Q4 2021 Weatherford International PLC Earnings Call

Speaker 1: Ladies and gentlemen, thank you for standing by.

Ladies and gentlemen, thank you for standing by.

Speaker 1: Welcome to the Weatherford International fourth quarter and full year 2021 earnings call.

Welcome to the Weatherford International fourth quarter, and full year 2021 earnings call.

All participants will be in listen only mode.

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Speaker 1: After today's presentation, there will be an opportunity to ask questions.

After todays presentation, there will be an opportunity to ask questions.

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As a reminder, this event is being recorded.

Speaker 1: I would now like to turn the conference over to Mohamed Topuwala, Director, Investor Relations at M&A. Sir, you may begin.

I would now like to turn the conference over to Oklahoma Top of wallet director of Investor Relations. Sir you may begin.

Speaker 2: Welcome everyone to the Weatherford International fourth quarter and full year 2021 conference call. I am joined today by Girish Saligram, President and CEO and Keith Jennings, Executive Vice President and CFO .

Everyone to the Weatherford International fourth quarter, and full year 2021 conference call.

And today by Gui filing from <unk>.

And CEO and Keith Jennings Executive Vice President and CFO .

Speaker 2: We will start today with our prepared remarks, then open it up for questions.

We will start today with our prepared remarks, then open it up for questions.

Speaker 2: you may download a copy of the presentation slides that correspond with today's call from our website Investor Relations section

You may download a copy of the presentation slides that correspond to today's call from our website the Investor Relations section.

Speaker 2: I want to remind everyone that some of today's comments include forward-looking statements.

I want to remind everyone that today's comments include forward looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to materially differ from any expectation expressed herein.

Speaker 2: These statements are subject to many risks and uncertainties that could cause our actual results to materially differ from any expectation expressed herein.

Speaker 2: Please refer to our latest Securities and Exchange Commission filings, First Factors and Pations regarding Forward Living States.

Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward looking statements.

Speaker 2: Our comments today also include non-GAAP financial measures. The underlying details and reconciliation of GAAP to non-GAAP financial measures are included in our fourth quarter and folio press release, which can be found on our website. With that, I'd like to turn the call over to Girish. Thanks, Sm This video was made possible with the support of ante VW or other Windows developershm

Our comments today also include non-GAAP financial measures.

Underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our fourth quarter and full year press release, which can be found on our website.

I'd like to turn the call over to Girish.

And thank you all for joining the call today.

Speaker 3: I am pleased with the results of the fourth quarter of 2021, which build on the momentum we have generated throughout the year.

I am pleased with the results of the fourth quarter of 2021, which build on the momentum we have generated throughout the year.

Speaker 3: We face significant challenges, including inflationary pressure, supply chain bottlenecks, and ongoing disruptions caused by the pandemic. Despite these headwinds, the Weatherford team delivered another quarter in line with our outlook and outperformed in some areas.

We faced significant challenges, including inflationary pressure supply chain bottlenecks and ongoing disruptions caused by the pandemic. Despite these headwinds the weatherford team delivered another quarter in line with our outlook and outperformed in some instances.

Speaker 3: In the fourth quarter, we achieved overall revenue growth of 2% sequentially and 15% over the prior year with adjusted EBITDA margins of 16%. You will recall that in our prior earnings call, we explained the impact of several one-time items in the third quarter of 2021.

In the fourth quarter, we achieved overall revenue growth of 2% sequentially and 15% over the prior year with adjusted EBITDA margins of 16% you will recall that in our prior earnings call. We explained the impact of several one time items in the third quarter of 2021.

Speaker 3: We therefore expected Q4 to come in with lower margins.

We therefore expected Q4 to come in with lower margins. However, the team did a great job executing which enabled margins to come in above our guidance and over 400 basis points above the fourth quarter of 2020, a remarkable achievement in just one year.

Speaker 3: However, the team did a great job executing, which enabled margins to come in above our guidance, and over 400 basis points above the fourth quarter of 2020. A remarkable achievement in just one year.

Speaker 3: In addition, we generated $49 million of free cash flow during the quarter and $278 million for the full year.

In addition, we generated $49 million of free cash flow during the quarter and $278 million for the full year.

Speaker 3: We also achieved two consecutive years of positive free cash flow. The first time in 30 years that that has happened in Venezuela.

We also achieved two consecutive years of positive free cash flow.

First time in 30 years that that has happened and by the phone.

Speaker 3: 2021 was a significant year for us with several notable milestones, and I think it is worthwhile to reflect on how far we have come in a relatively short time.

2021 was a significant year for us with several notable milestones and I think it is worthwhile to reflect on how far we have come in a relatively short period.

Speaker 3: We fully return to the public market on the NASDAQ stock exchanges, WFRD. This move was driven by confidence in our operating posture and commercial profile to create sustainable profit.

We fully return to the public market on the NASDAQ stock exchange as Wf Rd. This move was driven by confidence in our operating posture and commercial profile to create sustainable profitability.

Speaker 3: Our return allows the broader base of investors the opportunity to participate in that value creation.

Our return allows a broader base of investors the opportunity to participate in that value creation.

Speaker 3: We also strengthened our capital structure by using the cash generated from the business to pay down debt and concluded a series of repanancing transactions.

We also strengthened our capital structure by using the cash generated from the business to pay down debt and concluded a series of refinancing transactions. These actions significantly reduced our interest expense and favorably position the company for the long term.

Speaker 3: these actions significantly reduced our interest expense and favorably positioned the company for the long term.

Speaker 3: We were careful and deliberate in our actions on our 2021 focus areas, driving outperformance across the board on automatic performance, organizational simplification, variable cost management, and inventory rationalization.

We were careful and deliberate in our actions and our 2021 focus areas driving outperformance across the board on North America performance organizational simplification variable cost management and inventory rationalization.

Speaker 3: In North America, we completely reorganized our operating structure. In doing so, we doubled our margins and grew revenues as we undertook several actions to address our footprint, business mix, and service delivery model under a new leadership team focused on return.

In North America, we completely reorganized our operating structure and doing so we doubled our margins and grew revenues as we undertook several actions to address our footprint business mix and service delivery model under a new leadership team focused on returns.

Speaker 3: These actions resulted in our exiting non-profitable business lines in the United States, such as drilling services and bellheads, and switching to a new model in our Y-Line services portfolio.

These actions resulted in our exiting non profitable business lines in the United States, such as drilling services, and Belle <unk> and switching to a new model and our wireline services portfolio.

Speaker 3: Next, in organizational simplification, we took critical steps to de-layer our company, which created greater operational efficiency and accountability, resulting in support cost savings.

Next an organizational simplification, we took critical steps to de layer, our company, which created greater operational efficiency and accountability, resulting in support cost savings in variable cost management be galvanized cross functional teams on several work streams, leading to improvements in diverse areas from contract management to sourcing of uniforms.

Speaker 3: In variable cost management, we galvanize cross-functional teams on several workstreams, leading to improvements in diverse areas from contract management to sourcing of uniforms and telecoms.

Telecom axis.

Speaker 3: Lastly, in inventory rationalization, an area which we identified as crucial to achieving our profitability and cash flow objectives, I am pleased with the achievements made by the team as we reduced our DSI by 14 days, well ahead of our 10-day DSI reduction.

Lastly, an inventory rationalization and area, which we identified as crucial to achieving our profitability and cash flow objectives. I am pleased with the achievements made by the team as we reduced our DSI by 14 days well ahead of our 10 day DSI reduction goal.

Speaker 3: In 2021, we also introduced our three strategic vectors. And the actions on these are yielding positive outcomes that are positioning as well for the time.

In 2021, we also introduced our three strategic vectors and the actions on these are yielding positive outcomes that are positioning us well for the future.

Speaker 3: We have provided more clarity on our portfolio with our new reportable segments that underscore the importance of our market-leading offerings of Managed Pressure Drilling, or MPB, tubular running services, or TRS, cementation products, and fishing and reentry.

We have provided more clarity on our portfolio with our new reportable segments that underscore the importance of our market leading offerings of managed pressure drilling or MPD tubular running services or Trs cementation products and fishing and reentry.

Speaker 3: As evidenced by our commercial successes, these product offerings are gaining greater traction and also positioning us for pulling through additional services from the portfolio.

As evidenced by our commercial successes these product offerings are gaining greater traction and also positioning us fulfilling through additional services from the portfolio.

Speaker 3: In the digital space, we accelerated the adoption of our foresight production optimization platform and reservoir monitoring solutions and received awards for performance excellence from key customers.

In the digital space, we accelerated the adoption of our foresight production optimization platform and reservoir monitoring solutions and received awards for performance excellence from key customers.

Speaker 3: In the fall, we held the Weatherford Enterprise Software Conference and delivered a strong testimonial to the efficacy of our digital solutions across the well life.

In the fall we held the bad part of Enterprise software conference and delivered a strong testimonial to the efficacy of our digital solutions across the <unk> lifecycle.

Speaker 3: In ESG and the energy transition, I recognize that our journey has just begun, but I'm encouraged by our progress.

In ESG in the energy transition I recognize that our journey has just begun but im encouraged by our progress we have affirmed our commitment to be net zero by 2015 and have signed on to the UN global compact.

Speaker 3: We have affirmed our commitment to be net zero by 2050 and have signed on to the UN Global Conference.

Speaker 3: Our offerings in geothermal, plug-in abandonment, and carbon capture utilization and storage, or CCUS, are securing wins across multiple geog.

Our offerings in geothermal plug and abandonment and carbon capture utilization and storage or <unk> or.

Securing wins across multiple geographies.

Speaker 3: As I share this with you, I am simultaneously proud and humble.

As I shared this with you I am simultaneously proud and humbled.

Speaker 3: Proud of everything our 17,000 plus team members have accomplished and humbled by their commitment, sacrifice and spirit to win in the market.

Proud of everything our 17000 plus team members have accomplished and humbled by the commitment sacrifice and spirit to win in the marketplace. My sincere gratitude and appreciation go out to every single one of our employees for driving the success of the new Weatherford.

Speaker 3: My sincere gratitude and appreciation go out to every single one of our employees for driving the successes of the new weather.

Speaker 3: We set an intermediate goal of getting to 15% EBITDA margins. And having delivered that in 2021, I'm confident that we can achieve that across sites.

We set an intermediate goal of getting to 15% EBITDA margins and having delivered back in 2021, I am confident that we can achieve that across cycles. We're now raising the bar for ourselves with the goal of continued margin expansion and believe that in the coming years, we can be a company delivering high teens EBITDA margins while all.

Speaker 3: We are now raising the bar for ourselves with the goal of continued margin expansion and believe that in the coming years We can be a company delivering high team Vibhita margins while also driving a high degree of cash conversion.

Also driving a high degree of cash conversion.

Speaker 3: We continue to gain momentum in the market, led by the strength of our portfolio, and I'd like to share some of our fourth quarter commercial highlights with you, starting with our well-construction and completion segments.

We continued to gain momentum in the market led by the strength of our portfolio and I'd like to share some of our fourth quarter commercial highlights with you starting with our well construction and completion segment.

Speaker 3: We were awarded two five-year contracts with Abu Dhabi National Oil Company with a combined value of more than $1 billion for down-hole completions and liner hanger systems. The down-hole completions contract is amongst the world's largest in this category.

We were awarded two five year contracts with Abu Dhabi National oil company with a combined value of more than $1 billion for downhole completions and liner hanger systems.

The downhole completions contract this amongst the worlds largest in this category.

Speaker 3: Stormoline in Canada awarded Weatherford a one-year contract extension for approximately 200 wells with increased scope for our completion product.

Normally even Canada awarded Weatherford, a one year contract extension for approximately 200 wells with increased Gulfport completion products.

Speaker 3: A European supermajor awarded Weatherford a five-year contract to deploy fiber optics and intelligent screen solutions in the North.

A European Supermajor awarded Weatherford, a five year contract would deploy fiber optics intelligence screen solutions in the North Sea.

Speaker 3: This award reinforces our leadership position in delivering reservoir monitoring at the Norwegian Continental Shell.

This award reinforces our leadership position in delivering reservoir monitoring at the Norwegian Continental shelf.

Speaker 3: In TRS, we achieved several big wins, including an award from Saudi Aramco for a five-year TRS contract to support onshore and offshore operations.

In Trs, we achieved several big wins, including an award from Saudi Aramco for a five year Trs contract to support onshore and offshore operations.

Speaker 3: Weatherford was selected based on its technology, safety record, quality performance, and commitment to local content and partners.

Weatherford with selected based on its technology safety record quarterly performance and commitment to local content and partnerships.

Speaker 3: Moving on to our drilling and evaluation segment, we continued to score wins in MPD and made headway in its adoption across our geos.

Moving onto our drilling and evaluation segment, we continued to score wins in MPD and made headway in its adoption across our Geo results as.

Speaker 3: As an example, following a successful implementation of Weatherford's MPD system, Shell awarded Weatherford a two-year multi-rig contract extension for MPD operations in deep water to continue the well delivery benefits offered by this technology.

As an example, following the successful implementation of Weatherford MPD system shell awarded <unk>, a two year multi rig contract extension for MPD operations in deepwater to continue the well delivery benefits offered by <unk> technology.

Speaker 3: We had several other meaningful wins in the space this quarter with notable awards in Latin America and Asia.

We had several other meaningful wins in this space this quarter with notable awards in Latin America and Asia.

Speaker 3: Our digital presence continues to grow across our segments, as evidenced by the commercial success in our production and intervention segment in the fourth quarter, including an award from Kuwait Oil Company, or KOC, which awarded Weatherford a three-year contract to support its digital transformation strategy in the North Kuwait heavy oil field and deploy its integrated enterprise excellence platform.

Our digital presence continues to grow across our segments as evidenced by the commercial success in our production and intervention segment in the fourth quarter, including an award from Kuwait Oil company, a KFC, which awarded Weatherford, a three year contract to support its digital transformation strategy in the north Kuwait heavy oilfield and deploy its integrated enterprise excellence.

Platform.

Speaker 3: The award includes instrumentation, real-time monitoring and production optimization, enabling KOC to advance its production and work over.

The award includes instrumentation real time monitoring and production optimization, enabling <unk> to advance its production and workover plants.

Speaker 3: Weatherford signed a global collaboration agreement with Light, a digitally led business backed by BP Launchpad.

Weatherford signed a global collaboration agreement with light a digitally led business backed by BP launch back.

Speaker 3: The agreement combines lights proprietary sensing insights with Weatherford's expertise in distributed fiber optic sensing deployed through our industry-leading foresight platform to help customers revitalize and optimize their energy access.

The agreement combined lights proprietary sensing insights with <unk> expertise in distributed fiber optic sensing deployed to our industry, leading <unk> platform to help customers revitalized and optimize their energy assets.

Speaker 3: Moving on to some of our wins in our energy transition platforms, I'd like to share a few noteworthy awards.

Moving onto some of our wins in our energy transition platform. So I'd like to share a few noteworthy awards.

Speaker 3: A European supermajor selected Weatherford to provide liner hanger products and services in its first CCUS pilot project as it endeavors to achieve carbon neutrality for its operators.

European Supermajor selected Weatherford to provide liner hanger products and services and its first <unk> pilot project asset endeavors to achieve carbon neutrality for its operations.

