Weatherford: Announces Fourth Quarter and Full Year 2021 Results

Weatherford International plc announced today its results for the fourth quarter of 2021.

Fourth quarter 2021 revenues were $965 million, an increase of 15% year-over-year and 2% sequentially. Fourth quarter 2021 operating income was $33 million compared to an operating loss of $107 million in the fourth quarter of 2020 and operating income of $71 million in the third quarter of 2021. Fourth quarter 2021 net loss was $161 million compared to $200 million in the fourth quarter of 2020 and $95 million in the third quarter of 2021.

Fourth quarter 2021 cash flows provided by operations were $88 million compared to $22 million in the fourth quarter of 2020 and $114 million in the third quarter of 2021. Capital expenditures were $41 million in the fourth quarter of 2021 compared to $54 million in the fourth quarter of 2020 and $20 million in the third quarter of 2021.

Revenues for the full year 2021 were $3.65 billion, compared to revenues of $3.69 billion in 2020. Full year operating income was $116 million compared to an operating loss of $1.5 billion in 2020. The Company’s full year 2021 net loss was $450 million compared to $1.9 billion in 2020. Full year cash flows provided by operations were $322 million, compared to $210 million in 2020. Capital expenditures for full year 2021 were $85 million, compared to $154 million in 2020.

Fourth quarter 2021:

• Adjusted EBITDA^[1] of $154 million, an increase of 57% year-over-year and a decrease of 14% sequentially
• Unlevered free cash flow^[1] of $147 million, an increase of $52 million year-over-year and $6 million sequentially
• Free cash flow^[1] of $49 million, an increase of $72 million year-over-year and a decrease of $62 million sequentially

Full year 2021:

• Adjusted EBITDA of $571 million, an increase of $112 million, or 24%, compared to full year 2020
• Unlevered free cash flow of $547 million, an increase of $237 million, or 76%, compared to full year 2020
• Free cash flow of $278 million, an increase of $200 million compared to full year 2020

Girish Saligram, President and Chief Executive Officer, commented, “We are pleased with our fourth quarter results as we delivered another quarter of sequential revenue growth and positive free cash flow. Fourth quarter adjusted EBITDA margins of 16% were in line with expectations, despite significant supply chain bottlenecks and inflationary headwinds. Our results demonstrate the increasing traction of our strategy, as we saw revenue growth across all our reportable segments and geographies on a year-over-year basis.

We are proud of the significant achievements in 2021, as we executed on our strategic priorities, including listing on the Nasdaq, refinancing our debt, improving margins and generating free cash flow. I want to thank the Weatherford team for their dedication and hard work in making significant strides towards our goal of sustainable profitability and positive free cash flow through a full cycle.

Throughout the year our deliberate and disciplined approach to implementing actions across our focus areas enabled measurable improvements across our operating processes. We took decisive steps to reorganize our North America operations as we exited unprofitable offerings and rationalized our footprint with a returns-focused approach. We took additional steps to simplifying our organization, de-layering where necessary, and changing our operating paradigm to deliver greater efficiency and accountability company wide.

With the strong finish of 2021, we are very excited about our strategic direction as the Company is poised to perform competitively in the unfolding multi-year upcycle for the energy industry. We are entering 2022 with a growth and execution mindset, focused on further improving the Company’s fulfillment strategy, achieving profitable growth in the marketplace led by the strength of our portfolio, and building upon the incredible cost and cash successes of the last two years. The contract awards in the fourth quarter demonstrate our ability to win in the marketplace and represent a pivot from the profile of a shrinking company over the past several years to one with a directed growth trajectory that continues to deliver increasing earnings.”

Notes:
^[1] EBITDA represents income before interest expense, net, loss on extinguishment, bond redemption and loss on termination of ABL credit agreement, income tax, depreciation and amortization expense. Adjusted EBITDA excludes, among other items, impairments of long-lived assets and goodwill, restructuring expense, share-based compensation expense, as well as write-offs of property plant and equipment, right-of-use assets, and inventory. Free cash flow is calculated as cash flows provided by (used in) operating activities, less capital expenditures plus proceeds from the disposition of assets. Unlevered free cash flow is calculated as free cash flow plus cash paid for interest. EBITDA, adjusted EBITDA, free cash flow and unlevered free cash flow are non-GAAP measures. Each measure is defined and reconciled to the most directly comparable GAAP measure in the tables below.

