Weatherford International plc

Ladies and gentlemen, thank you for standing by. Welcome to the Weatherford Second Quarter 2026 results. 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, and to withdraw your question, please press star then two. We also ask that you please limit yourself to one question. As a reminder, today's event is being recorded. I would now like to turn the conference over to Luke Lemoine, Senior Vice President of Corporate Development. Sir, you may begin.

Welcome, everyone, to the Weatherford International's second quarter 2026 earnings conference call. I'm joined today by Gary Salagram, President and CEO, and Anuj Dhru, Executive Vice President and CFO. We'll start today with our prepared remarks and then open 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 can be found on our website. As a reminder, today's call is being webcast, and a recorded version will be available in our website's investment 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 second quarter performance and short-term outlook. followed by a couple of key enterprise updates. Anuj will then cover specifics on financial performance, balance sheet, detailed guidance, and I will wrap up with some thoughts on the current operating environment and our focus areas before opening for Q&A. To summarize our Q2 2026 performance, we delivered revenue of $1.105 billion, adjusted EBITDA of $223 million at a 20.2% margin, and adjusted free cash flow of $139 million, representing a 62.3% conversion on adjusted EBITDA. I would like to thank the One Weatherford team and especially our Middle East-based employees for their focus on customers, safety and operational discipline as the region continues to work through a challenging operating environment due to the ongoing conflict. I am especially pleased with Q2 margin and cash performance, given the challenging environment. We were hampered by the Middle East activity profile, not returning to pre-conflict levels, driven by the geopolitical events that everyone is well aware of. Further, we had activity declines in Indonesia, pockets of pricing headwinds leading to volume declines, and a union strike in Norway that put further pressure. Despite those incremental pressures, our team rallied to deliver EBITDA margins north of 20% and essentially flat to Q1. Moreover, our adjusted free cash flow performance was excellent, driven by working capital execution, including strong payments from our largest customer in Mexico. I am again encouraged by progress on payments in Mexico and remain hopeful for the trend to continue in the second half. The Middle East region bore the most visible impact of the conflict in the second quarter. Activity suspensions, project deferrals, and logistical disruptions that began in March carried through much of the quarter, and freight and logistics costs remained elevated, peaking in May before beginning to moderate. Throughout this period, our priority has remained the safety of our people and business continuity for our customers, and our teams have done an exceptional job on both while tightly managing costs. While the quarter ended with signs of recovery, the recent and ongoing incidents across the region create an environment of uncertainty in the short-term outlook. We do expect the recovery to continue, but it will take some time to fully normalize. The financial impact in the first half was within the $30 to $50 million profit range we outlined on our last call. and given the recent flare-up, we expect that to increase over the course of the year and have incorporated that into our guidance. We did experience a revenue decline in Saudi Arabia due to the conclusion of our LSDK contract, and this will be further visible in the second half. We continue to view the kingdom as an opportunity for growth, but at the same time are comfortable with not having an LSDK contract given the pricing levels in the market. I am very proud of our team's execution on this contract for the past three years and grateful to Aramco for the opportunity. We have a very strong presence in Saudi and will continue our journey on adding value through technology differentiation. In Oman, we also concluded our five-year integrated contract with PDO. It is a testament to the operating prowess of our team that we finished the original scope 14 months ahead of schedule. On the back of this execution, I am pleased that we have won the Marmool Extension with PDO that will commence in the third quarter. Latin America declined sequentially, driven predominantly by Mexico, where activity came in below our expectations, several wells were deferred, and our largest customer in the country continued to prioritize its spending. Collections from our largest customer in Mexico were strong through the quarter and supported our working capital performance. We have aligned our cost structure and footprint in Mexico to current activity levels, and we are positioned to respond quickly as activity increases. I've also been pleasantly surprised with the progress in Venezuela, and now believe that Venezuela can provide a tangible contribution to revenue and margins in 2027. Our pipeline of opportunities with multiple customers is growing, and we are anticipating closing on some of these in the second half. In Europe, Sub-Saharan Africa, and Russia, revenue grew sequentially on higher activity, despite the labor strike in Norway impacting activity late in the second quarter. This will remain a headwind into the third quarter and will weigh on the region's near-term results. Russia revenues as a percent of enterprise revenue increased, but this was driven more by the decline of the rest of the world and impacted significantly by the conflict resultant decline in the Middle East. Flight 7 through 9 layout key highlights across our segments. WCC revenue declined 5% year-over-year, primarily for lower activity in MENA, partly offset by higher completions activity in