Speaker 3: Another European customer selected Weatherford to help with their carbon sequestration operations using our downhole sealing technology for a well-recompletion project. And in the United States, we mobilized a 50-well offshore plug-in abandonment project for a major operation.

Another European customer selected <unk> to help with their carbon sequestration operations, using our downhole sealing technology, well re completion project and in the United States, We mobilized a 15, well offshore plug and abandonment project for a major operator.

Speaker 3: I am encouraged by the traction we are seeing in these areas and am confident in our growing role in the energy transition as we leverage the capabilities inherent to our portfolio.

I am encouraged by the traction we are seeing in these areas and I'm confident in our growing role in the energy transition as we leverage the capabilities and adding to our portfolio.

Now turning to our view on the markets. The overall macro environment continues to improve and we are now in the early stages of a multiyear up cycle.

Speaker 3: The overall macro environment continues to improve and we are now in the early stages of a multi-year option.

Speaker 3: In North America, U.S. Land markets continue to see the trend of robust growth with increased activity and spending.

In North America U S land markets continue to see the trend of robust growth with increased activity and spending.

Speaker 3: At the same time, we are also seeing some of the same trends from last year continue as public EMPs remain committed to capital discipline, while we are seeing private EMPs increasing and basing by speed as well.

At the same time, we are also seeing some of the same trends from last year continuous public e&ps remain committed to capital discipline. While we are seeing private e&ps increasing investments. Our focus however continues to be on generating sustainable returns and going after work only where it makes sense for us to do so.

Speaker 3: Our focus, however, continues to be on generating sustainable returns and going after work only where it makes sense for us to do.

Speaker 3: Internationally, we expect capital spending to continue increasing, building on last year's strong finish. I am particularly excited by the growth prospects in the Middle East and Latin America as capital gets deployed to restore production levels and lay the groundwork for longer term experience.

Internationally, we expect capital spending to continue increasing building on last year's strong finish I am, particularly excited about the growth prospects in the middle East and Latin America as capital gets deployed to restore production levels and lay the groundwork for longer term expansion.

Speaker 3: The past year's results show that Weatherford has firmly improved its financial and operational profile.

The past year's results show that Weatherford has firmly improve its financial and operational profile.

Speaker 3: We will continue to focus on the work necessary to further strengthen our capabilities.

We will continue to focus on the work necessary to further strengthen our capabilities.

Speaker 3: We are now more confident in the growth scenario we highlighted in our third protocol and expect to see continued improvement and profitability reflected in margin expansion on a year-over basis. Now I'll hand it over to Keith Brofist.

We are now more confident in the growth scenario, we highlighted in our third quarter call and expect to see continued improvement in profitability reflected in margin expansion on a year over basis now.

Now I'll hand, it over to Keith for a financial update.

Thank you Gary.

Speaker 4: Before I review our fourth quarter and full year 2021 results, I will remind us all of the segment changes implemented in the fourth quarter.

Before I review, our fourth quarter and full year 2021 results I'll remind us all of the segment changes implemented in the fourth quarter.

Speaker 4: We recently announced realigning how we report our results to three product lines.

We recently announced realigning how we report our results to three product lines drilling and evaluation or DRA, well, construction and completions or WCC and production and intervention or PRA.

Speaker 4: Drilling and Evaluation or DRE, Well Construction and Completions or WCC, and Production and Intervention or PRI.

Speaker 4: The updated reporting structure better aligns with the company's focus and business strategy around the well lifecycle, designed to drive improved customer collaboration and growth opportunities.

The updated reporting structure better aligned with the company's focus on business strategy around the world lifecycle designed to drive improved customer collaboration and growth opportunities.

Speaker 4: All segments provide services to core oil and gas and view energy markets.

All segments provides services to core oil and gas and new energy markets.

Speaker 4: Aligning our management strategy and reporting structure further drives organizational priorities into our operating processes and investment choices.

Aligning our management strategy and reporting structure further drives organizational priorities into our operating processes and investment choices.

Speaker 4: The market leading offerings in each segment reflect the strength and differentiation of our technology and innovation.

The market leading offerings in each segments reflect the strength and differentiation of our technology and innovation.

Speaker 4: These product offerings serve as a foundation to drive growth and pull through across our portfolio.

These product offerings serve as a foundation to drive growth and pull through across our portfolio. Additionally.

Speaker 4: Additionally, the seamless integration of our digital offerings and the ability to provide integrated solutions across our segments would enable continued growth in our core operations and energy transition.

Additionally, the seamless integration of our digital offerings and the ability to provide integrated solutions across our segments will enable continued growth in our core operations and the energy transition.

Speaker 4: Our fourth quarter results were the perfect capstone to our 2021 performance.

Our fourth quarter results with a perfect capstone to our 2021 performance.

Speaker 4: Fourth quarter and four-year 2021 results reflect the ongoing improvements in our operations and go-to-market strategies as we navigate an environment of inflation and increasing complexity.

Fourth quarter and full year 2021 results reflect the ongoing improvements in our operations and go to market strategies, as we navigate an environment of inflation and increasing complexity.

Speaker 4: Consolidated fourth quarter 2021 revenues were $965 million, an improvement of 15% year over year and 2% sequentially.

Consolidated fourth quarter, 2021 revenues were $965 million, an improvement of 15% year over year and 2% sequentially.

Speaker 4: primarily driven by a 27% year-over-year increase in service revenues as we saw improvements across all of our segments.

Primarily driven by a 27% year over year increase in service revenues as we saw improvements across all of our segments.

Speaker 4: Seasonally higher product revenues drove a 2% increase in revenue sequentially, partially offset by the seasonal slowdown in service-related activity.

Seasonally higher product revenues drove a 2% increase in revenue sequentially, partially offset by the seasonal slowdown in service related activity.

Speaker 4: Fourth quarter operating income was 33 million, or 3% of revenues, increasing 140 million year over year, and decreasing 38 million sequentially.

Fourth quarter operating income was $33 million or 3% of revenues, increasing $140 million year over year and decreasing $38 million sequentially.

Speaker 4: Adjusted EVADA for the fourth quarter was 154 million.

Adjusted EBITDA for the fourth quarter was $154 million and.

Speaker 4: an adjusted EBITDA margin of 16%, representing a 440 basis points improvement year over year, driven primarily by growth in service revenues, an improved mix of services, and lower operational expenses resulting from our cost improvement initiative.

And adjusted EBIT margin of 16%, representing a 440 basis points improvement year over year, driven primarily by growth in service revenues and improved mix of services.

And lower operational expenses, resulting from our cost improvement initiatives.

Speaker 4: Adjusted EBITDA margins declined by 290 basis point sequential.

Adjusted EBITDA margins declined by 290 basis points sequentially.

Speaker 4: reflecting a change in the revenue mix and non-repeats of certain one-time items from the third quarter of 2021.

Electing a change in the revenue mix and non repeat of certain onetime items from the third quarter of 2021.

Now, let's look at our segment breakdown.

Speaker 4: Drilling and evaluation or DRE revenues of $287 million in the fourth quarter of 2021 increased 34% year over year and 3% sequential.

Drilling and evaluation or DRA revenues of $287 million in the fourth quarter of 2021 increased 34% year over year and 3% sequentially.

Speaker 4: The year-over-year improvement was driven by higher business activity across all product lines led by MPD and wireline services, with significant growth in the Middle East and Latin America.

The year over year improvement was driven by higher business activity across all product lines led by MPD and wireline services with significant growth in the middle East and Latin America.

Speaker 4: Segment adjusted EVADA of $55 million increased $33 million and associated margins of 19% improved 890 basis points year over year and decreased 90 basis points sequential.

Segment, adjusted EBITDA of $55 million increased $33 million and associated margins of 19% improved 890 basis points year over year and decreased 90 basis points sequentially.

Speaker 4: segment-adjusted EVID and margins declined sequentially primarily due to product...

<unk> adjusted EBITDA and margins declined sequentially, primarily due to product mix.

Speaker 4: The year-over-year growth in segment adjusted EBITDA and margins were driven mainly by improved services revenue mix, pricing,

The year over year growth in segment adjusted EBITDA and margins were driven mainly by improved services revenue mix.

Pricing and geographic mix.

Speaker 4: Lower operational expenses relate to our cost improvement initiatives and lower inventory charges help expand margins and offset supply chain head.

Lower operational expenses related to our cost improvement initiatives and lower inventory charges help expand margins and offset supply chain headwinds.

Speaker 4: Well construction and completions or WCC revenues of $348 million increase 3% year over year and 1% sequential.

Well construction and completions or WCC revenues of $348 million increased 3% year over year, and 1% sequentially driven by improved demand primarily for cement patient products with North America, delivering the most significant growth.

Speaker 4: driven by improved demand primarily for cementation products with North America delivering the most significant growth.

Speaker 4: Activity increases in North America and Latin America were partially offset by a decline in Europe , Sub-Saharan Africa, and Russia.

Activity increases in North America, and Latin America were partially offset by a decline in Europe sub Sahara Africa and Russia.

Speaker 4: segment adjusted EVIDA of 72 million increased 15 million year over year and associated margins of 21% improved 380 basis points year over year and decreased 220 basis points sequentially.

Segment, adjusted EBITDA of $72 million increased $15 million year over year and associated margins of 21% improved 380 basis points year over year and decreased 220 basis points sequentially.

Speaker 4: Sequentially, segment adjusted EBITDA and margins declined primarily due to non-repeat of one-time items in the prior quarter.

Sequentially.

<unk> adjusted EBITDA and margins declined primarily due to the non repeat of one time items in the prior quarter.

Speaker 4: The growth in segment adjusted EVA and margins year over year was primarily driven by an improved service revenue mix, improved product volumes, lower operational expenses related to our cost improvement initiatives, and reduced inventory charges.

The growth in segment adjusted EBITDA and margins year over year was primarily driven by an improved service revenue mix improved product volumes lower operational expenses related to our cost improvement initiatives and reduce inventory charges.

Speaker 4: Production and intervention or PRI revenues of $298 million increased 10% year over year and 2% sequentially, driven by increased demand for intervention services and production automation software globally.

Production and intervention or PRA revenues of $298 million increased 10% year over year, and 2% sequentially driven by increased demand points intervention services and production automation software globally.

Speaker 4: Segment-adjusted EVADA of 47 million increased 8 million, and associated margins of 16% improved 140 basis points year over year and decreased 370 basis points sequentially.

Segment, adjusted EBITDA of $47 million increased $8 million and associated margins of 16% improved 140 basis points year over year and decreased 370 basis points sequentially.

Speaker 4: Segment-adjusted EBITDA and margins declined sequentially, primarily due to non-repeat of one-time items in the prior quarter and the seasonal shift of products and services.

Segment, adjusted EBITDA and margins declined sequentially, primarily due to non repeat of one time items in the prior quarter and the seasonal shift of products and services.

Speaker 4: The year-over-year adjusted EBITDA growth was mainly due to increased activity, lower operational expenses related to our cost improvement initiatives, and lower inventory charges.

The year over year adjusted EBITDA growth was mainly due to increased activity lower operational expenses related to our cost improvement initiatives and lower inventory charges.

Turning to liquidity and cash flow.

Speaker 4: we continue to maintain the focus of managing our business to generate operating cash flow. This is demonstrated through the results for underlying business and cost improvement initiatives.

Continuing to maintain the focus of managing our business to generate operating cash flow. This is demonstrated through the results of our underlying businesses business and cost improvement initiatives.

Speaker 4: For the full year of 2021, operating cash flow was $322 million and free cash flow was $278 million.

For the full year of 2021 operating cash flow was $322 million and free cash flow was $278 million free.

Speaker 4: Free cash flow increased 200 million compared to full year 2020, primarily due to increased earnings driven by increased margins and lower capital expenditures partially offset by higher interest.

Free cash flow increased 200 million compared to full year 2020, primarily due to increased earnings driven by increased margins and lower capital expenditures, partially offset by higher interest expense.

Speaker 4: In the fourth quarter of 2021, we generated unlevered free cash flow of $147 million, an improvement of $52 million year over year from a 57% increase in adjusted EBITDA.

In the fourth quarter of 2021, we generated unlevered free cash flow of $147 million, an improvement of $52 million year over year from a 57% increase in adjusted EBITDA.

Speaker 4: Free cash flow in the quarter was $49 million, which improved $72 million year over year.

Free cash flow in the quarter was $49 million, which improved $72 million year over year.

Speaker 4: Total cash in hand as of December 31, 2021, was approximately $1.1 billion, down $333 million sequentially, reflecting the repayment of $200 million of exit notes and the redemption costs of refinance our exit notes with our 2030 senior notes.

Total cash on hand as of December 31, 2021 was approximately $1 1 billion down $333 million sequentially, reflecting the repayment of $200 million of exit notes and the redemption cost to refinance debt our exit notes with our 2030 senior notes.

Speaker 4: Capital expenditures were $41 million in the fourth quarter, compared to $54 million in the fourth quarter of 2020, and $20 million in the third quarter of 2021.

Capital expenditures were $41 million in the fourth quarter compared to $54 million in the fourth quarter of 2020 and $20 million in the third quarter of 2021.

Speaker 4: Our capital expenditures increased sequentially as we focused on our growth capital requirements given increasing activity levels.

Our capital expenditures increased sequentially as we focused on our growth capital requirements, given increasing activity levels.

Speaker 4: Capital expenditures for the full year were $85 million compared to $154 million in 2020.

Capital expenditures for the full year.

$85 million compared to $154 million in 2020.

Speaker 4: We expect to at least double our capital expenditures in 2022 to meet the increasing demand for our services and technologies, while continuing to be vigorous and rigorous about driving redeployment, reuse, and productivity.

We expect to at least double our capital expenditures in 2022 to meet the increasing demand for our services and technologies, while continuing to be vigorous and rigorous about driving redeployment reuse and productivity.

Speaker 4: We successfully completed phase one of our efforts to restructure our debt by refinancing $2.1 billion and repaying $200 million of debt during the fourth quarter, resulting in a significantly improved debt maturity profile and reducing cash interest by approximately $71 million per year.

We successfully completed phase one of our efforts to restructure our debt by refinancing $2 1 billion in repaying $200 million of debt during the fourth quarter, resulting in a significantly improved debt maturity profile and reducing cash interest by approximately $71 million per year.

Speaker 4: In the fourth quarter, Standard & Poor's upgraded the company's corporate credit.

In the fourth quarter standard <unk> Poor's upgraded.

The company's corporate credit rating to B minus.

Speaker 4: I wish to thank our One Weatherford team for the continuing cash flow improvements resulting from the outstanding operating performance, disciplined capital expenditures, and capital management driven by a continuous focus on asset utilization.

Wish to thank over one weatherford team for their continuing cash flow improvements, resulting from the outstanding operating performance disciplined capital expenditures and capital management, driven by our continuous focus on asset utilization.

Speaker 4: Shifting our focus to the current year, I will now share some of our qualitative thoughts on the first quarter of 2022 and the full year.

Shifting our focus of the current year I will now share some of our qualitative thoughts on the first quarter of 'twenty, two and the full year.

Speaker 4: As we look ahead to the first quarter, we expect consolidated revenues to decline by low single digits driven in part by lower contract consumption, currency weakness, and supply chain challenges, which we expect to recover in later quarters.

As we look ahead to the first quarter we.

We expect consolidated revenues to decline by low single digits, driven in part by lower contract consumption currency weakness and supply chain challenges, which we expect to recovery in later quarters.

