Weatherford Announces Fourth Quarter and Full Year 2022 Results

• Fourth quarter revenues of $1,209 million, increased 8% sequentially and 25% year-over-year; full year revenues of $4,331 million, increased 19% from prior year, the highest growth rate in over 10 years
• Fourth quarter operating income of $169 million, increased 40% sequentially and 412% year-over-year; full year operating income of $412 million, increased 255% from prior year
• Fourth quarter net income of $72 million, increased 157% sequentially; full year net income of $26 million, compared to net loss of $450 million in the prior year
• Fourth quarter adjusted EBITDA^[1] was $266 million, a 22.0% margin with a 290 basis point sequential improvement and 73% improvement year-over-year; full year adjusted EBITDA^[1] of $817 million, a 18.9% margin, representing a 43% increase year-over-year and a 320 basis point improvement
• Fourth quarter net cash provided by operating activities was $193 million and free cash flow^[1] was $171 million; full year net cash provided by operating activities was $349 million and free cash flow^[1] was $299 million
• Credit rating upgrades from Standard & Poor from “B-” to “B”
• Credit facility increased from $370 million to $400 million
• Total debt repayments of $214 million from January 1, 2022 through January 31, 2023, including the previously announced $175 million and an additional $39 million
• Over $6.5 billion of global commercial wins in full year 2022

HOUSTON, Feb. 07, 2023 (GLOBE NEWSWIRE) —  Weatherford International plc (NASDAQ: WFRD) (“Weatherford” or the “Company”) announced today its results for the fourth quarter of 2022 and full year 2022.

Revenues for the fourth quarter of 2022 were $1,209 million, an increase of 8% sequentially and 25% year-over-year. Operating income was $169 millionin the fourth quarter of 2022, compared to $121 million in the third quarter of 2022 and $33 million in the fourth quarter of 2021. The Company’s fourth quarter of 2022 net income was $72 million, compared to $28 million in the third quarter of 2022 and a net loss of $161 million in the fourth quarter of 2021.

Fourth quarter 2022 cash flows provided by operations were $193 million, compared to $160 million in the third quarter of 2022 and $88 million in the fourth quarter of 2021. Capital expenditures were $49 million in the fourth quarter of 2022, compared to $39 million in the third quarter of 2022 and $41 million in the fourth quarter of 2021.

Revenues for the full year 2022 were $4,331 million, compared to revenues of $3,645 million in 2021. Operating income for the full year was $412 million, compared to $116 million in 2021. The Company’s full year 2022 net income was $26 million, compared to a $450 million net loss in 2021. Full year cash flows provided by operations were $349 million, compared to $322 million in 2021. Capital expenditures for full year 2022 were $132 million, compared to $85 million in 2021.

Fourth quarter 2022:

• Adjusted EBITDA^[1] was $266 million, an increase of 24% sequentially and 73% year-over-year
• Adjusted EBITDA^[1] margin of 22.0% was our highest margin quarter in more than 12 years
• Free cash flow^[1] was $171 million, an increase of $38 million sequentially and $122 million year-over-year

Full year 2022:

• Adjusted EBITDA^[1] of $817 million, an increase of $246 million, or 43%, compared to full year 2021
• Free cash flow^[1] of $299 million, an increase of $21 million compared to full year 2021
• 2022 marks three consecutive years of positive free cash flow^[1]

Girish Saligram, President and Chief Executive Officer, commented, “The outstanding results of the fourth quarter 2022 and full year are a concrete marker of the success of our turnaround initiatives for Weatherford. I am incredibly proud of and grateful to our 17,700 One Weatherford team members who have come together to deliver a year of many firsts and excellent operating results. Our commercial wins, revenue growth, margin expansion, and free cash flow are all demonstrative of exceptional performance to close the year with significant momentum.

