Weatherford: 53% Sequential Increase in EPS driven by Improved Operating Margins FCPA, Oil-for-Food and Sanctioned Countries Definitive Agreements Reached
Weatherford International Ltd. reported results for the third quarter ended September 30, 2013.
Third Quarter 2013 Summary
- $0.23 per diluted share (non-GAAP), or net income of $177 million excluding after-tax charges of $155 million;
- FCPA, Oil-for-Food and Sanctioned Countries definitive agreements reached, subject to final SEC Commission and Court approvals; estimated costs and terms of the settlement remain unchanged;
- International operating income margin increased 270 basis points sequentially, and all international segments showed operating income margin improvement;
- North America operating income margin expanded 260 basis points sequentially with the U.S. and Canada both generating margin improvement;
- Foreign exchange losses were $27 million in the third quarter, an increase of $12 million sequentially;
- The non-GAAP effective tax rate for the quarter was 20%;
- Announced the sale of Borets for $400 million with cash proceeds of $370 million in Q4;
- Free cash flow improved by over $150 million sequentially, driven by reduction in capital expenditures and operating efficiency improvements; and
- Capital expenditures, net of lost-in-hole, declined 39% compared to the prior year quarter and 20% sequentially.
Third Quarter 2013 Results
On a GAAP basis, segment operating income was $395 million with third quarter net income of $22 million, or earnings of $0.03 per diluted share. This included:
- $113 million, net of tax, associated with legacy lump sum contracts in Iraq;
- $25 million, net of tax, in severance, exit and other charges; and
- $17 million, net of tax, in professional fees and expenses related to the historical U.S. government investigations and the on‑going remediation of our material weakness related to income taxes.
Outlook
The Company expects the fourth quarter to continue to show sequential improvements in revenue and operating
