Weatherford International plc (WFRD) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects mixed signals. While there are positive developments, such as improved EBITDA margins and operational efficiency, the market conditions remain soft with pricing pressures. The cautious optimism about future market improvements is tempered by uncertainties in customer spending and specific regional challenges. The Q&A section reveals management's strategic focus but also highlights areas with vague guidance, contributing to a neutral sentiment.
Key Financial Performance
Sequential Revenue Growth 5% sequential revenue growth, driven by higher activity in Latin America (16% sequential growth), modest growth in North America, and 4% sequential growth in the Middle East, North Africa, and Asia region. Europe Sub-Sahara Africa and Russia region declined 2% sequentially.
Mexico Revenues Declined over 50% year-over-year due to significant activity decline. However, the situation has stabilized with steady activity levels and resumed payments in the second half of 2025.
Adjusted EBITDA Margins 22.6% in Q4 2025, a sequential improvement of 74 basis points, attributed to intense focus on operations and execution.
Adjusted Free Cash Flow (Q4 2025) $222 million, significantly enhanced by collections from a key customer in Mexico.
Adjusted Free Cash Flow (Full Year 2025) $466 million, representing a 43.7% conversion ratio, a 576 basis points improvement over 2024, driven by improved payment mechanisms and operational performance.
Net Working Capital Efficiency 28.9% of revenue in 2025, up from 24.5% in 2024 (450 basis points increase), impacted by outstanding collections in Mexico.
Shareholder Returns $173 million in 2025, comprising $72 million in dividends and $101 million in share repurchases, representing 37% of annual adjusted free cash flow.
Debt Reduction Reduced gross debt by $161 million in 2025, resulting in a net leverage ratio of 0.42x.
Capital Expenditures (CapEx) $226 million in 2025 (4.6% of revenues), with a planned reduction to $190 million to $230 million in 2026.
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Operating Highlights
MARS (Mature Asset Rejuvenation to Surveillance): A fiber optic-enabled solution providing real-time insights for production enhancement, targeting over 1 million wells in over 100 countries.
Modus (performance tier MPD solution): Completed over 70 jobs globally in its first full year of commercial availability in 2025.
Latin America growth: 16% sequential growth driven by Mexico and Brazil.
Middle East, North Africa, and Asia growth: 4% sequential growth led by Kuwait, Oman, UAE, and Indonesia.
Potential Venezuela market: Substantial potential for intervention, well services, and artificial lift portfolios if stable governance and regulatory environment is achieved.
Adjusted EBITDA margins: Improved to 22.6% in Q4 2025, showcasing operational focus.
Free cash flow: Achieved $222 million in Q4 2025, with a full-year total of $466 million, representing a 43.7% conversion ratio.
Cost optimization: Reduced personnel expenses by over $150 million in 2025 and implemented restructuring and severance charges of $58 million.
Dividend increase: Announced a 10% increase in dividend, reflecting confidence in long-term prospects.
Infrastructure program overhaul: Aimed at scaling the company efficiently through cycles.
Partnership agreements: Signed agreements for technology development, infrastructure provision, customer collaboration, and new energy platforms.
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Risk or Challenges
Mexico Revenue Decline: Mexico revenues declined over 50% in 2025 compared to the prior year, significantly impacting financial performance. Although the situation has stabilized, future cash flow remains dependent on consistent payment streams.
North America Spending Decline: North America spending is expected to decline in 2026 as operators maintain tight budgets, leading to mid- to high single-digit declines in activity levels.
Geopolitical and Trade Policy Risks: Geopolitical conflicts, trade policy impacts, and commodity price volatility are expected to cause greater-than-normal seasonal declines in international activity during the first half of 2026.
Legacy Pricing Variability: Legacy pricing variability poses a challenge to maintaining profitability, requiring mitigation through productivity and cost control measures.
Supply Chain and Cost Optimization: Cost optimization efforts, including restructuring and severance charges, are ongoing to align with activity levels. However, these actions may impact operational efficiency and employee morale.
Venezuela Market Risks: Potential re-entry into the Venezuelan market depends on stable governance, regulatory environment, and payment mechanisms, posing risks if these conditions are not met.
Working Capital Efficiency: Outstanding collections in Mexico have significantly impacted net working capital efficiency, which increased by 450 basis points in 2025. Future improvements depend on materializing pending collections.
