Weatherford International plc

Ladies and gentlemen, thank you for standing by. Welcome to the Weatherford International First Quarter 2024 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 which are your questions, please press star then two. As a reminder, this event is being recorded. I would now like to turn the conference over to Mohammad Topalwa, Vice President, Investor Relations and M&A. Sir, you may begin.

Welcome everyone to the Weatherford International First Quarter 2024 Earnings Conference Call. I'm joined today by Girish Saligram, President and CEO, and Arun Mitra, Executive Vice President and CFO. We will start today with our prepared remarks and then open it up for questions. You may download a copy of the presentation slides corresponding to 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 differ materially from any expectation expressed herein. Please refer to our latest Security 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 first quarter earnings press release, which can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available on our website's investor relations section, following the conclusion of this call. With that, I'd like to turn the call over to Girish.

Thanks, Mohammad, and thank you all for joining our call. I will provide an overview of our operating performance, commercial and technology highlights, our view on the markets, and an update on our strategic priorities. Arun will then cover the financial results and specifics on guidance before we open for Q&A. You will notice an updated format to our investor presentation, as we have tried to provide additional clarity around our portfolio and differentiation, and we will reference the data and information within the presentation as part of our prepared remarks. As illustrated in slide three, we delivered yet another quarter of exceptional results. I remain extremely grateful to our entire One Weatherford team, and I'm excited that we are developing an operating culture that provides execution differentiation. First quarter revenue grew 15% year over year, driven by DRE and WCC from a segment standpoint. Our integrated services project team did an excellent job in driving efficiencies and delivered above expectations. Geographically, we once again witnessed growth driven by the strength in our international business, which was up 21% year over year, spearheaded by our Middle East, North Africa, and Asia region, which grew 32%. While year-over-year growth is significant, we are also encouraged by sequential revenue performance that was essentially flat in a quarter that typically sees a seasonal decline. This was driven by strong performance in Latin America and North America, and also aided slightly by our recent acquisitions contributing revenue for part of the quarter. We have now had 12 consecutive quarters of year-over-year adjusted EBITDA margin expansion. And Q1 represents the ninth consecutive quarter of sequential expansion. In the first quarter of 2024, adjusted EBITDA margins set another high at 24.7%, driven by accelerated outcomes from our initiatives and continued rigor on the commercial, technology, and operational fronts. The performance in the first quarter has given us the confidence and visibility to raise our margin guidance for the remainder of the year and we now anticipate achieving our goal of 25% adjusted EBITDA margins in 2024 itself. We had indicated that our exit rate would be 25%, but now believe that we will hit that milestone on a total year basis. Importantly, we continue to see opportunities for further enhancements and will articulate the next milestone and roadmap towards that once we have delivered the 25%. We also successfully expanded our credit facility by $130 million to $680 million. In line with our previous commitment to pay off the 6.5% senior secured notes, we issued a notice to redeem the remaining balance. This paves the way to providing a comprehensive capital allocation framework that we intend on communicating later this year. As we have seen, the OFS sector is witnessing a degree of consolidation and I am excited about the opportunities we see with the companies we acquired in the first quarter. I am pleased with the progress we've made so far on the integration of Ardine, Probe, and ISI into the Weatherford operating structure. The detailed planning has helped facilitate smooth transitions and ensure that we remain focused on serving customers. While still early days, we are starting to see greater opportunities in terms of commercial benefits, increased technology cross-selling, and growing adoption rates across our expanded portfolio. These headlights provide greater confidence in the long-term value creation potential of these acquisitions. Now turning to our segment overview on slides five through seven. The operational and technical highlights showcase synergies between product lines, which is driven by our solutions creation mindset. In DRE, I am particularly excited about our MPD win with PDO and Oman, as this represents another example of growing MPD adoption and our technology differentiation. We are also seeing some quick wins from our acquisitions with the launch of the HD Spitfire tool