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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative factors: headcount reductions, uncertain customer spending, potential revenue decline, and unclear management responses in the Q&A. Despite stable dividends and share repurchases, the guidance reduction and market conditions indicate a negative outlook. The stock is likely to react negatively, with a potential decline of -2% to -8% over the next two weeks.
Adjusted Free Cash Flow $66 million, up from $64 million in Q1 2024, driven by strong collections.
Adjusted EBITDA Margins 21.2%, down from previous year due to lower revenues, project startup costs, and partially under-absorbed headcount.
Share Repurchases Approximately $53 million in Q1 2025, part of $152 million over the past three quarters.
Net Working Capital Efficiency 25.2%, improved from 26.1% in Q1 2024.
CapEx $77 million, higher than targeted range due to long-term subsea intervention contract in Brazil.
Net Leverage Ratio 0.5 times, indicating a strong balance sheet.
Total Liquidity Approximately $1.3 billion, consisting of $930 million in cash.
Dividend $0.25 per share, maintained consistently over the past three quarters.
Revenue Expectations for 2025 $4.6 billion to $5 billion, reflecting a decline due to Argentina divestments and market conditions.
Adjusted EBITDA Expectations for 2025 $975 million to $1.1 billion, impacted by revenue changes.
New Product Launches: In deepwater Brazil, Weatherford successfully installed the first OptiROSS RFID Multi-Cycle Sliding Sleeve Valve for Petrobras, enhancing asset stimulation efficiency.
Technology Adoption: Strong uptake of ForeSite Power Regenerative variable speed drive technology, which helps customers reduce power consumption and emissions.
Market Expansion: Weatherford continues to see high tendering activity and has won high-impact contracts across key regions, particularly in the Middle East and Asia.
Geographic Performance: Year-on-year growth in the Middle East and Asia, despite declines in North America and Mexico.
Operational Efficiencies: Adjusted free cash flow of $66 million for Q1, with a focus on cost management and cash discipline.
Headcount Reduction: Reduced headcount by over 1,000 since Q3 2024, leading to annualized personnel expenses down by over $100 million.
Leadership Changes: Anuj Dhruv appointed as Executive Vice President and Chief Financial Officer, bringing over two decades of experience.
Divestitures: Divested Argentina Pressure Pumping and Wireline businesses to focus on the Vaca Muerta region, improving portfolio quality.
Market Activity Decline: Activity levels softened further in key segments and geographies, with Mexico expected to decline by 60% year-over-year, and North America down 4% sequentially.
Regulatory Issues: Recent U.S. tariffs and retaliatory tariffs have added significant uncertainty in the market, potentially causing demand destruction in the short- to mid-term.
Economic Factors: Lower commodity prices have driven caution and slowdown in customer spending, contributing to a broader downturn in the market.
Supply Chain Challenges: The company has modernized its fulfillment network and consolidated facilities to build a more nimble supply chain, indicating existing challenges.
Revenue and EBITDA Reductions: Divestitures in Argentina have led to revenue and EBITDA reductions, impacting overall financial outlook.
Headcount Reductions: Over 1,000 personnel have been laid off, with annualized personnel expenses down by over $100 million, indicating a response to market conditions.
Uncertain Customer Spending: There is a lack of clear direction from customers, making it difficult to provide precise near-term visibility on spending plans.
Potential Revenue Decline: Expectations of a potential annual double-digit revenue decline, particularly in North America and internationally.
Leadership Changes: Anuj Dhruv appointed as Executive Vice President and CFO, bringing over two decades of experience.
Cost Structure Optimization: Initiated a multi-year cost optimization program focused on sustainable productivity gains through technology and lean processes.
Divestitures: Divested Argentina Pressure Pumping and Wireline businesses to focus on higher quality portfolio and return cash to shareholders.
Share Repurchase Program: Continued commitment to share repurchase program with approximately $152 million repurchased over the past three quarters.
Technology Advancements: Successful delivery of advanced technology solutions, including logging while drilling and OptiROSS RFID Multi-Cycle Sliding Sleeve Valve.
Revenue Expectations: 2025 revenues expected to be between $4.6 billion to $5 billion, with North America revenues declining high-single- to mid-double-digits year-on-year.
EBITDA Projections: Adjusted EBITDA expected to be between $975 million to $1.1 billion for 2025.
CapEx Guidance: CapEx expected to trend down to 3% to 5% of revenues for the year.
Q2 Revenue Guidance: Expected revenues for Q2 between $1.165 billion to $1.195 billion.
Free Cash Flow Conversion: Free cash flow conversion expected to increase by 100 to 200 basis points year-on-year.
Quarterly Dividend: $0.25 per share paid for three quarters.
Share Repurchase: Approximately $152 million worth of shares repurchased over the past three quarters, including $53 million during Q1.
Buyback Program: Commitment to the buyback program with sufficient capacity under a $500 million authorization.
The earnings call presents a mixed picture: strong EBITDA margin improvements and cost optimization are positives, but revenue declines and market headwinds in key regions are concerning. The Q&A highlights cautious optimism, particularly in Mexico and Saudi Arabia, but also reveals uncertainties in pricing pressures and future spending. The positive aspects are counterbalanced by the cautious guidance and market challenges, leading to a neutral sentiment.
The earnings call revealed mixed signals: strong free cash flow and liquidity, but challenges in Saudi Arabia and Mexico. The Q&A highlighted uncertainties in cash flow improvements and pricing pressures, although there's optimism in technology and M&A strategies. The guidance shows moderate growth, tempered by tariff impacts. The stock is expected to remain stable over the next two weeks, with no major catalysts for a significant move.
The earnings call reveals several negative factors: headcount reductions, uncertain customer spending, potential revenue decline, and unclear management responses in the Q&A. Despite stable dividends and share repurchases, the guidance reduction and market conditions indicate a negative outlook. The stock is likely to react negatively, with a potential decline of -2% to -8% over the next two weeks.
The earnings call highlights several challenges: revenue declines in North America and international markets, significant activity drops in Mexico and Russia, and near breakeven free cash flow in Q1. While there are positive elements like share repurchases and strong liquidity, the negative market outlook and management's unclear responses on recovery timelines overshadow these. The Q&A section further emphasizes the challenges in Mexico and Russia, and the inability of Saudi growth to offset these declines. Overall, the sentiment leans negative, likely leading to a stock price decline.
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