Seasonal and Market Activity Declines: Seasonal declines and market restraint due to global oil demand-supply imbalance are expected to impact international activity levels in the first half of 2026.
CapEx Adjustments: Capital expenditure adjustments, including reduced spending on service tools and increased IT-related investments, may affect operational readiness and efficiency.
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Guidance & Outlook
Customer Spending: Customer spending is expected to increase over the course of 2026, with a stronger second half driven by contract awards and project start-ups in regions such as Saudi Arabia, Argentina, UAE, Brazil, Australia, Indonesia, and Egypt.
North America Spending: Spending in North America is expected to decline in 2026 due to operators maintaining tight budgets, resulting in mid- to high single-digit declines in activity levels.
International Activity Levels: International activity levels are expected to be flat to slightly down in 2026 compared to 2025, with a stronger second half potentially leading to year-on-year growth in 2027.
Offshore Deepwater Activity: Early signs of improvement in offshore deepwater activity are observed, particularly in core basins such as the Gulf of America, Brazil, the Caribbean, and the Caspian Sea.
Venezuela Market Potential: Potential opportunities in Venezuela could arise, contingent on stable governance, regulatory environment, operational stability, and approval of brownfield redevelopment with a strong payment plan.
Free Cash Flow Outlook: Free cash flow for 2026 is expected to remain strong, with a conversion rate in the low to mid-40% range, progressing towards a 50% target.
Capital Expenditures (CapEx): 2026 CapEx is expected to range between $190 million to $230 million, with a shift in spending towards IT-related investments, particularly ERP systems.
Revenue and EBITDA Guidance: For full year 2026, revenues are expected to range between $4.6 billion to $5.05 billion, and adjusted EBITDA is projected to be between $980 million to $1.12 billion.
Tax Rate: The effective tax rate for 2026 is expected to be in the low to mid-20% range.
2027 Outlook: Activity levels are expected to show year-on-year growth in 2027, with the company positioned to benefit from stable or improving activity.
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Shareholder Return Plan
Dividend Increase: The company announced a 10% increase in its dividend, reflecting confidence in its long-term prospects.
Dividend Payout: For the full year 2025, $72 million was returned to shareholders through dividends.
Share Repurchase: The company repurchased $101 million worth of shares in 2025.
Shareholder Return Program: Since the program's inception 1.5 years ago, approximately 38% of adjusted free cash flow has been returned to shareholders through share repurchases and dividends.
Future Commitment: The company remains committed to returning approximately 50% of adjusted free cash flow to shareholders over the course of the cycle.
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Key Q&A
Q:How does Weatherford see Saudi Arabia's market playing out this year and in 2027, and what are the pricing trends?
A:Saudi Arabia is Weatherford's most significant international market. The company expects a healthy recovery in the second half of the year as rigs come online, with further growth into 2027. Weatherford sees strong opportunities due to underrepresentation and collaboration with Aramco. Pricing remains competitive, with a focus on cost efficiency and maintaining margins through total cost of ownership solutions.
Q:What is Weatherford's outlook for the broader Middle East and North Africa region?
A:The Middle East and North Africa region is Weatherford's largest and historically strongest region. The company sees variability in activity across countries, with strong momentum in the UAE and Kuwait, but a decline in Qatar due to development campaign cycles. Oman has shown tremendous growth, though a large integrated service contract is ending. Egypt is expected to see increased activity in the second half of the year. The region remains foundational for growth.
Q:What is Weatherford's perspective on the Mexico market for 2025 and 2026?
A:Weatherford has seen three consecutive quarters of sequential improvements in Mexico, with stability expected to result in slight year-on-year growth. The company is diversifying beyond one large customer and is optimistic about recent awards like the Trion deepwater development. Payment collections improved significantly in 2025, and the company is confident in continued collections in 2026 due to structural reforms and clear communication mechanisms.
Q:What is Weatherford's view on the Venezuela market and its potential impact?
A:Weatherford has not assumed any Venezuela uptick in its guidance. At its peak, Venezuela contributed over $500 million in revenue, and the company still has relevant technologies and product lines for the market. Key factors for re-entry include governance, regulatory clarity, safety, and payment mechanisms. Weatherford is monitoring developments and preparing plans but does not expect immediate changes.