There are many significant milestones in these results – the first time in over three decades that we generated positive free cash flow for three consecutive years, achieving the lowest net leverage ratio in more than 15 years, growing revenue year-over-year by 19%, the highest growth rate in over 10 years, and generating positive net income of $26 million, a first in over 10 years^[2] . These results clearly demonstrate the effectiveness of our new operating paradigm and reaffirm our ability to sustainably expand margins over the cycle while generating positive free cash flow.

We have taken bold actions to strengthen our Company and balance sheet resulting in clear outcomes. Our results, ranging from the free cash flow performance, which gave us the ability to pay down debt meaningfully, to securing a credit facility and improving our credit rating, underscore the substantial improvements we have made and allow us greater flexibility to drive our priorities throughout our next chapter.

The overall macro-environment for the sector continues to be supported by strong fundamentals despite continued inflationary and geopolitical headwinds. Our ability to carry our momentum forward is evident in the commercial wins in 2022, including over $6.5 billion of contract wins across our broad customer footprint. In the coming quarters, we will begin to see the impact of our new contracts, technology advancements, and partnerships as we continue to focus on margins, cash flow, and positioning the Company for success over the long term.

We expect full year 2023 revenue to grow by low double digits to mid-teens year-over-year and for EBITDA margins to expand at least 100 basis points year-over-year.

2023 marks a new phase for Weatherford as we shift from being a turnaround to a true value creating engine. Although there are still opportunities to drive additional efficiencies in our structure and processes, our mindset in this new phase is evolving to a longer-range vision of creating a business that will withstand cycles and perform as the sector evolves while maintaining our commitment to transparency, credibility, and performance.”

Operational Highlights

• Kuwait Oil Company awarded Weatherford a five-year contract to provide directional drilling and logging while drilling services, which provide fit-for-purpose solutions to overcome complex challenges.
• A major IOC in the Middle East awarded Weatherford with a five-year contract to provide fishing equipment and services. Our consistent service quality and safety performance enabled this win, and we are excited to continue delivering excellence and creating value for our customer.
• Weatherford secured a two-year, sole-provider award with Petrobras for the provision of our newly enhanced chemical injection system addressing the reliability and conveyance requirements of the pre-salt play. Our early engagement and commitment to solving Petrobras’ challenges in Brazildrove the development of an advanced Weatherford chemical injection wireline retrievable system that will be deployed beginning the first quarter of 2024.
• Weatherford was awarded three contracts in Latin America to deliver integrated drilling and completion services in onshore and offshore operations, including shallow water developments and exploration wells, enabled by our technological and operational leadership.
• As previously announced, Weatherford received a three-year contract from Aramco to deliver multiple services in a lump-sum turnkey project, with the possibility to extend for two years; and also received a five-year contract exceeding $500 million from Petroleum Development Oman to deliver integrated drilling services in the Marmul and Grater Saqar fields.
• Weatherford entered into a strategic partnership with Ardyne, a leader in specialized well-decommissioning technology to deliver significant value to customers globally by offering the industry’s most comprehensive portfolio of Plug & Abandonment (P&A) and Slot Recovery solutions. Weatherfordwill invest in Ardyne’s specialized single-trip abandonment and slot-recovery technology to pair with the premier Firma™ P&A offering from Weatherford. This combined offering addresses a vital niche in late-life well management by allowing operators to tap into additional reserves or sustainability abandon nonproductive wells with a significant reduction in rig time in complex well environments.
• Weatherford signed a multi-year agreement with DataRobot, a leader in artificial intelligence (AI) to deliver advanced AI solutions in its digital platforms, including Foresite® production optimization and Centro™ well construction platforms. By forging this new relationship with DataRobot, Weatherford will accelerate the development of machine learning (ML) and AI-enabled offerings with its Digital Solutions portfolio to deliver disruptive and innovative technologies to the market.