Speaker 4: Adjusted EBITDA margins are currently expected to be 15 to 16 percent.

Adjusted EBITDA margins are currently expected to be 15% to 16%.

Speaker 4: Unlevered free cash flow is expected to decline, driven by working capital investments, and we expect capex to be in the range of 20-30 million in the first quarter.

Unlevered free cash flow is expected to decline driven by working capital investments and we expect capex to be in the range of 20% to $30 million in the first quarter.

Speaker 4: Full year 2022 consolidated revenues are expected to grow by high single to low double digits.

Full year 2022 consolidated revenues are expected to grow by high single to low double digits.

Speaker 4: Across the segments, DRE is forecasted to deliver low double digit growth.

Cross the segments.

<unk> is forecasted to deliver low double digit growth.

Speaker 4: WCC is forecasted to deliver in the high single digits, and PRI is forecasted in the mid to high double digits.

WCC is forecasted to deliver in the high single digits and priv is forecasted in the mid to high double digits.

Speaker 4: Consolidated adjusted EBITDA margins are expected to be 16 to 17 percent, as we expect margins to expand by at least 50 basis points for the full year 2022.

Consolidated adjusted EBITDA margins are expected to be 16% to 17% as we expect margins to expand by at least 50 basis points for the full year 2022.

Speaker 4: As stated earlier, capex will be at least double 2021 spending and will range from $175 million to $225 million.

As stated earlier Capex will be at least double 2021 spending and will range from 175 million to $225 million.

Speaker 4: Full year free cash flow is expected to decline compared to 2021, as increases in networking capital, cash taxes, and capex driven by an increase in revenue will only be partially offset by lower cash interest payments for the year. However, we expect to continue generating positive free cash flow for a third consecutive year.

Full year free cash flow is expected to decline compared to 2021 as increases in net working capital cash taxes, and capex driven by an increase in revenue will only be partially offset by lower cash interest payments for the year.

However, we expect to continue generating positive free cash flow for the third consecutive year.

Speaker 4: Thank you for your time today. I will now pass the call back to Girish for his closing comments.

Thank you for your time today I will now pass the call back to <unk> for his closing comments.

Speaker 3: Our 2021 focus areas have yielded terrific results, but even more importantly, have laid the groundwork for improved processes and procedures in the organization.

Thanks Keith.

2021 focus areas have yielded terrific results, but even more importantly have laid the groundwork for improved processes and procedures in the organization.

Speaker 3: We will continue to drive rigor and discipline in those areas, but recognize that we have new demands and needs, and our 2022 focus areas will drive our growth and execution strategy.

We'll continue to drive rigor and discipline in those areas, but recognize that we have new demands and needs and our 2022 focus areas will drive our growth and execution strategy.

Speaker 3: We have four key themes for 2022 for Weatherford. Fulfillment, Directed Growth, Excellence in Exhibitions.

We have four key themes for 2020 due for Weatherford.

Settlement.

Directed growth.

Excellence in execution and simplification.

Speaker 3: We refer to all of our customer delivery mechanisms as fulfillment, and this is a core area of how we operate.

We refer to all of our customer delivery mechanisms is fulfillment and this is a core area of how we operate.

Speaker 3: We are evolving from a set of independent product lines with their own fulfillment mechanisms to a globally integrated business with a contemporary and industrialized network of factories and repair and maintenance centers.

Evolving from a set of independent product lines with their own fulfillment mechanisms do a globally integrated business with a contemporary and industrialized network.

Our factories in repair and maintenance centers.

Speaker 3: This will drive excellence in service delivery and customer satisfaction while significantly improving efficiency.

This will drive excellence in service delivery and customer satisfaction, while significantly improving efficiencies. This is a significant change that is a multiyear journey, but we are starting on our first important steps. This year it will affect multiple aspects of the company from how we manage inventories through our supply chain and logistics functions.

Speaker 3: This is a significant change that is a multi-year journey, but we are starting on our first important steps this year. It will affect multiple aspects of the company, from how we manage inventories to our supply chain and logistics ones.

Speaker 3: We have demonstrated that we can take on significant challenges and deliver operating improvements in a deliberate and focused fashion, and I am confident this effort will be the same. Our second focus area is the

We have demonstrated that we can take on significant challenges and delivering deliver operating improvements in a deliberate and focused fashion and I am confident this effort will be the same.

Our second focus area is directed growth for the first time in five years, we are going to grow the top line of Weatherford, but in a focused fashion with an emphasis on profitability.

Speaker 3: For the first time in five years, we are going to grow the top line of Eberhard, but in a focused fashion with an emphasis on profitability.

Speaker 3: Our growth strategy for the year will be driven by technology differentiation and we will increase investment in innovation.

Our growth strategy for the year will be driven by technology differentiation and we will increase investment in innovation.

Speaker 3: We believe that innovation is the best option for pricing and share increases, and will arm our commercial teams to drive those imperatives, starting with our market leading off.

We believe that innovation is the best option for pricing and share increases and will arm, our commercial teams to drive those imperatives, starting with our market leading offerings.

Speaker 3: In a growth scenario, our third focus area of excellence and execution is even more critical.

In a growth scenario, our third focus area of excellence and execution is even more critical we.

Speaker 3: We are building a new quality function and recognize that we must win our customers trust every day by delivering on our commitment.

We are building a new quality function and recognize that we must win our customers' trust every day by delivering on our commitments at.

Speaker 3: At the same time, we need the same process discipline to ensure we execute with a lean mindset and drive accountability through the organization.

At the same time, we need the same process discipline to ensure we execute with a lean mindset and drive accountability through the organization.

Speaker 3: Finally, simplification is an enduring theme for us, both organizationally and operationally.

Finally simplification is an enduring team for us both organizationally and operationally our focus is on improving information flows and reducing complexity with minimal disruption.

Speaker 3: Our focus is on improving information flows and reducing complexity with minimal disruption.

Speaker 3: We believe the industry is in a multi-year growth cycle driven by global demand and exacerbated by underinvestment.

We believe the industry is in a multiyear growth cycle, driven by global demand and exacerbated by Underinvestment.

Speaker 3: Increasing activity levels, tightening OFS capacity, and green shoots on pricing give us confidence in our 2022 growth.

Increasing activity levels tightening Oss capacity and green shoots on pricing give us confidence in our 2022 growth.

Speaker 3: There are always balancing dynamics in the market, and the current situation is no different. A confluence of rising commodity prices, inflationary pressure, and supply chain issues could significantly restrict margin expense.

There are always balancing dynamics of the market and the current situation is no different a confluence of rising commodity prices inflationary pressure and supply chain issues could significantly restrict margin expansion.

Speaker 3: Additionally, we think the combination of the pandemic and certain geopolitical situations are a legitimate threat that could result in demand destruction.

Additionally, we think the combination of the pandemic and certain geopolitical situations that are legitimate threat that could result in demand destruction.

Speaker 3: Conversely, we see positive momentum across diverse themes, including the regulatory environment, commercial wins, and traction in the uptake of our market leading authors.

Conversely, we see positive momentum across diverse teams, including the regulatory environment commercial wins and traction in the uptake of our market leading offerings.

Speaker 3: In balance, we are positively biased and 2022 marks the first time in the last five years where we are poised to grow consolidated revenues and are well positioned to take advantage of the market dynamics as our hard work on expanding margins and being selective on growth takes hold.

In balance we are positively biased and 2022 marks the first time in the last five years, where we have a place to grow consolidated revenues and are well positioned to take advantage of the market dynamics as our hard work on expanding margins and being selective on growth takes hold.

Speaker 3: Our 2021 adjusted EBITDA margins were over 400 basis points better, on 30% lower revenue than 2019 pre-pandemic performance.

2021, adjusted EBITDA margins were over 400 basis points better on 30% lower revenue than 2019 pre pandemic performance.

Speaker 3: As exciting as our 2021 performance and results were, we believe our journey has just begun.

As exciting as our 2021 performance and results were we believe our journey has just begun.

Speaker 3: Thank you for joining us today. And with that operator, let's please open it up for Q&A.

Thank you for joining us today and with that operator, let's please open it up for Q&A.

Speaker 1: Thank you. We'll now begin the question and answer session. To ask a question, you may press star 1 on your touch-tone phone.

Thank you we will now begin the question and answer session to ask a question in reverse stars and one on you touched on phone.

Speaker 1: If using a speakerphone, we ask that you please pick up the handset before pressing the keys. To withdraw your question, please press...

It's using a speaker phone we ask you please pick up the handset question Ashish.

Your question. Please press Star then two.

Speaker 1: Today's first question comes from Ian McPherson with Piper Sambler. Please go ahead. Thanks.

So the first question cultural endless version with Piper Sandler. Please go ahead.

Thanks, Good morning, gentlemen.

Morning Ann.

Speaker 5: Grace, I appreciate you balancing the multi-year cyclical tailwinds with the lingering inflation and disruptive on the world accountants?

<unk> you I appreciate you're balancing the multiyear cyclical tailwind with the with the lingering inflation and disruptive.

Speaker 5: headwinds in the market with supply chain, etc. But when we look at your full year outlook of around 10% growth, it would not appear to reflect much

Headwinds in the market with supply chain et cetera, but.

When we look at your full year outlook for <unk>.

Round, 10% growth that would not appear to reflect much.

Speaker 5: gross or net pricing traction in your international markets? And we know that the pricing climate is heating up earlier domestically in the U.S. than it is internationally. That's intuitive. But when you see the building pipeline of contract tenders internationally, can you discuss how receptive your international customers are to the need for

Gross or net pricing traction in your international markets, and we know that the pricing climate is heating up earlier.

Particularly in the U S than it is internationally.

Intuitive, but.

When you see the building pipeline.

Contract tenders internationally can you discuss how receptive.

Your international customers are to the need for.

Speaker 5: Weatherford and Piers to raise pricing in this inflationary environment.

Weatherford appears to raise pricing in this inflationary environment.

Speaker 3: Sure, I think it's a really important point. I think a couple of things that are at play here. I think you hit the nail on the head. It's really long-term contracts versus the transactional pricing model in the US. So I think part of our...

Sure.

I think look.

Really important point I think a couple of things that are at play here I think you hit the nail on the head.

Really long term contracts versus the transactional pricing model in the U S. So I think qualify.

Speaker 3: you know, sort of evolution here is that we already have a number of contracts in place.

Set of evolution here is that we already have a number of contracts in place. So as we get new contracts and Thats, where the price increases typically take hold and those are for us and we've announced a series of them. Those are typically backend loaded for us. So we will see that more in the second half of this year and then going into 'twenty three so that's one big Guy.

Speaker 3: So as we get new contracts in, that's where the pricing increases typically take hold. And those are for us, and we've announced a series of them, those are typically back-end loaded for us. So we'll see that more in the second half of this year and then going into 23. So that's one big effect of why, you know, you see some of the numbers lay out the way you do.

Effect of why Youll see some of the numbers. So I'll lay out the way you do look on your question on Receptiveness I don't think generally 80 customer is is that opening to saying come in pricing, but I think everyone understands the situation.

Speaker 3: Look, on your question on receptiveness, I don't think generally any customer is that open to saying come in pricing, but I think everyone understands the situation, but they all want it to be within reason. I think they're having constructive dialogues and conversations, and we're looking at ways to both cut costs.

But.

They all want it to be within reason I think that having constructive dialogues and conversations and we're looking at ways to both cut costs.

Speaker 3: to increase margins, but also to raise prices. So it's a combination of both, but I would say, look, there is a sense of rationality that's constructive dialogue, but at the same time, especially in the international markets and certain geographies and markets, there's a lot of local players that do tend to compete at a different level of thresholds that we've just got to surmount.

The increase margins, but also to raise prices. So I'd say its a combination of both but I would say look there is a debt.

That is a sense of rationality, that's constructive dialogue, but at the same time, especially in the international markets in certain geographies and markets Theres a lot of local players that do tend to compete at a different level of thresholds that we've just got to surmount.

Makes sense.

Speaker 5: One element of your outlook caught my attention and that was the trajectory that's indicated for production and intervention, which appears to have more of a sequential decline in Q1 but also guided the highest full year growth rate, which...

One element of your outlook caught my attention and that was the trajectory that's indicated for production and intervention, which appears to have more of a sequential decline in Q1, but also guided the highest full year growth rate.

<unk>.

Speaker 5: you know, implies more of an upward sloping trajectory for those businesses. And I wanted to ask if that is related more to specific contract backlog that informs that trajectory or if you're expecting more of a

Implies more of an upward sloping.

<unk> for those businesses and I wanted to ask if that is related more to specific.

Contract backlog that informs that trajectory or if you're expecting more of a.

Speaker 5: geographic evolution within that business as the year unfolds.

Geographic.

Evolution within that business as the year unfolds.

Speaker 3: Yes, I think there's a couple of things, and I'll ask Keith to weigh in as well. I think, first of all, as we have pointed out a couple of times in our prepared remarks, that we have, the whole industry is facing the supply chain and logistics headwinds, and we've had a set of them that is really impacting us, especially in Q1, that we are working hard to mitigate, and so it's a bit of a balanced view. So that really starts to alleviate as we go through the rest of the year, improving in Q2 onwards, and especially towards the second half. So that's what you see. The second thing to remember is, look, it's the production business, but it's also intervention services. So as we have more wealth that come on stream, if you will, and you actually have a degree of greater drilling operations, the intervention services portion will also pick up, and we expect that to be a bit more back and loaded. So that's really what it is. But it is a segment, look, we've got some fantastic products and service offerings, so we're excited about that.

So I think Theres, a couple of things and I'll ask Keith to weigh in as well I think look first of all as we have pointed out a couple of times in our prepared remarks that we have the whole industry is facing the supply chain and logistics headwinds that we've had.

A set of them that is really impacting us, especially in Q1 that we are working hard to mitigate and so it's a bit of a balanced view so that really starts to alleviate as we go through the rest of the year, improving in Q2 onwards, and especially towards the second half. So that's what you see the second thing to remember is look it's a the production business, but it's also a.

<unk> services, so as we have more wells that.

Come on stream, if you will and you actually have a degree of greater drilling operations to intervention services portion will also pick up and we expect that to be a bit more backend loaded. So that's really what it is but it is a segment look we've got some fantastic products and service offerings. So we are excited about that we've also got a significant portion of our digital offerings in this space.

Speaker 3: We've also got a significant portion of our digital offerings in this space, our production automation software. So again, a lot of that kicks in a little bit later, which is why you see us being a bit more bullish on that throughout the rest of the year. Keith, anything you want to add? I think you nailed it.

Our production automation software, so again lot of that kicks in a little bit later, which is why you see us being a bit more bullish on that throughout the rest of the year is there anything you want.

I think you nailed it.

Speaker 4: Very well there, Girish. Ian, we have some very specific things happening.

Very well thank you rich.

And we have some very specific things happening around logistics and supply chain that will.

Speaker 4: logistics and supply chain that will impact the PRI business more so than the others because of the size of the equipment there. So as that works itself through the

In fact, the PRA business more so than the others because of the size of the equipment there.

So as that.

Works itself through the <unk>.

Speaker 4: in the fulfillment, at the fulfillment organization, we have to balance what we planned for Q1 and what falls over into Q1.

Fulfillment.

Fulfillment organization, we have to balance what we planned for Q1 and what flows over into Q2 and Thats just curious.