Latin America. DRE revenue declined 13% year-over-year, primarily from lower wireline and drilling-related services activity in MENA, partly offset by higher managed pressure drilling activity in ESSR. PRI revenue declined 3% year-over-year, primarily from lower artificial lift activity in North America and Latin America. Across all three segments, our product lines continue to benefit from differentiated technology, a strong installed base, and the operational and manufacturing capability we have built over the past several years. During the quarter, we continued to build momentum with new contract wins across our portfolio and key regions. I am especially encouraged by the number and quality of deepwater awards this quarter. In Brazil, Constellation Oil Services awarded us two contracts for offshore well intervention and MPD in deepwater. Ventura Offshore awarded us a complete MPD solution for the SSV Victoria, and Valaris awarded us a two-year contract for MPD equipment and services offshore. In West Africa, Noble Corporation awarded us multiple MPD contracts in a global aftermarket agreement in Nigeria. And ESSO Exploration and Production Nigeria awarded us a deepwater integrated completions contract covering upper and lower completion solutions. And in Australia, Chevron awarded us a five-year framework contract for tubular running services, casing accessories, and other tools supporting a deepwater development project. We will see some of these MPD awards get delivered in the fourth quarter, and that is part of the ramp we expect to see in the second half. Beyond Deepwater, KOC awarded us two five-year contracts for cementation products and completion services in Kuwait. PTTP awarded us a 22-month downhole deployment valve contract in Thailand. And as I referenced earlier, PDO awarded us a three-year contract to provide integrated drilling services covering 247 wells in the Marmool field, supporting both production and injection operations following the successful completion of the 837 wells contract awarded in 2022. Given all of the near-term market dynamics, we have adjusted our second half guidance in what we believe is a realistic and responsible fashion. We do expect second half margins to be significantly higher than the first, but the quantum of improvement is slightly reduced versus our April expectations due to the ongoing nature of the Middle East conflict. Our total year thesis on margins is generally intact, but it is difficult to offset the impacts of operational disruptions due to the Iran conflict. At the same time, we have increased confidence in our adjusted free cash flow conversion and are therefore increasing guidance on that metric. We have been clear that we will not chase revenue at the expense of returns, and we would rather step away from lower margin work and concentrate on higher quality revenue that strengthens the business. The clearest evidence of that discipline is our second quarter margins and our third quarter guidance, where we expect adjusted EBITDA margins to be up at least 100 basis points, despite the ongoing conflict in the Middle East and the loss of revenue from the Saudi LSDK contract. Let me also provide an update on our proposed redomestication to the United States. At our shareholder meetings on June 11th, the proposals to redomesticate to Texas received support from more than 60% of the votes cast, but fell short of the 75% approval threshold required under Irish law. The engagement we had with shareholders through that process reinforced our conviction in the value creation potential of a move back to the U.S., and taking that feedback into account, we introduced an updated proposal to re-domesticate to Delaware. The definitive proxy statement was recently filed and is being distributed to shareholders and we will hold special shareholder meetings on September 3rd to vote on the Delaware proposals. We continue to expect approximately $20 to $30 million of annual cash savings beginning in 2027 with completion expected by the end of this year, subject to shareholder and Irish High Court approvals. Importantly, the re-domestication does not impact our global footprint, our customer commitments, or our ongoing operations, and our board unanimously recommends that shareholders vote for all of the related proposals. During the quarter, and as shown on slides 13 and 14, we also announced a definitive agreement to acquire NCS Multistage, which expands our completions portfolio and deepens our exposure to unconventional resources. It has been approved by the boards of both companies and by NCS's controlling shareholder, and we expect it to close in the second half of 2026, subject to regulatory approvals and customary closing conditions. The industrial logic of this transaction is compelling. NCS's technology spans completions design, execution, production optimization, and late-life intervention, which completes our coverage of the well lifecycle and enhances the application fit of our well construction products portfolio. It deepens our exposure to unconventional resources in North American basins and in the international unconventional markets where we see the next leg of growth, including the Middle East and Argentina, along with the offshore opportunities such as the North Sea. And it is, at its core, a distribution play. NCS has built a differentiated, capital-light business with a concentrated footprint, and Weatherford brings a customer base across six continents on which to scale them. The financial logic is equally clear. The consideration is structured predominantly in equity, preserving our balance sheet strength. We expect at least $15 million of annual cost synergies within 18 months of closing. NCS's operationally levered, capitalized model supports both our EBITDA margins and our cash conversion, fully consistent with the M&A criteria in our capital allocation framework. With that, I'd like to turn the call over to Anuj.