Q:What is Weatherford's offshore outlook, particularly for deepwater activity?
A:Weatherford is optimistic about offshore deepwater activity, with a focus on MPD (Managed Pressure Drilling) and TRS (Tubular Running Services) businesses. The company is also advancing in completions and interventions, with significant contracts like Petrobras' cycle 10 work. Weatherford aims to drive margins, efficiency, and automation in offshore operations.
Q:How is Weatherford positioned in the North America market, given the expected activity decline in 2026?
A:Weatherford's North America business is more production-oriented, with artificial lift as a key product line. The company is optimizing its footprint, driving differentiation and innovation, and focusing on higher-quality revenue with better EBITDA and cash contributions. While not immune to activity declines, Weatherford aims to maintain margins through efficiency and innovation.
Q:What are the factors impacting Weatherford's first-quarter guidance for 2026?
A:The first-quarter guidance reflects typical seasonality, orders pulled into Q4 2025 from Q1 2026, and weather impacts in Texas. Year-over-year, Q1 2025 benefited from the Argentina divestiture, while Q1 2026 faces slight tariff impacts. The company expects a sequential ramp-up in the second half of 2026, creating a solid foundation for 2027.
Q:How is Weatherford managing its capital expenditure (CapEx) and focusing on efficiency?
A:Weatherford is maintaining CapEx within 3%-5% of revenue, doubling ERP spend in 2026 to drive efficiencies. The company is optimizing asset utilization, trading CapEx for OpEx where possible, and leveraging existing capital for incremental business. Weatherford is focused on return on invested capital and driving cash and margin improvements.
Q:What initiatives are driving Weatherford's cost cuts and margin improvements?
A:Weatherford reduced its workforce by over 2,000 in 2025, saving $150 million in run-rate costs. The company is continuously improving its organizational structure, outsourcing tasks, and implementing a new ERP system to enhance efficiency. Weatherford aims to maintain margins during activity declines and capitalize on structural changes during market upswings.
Q:What transformational changes is Weatherford implementing, and how will they impact the company?
A:Weatherford is implementing a new ERP system for automation, AI enablement, and data transparency. The company is focusing on new products and technologies targeting significant market opportunities and lower capital intensity. Weatherford's operating model emphasizes consistent improvement, aiming for margin resilience in flat markets and amplified growth during activity increases.
Q:What is Weatherford's outlook for its Modus Managed Pressure Wells Solution?
A:Weatherford is excited about the Modus Managed Pressure Wells Solution, which targets the performance tier and shallow water markets. The technology enables applications beyond drilling, such as cementing and setting liner hangers. With tools deployed globally and strong customer interest, Weatherford expects significant growth in this product line.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numbers for Weatherford's offshore-related revenue, citing early signs of improvement in offshore deepwater activity but not elaborating on quantitative details. Additionally, while discussing Venezuela, management emphasized the need for governance and regulatory clarity but did not provide a clear timeline or specific actions for re-entry into the market.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Argentina
Conference
Corporate Development
Indonesia
activity decline
allocation Slide
base
basis point
budget
capability
capital allocation
collection customer
course
credit
customer Mexico
debt
divestiture
flow collection
footprint
increase basis
interest
investment
leverage
lift
market Anuj
mid
objective
outcome
payment
productivity cost
progress
ratio
return dividend
share repurchase
shareholder return
situation
spend
tale half
term prospect
trade
win
WFRD Transcript
Weatherford International plc (WFRD) Q4 2025 Earnings Call Transcript
Unknown2-4
The earnings call reflects mixed signals. While there are positive developments, such as improved EBITDA margins and operational efficiency, the market conditions remain soft with pricing pressures. The cautious optimism about future market improvements is tempered by uncertainties in customer spending and specific regional challenges. The Q&A section reveals management's strategic focus but also highlights areas with vague guidance, contributing to a neutral sentiment.
Weatherford International plc (WFRD) Q3 2025 Earnings Call Transcript
Unknown10-22
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.
Weatherford International plc (WFRD) Q2 2025 Earnings Call Transcript
Unknown7-23
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.
Weatherford International plc (NASDAQ:WFRD) Q1 2025 Earnings Call Transcript
Unknown4-24
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.
WFRD Slides
WFRD Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