Speaker 4: And that's just, you know, feel specific to that. And also, you know, we have to think about the FX impact of the European currencies that have weakened against the dollar given the geopolitical situation. That's a translation effect. And also just I think...

Specific to that and also we have to think about the FX impact of the European currencies that have weakened against the dollar given the geopolitical situation. That's a translation effect and also just thinking through some overall.

Speaker 4: of slower contract consumption. So we haven't lost these contracts. The customers have just pushed some timing out. And so we still expect strong growth in PRI across the year.

Contract consumption. So we haven't lost those contracts to customers have just pushed some timing and so we still expect strong growth in PRA across the year.

Thank you gentlemen.

Thanks Sam.

Speaker 1: Our next question today comes from Doug Becker at Benchmark. Please go ahead.

Our next question today comes from Doug Becker of benchmark. Please go ahead.

Speaker 6: Thanks. The previous question kind of touched on this a little bit, but I wanted to get more color on the margin guidance by reporting segment and just the thoughts on the trajectory by reporting segment as we go through.

Thanks.

The previous question kind of touched on this a little bit, but I wanted to get more color on that.

The margin guidance by reporting segment and just the thoughts on the trajectory by reporting segment as we go through the year.

Speaker 4: So sure, so we haven't given margin guidance by reporting segment. We give consolidated margin.

So sure. So we haven't given margin guidance by reporting segment we.

We give consolidated margins.

And.

Speaker 4: And also, you know, what we have done is looked at the balance of precisely how we think the revenue will unfold across these segments more so. So, if there's something specific you want to ask about a particular segment, we're happy to try to feel that.

And also.

What we have done is looked at the balance of.

Precisely how we think the revenue will unfold across these segments more so so if there's something specific you want to ask about a particular segment, we're happy to try to feel that.

Speaker 6: I would just be fair to characterize that we see pretty consistent margin progression through the year.

We'll just be fair to characterize that we see pretty consistent margin progression through the year in each of the segments.

High level way of framing it.

Speaker 3: Yeah, I think to a certain extent, Doug, we will. Obviously there's gonna be some impacts of mix and how that unfolds within the segments because we've also got a balance of that. But I think broadly speaking, what we would look to see is margin expansion each quarter. Looks similar to last year. Now last year was very different in terms of the magnitude that we saw. And then Q3, we had this effect of several one-time items. But as you've seen throughout the year of 2021, we have made steady progress and steady improvements as we really dig into our initiatives and we get the traction from them, we will expect to see continued improvement over the course of the year with an exit rate that's hopefully better, which is why our overall blended effect for the year is what we've laid out in the guide.

Yes, I think to a certain extent, Doug we will obviously theres going to be some impacts of mix and how that how that unfolds within the segments. Because we've also got a balance of that but I think look broadly speaking what we would look to see is margin expansion.

Each quarter look similar to.

The last year now last year was very different in terms of the magnitude that we saw.

And then Q3, we have the.

The effect of several onetime items, but if you've seen sort of throughout the year of 2021, we have made steady progress and steady improvements as we set a really dig into our initiatives and we sort of get the traction from them. We will expect to see continued improvement over the course of the year with an exit rate, that's hopefully better which is why our overall.

Blended effect for the year is is what we've laid out of the guidance.

Speaker 6: Okay, and then you highlighted that EBITDA conversion should be pretty high as we...

Okay, and then you highlighted.

At EBITDA conversion should be pretty high as we.

Speaker 6: go through the cycle. Just any way to frame that EBITDA conversion to the cash flows we think say three years out.

Go through the cycle, just any way to frame that EBITDA conversion to cash flows we think say three years out.

Well I don't know if I can.

Speaker 4: give three years out of view, but when we think about 2022, you know, we think we'll have strong conversion, but we think we will have less free cash flow than 2021 simply because of the requirements to invest in working capital.

Give three years out view, but when we think about 2022.

We think we will have strong conversion.

But we think we will have less free cash flow, then 2021 simply because of the requirement to invest in working capital.

Speaker 4: the requirements to double our capex expenditures. And as we've become a more profitable company in certain.

Acquirements to double our capex expenditures and as beef to come up.

More profitable company in certain geographies, we'll have more cash taxes, and we will be maintaining about the same level of investment and restructuring. So that says that we will still be positive on free cash flow for the year given the interest savings that we have created to help fund.

Speaker 4: geographies, we'll have more cash taxes, and we'll be maintaining about the same level of investment in restructuring. So you know that

Speaker 4: says that we will still be positive on free cash flow for the year given the interest savings that we have created to help fund these expansionary investments. But we're hoping to maintain that trajectory with – given the steadiness of our margin profile across the next two to three years.

These.

Expansionary.

Investments, but we're hoping to maintain that trajectory with.

Given the steadiness of our margin profile across the next two to three years.

Speaker 6: Just to be clear, I wasn't trying to get a specific number three years out. We live in a certain world, but maybe what do you consider a high conversion or just a target?

And just to be clear I wasn't trying to get a specific number three years out.

World, but maybe.

Maybe what.

What do you consider a high conversion or just a target.

To think about.

Over the longer term silver.

Speaker 4: So over the longer term, I would say that, you know, EBITDA to operating cash flow at the moment, we are in the, I think, the 60 to 70% range when I think about that on a four-year basis. I think that's something we can probably easily maintain because that just says that we have to make sure that our working capital mechanics are operating as efficiently as we have them today. So if you look at how we performed over the course of 20...

So over the longer term I would say that.

EBITDA to operating cash flow.

The moment, we are in the I think the 60% to 70% range when I think about that on.

On a full year basis, I think thats something we can probably easily maintained because that just says that we have to make sure that we're working capital mechanics.

Operating as efficiently as we have them today. So if you look at how we performed over the course of 'twenty 'twenty. One we've taken in 2006 days out of our net working capital cycle overall 14 days out of inventory 11 out of that.

Speaker 4: You know, we've taken 26 days out of our net working capital cycle overall, 14 days out of inventory, 11 out of AR. That kind of pushes the boundaries, but we still are pushing the teams to do better. So those are the kind of mechanics that we have to keep monitoring.

Is that kind of pushes the boundaries, but we still are pushing the teams to do better. So those are the kind of the mechanics that we have to keep monitoring.

Fair enough. Thank you.

Yeah.

Speaker 1: And our next question today comes from Greg Rudy, Bank of America. Please go with it.

And our next question today comes from Greg royalty of Bank of America. Please go ahead.

Okay.

Speaker 7: Hey guys, good afternoon or good morning. Excuse me.

Hey, guys good afternoon, or good morning, excuse me.

<unk>.

Speaker 7: Just a first question, I didn't hear an update on the credit facility. I'm curious if you can tell us where that stands or how you're thinking about that today.

Just a first question I didn't hear an update on our credit facility.

Curious if you could tell us where that stands or how youre thinking about that today.

Speaker 4: Sure, so we are working diligently with our banks. We are still working through that process.

Sure. So we are working diligently with our banks.

We are.

Still working through that process.

Speaker 4: They were waiting to see what our Q4 print looks like, of course, and that is out today. So we will get back into the dialogue and discussion with that process. We've looked across the industry as a whole as well, and we've seen very little banking facilities being given back to OFS companies or ones that we, you know, I can now point to, saying that there's a loosening of the banking, and, you know...

They were waiting to see what our Q4 print looks like of course and that is that is out today.

So we will get back into the dialogue and.

In discussion with that process, we've looked across the industry as a whole as well and we've seen very little bank.

Banking facilities being given back to oil companies or ones that we.

I can I'll point to saying that there is a loosening of the.

Banking.

Speaker 4: the bank market towards us, but we have positive conversations happening. We're working through it and we should have an update in coming quarters.

The bank market towards us, but we've had positive conversations happening we're working through it and we should have an update.

In coming quarters.

Speaker 7: Got it. So nothing, nothing emitted here? Um, sounds like you got it here. You said coming quarters, that could be a couple quarters until we get a resolution.

Got it.

Nothing nothing eminent here.

It sounds like you got it.

As you said coming quarters.

It could be a couple of quarters.

So we get a resolution here.

Speaker 4: I think it comes down to getting terms and conditions that we find acceptable for the organization. We could probably sign a facility tomorrow, but it probably wouldn't be in the best interest of weather.

I think it comes down to getting terms and conditions that we find acceptable for the organization, we could probably sign a facility tomorrow, but probably wouldn't be in the best interest of Weatherford.

Speaker 3: And that's really the focus here, Greg. As we have demonstrated over the last year, we are very focused on reducing our interest expense. We know we've got to address the capital structure. We've taken a huge set of steps towards that last year and improved where we stand. We've also got the stub hanging out there of 300 million. We know we've got to address that. But we are gonna do everything to make sure that the company is set up and protected for the longer term versus just get it in place for the sake of getting something in place.

And that's really the focus here Greg.

As we have demonstrated over the last year, we are very focused on reducing our interest expense. We know we've got to address the capital structure. We have taken a huge set of steps towards that last year and improved where we stand. We've also got the stub hanging out there. The 300 million. We know we've got to address that but we are going to do everything to make sure that the.

<unk> is set up and predicted for the longer term versus just get it in place for the sake of getting something in place.

Speaker 4: And the stub will be addressed as we continue to generate free cash flow.

And the study will be addressed.

As we continue to generate free cash flow.

Speaker 4: that we don't need to reinvest in the business. We will address the stuff. Last year we generated

We don't need to reinvest in the business, we will address this last.

Last year, we generated $278 million of free cash flow.

Speaker 4: $278 million of free cash flow. We took $200 million of that and repaid the stuff, and we took $100 plus million to pay the fees of fund refinancing.

We took $200 million of that and repaid the stope and we took a 100 plus million to pay the fees to fund the refinancing.

Speaker 4: So, we are focused on the capital structure, so there's some things that we know we can do ourselves, and there's some things that we're gonna look at the bank market to provide support for.

So we are focused on the capital structure. So there's some things that we know we can do ourselves and there is something that we're going to look to the bank market to provide support for.

Speaker 7: I appreciate the update there on that. Maybe just turning gears. You mentioned the first question was about inflation, and you highlighted that you have a number of long-term contracts, so you're not necessarily going to see revenues increase as a result of this today. And you did guide to better margins this year. So I'm trying to figure out, do you have the ability to pass inflation through to customers on these older contracts?

I appreciate the update there on that.

Maybe just turning gears.

Mentioned.

The first question was about inflation.

You've highlighted that you have a number of long term contracts. So it's not necessarily going to see revenues increase as a result of this today so.

You did guide to better margins. This year. So I'm trying to figure out is do you have the ability to pass inflation through to customers on these older contracts or are you simply finding ways to to address it through through operating cost savings, yes. So it's a mix.

Speaker 7: or are you simply finding ways to address it through operating costs?

Speaker 3: Yeah, so it's a mix, Greg. So we've got labor inflation typically that we can pass along and be doing pretty much all circumstances. And then we've got a mix in terms of material inflation and it really depends, right? If you look at our portfolio mix, you've got a fairly high degree of service-related offering so it's not really that product dependent and the product business tends to be a little bit more transactional, if you will. So I think we are overall well protected on that front, but as we get the longer term contracts, the bigger point is really that they sort of really kick in in this latter part of the market.

Greg So we've got a labor inflation typically.

We can pass along and be doing pretty much all circumstances, and then we've got a mix in terms of material inflation and it really depends right. If you look at our our product.

Portfolio mix, if <unk> got a fairly high degree of service related offerings. So, it's not really that product dependent and the product business tends to be a little bit more transactional. If you will so I think we are overall well protected on that front, but as we get the longer term contracts. The bigger point is really that they start to really kick in in the latter part of the year.

Speaker 7: And then just just on the free cash flow on items that usually get this from me so I'll just run through the ones that I think you said it'd be the same similar level of investment this year. Does that mean we should see a 30 million dollar number of this year?

Alright, and then just just on the free cash flow line items that you usually get this from me. So I'll just run through the ones that are.

Restructuring I think you said it would be the same similar level of investment. This year does that mean, we should see a $30 million number.

Sure.

Speaker 4: I would think it would be higher than the 30, but I don't think it will be much higher than the 30. So I would put that number between 30 and 50 at this time. And so, you know, we're still working through our plans. As Giris says in his opening, one of our major strategic focuses this year is our fulfillment system.

I would think it would be higher than the 30.

But I don't think it will be much higher than the 30%. So I would put that number between 30% and 50 at this time.

And so.

We're still working through our plans.

As Gary says.

His opening one of our major strategic focuses this year is our fulfillment system and that could mean that we are working through how we make things and deliver things consolidating footprint working on that.

Speaker 4: And that could mean that we are working through how we make things and deliver things, consolidating footprint, working on the back end of our warehouses and so forth. So there's probably going to be some restructuring investment that we will have to make into that.

The backend of our warehouses and so forth. So there is probably going to be some restructuring investment that we will have to make in into that.

Speaker 3: And again, Greg, look, the other thing I would just add is we talked about multiple times.

And again, Greg the other thing I would just add as we've talked about multiple times our focus on restructuring is dramatically different we really looking at a very rigorous set of business cases, and it's all about payback and until we're absolutely sure and we're doing it in sort of a metered approach, where we fund a little bit we get the benefit then that sort of leads.

Speaker 3: Our focus on restructuring is dramatically different. We're really looking at a very rigorous set of business cases, and it's all about payback, and until we're absolutely sure, and we're doing it in sort of a metered approach, where we fund a little bit, we get the benefits, then that sort of leads to the next piece, et cetera. So we're being very thoughtful, very careful, and very deliberate about where we do it. It is just like any other investment that we put into the company, with us having a high degree of confidence that it's going to pay off.

The next piece et cetera. So we are being very thoughtful very careful and very deliberate about where we do it is just like any other investment that we put into the company.

I was having a high degree of confidence that it's going to pay off.

Speaker 7: Alrighty. And just a few others here. So working capital, that's trend, we should expect to trend with revenues and where you've been seeing payables and receivable days, right?

Alright, and just just a few others here so working capital that should trend.

You should expect to trend with revenues and where you've been seeing payables and just.

Receivable days right.

Yes.

Speaker 7: The ENO inventory charge, is that...

The inventory charge.

Is that is that.

Speaker 7: Is there some number we should be thinking about there as an add-back or deduction or is that to have it in your margins and you're sort of taking it out? In our margins, it's included in our EBITDA margins. We just have to adjust it for cash flow purposes.

Is there some number we should be thinking about there is an AD backwards deduction or.

To have that in your margins.

Youre sort of taking it out.

In our margins.

Included in our EBITDA margins, we just have to adjusted for cash flow purposes.

Speaker 7: Yeah, gee, so we is there going to be an adjustment that we should be that's that we should be thinking about this year when we be No point actually castle number

Yes.

So is there going to be an adjustment that we should be.

We should be thinking about this year when we.

Our free cash flow numbers.

Speaker 4: So when I think about, you know, at the moment, I think about it more so in terms of where are we now with the run rate? And I think the second half

So when I think about at the moment I think about it more so in terms of where are we now with the run rate and I think the.

Second half.

Speaker 4: 21 run rate is probably where I'm thinking that we will start 22 and probably take it through the year until we get through our inventory planning and fulfillment initiatives further and can get a better rate. It's really just about working off...

'twenty one run rate is probably where I am thinking that we will start 'twenty, two and probably take it through the year until we get through our inventory planning and fulfillment initiatives further and can get a better rate because really it's just about working off.

