Weatherford International plc

Good day, and welcome to the Weatherford Fourth Quarter 2025 Results Conference Call. All participants will be in listening 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, and to withdraw your question, please press star then two. We do ask that you please limit yourself to one question per time in the queue. Please also note today's event is being recorded. I would now like to turn the conference over to Luke Lemoyne, Senior Vice President, Corporate Development. Please go ahead.

Welcome, everyone, to the Weatherford International Fourth Quarter and Full Year 2025 Earnings Conference Call. I'm joined today by Gary Sellegram, President and CEO, and Anuj Dharu, Executive Vice President and CFO. We'll 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'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 differ materially 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 earnings press release or company slide deck, which will 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, Luke, and thank you all for joining our call. I'll start with an overview of our financial and operational performance, followed by our outlook on the markets. Anuj will then cover specifics on financial performance, balance sheet, detailed guidance, and I will wrap up with some thoughts on whether for strategic plans for 2026 and beyond, before opening for Q&A. I want to start by summarizing our Q4 2025 performance. We had sequential revenue growth, operating income that was higher sequentially and year-on-year, adjusted EBITDA margins well above 22%, and free cash flow conversion of 76%. Overall, I am very pleased with our team's execution, and I would like to thank everyone on our One Weatherford team for clearly demonstrating our ability to perform well, even in a soft and challenging market environment. This performance builds on our confidence in the long-term prospects of the company, which is reflected in the significant increase of 10% of the dividend. As illustrated on slide three, we delivered 5% sequential revenue growth, driven by higher activity in Latin America, which grew 16% sequentially, led primarily by Mexico and Brazil. North America grew modestly, supported by higher Canadian activity and U.S. offshore that was partially offset by a decline in U.S. land activity. The Europe, Sub-Sahara Africa, and Russia region declined 2% sequentially, and this region continues to exhibit softness. I am also very pleased with the continued strong performance in the Middle East. The Middle East, North Africa, and Asia region delivered 4% sequential growth, led by Kuwait, Oman, the UAE, and Indonesia. Activity in Saudi Arabia remained muted, although we are hopeful of a healthy recovery in the back half of 2026. As we have been discussing for a while, 2025 was notably characterized by the significant activity decline in Mexico. For the full year, Mexico revenues declined a little over 50% compared to the prior year. We believe the worst in Mexico is behind us and the situation has stabilized as evidenced by steady activity levels and the resumption of payments in the second half of 2025. From a segment perspective, WCC and PRI were the largest contributors to top-line growth, driven by strong performance in completions and artificial lift, respectively. These product lines are a great example of the opportunity and execution in Weatherford. Completions, a low capital intensity business, has grown significantly on a year-on-year and quarter-on-quarter basis, and over the past few years has become our largest product line, fueled by technology advancements, and manufacturing capabilities. Artificial lift is the outcome of a very strong installed base, great customer relationships, and leveraging our international footprint to take our North America expertise and scale it. Despite macro headwinds, our fourth quarter EBITDA margins came in at 22.6%, representing a sequential improvement of 74 basis points, showcasing our intense focus on operations and execution. Our adjusted free cash flow for the quarter came in at $222 million, which was significantly enhanced by collections from a key customer in Mexico. We received payments for 2025 operations, as well as some older receivables, and we are more confident on payment streams with the new mechanisms in place. As a result, our full year 2025 adjusted free cash flow totaled $466 million, representing a 43.7% conversion ratio as seen on slide four. This is a 576 basis points improvement over 2024, well over our initial view of an increase of 100 to 200 basis points coming into the year. While we are cautiously optimistic about the visibility and cadence of payments, our 2026 outlook on free cash flow will continue to remain dependent on this important variable. In addition to strong operational performance throughout the year, we also significantly fortified the balance sheet with improvements in leverage, interest costs, credit ratings, and total liquidity with the net leverage that now stands at 0.42 times. This gives us a greater degree of financial flexibility to pursue long-term strategic objectives. As shown on slide seven, 2025 was also our first full year of shareholder returns and we returned $173 million between dividends and share repurchases. Our conviction in the long-term prospects of the company is underpinned by our announcement last week to increase the dividend by 10%. Slides nine through 12 lay out key highlights of our segments. During the quarter, we continue to build momentum with new contract wins across our portfolio and key regions. These wins are a clear testament to our operational and technical capabilities to deliver a diverse range of differentiated technology and cost-effective solutions for our customers. I am especially encouraged by the wins in product lines like Wireline in Romania, completions in Kuwait, and operational milestones, such as more than 25 installations of plug-and-play liner systems in Norway. These highlights underscore the meaningful progress we are making in product lines that were not historically ranked number one or number two, reflecting the impact of sustained investment and focus over the past several years. Now turning to our outlook. Overall, customer spending is expected to increase over the course of the year, and while we are encouraged about second half 2026 and beyond, legacy pricing variability will need to be mitigated with productivity and cost control in the first half of 2026. North America spending is expected to decline this year, as operators continue to maintain tight budgets, resulting in mid to high single digit declines in activity levels throughout the year. At the same time, the international outlook is a tale of two halves. We expect the first half to experience slightly greater than normal seasonal declines due to geopolitical conflicts, trade policy impacts, commodity price volatility, and the market restraint deriving from a concern of global oil demand supply imbalance. As we enter the second half, we are encouraged by a number of contract awards and project startups that should lead to noticeable second half growth over the first half. Similar to what we saw in second half 2025 versus first half 2025. These include Saudi, Argentina, UAE, Brazil, Australia, Indonesia, and Egypt. Accounting for all these moving parts, we expect 2026 international activity levels to be flat to slightly down compared to the prior year. However, we are encouraged that second half 2026 international revenues could possibly be up year on year and lead to growth in 2027. Furthermore, we are seeing early signs of improvement in offshore deepwater activity underpinned by rising service-related demands in core basins such as Gulf of America, Brazil, the Caribbean, and the Caspian Sea. Speaking of potential opportunities, I'd like to briefly address the Venezuelan one. At its peak, Venezuela represented over $500 million of revenues for Weatherford, and recent developments may begin to reopen a market that was once meaningful to us. Assuming a stable governance and regulatory environment, operational stability, and the approval of brownfield redevelopment with a strong payment plan, we see substantial potential for our intervention, wealth services, and artificial portfolios over the mid to long term. We are closely monitoring the situation and as we have done in the past, we will act swiftly and decisively as the opportunity materializes. We remain optimistic about a stronger 2027 outlook where we expect activity levels to show year on year growth. We remain well positioned to benefit from stable or improving activity and at the same time we are taking proactive measures to strengthen margins should the market move sideways. With that, I'd like to turn the call over to Anuj.