Operational Highlights

• Weatherford was awarded two five-year contracts with Abu Dhabi National Oil Company with a combined value of more than $1 billion for downhole completions equipment and liner hanger systems. The Downhole Completions contract is the world’s largest in this category.
• Weatherford was awarded a three-year contract from Kuwait Oil Company (“KOC”) to support its digital transformation strategy in the North Kuwait Heavy Oil field and for deploying its Integrated Enterprise Excellence Platform across KOC. The award includes instrumentation, real-time monitoring, and production optimization enabling KOC to optimize its production and workover plans.
• Saudi Aramco awarded Weatherford a five-year Tubular Running Services contract to support onshore and offshore operations. Weatherford was selected based on its technology, safety record, quality performance, and commitment to local content.
• Following successful implementation of the Weatherford Managed Pressure Drilling System, Shell awarded the Company a two-year, multi-rig contract extension for Managed Pressure Drilling operations in deep water to continue the well delivery benefits offered by this technology.
• Tourmaline awarded Weatherford a one-year contract extension for approximately 200 wells with increased scope for its completion products, backed by the deployment of Weatherford ZoneSelect® Frac Sliding Sleeves and Openhole Isolation Packers to deliver longer laterals, more stages, and higher pumping rates, while reducing overall operating costs.
• A European supermajor selected Weatherford to provide liner hanger products and services in its first Carbon Capture, Utilization, and Storage (CCUS) pilot project, as it endeavors to achieve carbon neutrality for its operations.
• Weatherford signed a global collaboration agreement with LYTT, a digitally led business backed by bp launchpad. The agreement combines LYTT’s proprietary sensing insights with Weatherford expertise in distributed fiber-optic sensing (DFOS), deployed through the industry-leading ForeSite® platform to help customers revitalize and optimize their energy assets.
• A major operator awarded Weatherford a five-year contract to deploy fiber optics and intelligent screens solutions in the North Sea. This award reinforces the Company’s leadership position in delivering reservoir monitoring in the Norwegian Continental Shelf.

Liquidity

The Company maintained its focus on liquidity during the fourth quarter of 2021. Unlevered free cash flow of $147 million in the fourth quarter of 2021 improved by $52 million versus the fourth quarter of 2020, from a 57% increase in adjusted EBITDA. This is a result of the Company’s improved operating performance and disciplined spending. Fourth quarter 2021 free cash flow of $49 million improved by $72 million year-over-year and was down $62 million sequentially, primarily due to accelerated interest payments in the fourth quarter upon early redemption on certain of our long-term debt. Total cash of approximately $1.1 billion as of December 31, 2021, was down $333 million sequentially, primarily from the repayment of $200 million in principal plus interest and costs related to the early redemption of certain of our long-term debt.

Results by Reportable Segment

Drilling & Evaluation (“DRE”)

Fourth quarter 2021 DRE revenues of $287 million increased 34% year-over-year and 3% sequentially. The year-over-year improvement was due to higher business activity across all product lines, led by managed pressure drilling and wireline services, with significant growth internationally in the Middle East and Latin America.

DRE segment adjusted EBITDA of $55 million increased 150% year-over-year and decreased 2% sequentially. Current quarter margins of 19% improved 890 basis points year-over-year and decreased 90 basis points sequentially. The year-over-year growth was primarily driven by an improved revenues, pricing and geographic mix, which drove margin improvement across our product lines. Additionally, lower operational expenses from cost improvement initiatives and lower inventory charges, contributed to the improvement. The sequential decline was primarily due to product mix.

Well Construction and Completions (“WCC”)

Fourth quarter 2021 WCC revenues of $348 million increased 3% year-over-year and 1% sequentially. The sequential and year-over-year improvement was primarily due to higher business activity in cementation products, with the largest growth in North America. Additionally, year-over-year growth was driven higher by activity for tubular running services, internationally.

WCC segment adjusted EBITDA of $72 million increased 26% year-over-year and decreased 9% sequentially. Current quarter margins of 21% increased 380 basis points year-over-year and decreased 220 basis points sequentially. The year-over-year growth was primarily driven by an improved revenues mix, lower operational expenses from our cost improvement initiatives and lower inventory charges. The sequential decline was primarily due to non-repeat items in the prior quarter.

Production and Intervention (“PRI”)

Fourth quarter 2021 PRI revenues of $298 million increased 10% year-on-year and 2% sequentially. The year-over-year improvement on higher business activity primarily for intervention services and production automation software globally.

PRI segment adjusted EBITDA of $47 million increased 21% year-over-year and decreased 18% sequentially. Current quarter margins of 16% increased 140 basis points year-over-year and decreased 370 basis points sequentially. The year-over-year growth was primarily driven by an improved revenues mix, lower operational expenses from our cost improvement initiatives and lower inventory charges. The sequential decline was primarily due to non-repeat items in the prior quarter and the seasonal shift of products and services.

About Weatherford 

Weatherford is a leading global energy services company. Operating in approximately 75 countries, the Company answers the challenges of the energy industry with its global talent network of approximately 17,000 team members and approximately 350 operating locations, including manufacturing, research and development, service, and training facilities. Visit https://www.weatherford.com/ for more information or connect on LinkedIn, Facebook, Twitter, Instagram, or YouTube.

Conference Call Details

Weatherford will host a conference call on Thursday, February 17, 2022, to discuss the results for the fourth quarter ended December 31, 2021. The conference call will begin at 9:00 a.m. Eastern Time (8:00 a.m. Central Time).

Listeners are encouraged to download the accompanying presentation slides which will be available in the investor relations section of the Company’s website.

Listeners can participate in the conference call via a live webcast at https://www.weatherford.com/en/investor-relations/investor-news-and-events/events/, or by dialing +1 877-328-5344 (within the U.S.) or +1 412-902-6762 (outside of the U.S.) and asking for the Weatherford conference call. Listeners should log in or dial in approximately 10 minutes prior to the start of the call.

A telephonic replay of the conference call will be available until March 3, 2022 at 5:00 p.m. Eastern Time. To access the replay, please dial +1 877-344-7529 (within the U.S.) or +1 412-317-0088 (outside of the U.S.) and reference conference number 2884053. A replay and transcript of the earnings call will also be available in the investor relations section of the Company’s website.