Speaker 4: things that are obsolete and slow moving. And also as we think about what new demand is coming in, then that will also work with the calculations. It's a very specific calculation that looks at movement by plant. And so it's one of those things where I always, the best way to think of it is where are we running at now.

Things that are obsolete and slow moving.

And also as we think about what new demand is coming in then that will also work with the calculations is a very.

Specific calculation that looks at.

Movement by plant and so it's one of those things where I always the best way to think of it as where are we running at now and so if I take the second half of 'twenty, one as kind of what I would guide to use for the full year until we get we get an update can you remind us what the second half of 'twenty one was.

Speaker 4: And so if I take the second half of 21, that's kind of what I would guide to use for the full year until we get an update. Can you remind us what the second half of...

Speaker 4: It's in the back of the deck. I think we were 12 million for the quarter, probably about the same in Q3, so that makes it about 24 or 25 for the half.

It's in the back of the deck I think.

We were $12 million for the quarter, probably about the same in Q3, so that makes it about 'twenty four 'twenty five.

For the half.

Speaker 7: And we should annualize that number or we should just assume? Just annualize that number for now.

And we should annualize that number or if we should just assume.

Just just annualized that number for now and.

And thats going to be.

A benefit to cash flow this year.

Speaker 4: That's a benefit, yeah, because it's an ad-vac.

That's a benefit yet because of the ad market.

Speaker 7: Great. So I got it. So add 50 back. And then the cash taxes. How should we think about that this year?

Okay.

Got it so add 50 back.

And then the cash taxes, how should we think about that.

This year.

Speaker 4: So I think cash taxes this year was total what six was it?

So I think cash taxes this year was.

It was total was $6 65 or 70.

Speaker 4: And I think that we should see that step up closer to you know night somewhere between 80

And I think that we should see that step up.

Closer to.

Night somewhere between 80 and 100.

Speaker 7: Got it. And then last question for me, any thoughts on additional asset sales or what you categorize as disposition? We don't forecast that. We think that that's just comes in as a bump. Most of the covering analysts tend to remove it from the cash flow calculation anyway. So we just don't focus on that.

Got it and then last question for me any any thoughts on additional asset sales or what you would categorize as dispositions. So we don't forecast that we think that that's just comes in as a bump most of the covering analyst tend to remove it from the cash flow calculation anyway. So we just don't focus.

On that.

Speaker 7: And maybe this last one strategically, how are you looking at the M&A environment? Obviously, things are in a much better position than you were last year. However, what was back on the line was that the agricultural Look-O-D Camper is still

And maybe just last one strategically how are you looking at the M&A environment, obviously things are much better positioned than you were last year or is there other opportunities for you to add to your portfolio.

Speaker 7: Are there opportunities for you to add to your portfolio? Yeah, so look, we'll look at it, as you said, sort of opportunistically. Greg, you know, our focus really continues to be on writing the ship. We think we've got a tremendous amount of opportunity within the company both to fix...

Yes, so look we will look at it.

Sort of Opportunistically, Greg our focus really continues to be on righting the ship.

We've got a tremendous amount of opportunity within the company both to fix our underlying operating processes, but also to drive innovation and organic growth within the portfolio. So thats, our our overall priority, but look if there's something that comes along that makes compelling sense from a shareholder value perspective will most definitely look at it. So we we're staying open.

Speaker 3: our underlying operating processes, but also to drive innovation and organic growth within the portfolio. So that's our overall priority, but look if there's something that comes along that makes a compelling sense from a shareholder value perspective, we'll most definitely look at it. So we're staying open and willing to engage in.

And willing to engage in conversations.

Speaker 7: That's very helpful. I appreciate the time guys. I'll yield to you.

Yes.

That's very helpful.

I appreciate the time guys.

Youll see Ya.

Thank you Greg Thanks, Greg.

Speaker 1: And our next question today comes from Connor Lineall with Morgan Stanley . Please go ahead.

Our next question today comes from smaller.

<unk> with Morgan Stanley . Please go ahead.

Speaker 8: Yeah, thanks. Two higher level questions that are pretty related here, so I'll put them together. You know, as you look at your CapEx budget that you're increasing, you know, if we think about the new segment allocation here, where are you deploying most of your incremental capital? Is there a noticeable directional trend within the businesses? And then more sort of structurally and long term, as you look at the cycle, where do you see the greatest opportunity for growth and maybe less part of that in terms of revenue and margin?

Yes. Thanks.

Two higher level questions that are pretty related here, so I'll ask them together.

As you look at your Capex budget.

That you are increasing.

About the new segment allocation here, where are you deploying most of your incremental capital is there.

Notable directional trend within the businesses and then more sort of structurally and long term as you look at the cycle, where do you see the greatest opportunity for growth.

Maybe let's parse that in terms of revenue and margin.

Thank you Connor really great question.

Speaker 4: So if you think about our business and the way it's currently set up and the way we've made it out, if you start with drilling and evaluation or DRI, that business is heavily service oriented, where we take our tools out and we perform work.

So if you think about our business and the way. It is currently set up where we have made it out.

If you start with drilling and evaluation of <unk> that business is heavily service oriented where we take our tools out and we perform work as you get down to well construction.

Speaker 4: as you get down to well construction, it's a really good mix of services and product sales. So liner hangers that go into the whole cementation products and so forth. And then when you get down to the production and intervention business, it's much more products oriented. So we are building systems and leaving them behind and so forth. So when you look at our cap.

Really good mix of services and product sales. So a liner hangers that go into the whole segmentation products and so forth and then when you get down to.

The production and intervention business, it's much more product oriented. So we are building systems, and leaving them behind and so forth. So when you look when you look at our Capex you will see that.

Speaker 4: you will see that as we look at it, we would say that easily 35 to 40 percent of our Catholics right now is focused on the drilling and evaluation segment because that's where we need new toys to vote.

As we look at it we would say that easily 35% to 40% of our Capex right. Now is focus on the drilling and evaluation segment, because that's where we need new toys and do things.

Speaker 4: And then you can split the remaining 60 or so between the other two product lines. And that's kind of been the long-term trend as we've gone through and recycled.

And then you can split.

The remaining 60 or so between the other two product lines and Thats kind of been the the long term trend as we've gone through and re segment. This the the challenge we have at the moment now is we're going to have to think about how we.

Speaker 4: The challenge we have at the moment now is we're going to have to think about how we change our fulfillment practices. So there may be bigger investments in changing the footprint of our plants. And so the infrastructure capex may change, and that may be for in the near term. But that should smooth itself out and go back to this, how do we build a toolkit for the segments that we saw?

Change our fulfillment practices, so there may be bigger investments.

And changing the footprint of our plants and so the infrastructure Capex may change and that may be.

Before.

In the near term, but that should smooth itself out and go back to this how do we build the toolkit for the segments that we service.

Speaker 3: Yours? Yep, no, I completely agree. And Connor, to your second part of your question on where we see the long-term growth. Look, part of the reason we segmented the way we did is that's the way the business operates really, and it really highlights, though, that we've got traction in each one of these segments. Look, in the short term, I think we will, in the short to mid term, I would say, in this sort of cycle, we'll probably see a little bit more growth in our production business, but also our drilling business. But then there's always a lag effect, because it sort of follows the well life cycle, so we'll see construction and completions pick up where drilling takes off. Look, on the long term, we believe, like many others in the industry, that...

Yes, no I completely agree and quantity of second part of your question on where we see long term growth.

Part of the way part of the reason we segmented the way we did is perhaps the way the business operates really been it really highlights that we've got traction in each one of these segments. You know look into short term I think we will.

Midterm I would say in this sort of cycle, we'll probably see a little bit more growth.

In our production business, but also our drilling.

Business, but then there is always a lag effect because it sort of follows the Val lifecycle. So we will see construction completions pick.

Pick up where we're drilling takes a look on the on the long term.

We believe like many others in the industry.

Yes.

Speaker 3: Oil and gas will continue to be a very significant portion of the energy supply of the world for a while to come and so the production piece of it really...

Oil and gas will continue to be a very significant portion of the energy supply the world for a while to comment so the production piece of it really.

Speaker 3: will be something that's significant, but as we look at what we are doing with respect to digital solutions across the spectrum, we look at energy transition offerings, I would say all segments really are ones that we are excited about and think we've got strong growth prospects, and you look at it with this here, right, in terms of the guidance that we laid out, so it is a little bit more skewed towards PRI, especially towards the back end, but really we've got good growth in all of them, but it's also geography specific, because we are not playing in every single market with every single.

We will will be something thats significant but as we look at what we're doing with respect to digital solutions across the spectrum. We look at energy transition offerings I would say all segments really are ones that we're excited about it and think we've got strong growth prospects and you look at it for this year right in terms of the guidance that we laid out so it is a little bit more skewed towards <unk>.

PRA towards especially towards the.

The backend, but really we've got good growth in all of them, but it's also geography specific because we're not playing in every single market with every single product line.

Speaker 8: It's all helpful context. Thanks very much for the color.

That's all helpful context, thanks, very much for the color I'll turn it back.

Yes.

Speaker 1: And our next question today comes from Sean Mitchell at Daniel Energy. What are you doing?

And our next question today comes from Shaun Mitchell Energy. Please go ahead.

Speaker 9: Hey guys, thanks for taking the question. Obviously in the US, we're seeing a huge problem with labor, especially with shortage of truck drivers and whatnot. And you guys mentioned in your opening kind of narrative that you're seeing supply chain and issues and bottlenecks internationally as well, given your exposure to the international market. Can you talk a little bit more about specifically highlight something that V

Hey, guys. Thanks for taking the question.

Obviously in the U S.

We're seeing a huge problem with labor, especially with shortage of truck drivers and whatnot and you guys mentioned in your opening.

Narrative that youre seeing supply chain issues and bottlenecks internationally as well given your exposure to the international markets can you talk a little bit more about specifically.

Speaker 9: internationally what's going on from a supply chain or bottleneck or labor issues maybe that you're seeing in the international markets? Is it similar to what we're seeing in the US, do you think, or is it other things?

Internationally, what's going on from a supply chain or bottleneck or labor issues, maybe that youre seeing in the international markets is it similar to what we're seeing in the U S. Do you think or is it or is it other things sure Hey look so I'll start with supply chain I think those issues truly our global it is not restricted to the U S alone.

Speaker 3: Sure. Hey, look, so I'll start with supply chain. I think, you know, those issues truly are global. It's not restricted to the U.S. alone. You know, the logistics challenges are a little bit different just given, you know, in the U.S., the transportation infrastructure that we've got and a lot of the trucking capabilities across. But look, we are seeing very significant shortages and, you know, constraints around shipping lanes and freight charges and stuff like that. So overall, you know, getting raw materials, we do factories, especially where you've got electronics components and we do in a lot of our high-tech applications, et cetera. You know, that is a challenge for us today on a global basis.

Logistics challenges at a little bit different just given in the U S B transportation.

<unk> infrastructure that we've got a lot of the trucking capabilities across our but look we are seeing very significant shortages and constraints around shipping lanes and freight charges and stuff like that so overall getting raw materials do factories, especially where you've got electronics components side, we're doing a lot of our hi Tech applications.

<unk> et cetera that is a challenge for us today on a global basis from a labor labor side, if I look at this a little bit different I would say the U S has a much more fluid labor market.

Speaker 3: From a labor side of it, look, it is a little bit different. I would say the U.S. has a much more fluid labor market.

Speaker 3: than the rest of the world, generalizing to a very large extent.

And then the rest of the world.

Generalizing to a very large extent.

Speaker 3: We've also got different dynamics in terms of the unionization piece, et cetera. So I would say the labor side is a tad bit more challenging in the US and a little bit more stable in the rest of the world, but you've got inflation aspects that are very different again by country.

Also got different dynamics in terms of the utilization piece et cetera. So I would say the labor side is add bit more challenging in the U S and a little bit more stable in the rest of the world, but you've got inflation aspects that are very different again by country.

Thank you.

Speaker 1: Anyways, ladies and gentlemen, our next question today comes from Ian McPherson with Piper Sandler. Hi, I'm Ian McPherson.

Ladies and gentlemen, our next question.

What are they saying.

Please go ahead.

Speaker 5: Thanks for the follow up, Keith. I'm sorry to put you back in the hot seat with the model questions. I think the one that we didn't revisit was the step up in stock comp that was in your EBITDA in the fourth quarter. And I was wondering if you could just re-baseline that for us for our free cash flow estimates for 2022. Thanks. Sure. Thank you, Ian.

Thanks for the follow up Keith I'm, sorry to put you back in the hot seat model questions. I think the one that we didn't revisit was the step up in stock comp that was in your EBITDA in the fourth quarter and I was wondering if you could just re baseline that for us for our free cash flow estimates.

For 2022 thanks.

Sure.

Ian.

Speaker 4: So the fourth quarter was a confluence of a few things. The step-up related to two primary catch-up calculations. One was some plain ending data, and the rest is various.

So the fourth quarter with the confluence of a few things.

The step up.

Rated to two primary catch up calculations one was some.

Speaker 4: phantom share program that we had. It was supposed to be paid out for two years, however the target was hit early.

Phantom.

Sure program that we had it was supposed to be paid out over two years. However, the target was hit early and that was.

Speaker 4: And that was so we have to accelerate the second half of the payment and the calculation into 2021.

So we have to accelerate the second half of the payment and the calculation into 2021 and then we also have to true up some long term incentive compensation programs for.

Speaker 4: And then we also have to true up some long-term incentive compensation programs for being based upon the revised outlook for 2022. We are more confident that we will hit the targets on that as well. And so that brought it up.

Being <unk>.

Based upon the revised outlook for 2022, we are more confident that we will hit the targets on that as well and so that brought it up when you look at the stock comp.

Speaker 4: When you look at the stock comp, you know, the equity adjustment back to EBITDA on the quarter, I think that should normalize back in Q1 of this year back to the 4 or 5 where we're usually at each quarter.

The equity adjustment back to EBITDA on the quarter I think that should normalize back in Q1 of this year back to the $4 five where we're usually.

At each quarter.

Perfect. Thanks, Keith I appreciate it guys.

Speaker 1: Thank you. Ladies and gentlemen, this concludes our question and answer session. I'll leave the chairman's office back over to management for final remarks.

Thank you.

Ladies and gentlemen, this concludes our question and answer session.

The results back over to management for final remarks, great.

Speaker 4: Great. Thank you everyone for joining us today. I really appreciate the engagement of the dialogue and I look forward to speaking to you again at the conclusion of the first quarter.

Great Hey, Thank you to everyone for joining us today really appreciate the engagement of the dialog and I look forward to speaking to you again at the conclusion of the first quarter.

Speaker 1: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

[music].

[music].

Speaker 1: Ladies and gentlemen, thank you for standing by.

Ladies and gentlemen, thank you for standing by.

Speaker 1: Welcome to the Weatherford International fourth quarter and full year 2021 earnings call.

So the Weatherford international fourth quarter, and full year 2021 earnings call.

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Speaker 1: I would now like to turn the conference over to Mohammed Tobawala, Director of Investor Relations and M&A. Sir, you may begin.

I would now like to turn the conference over the long haul, it's overall, a director of Investor Relations and M&A.

Sir you may begin.