Liquidity

We closed the fourth quarter of 2022 with total cash of approximately $1.1 billion as of December 31, 2022, down $31 million sequentially, despite having paid down $125 million of our 11% Exit Notes and repurchased $8 million of our 6.5% Senior Secured Notes in the same quarter. Net cash provided by operating activities of $193 million improved $33 million sequentially and free cash flow^[1] of $171 million improved $38 million sequentially. These improvements were driven mainly by higher adjusted EBITDA^[1], as well as improved working capital efficiencies especially around inventory utilization.

During the fourth quarter of 2022, Standard & Poor upgraded our credit ratings to “B” from “B-”. Additionally, we increased the aggregate amount available under our credit facility to $400 million. For the full year, we made total debt repayments and repurchases of $183 million, comprised of $175 million of our 11% Exit Notes, and $8 million of our 6.5% Senior Secured Notes, achieving a net leverage ratio^[3] of 1.4x which is our lowest in over 15 years. In January of 2023, we paid down an additional $20 million of our 11% Exit Notes and repurchased $11 million of our 6.5% Senior Secured Notes.

^[1] EBITDA represents income before interest expense, net, income taxes, depreciation and amortization expense. Adjusted EBITDA excludes, among other items, restructuring charges, share-based compensation expense, as well as other charges and credits. Free cash flow is calculated as cash flows provided by (used in) operating activities, less capital expenditures plus proceeds from the disposition of assets. EBITDA, adjusted EBITDA, and free cash flow are non-GAAP measures. Each measure is defined and reconciled to the most directly comparable GAAP measure in the tables below.
^[2] Positive net income for the first time in over 10 years excludes the gain from bankruptcy emergence.
^[3] Net leverage ratio is a non-GAAP measure and is calculated by net debt (total short and long-term debt less cash and cash equivalents and restricted cash) divided by adjusted EBITDA for the trailing 12 months.

Results by Reportable Segment

Drilling & Evaluation (“DRE”)

Fourth quarter 2022 DRE revenues of $371 million increased by $23 million, or 7% sequentially, mainly due to higher activity and price recoveries for drilling services and higher wireline and managed pressure drilling activity in Latin America and the Middle East/North Africa/Asia regions. Year-over-year DRE revenues increased by $84 million, or 29%, due to increased activity across all products lines.

Fourth quarter 2022 DRE segment adjusted EBITDA of $111 million increased by $26 million, or 31% sequentially, largely due to higher fall-through for drilling services activities and certain contract pricing adjustments during the quarter. Year-over-year DRE segment adjusted EBITDA increased by $56 million, or 102%, mainly due to higher activity across all product lines.

Well Construction and Completions (“WCC”)

Fourth quarter 2022 WCC revenues of $403 million increased by $12 million, or 3% sequentially, primarily driven by higher cementation and liner hanger products revenue in the Middle East/North Africa /Asia and Latin America regions. Year-over-year WCC revenues increased by $55 million, or 16%, mainly due to higher cementation products and tubular running services revenue.

Fourth quarter 2022 WCC segment adjusted EBITDA of $87 million increased by $9 million, or 12% sequentially, largely due to higher fall-through and execution efficiencies for cementation and liner hanger products in the Middle East/North Africa/Asia and Latin America regions. Year-over-year WCC segment adjusted EBITDA increased by $15 million, or 21%, mainly driven by increased fall through from higher cementation products revenue.

Production and Intervention (“PRI”)

Fourth quarter 2022 PRI revenues of $407 million increased by $50 million, or 14% sequentially, primarily driven by higher international pressure pumping and artificial lift activity in North America. Year-over-year PRI revenues increased by $109 million, or 37%, driven by higher activity across all regions.

Fourth quarter 2022 PRI segment adjusted EBITDA of $88 million, increased $22 million, or 33% sequentially, mainly due to higher margin fall-through for pressure pumping overall. Year-over-year PRI segment adjusted EBITDA increased by $41 million, or 87%, mainly due to improved margin performance across all regions.

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