as part of our wireline products portfolio. In WCC, we continue to see significant awards through the quarter, and the deployment of our pressure balance liner system, the Express XT, in an offshore setting for the first time is particularly encouraging. In PRI, our focus on digital solutions has resulted in significant advancements in operational efficiency and value creation for our customers. A significant development in this segment is the commercial launch of Foresight 5.3, which combines artificial intelligence, machine learning, and autonomous control for proactive failure prediction and therefore prevents ESP and RODLIFT failures. We'll now turn to the market outlook, which is laid out on slides 9 through 11. We anticipate sustained growth in international land and offshore sectors, particularly driven by the Middle East and Latin America. Our focus remains on production optimization, digital solutions, and exploration investments with significant potential in gas-rich regions such as Guyana and the Eastern Mediterranean, and growing unconventionals in the Middle East, paired with oil-focused growth across major deepwater basins. The increasing adoption of managed pressure drilling, both onshore and offshore, and well-life extensions via interventions will play well to our strengths in these areas. Additionally, responsible well management, including plug-in abandonment services and growth in geothermal and carbon capture, present promising opportunities. Leveraging our advanced technology suite, we are well poised to capitalize on these strengths. The first quarter results validate our expectations about the market outlook that we presented in the previous quarter. To summarize, The current stage of the upcycle is reflected by a combination of continued demand for energy, persistent investment, and activity for oil and gas projects at least through the end of the decade. We continue to see the most momentum in our DRE segment with high teens growth, reflective of our continued belief in the longevity of the cycle with growth in WCC and PRI that typically follows. Looking across our geographies for 2024, In North America, we continue to expect our Canadian business to grow in the high single digits, though there is some uncertainty around the second half driven by commodity prices. We believe the offshore Gulf of Mexico will remain stable, and U.S. land business is expected to be relatively flat. On the international front, there continues to be broad strength both offshore and onshore. Latin America had a solid start to the year and expect growth for the year to be in the mid to high single digit range, mainly driven by Brazil and Mexico and partially tempered by Colombia. In Europe and sub-Saharan Africa, offshore continues to be the growth driver, enabling high-teens growth led by the Nazi. As previously discussed, Russia continues to be challenging and declining in revenue given the operation's complexity as well as FX volatility. In the Middle East, North Africa, and Asia region, We continue to remain optimistic about the growth potential and still foresee a year of high-teens growth. We believe this growth is spread across multiple countries and is backed by the investment plans of our customers. A key element of our growth has been our integrated contracts, and as I mentioned before, I'm very proud of the work the team has done, and we are focused on the modulation of execution pace to drive optimal outcomes on safety, customer hookups, and margins. We are also cognizant of the need for investment to support that growth, and to that end, we'll continue to drive CapEx towards 5% of revenue and invest in networking capital and infrastructure support. In summary, we don't see any material shift in our market and revenue outlook discussed a couple of months ago. The most significant risk to our outlook is driven by geopolitical events, and we remain focused on the safety and well-being of our employees and business continuity plans. Turning to slide 12, I want to provide a brief update on our strategic priorities. Our five strategic priorities of organizational vitality, creating the future, customer experience, lean operations, and financial performance remain our guardrails for driving investment and initiatives. As we deliver phases of each initiative, we devise the targets to raise the bar even higher. As you can see, we have significantly increased our spend on engineering and technology, But importantly, that has been offset in other functions, ensuring that our SG&A as a percent of revenue has continued to get more efficient. We also continue to drive simplification and process improvement into the company. And the most evident result of that is in our networking capital days improved. As we conclude the first quarter of 2024, I believe our results speak clearly to the progress we have made across our organization and with our customers. We remain confident and optimistic about Weatherford's growth prospects, as well as the potential for upward mobility in the stock with a multiple re-rate that should be reflective of top-tier industry performance on margins and return on invested capital. With that, I'd like to hand it over to Arun.