Speaker 2: Welcome everyone to the Weatherford International fourth quarter and full year 2021 conference call. I am joined today by Girish Saligram, President and CEO and Keith Jennings, Executive Vice President and CFO .

Welcome everyone to the Weatherford International fourth quarter, and full year 2021 conference call.

Today, my grief filing drum.

And CEO and Keith Kennedy Executive Vice President and CFO .

Speaker 2: We will start today with our prepared remarks, then open it up for questions.

We will start today with our prepared remarks, then open it up for questions you.

Speaker 2: you may download a copy of the presentation slides that correspond with today's call from our website investor relations section

You may download a copy of the presentation slides that corresponds with today's call from our website the Investor Relations section.

Speaker 2: I want to remind everyone that some of today's comments include forward-looking statements.

I want to remind everyone that today's comments include forward looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to materially differ from any expectation expressed herein.

Speaker 2: These statements are subject to many risks and uncertainties that could cause our actual results to materially differ from any expectation expressed herein.

Speaker 2: Please refer to our latest Securities and Exchange Commission filings, First Factors and Pations regarding Forward Living States.

Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward looking statements.

Speaker 2: Our comments today also include non-GAAP financial measures. The underlying details and reconciliation of GAAP to non-GAAP financial measures are included in our fourth quarter and full year press release, which can be found on our website. With that, I'd like to turn the call over to Girish. Thank you.

Our comments today also include non-GAAP financial measures the underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our fourth quarter and full year press release, which can be found on our website with that I'd like to turn the call over to Girish.

Thanks, Bob and thank you all for joining the call today.

Speaker 4: I am pleased with the results of the fourth quarter of 2021, which build on the momentum we have generated throughout the year.

I am pleased with the results of the fourth quarter of 2021, which build on the momentum we have generated throughout the year.

Speaker 4: We face significant challenges, including inflationary pressure, supply chain bottlenecks, and ongoing disruptions caused by the pandemic. Despite these headwinds, the Weatherford team delivered another quarter in line with our outlook and outperformed in some instances.

We faced significant challenges, including inflationary pressure supply chain bottlenecks and ongoing disruptions caused by the pandemic. Despite these headwinds the weatherford team delivered another quarter in line with our outlook and outperformed in some instances.

Speaker 4: In the fourth quarter, we achieved overall revenue growth of 2% sequentially and 15% over the prior year with adjusted EBITDA margins of 16%. You will recall that in our prior earnings call, we explained the impact of several one-time items in the third quarter of 2021.

In the fourth quarter, we achieved overall revenue growth of 2% sequentially and 15% over the prior year with adjusted EBITDA margins of 16% you will recall that in our prior earnings call. We explained the impact of several onetime items in the third quarter of 2021.

Speaker 4: We therefore expected Q4 to come in with lower margins.

We therefore expected Q4 to come in with lower margins. However, the team did a great job executing which enabled margins to come in above our guidance and over 400 basis points above the fourth quarter of 2020.

Speaker 4: However, the team did a great job executing, which enabled margins to come in above our guidance, and over 400 basis points above the fourth quarter of 2020. A remarkable achievement in just one year.

A remarkable achievement in just one year.

Speaker 4: In addition, we generated $49 million of free cash flow during the quarter and $278 million for the full year.

In addition, we generated $49 million of free cash flow during the quarter and $278 million for the full year.

Speaker 4: We also achieved two consecutive years of positive free cash flow. The first time in 30 years that that has happened in Vethal.

We also achieved two consecutive years of positive free cash flow. The first time in 30 years that that has happened in weatherford.

Speaker 4: 2021 was a significant year for us with several notable milestones, and I think it is worthwhile to reflect on how far we have come in a relatively short time.

2021 was a significant year for us with several notable milestones and I think it is worthwhile to reflect on how far we have come in a relatively short period.

Speaker 3: We fully return to the public market on the NASDAQ stock exchanges, WFRD. This move was driven by confidence in our operating posture and commercial profile to create sustainable profit.

We fully return to the public market on the NASDAQ stock exchange as Wf Rd. This move was driven by confidence in our operating posture and commercial profile to create sustainable profitability.

Speaker 4: Our return allows the broader base of investors the opportunity to participate in that value creation.

Our return allows a broader base of investors the opportunity to participate in that value creation.

Speaker 4: We also strengthened our capital structure by using the cash generated from the business to pay down debt and concluded a series of refinancing transactions.

We also strengthened our capital structure by using the cash generated from the business to pay down debt and concluded a series of refinancing transactions. These actions significantly reduced our interest expense and favorably position the company for the long term.

Speaker 3: these actions significantly reduced our interest expense and favorably positioned the company for the long term.

Speaker 3: We were careful and deliberate in our actions on our 2021 focus areas, driving outperformance across the board on automatic performance, organizational simplification, variable cost management and inventory rationalization.

We were careful and deliberate in our actions and our 2021 focus areas driving outperformance across the board on North America performance organizational simplification variable cost management and inventory rationalization.

Speaker 3: In North America, we completely reorganized our operating structure. In doing so, we doubled our margins and grew revenues as we undertook several actions to address our footprint, business mix, and service delivery model under a new leadership team focused on return.

In North America, we completely reorganized our operating structure and doing so we doubled our margins and grew revenues as we undertook several actions to address our footprint business mix and service delivery model under a new leadership team focused on returns. These actions resulted in our exiting non profitable business lines and the United.

Speaker 3: These actions resulted in our exiting non-profitable business lines in the United States, such as drilling services and bellheads, and switching to a new model in our Y-Line services portfolio.

States, such as drilling services, and Belle <unk> and switching to a new model and our wireline services portfolio.

Speaker 3: Next, in organizational simplification, we took critical steps to de-layer our company, which created greater operational efficiency and accountability, resulting in support cost savings.

Next an organizational simplification, we took critical steps to de layer, our company, which created greater operational efficiency and accountability, resulting in support cost savings and variable cost management be galvanized cross functional teams on several work streams, leading to improvements in diverse areas from contract management the sourcing of uniforms.

Speaker 3: In variable cost management, we galvanize cross-functional teams on several workstreams, leading to improvements in diverse areas from contract management to sourcing of uniforms and telecoms.

And telecom axis.

Speaker 4: Lastly, in inventory rationalization, an area which we identified as crucial to achieving our profitability and cash flow objectives, I am pleased with the achievements made by the team as we reduced our DSI by 14 days, well ahead of our 10-day DSI reduction.

Lastly, an inventory rationalization and area, which we identified as crucial to achieving our profitability and cash flow objectives. I am pleased with the achievements made by the team as we reduced our DSI by 14 days well ahead of our 10 day DSI reduction goal.

Speaker 3: In 2021, we also introduced our three strategic vectors, and the actions on these are yielding positive outcomes that are positioning as well for the future.

In 2021, we also introduced our three strategic vectors and the actions on these are yielding positive outcomes that are positioning us well for the future.

Speaker 3: We have provided more clarity on our portfolio with our new reportable segments that underscore the importance of our market-leading offerings of Managed Pressure Drilling, or MPD, tubular running services, or TRS, cementation products, and fishing and re-entry.

We have provided more clarity on our portfolio with our new reportable segments that underscore the importance of our market leading offerings of managed pressure drilling or MPD tubular running services or Trs cementation product and fishing and reentry.

Speaker 3: As evidenced by our commercial successes, these product offerings are gaining great traction and also positioning us for pulling through additional services from the portfolio.

As evidenced by our commercial successes these product offerings are gaining greater traction and also positioning us fulfilling through additional services from the portfolio.

Speaker 3: In the digital space, we accelerated the adoption of our foresight production optimization platform and reservoir monitoring solutions and received awards for performance excellence from key customers.

In the digital space, we accelerated the adoption of our foresight production optimization platform and reservoir monitoring solutions and received awards for performance excellence from key customers.

Speaker 3: In the fall, we held the Weatherford Enterprise Software Conference and delivered a strong testimonial to the efficacy of our digital solutions across the well life.

In the fall we held the vast part of Enterprise software conference and delivered a strong testimonial to the efficacy of our digital solutions across the <unk> lifecycle.

Speaker 3: In ESG and the energy transition, I recognize that our journey has just begun, but I'm encouraged by our progress.

In ESG in the energy transition I recognize that our journey has just begun but I'm encouraged by our progress we have affirmed our commitment to be net zero by 2050 and have signed on to the UN global compact.

Speaker 3: We have affirmed our commitment to be net zero by 2050 and have signed on to the UN Global Conference.

Speaker 3: Our offerings in geothermal, plug-in abandonment, and carbon capture utilization and storage, or CCUS, are securing wins across multiple geog.

Our offerings in geothermal plug and abandonment and carbon capture utilization and storage, our ccs are securing wins across multiple geographies.

Speaker 3: As I share this with you, I am simultaneously proud and humble.

As I shared this with you I am simultaneously proud and humbled.

Speaker 3: Proud of everything our 17,000 plus team members have accomplished and humbled by their commitment, sacrifice and spirit to win in the market.

Brown of everything our 17000 plus team members have accomplished and humbled by the commitment sacrifice and spirit to win in the marketplace.

Speaker 3: My sincere gratitude and appreciation go out to every single one of our employees for driving the successes of the new weather.

My sincere gratitude and appreciation go out to every single one of our employees for driving the success of the new Weatherford.

Speaker 4: We set an intermediate goal of getting to 15% EBITDA margins. And having delivered that in 2021, I'm confident that we can achieve that across sites.

We set an intermediate goal of getting to 15% EBITDA margins and having delivered that in 2021 I am confident that we can achieve that across cycles. We are now raising the bar for ourselves with the goal of continued margin expansion and believe that in the coming years, we can be a company delivering high teens EBITDA margins while also.

Speaker 4: We are now raising the bar for ourselves with the goal of continued margin expansion and believe that in the coming years We can be a company delivering high team feedback margins while also driving a high degree of cash conversion.

So driving a high degree of cash conversion.

Speaker 3: We continue to gain momentum in the market, led by the strength of our portfolio, and I'd like to share some of our 4th quarter commercial highlights with you, starting with our well construction and completion segment.

We continued to gain momentum in the market led by the strength of our portfolio and I'd like to share some of our fourth quarter commercial highlights with you starting with our well construction and completion segment.

Speaker 3: We were awarded two five-year contracts with Abu Dhabi National Oil Company with a combined value of more than $1 billion for downhole completions and liner hanger systems. The downhole completions contract is amongst the world's largest in this category.

We were awarded two five year contracts with Abu Dhabi National oil company with a combined value of more than $1 billion for downhole completions and liner hanger systems.

The downhole completions contract is amongst the world's largest in this category.

Speaker 3: Tourmaline in Canada awarded Weatherford a one-year contract extension for approximately 200 wells with increased scope for our completion product.

Normally even Canada awarded Weatherford, a one year contract extension for approximately 200 wells with increased coproduct completion products.

Speaker 3: A European supermajor awarded Weatherford a five-year contract to deploy fiber optics and intelligent screen solutions in the North.

A European Supermajor awarded Weatherford, a five year contract to deploy fiber optics intelligence screen solutions in the North Sea. This award reinforces our leadership position in delivering reservoir monitoring at the Norwegian Continental shelf.

Speaker 3: This award reinforces our leadership position in delivering reservoir monitoring at the Norwegian Continental Shell.

Speaker 3: In TRS, we achieved several big wins, including an award from Saudi Aramco for a five-year TRS contract to support onshore and offshore operations.

In Trs, we achieved several big wins, including an award from Saudi Aramco for a five year Trs contract to support onshore and offshore operations.

Speaker 3: Weatherford was selected based on its technology, safety record, quality performance, and commitment to local content and partners.

Weatherford with selected based on technology safety record quarterly performance and commitment to local content and partnerships.

Speaker 3: Moving on to our drilling and evaluation segment, we continued to score wins in MPD and made headway in its adoption across our geos.

Moving on to our drilling and evaluation segment, we continued to score wins in MPD and made headway in its adoption across our <unk> results.

Speaker 4: As an example, following a successful implementation of Weatherford's MPD system, Shell awarded Weatherford a two-year multi-rig contract extension for MPD operations in deep water to continue the well delivery benefits offered by this technology.

As an example, following a successful implementation of Weatherford MPD system shell awarded Weatherford, a two year multi rig contract extension for MPD operations in deepwater to continue the well delivery benefits offered by this technology.

Speaker 4: We had several other meaningful wins in the space this quarter with notable awards in Latin America and Asia.

We had several other meaningful wins in this space this quarter with notable awards in Latin America and Asia.

Speaker 3: Our digital presence continues to grow across our segments, as evidenced by the commercial success in our production and intervention segment in the fourth quarter, including an award from Kuwait Oil Company, or KOC, which awarded Weatherford a three-year contract to support its digital transformation strategy in the North Kuwait heavy oil field and deploy its integrated enterprise excellence platform.

Our digital presence continues to grow across our segments as evidenced by the commercial success and our production and intervention segment in the fourth quarter, including an award from Kuwait Oil company, a KFC, which awarded better part of three year contract to support its digital transformation strategy and the north Kuwait heavy oilfield and deploy its integrated enterprise.

Excellent platform.

Speaker 3: The award includes instrumentation, real-time monitoring and production optimization, enabling KOC to advance its production and work over.

The award includes instrumentation real time monitoring and production optimization, enabling <unk> to advance its production and workover plants.

Speaker 3: Weatherford signed a global collaboration agreement with Light, a digitally led business backed by BP Launchpad.

Weatherford signed a global collaboration agreement with light a digitally led business backed by BP launch back.

Speaker 3: The agreement combines Light's proprietary sensing insights with Weatherford's expertise in distributed fiber optic sensing deployed through our industry-leading foresight platform to help customers revitalize and optimize their energy assets.

The agreement combined lights proprietary insights with <unk> expertise in distributed fiber optic sensing deployed to our industry, leading <unk> platform to help customers revitalized and optimize their energy assets.

Speaker 3: Moving on to some of our wins in our energy transition platforms, I'd like to share a few noteworthy awards.

Moving onto some of our wins in our energy transition platform. So I'd like to share a few noteworthy awards a European Supermajor selected weatherford to provide liner hanger products and services and its first <unk> pilot project asset endeavors to achieve carbon neutrality, but its operations.

Speaker 3: A European supermajor selected Weatherford to provide liner hanger products and services in its first CCUS pilot project as it endeavors to achieve carbon neutrality for its operation.

Speaker 3: Another European customer selected Weatherford to help with their carbon sequestration operations using our downhole sealing technology for a well-recompletion project. And in the United States, we mobilized a 50-well offshore plug-in abandonment project for a major operation.

Another European customer selected <unk> to help with their carbon sequestration operations, using our downhole sealing technology, well re completion project and in the United States, We mobilized a 15, well offshore plug and abandonment project for a major operator.

Speaker 3: I am encouraged by the traction we are seeing in these areas and am confident in our growing role in the energy transition as we leverage the capabilities inherent to our portfolio.

Im encouraged by the traction we are seeing in these areas and I'm confident in our growing role in the energy transition as we leverage the capabilities and adding to our portfolio.

Now turning to our view on the markets.

Speaker 3: The overall macro environment continues to improve and we are now in the early stages of a multi-year option.

The overall macro environment continues to improve and we are now in the early stages of a multiyear up cycle.

Speaker 3: In North America, US Land markets continue to see the trend of robust growth with increased activity and spending.

