year commercial contract to deliver tubular running services. We credit this award to our 60 years of experience in TRS, our track record of incident-free operations in the region, and our high level of operational efficiency. We entered a three-year commercial agreement with Hess Corporation to serve as the primary supplier of artificial equipment and services, including automation in Hess's Bakken operations. We received this award because of the field-proven application of our Rotoflex long-stroke pumping unit, combined with Weatherford WellPilot, and the ability to provide value-added services, support, engineering and quality. We also received a three-year award to provide Santos with industry-leading sucker rods for their operations in Australia. Our sucker rod portfolio guarantees a match between customer needs, budget and production strategy to make the most of existing assets and unique well environments. Now let's turn to our view of the markets. In North America, we continue to capitalize on the current growth momentum by going after directed growth and margin expansion. On the production side, we see demand for artificial lift growing as E&P operators capitalize on sustained higher commodity prices, and in some cases, benefiting from the faster transition from ESP to conventional lift. We have been talking about our PRI segment lagging rig count, and now we are seeing it come through with strong revenue growth as our PRI segment revenue increased by 21% sequentially, outpacing rig count growth. We continue to see strong performance from our international markets as well, with demand in Asia, Latin America, and Middle East markets continuing to grow. We expect this to continue into the second half of the year and beyond. Additionally, tendering activity continues to be strong throughout, with robust demand coupled with the industry's resources becoming scarcer, which will result in pricing uplift opportunities. Our leading product lines, including TRS, fishing and intervention services, MPD, and completions continue to position Weatherford for differentiated growth. Overall this quarter, our focus on pricing, directed growth strategies, operational improvements, and cash culminated in strong revenue growth, margin expansion, and free cash flow generation. Before I hand it over to Keith for the financial and full year updates, I want to take a moment to express my gratitude for his leadership. As we have previously announced, Keith will leave the company at the end of the month. Keith's commitment and leadership over the last two years have been essential to building the new Weatherford. During his time with the company, we were able to return to a major public exchange, improve and stabilize our capital structure, and strengthen our operational profile. At the same time, we have announced that Desmond Mills, our chief accounting officer, will be stepping in as interim CFO. Desmond has been with us for over a year, and done a great job in improving our accounting systems and reporting. Keith, we wish you the best, and with that, I'll turn it over to you.