In North America U S land markets continue to see the trend of robust growth with increased activity and spending.

Speaker 4: At the same time, we are also seeing some of the same trends from last year continue as public EMPs remain committed to capital discipline, while we are seeing private EMPs increasing and better.

At the same time, we are also seeing some of the same trends from last year continuous public e&ps remain committed to capital discipline. While we are seeing private e&ps increasing investments. Our focus however continues to be on generating sustainable returns and going after work only where it makes sense for us to do so.

Speaker 3: Our focus, however, continues to be on generating sustainable returns and going after work only where it makes sense for us to do so.

Speaker 3: Internationally, we expect capital spending to continue increasing, building on last year's strong finish. I am particularly excited by the growth prospects in the Middle East and Latin America as capital gets deployed to restore production levels and lay the groundwork for longer term experience.

Internationally, we expect capital spending to continue increasing building on last year's strong finish I am, particularly excited by the growth prospects in the Middle East and Latin America as capital gets deployed to restore production levels and lay the groundwork for longer term expansion.

Speaker 4: The past year's results show that Weatherford has firmly improved its financial and operational profile.

The past year's results show that Weatherford has firmly improve its financial and operational profile.

Speaker 3: we will continue to focus on the work necessary to further strengthen our capabilities.

We will continue to focus on the work necessary to further strengthen our capabilities.

Speaker 4: We are now more confident in the growth scenario we highlighted in our third protocol and expect to see continued improvement and profitability reflected in margin expansion on a year-over basis. Now I'll hand it over to Keith Frost and I'll see you in the next video.

We are now more confident in the growth scenario, we highlighted in our third protocol and expect to see continued improvement in profitability reflected in margin expansion on a year over basis now.

Now I'll hand, it over to Keith for a financial update.

Thank you Girish.

Speaker 4: Before I review our fourth quarter and full year 2021 results, I will remind us all of the segment changes implemented in the fourth quarter.

Before I review, our fourth quarter and full year 2021 results I'll remind us all of the segment changes implemented in the fourth quarter.

Speaker 4: We recently announced realigning how we report our results to three product lines.

We recently announced realigning how we report our results to three product lines drilling and evaluation or DRA, well, construction and completions or WCC and production and intervention or PRA.

Speaker 4: Drilling and Evaluation or DRE, Well Construction and Completions or WCC, and Production and Intervention or PRI.

Speaker 4: The updated reporting structure better aligns with the company's focus and business strategy around the well life cycle, designed to drive improved customer collaboration and growth opportunities.

The updated reporting structure better aligns with the company's focus on business strategy around the world lifecycle designed to drive improved customer collaboration and growth opportunities.

Speaker 4: All segments provide services to core oil and gas and new energy markets.

All segments provides services to core oil and gas and new energy markets.

Speaker 4: Aligning our management strategy and reporting structure further drives organizational priorities into our operating processes and investment choices.

Aligning our management strategy and reporting structure further drives organizational priorities into our operating processes and investment choices.

Speaker 4: The market leading offerings in each segment reflect the strength and differentiation of our technology and innovation.

The market leading offerings in each segments reflect the strength and differentiation of our technology and innovation.

Speaker 4: These product offerings serve as a foundation to drive growth and pull through across our portfolio.

These product offerings serve as a foundation to drive growth and pull through across our portfolio. Additionally.

Speaker 4: Additionally, the seamless integration of our digital offerings and the ability to provide integrated solutions across our segments would enable continued growth in our core operations and energy transition.

Additionally, the seamless integration of our digital offerings and the ability to provide integrated solutions across our segments will enable continued growth in our core operations and the energy transition.

Speaker 4: Our fourth quarter results were the perfect capstone to our 2021 performance.

Our fourth quarter results with a perfect capstone to our 2021 performance.

Speaker 4: Fourth quarter and four-year 2021 results reflect the ongoing improvements in our operations and go-to-market strategies as we navigate an environment of inflation and increasing complexity.

Fourth quarter and full year 2021 results reflect the ongoing improvements in our operations and go to market strategies, as we navigate an environment of inflation and increasing complexity.

Speaker 4: Consolidated fourth quarter 2021 revenues were $965 million, an improvement of 15% year-over-year and 2% sequentially.

Consolidated fourth quarter, 2021 revenues were $965 million, an improvement of 15% year over year and 2% sequentially Pri.

Speaker 4: primarily driven by a 27% year-over-year increase in service revenues as we saw improvements across all of our segments.

Primarily driven by a 27% year over year increase in service revenues as we saw improvements across all of our segments.

Speaker 4: Seasonally higher product revenues drove a 2% increase in revenue sequentially, partially offset by the seasonal slowdown in service-related activity.

Seasonally higher product revenues drove a 2% increase in revenue sequentially, partially offset by the seasonal slowdown in service related activity.

Speaker 4: Fourth quarter operating income was 33 million, or 3% of revenues, increasing 140 million year over year and decreasing 38 million sequentially.

Fourth quarter operating income was $33 million or 3% of revenues, increasing $140 million year over year and decreasing $38 million sequentially.

Speaker 4: Adjusted EBITDA for the fourth quarter was 154 million.

Adjusted EBITDA for the fourth quarter was $154 million and.

Speaker 4: an adjusted EBITDA margin of 16%, representing a 440 basis point improvement year over year, driven primarily by growth in service revenues, an improved mix of services, and lower operational expenses resulting from our cost improvement initiative.

And adjusted EBIT margin of 16%, representing a 440 basis points improvement year over year, driven primarily by growth in service revenues and improved mix of services and lower operational expenses, resulting from our cost improvement initiatives.

Speaker 4: Adjusted EBITDA margins declined by 290 basis point sequential.

Adjusted EBIT margins declined by 290 basis points sequentially, reflecting.

Speaker 4: reflecting a change in the revenue mix and non-repeats of certain one-time items from the third quarter of 2021.

Reflecting a change in the revenue mix and non repeat of certain onetime items from the third quarter of 2021.

Now, let's look at our segment breakdown.

Speaker 4: Drilling and evaluation or DRE revenues of $287 million in the fourth quarter of 2021 increased 34% year over year and 3% sequential.

Drilling and evaluation or DRA revenues of $287 million in the fourth quarter of 2021 increased 34% year over year and 3% sequentially.

Speaker 4: The year over year improvement was driven by higher business activity across all product lines led by MPD and wireline services with significant growth in the Middle East and Latin America.

The year over year improvement was driven by higher business activity across all product lines led by MPD and wireline services with significant growth in the middle East and Latin America.

Speaker 4: Segment adjusted EVADA of $55 million increased $33 million and associated margins of 19% improved 890 basis points year over year and decreased 90 basis points sequentially.

Segment, adjusted EBITDA of $55 million increased $33 million and associated margins of 19% improved 890 basis points year over year and decreased 90 basis points sequentially.

Speaker 4: segment adjusted EVID and margins declined sequentially primarily due to product...

Segment, adjusted EBITDA and margins declined sequentially, primarily due to product mix.

Speaker 4: The year-over-year growth in segment-adjusted EBITDA and margins were driven mainly by improved services revenue mix, pricing, and

The year over year growth in segment adjusted EBITDA and margins were driven mainly by improved services revenue mix pricing and geographic mix.

Speaker 4: Lower operational expenses relate to our cost improvement initiatives and lower inventory charges help expand margins and offset supply chain head

Lower operational expenses related to our cost improvement initiatives and lower inventory charges help expand margins and offset supply chain headwinds.

Speaker 4: Well construction and completions or WCC revenues of $348 million increase 3% year over year and 1% sequential.

Well construction and completions or WCC revenues of $348 million increased 3% year over year and 1% sequentially drew.

Speaker 4: driven by improved demand primarily for cementation products with North America delivering the most significant growth.

Driven by improved demand primarily for some in patient products with North America, delivering the most significant growth.

Speaker 4: Activity increases in North America and Latin America were partially offset by a decline in Europe , Sub-Saharan Africa, and Russia.

Activity increases in North America, and Latin America were partially offset by a decline in Europe sub Sahara Africa and Russia.

Speaker 4: Segment adjusted EVIDA of 72 million increased 15 million year over year and associated margins of 21% improved 380 basis points year over year and decreased 220 basis points sequentially.

Segment, adjusted EBITDA of $72 million increased $15 million year over year and associated margins of 21% improved 380 basis points year over year and decreased 220 basis points sequentially.

Speaker 4: Sequentially, segment adjusted EBITDA and margins declined primarily due to non-repeat of one-time items in the prior quarter.

Sequentially segment, adjusted EBITDA and margins declined primarily due to the non repeat of one time items in the prior quarter.

Speaker 4: The growth in segment adjusted EVA and margins year over year was primarily driven by an improved service revenue mix, improved product volumes, lower operational expenses related to our cost improvement initiatives, and reduced inventory charges.

The growth in segment adjusted EBITDA and margins year over year was primarily driven by an improved service revenue mix improved product volumes lower operational expenses related to our cost improvement initiatives and reduce inventory charges.

Speaker 4: Production and intervention or PRI revenues of $298 million increased 10% year over year and 2% sequentially, driven by increased demand for intervention services and production automation software globally.

Production and intervention or PRA revenues of $298 million increased 10% year over year, and 2% sequentially driven by increased demand for intervention services and production automation software globally.

Speaker 4: Segment-adjusted EVADA of 47 million increased 8 million, and associated margins of 16% improved 140 basis points year over year and decreased 370 basis points sequentially.

Segment, adjusted EBITDA of $47 million increased $8 million and associated margins of 16% improved 140 basis points year over year and decreased 370 basis points sequentially.

Speaker 4: Segment-adjusted EBITDA and margins declined sequentially, primarily due to non-repeat of one-time items in the prior quarter and the seasonal shift of products and services.

Segment, adjusted EBITDA and margins declined sequentially, primarily due to non repeat of one time items in the prior quarter and the seasonal shift of products and services.

Speaker 4: The year-over-year adjusted EBITDA growth was mainly due to increased activity, lower operational expenses related to our cost improvement initiatives and lower inventory charges.

The year over year adjusted EBITDA growth was mainly due to increased activity lower operational expenses related to our cost improvement initiatives and lower inventory charges.

Turning to liquidity and cash flow.

Speaker 4: we continue to maintain the focus of managing our business to generate operating cash flow. This is demonstrated through the results of our underlying business and cost improvement initiatives.

We continue to maintain the focus of managing our business to generate operating cash flow.

This is demonstrated through the result of our underlying businesses business and cost improvement initiatives.

Speaker 4: For the full year of 2021, operating cash flow was $322 million and free cash flow was $278 million.

For the full year of 2021 operating cash flow was $322 million and free cash flow was $278 million.

Speaker 4: Free cash flow increased 200 million compared to full year 2020, primarily due to increased earnings driven by increased margins and lower capital expenditures, partially offset by higher interest.

Free cash flow increased $200 million compared to full year 2020, primarily due to increased earnings driven by increased margins and lower capital expenditures, partially offset by higher interest expense.

Speaker 4: In the fourth quarter of 2021, we generated unlevered free cash flow of $147 million, an improvement of $52 million year over year from a 57% increase in adjusted EBITDA.

In the fourth quarter of 2021, we generated unlevered free cash flow of $147 million, an improvement of $52 million year over year from a 57% increase in adjusted EBITDA.

Speaker 4: Free cash flow in the quarter was $49 million, which improved $72 million year over year.

Free cash flow in the quarter was $49 million, which improved $72 million year over year.

Speaker 4: Total cash in hand as of December 31, 2021, was approximately $1.1 billion, down $333 million sequentially, reflecting the repayment of $200 million of exit notes and the redemption costs to refinance our exit notes with our 2030 senior notes.

Total cash on hand as of December 31, 2021 was approximately $1 1 billion down $333 million sequentially, reflecting the repayment of $200 million of exit notes and the redemption cost to refinance debt.

Our exit notes with our 2030 senior notes.

Speaker 4: Capital expenditures were $41 million in the fourth quarter compared to $54 million in the fourth quarter of 2020 and $20 million in the third quarter of 2021.

Capital expenditures were $41 million in the fourth quarter compared to $54 million in the fourth quarter of 2020 and $20 million in the third quarter of 2021.

Speaker 4: Our capital expenditures increased sequentially as we focused on our growth capital requirements given increasing activity levels.

Our capital expenditures increased sequentially as we focused on our growth capital requirements, given increasing activity levels.

Speaker 4: Capital expenditures for the full year were $85 million compared to $154 million in 2020.

Capital expenditures for the full year were $85 million compared to $154 million in 2020.

Speaker 4: We expect to at least double our capital expenditures in 2022 to meet the increasing demand for our services and technologies, while continuing to be vigorous and rigorous about driving redeployment, reuse, and productivity.

We expect to at least double our capital expenditures in 2022 to meet the increasing demand for our services and technologies, while continuing to be vigorous and rigorous about driving redeployment reuse and productivity.

Speaker 4: We successfully completed phase one of our efforts to restructure our debt by refinancing $2.1 billion and repaying $200 million of debt during the fourth quarter, resulting in a significantly improved debt maturity profile and reducing cash interest by approximately $71 million per year.

We successfully completed phase one of our efforts to restructure our debt by refinancing $2 1 billion and repaid $200 million of debt during the fourth quarter, resulting in a significantly improved debt maturity profile and reducing cash interest by approximately $71 million per year.

Speaker 4: In the fourth quarter, Standard & Poor's upgraded the company's corporate credit...

In the fourth quarter standard <unk> Poor's upgraded the company's corporate credit rating to B minus.

Speaker 4: I wish to thank our One Weatherford team for the continuing cash flow improvements resulting from the outstanding operating performance, disciplined capital expenditures, and capital management driven by a continuous focus on asset utilization.

I wish to thank over one weatherford team for their continuing cash flow improvements, resulting from the outstanding operating performance disciplined capital expenditures and capital management, driven by our continuous focus on asset utilization.

Speaker 4: Shifting our focus to the current year, I will now share some of our qualitative thoughts on the first quarter of 2022 and the full year.

Shifting our focus of the current year I will now share some of our qualitative thoughts on the first quarter of 'twenty, two and the full year.

Speaker 4: As we look ahead to the first quarter, we expect consolidated revenues to decline by low, single digits driven in part by lower contract consumption, currency weakness, and supply chain challenges, which we expect to recover in later quarters.

As we look ahead to the first quarter.

We expect consolidated revenues to decline by low single digits, driven in part by lower contract consumption currency weakness and supply chain challenges, which we expect to recover in later quarters.

Speaker 4: Adjusted EBITDA margins are currently expected to be 15 to 16 percent.

Adjusted EBITDA margins are currently expected to be 15% to 16%.

Speaker 4: Unlevered free cash flow is expected to decline, driven by working capital investments, and we expect capex to be in the range of 20 to 30 million in the first quarter.

Unlevered free cash flow is expected to decline driven by working capital investments and we expect capex to be in the range of $20 million to $30 million in the first quarter.

Speaker 4: Full year 2022 consolidated revenues are expected to grow by high single to low double digits.

Full year 2022 consolidated revenues are expected to grow by high single to low double digits.

Speaker 4: Across the segments, DRE is forecasted to deliver low double digit growth.

Across the segments DRA is forecasted to deliver low double digit growth.

Speaker 4: WCC is forecasted to deliver in the high single digits, and PRI is forecasted in the mid to high double digits.

WCC is forecasted to deliver in the high single digits and priv is forecasted in the mid to high double digits.

Speaker 4: Consolidated adjusted EBITDA margins are expected to be 16 to 17 percent, as we expect margins to expand by at least 50 basis points for the full year 2022.

Consolidated adjusted EBITDA margins are expected to be 16% to 17% as we expect margins to expand by at least 50 basis points for the full year 2022.

Speaker 4: As stated earlier, capex will be at least double 2021 spending and will range from $175 million to $225 million.

As stated earlier Capex will be at least double 2021 spending.

Will range from 175 million to $225 million.

Speaker 4: Full year free cash flow is expected to decline compared to 2021, as increases in networking capital, cash taxes, and capex driven by an increase in revenue will only be partially offset by lower cash interest payments for the year. However, we expect to continue generating positive free cash flow for a third consecutive year.

Full year free cash flow is expected to decline compared to 2021 as increases in net working capital cash taxes, and capex driven by an increase in revenue will only be partially offset by lower cash interest payments for the year. However, we expect to continue generating positive free cash flow for a third consecutive.

Year.

Speaker 4: Thank you for your time today. I will now pass the call back to Gibish for his closing comments.

Thank you for your time today I will now pass the call back to Gary for his closing comments.

Thanks Keith.

Speaker 3: Our 2021 focus areas have yielded terrific results, but even more importantly have laid the groundwork for improved processes and procedures in the organization.

Our 2021 focus areas have yielded terrific results, but even more importantly have laid the groundwork for improved processes and procedures in the organization.

Speaker 3: We will continue to drive rigor and discipline in those areas, but recognize that we have new demands and needs, and our 2022 focus areas will drive our growth and execution spread.

We will continue to drive rigor and discipline in those areas, but recognize that we have new demands and needs and our 2022 focus areas will drive our growth and execution strategy.

Speaker 3: We have four key themes for 2022 for Weatherford. Fulfillment, Directed Growth, Excellence in Existence.

We have four key themes for 2022 for Weatherford.

Fulfillment.

Directed growth.

Excellent in execution and simplification.

Speaker 3: We refer to all of our customer delivery mechanisms as fulfillment, and this is a core area of how we operate.

We refer to all of our customer delivery mechanisms is fulfillment and this is a core area of how we operate.

Speaker 3: We are evolving from a set of independent product lines with their own fulfillment mechanisms to a globally integrated business with a contemporary and industrialized network of factories and repair and maintenance centers.

We are evolving from a set of independent product lines with their own fulfillment mechanisms do a globally integrated business with a contemporary and industrialized network.

<unk> factories in repair and maintenance centers.

Speaker 3: This will drive excellence in service delivery and customer satisfaction, while significantly improving efficiency.

This will drive excellence in service delivery and customer satisfaction, while significantly improving efficiencies. This is a.

Speaker 3: This is a significant change that is a multi-year journey, but we are starting on our first important steps this year. It will affect multiple aspects of the company, from how we manage inventories to our supply chain...

Difficult change said, it's a multiyear journey, but we are starting on our first important steps. This year it will affect multiple aspects of the company from how we manage inventories through our supply chain and logistics functions.

Speaker 3: We have demonstrated that we can take on significant challenges and deliver operating improvements in a deliberate and focused fashion, and I am confident this effort will be the same.

We have demonstrated that we can take on significant challenges and delivering op, Delaware operating improvements in a deliberate and focused fashion and I am confident this effort will be the same.

Our second focus area is directed growth for the first time in five years, we are going to grow the top line of Weatherford, but in a focused fashion with an emphasis on profitability.

Speaker 3: For the first time in five years, we are going to grow the top line of Eberford, but in a focused fashion with an emphasis on profitability.

Speaker 3: Our growth strategy for the year will be driven by technology differentiation and we will increase investment in innovation.

Our growth strategy for the year will be driven by technology differentiation and we will increase investment in innovation.

Speaker 3: We believe that innovation is the best option for pricing and share increases, and will arm our commercial teams to drive those imperatives, starting with our market leading off.

We believe that innovation is the best option for pricing and share increases and will arm, our commercial teams to drive those imperatives, starting with our market leading offerings.

Speaker 3: In a growth scenario, our third focus area of excellence in execution is even more critical.

In a growth scenario, our third focus area of excellence and execution is even more critical.

Speaker 3: We are building a new quality function and recognize that we must win our customers' trust every day by delivering on our commitment.

We are building a new quality function and recognize that we must win our customers' trust every day by delivering on our commitments at the same time, we need the same process discipline to ensure we execute with a lean mindset and drive accountability through the organization.

Speaker 3: At the same time, we need the same process discipline to ensure we execute with a lean mindset and drive accountability through the organization.

Speaker 3: Finally, simplification is an enduring theme for us, both organizationally and operationally.

Finally simplification is an enduring team for us both organizationally and operationally our focus is on improving information flows and reducing complexity with minimal disruption.

Speaker 3: Our focus is on improving information flows and reducing complexity with minimal disruption.

Speaker 3: We believe the industry is in a multi-year growth cycle driven by global demand and exacerbated by underinvestment.

We believe the industry is in a multiyear growth cycle, driven by global demand and exacerbated by Underinvestment.

Speaker 3: Increasing activity levels, tightening OFS capacity, and green shoots on pricing give us confidence in our 2022 growth.

Increasing activity levels tightening Oss capacity and green shoots on pricing give us confidence in our 2022 growth.

Speaker 3: There are always balancing dynamics in the market, and the current situation is no different. A confluence of rising commodity prices, inflationary pressure, and supply chain issues could significantly restrict margin expansion.

There are always balancing dynamics of the market and the current situation is no different a confluence of rising commodity prices inflationary pressure and supply chain issues could significantly restrict margin expansion.

Speaker 3: Additionally, we think the combination of the pandemic and certain geopolitical situations are a legitimate threat that could result in demand destruction.

Additionally, we think the combination of the pandemic and certain geopolitical situations are a legitimate threat that could result in demand destruction.

Speaker 3: Conversely, we see positive momentum across diverse teams, including the regulatory environment, commercial wins, and traction in the uptake of our market leading off.

Conversely, we see positive momentum across diverse teams, including the regulatory environment commercial wins and traction in the uptake of our market leading offerings.

Speaker 3: In balance, we are positively biased, and 2022 marks the first time in the last five years where we are poised to grow consolidated revenues and are well positioned to take advantage of the market dynamics as our hard work on expanding margins and being selective on growth takes hold.

In balance we are positively biased and 2022 marks the first time in the last five years, where we have a place to grow consolidated revenues and are well positioned to take advantage of the market dynamics as our hard work on expanding margins and being selective on growth takes hold on.

Speaker 3: Our 2021 adjusted EBITDA margins were over 400 basis points better, on 30% lower revenue than 2019 pre-pandemic performance.

Our 2021, adjusted EBITDA margins were over 400 basis points better on 30% lower revenue than 2019 pre pandemic performance.

Speaker 3: As exciting as our 2021 performance and results were, we believe our journey has just begun.

As exciting as our 2021 performance and results were we believe our journey has just begun thank.

Speaker 3: Thank you for joining us today. And with that operator, let's please open it up for Q&A.

Thank you for joining us today and with that operator, let's please open it up for Q&A.

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Speaker 1: Today's first question comes from Ian McPherson with Piper Sambler. Please go ahead. Thanks!

So the first question cultural and resolution with Piper Sandler. Please go ahead.

Thanks, Good morning, gentlemen.

Morning Ann.

Speaker 5: Grace, I appreciate you balancing the multi-year cyclical tailwinds with the lingering inflation and disruptive

<unk> you I appreciate you're balancing the multi year cyclical tailwind with the with the lingering inflation and disruptive.

Speaker 5: headwinds in the market with supply chain, etc. But when we look at your full year outlook of around 10% growth, it would not appear to reflect much.

Headwinds in the market with supply chain et cetera, but.

When we look at your full year outlook.

Around 10% growth that would not appear to reflect much.

Speaker 5: gross or net pricing traction in your international markets. And we know that the pricing climate is heating up earlier domestically in the US than it is internationally. That's intuitive. But when you see the building pipeline of contract tenders internationally, can you discuss how receptive your international customers are to the need for action?

Gross or net pricing traction in your international markets and we know that the pricing climate is heating up earlier domestically in the U S than it is internationally.

Intuitive, but.

When you see the building pipeline.

Contract tenders internationally can you discuss how receptive.

Your international customers are to the need for.

Speaker 5: Weatherford and Piers to raise pricing in this inflationary environment.

Weatherford appears to raise pricing in this inflationary environment.

Speaker 3: Sure, Ian, I think, look, it's a really important point. I think a couple of things that are at play here. I think you hit the nail on the head. It's really long-term contracts versus the transactional pricing model in the US. So I think part of our...

Sure I think look it's a really important point I think a couple of things that are at play here I think you hit the nail on the head.

<unk> really long term contracts versus the transactional pricing model in the U S. So I think part of our.

Speaker 3: you know, sort of evolution here is that we already have a number of contracts in place.

Evolution here is that we already have a number of contracts in place. So as we get new contracts and Thats, where the price increases typically take hold and those are for us and we've announced a series of them. Those are typically backend loaded for us. So we'll see that more in the second half of this year and then going into 'twenty three so that's one big Guy.

Speaker 3: So as we get new contracts in, that's where the pricing increases typically take hold. And those are for us, and we've announced a series of them, those are typically back-end loaded for us, so we'll see that more in the second half of this year and then going into 23. So that's one big effect of why you see some of the numbers lay out the way you do. Look, on your question on receptiveness, I don't think generally any customer is that open to saying come in pricing, but I think everyone understands the situation. But they all want it to be within reason. I think they're having constructive dialogues and conversations, and we're looking at ways to both cut costs.

Effect of why you see some of the numbers. So I'll lay out the way you do look on your question on Receptiveness I don't think generally 80 customer is is that open to saying come in pricing, but I think everyone understands the situation.

But.

They all want it to be within reason I think that having constructive dialogues and conversations and we're looking at ways to both cut costs.

Speaker 3: to increase margins, but also to raise prices. So it's a combination of both, but I would say, look, there is a sense of rationality that's constructive dialogue, but at the same time, especially in the international markets and certain geographies and markets, there's a lot of local players that do tend to compete at a different level of thresholds that we've just got to surmount.

The increase margins, but also to raise prices. So I'd say its a combination of both but I would say look there is a debt.

That is a sense of rationality, that's constructive dialogue, but at the same time, especially in the lateral markets in certain geographies and markets Theres a lot of local players that do tend to compete at a different level of thresholds that we've just got to surmount.

Makes sense.

Speaker 5: One element of your outlook caught my attention and that was the trajectory that's indicated for production and intervention, which appears to have more of a sequential decline in Q1 but also guided the highest full year growth rate, which is the most recent growth rate.

One element of your outlook caught my attention and that was the trajectory thats indicated for production and intervention, which appears to have more of a sequential decline in Q1, but also guided the highest full year growth rate.

Speaker 5: you know, implies more of an upward sloping trajectory for those businesses. And I wanted to ask if that is related more to specific contract backlog that informs that trajectory or if you're expecting more of a

Implies more of an upward sloping.

Trajectory for those businesses and I wanted to ask if that is related more to specific contract backlog that informs that trajectory or if you're expecting more of a.

Speaker 5: geographic evolution within that business as the year unfolds.

Geographic evolution within that business as the year unfolds.

Speaker 3: Yes, I think there's a couple of things, and I'll ask Keith to weigh in as well. I think, look, first of all, as we have pointed out a couple of times in our prepared remarks, that we have, you know, the whole industry's facing the supply chain and logistics headwinds, and we've had a set of them that is really impacting us, especially in Q1, that we are working hard to mitigate, and so it's a bit of a balanced view. So that really starts to alleviate as we go through the rest of the year, improving in Q2 onwards, and especially towards the second half. So that's what you see. The second thing to remember is, look, it's the production business, but it's also intervention services. So as we have,

So I think there's a couple of things and I'll ask Keith to weigh in as well I think look first of all as we have pointed out a couple of times in our prepared remarks that we have the whole industry is facing the supply chain and logistics headwinds that we've had.

A set of them that is really impacting us, especially in Q1 that we are working hard to mitigate and so it's a bit of a balanced view so that really starts to alleviate as we go through the rest of the year, improving in Q2 onwards, and especially towards the second half. So that's what you see the second thing to remember is look it's a production business, but it's also <unk>.

Interventional services, so as we have more wealths debt.

Speaker 3: more wells that come on stream, if you will, and you actually have a degree of greater drilling operations, the intervention services portion will also pick up and we expect that to be a bit more back and loaded. So that's really what it is. But it is a segment, look, we've got some fantastic products and service offerings, so we're excited about that.

Come on stream, if you will and you actually have a degree of greater drilling operations to intervention services portion will also pick up and we expect that to be a bit more backend loaded. So that's really what it is but it is a segment look we've got some fantastic products and service offerings. So we are excited about that we've also got a significant portion of our digital offerings in this space.

Speaker 3: We've also got a significant portion of our digital offerings in this space, our production automation software. So again, a lot of that kicks in a little bit later, which is why you see us being a bit more bullish on that throughout the rest of the year. Keith, anything you want to add? I think you nailed it.

<unk> our production automation software. So again, a lot of that kicks in a little bit later, which is why you see us being a bit more bullish on that throughout the rest of the year is there anything you want to add.

I think you nailed it.

Speaker 4: Very well there, Girish. Ian, we have some very specific things happening.

Very well they're Jewish.

And we have some very specific things happening around logistics and supply chain that will.

Speaker 4: logistics and supply chain that will impact the PRI business more so than the others because of the size of the equipment there. So as that works itself through the

Impact.

Alright that business more so than the others because of the size of the equipment there.

So as that.

It works itself through the <unk>.

Speaker 4: in the fulfillment, at the fulfillment organization, we have to balance what we planned for Q1 and what follows over into Q1.

Fulfillment.

Order fulfillment organization, we have to balance what we planned for Q1 and what flows over into Q2 and Thats just.

Speaker 4: And that's just, you know, feel specific to that. And also, you know, we have to think about the effects impact of the European currencies that have weakened against the dollar given the geopolitical situation, that the translation effect and also just think...

Specific to that and also we have to think about the FX impact of the European currencies that have weakened against the dollar given the geopolitical situation. That's a translation effect and also just thinking through some of the <unk>.

Speaker 4: of our slower contract consumption. So we haven't lost these contracts. The customers have just pushed some timing out. And so we still expect strong growth in PRI across the year.

Store contract consumption. So we haven't lost those contracts to customers have just pushed some timing out and so we see.

We expect strong growth in PRA across the year.

Thank you gentlemen.

Thanks Sam.

Speaker 1: Our next question today comes from Doug Becker at Benchmark. Please go ahead.

And our next question today comes from Doug Becker of benchmark. Please go ahead.

Speaker 6: Thanks. The previous question kind of touched on this a little bit, but I wanted to get more color on the margin guidance by reporting segment and just the thoughts on the trajectory by reporting segment as we go through.

Thanks.

The previous question kind of touched on this a little bit, but I wanted to get more color on the margin guidance by reporting segment and just the thoughts on the trajectory by reporting segment as we go through the year.

Speaker 3: So sure, so we haven't given margin guidance by reporting segment. We give consolidated margin.

So sure. So we haven't given margin guidance by reporting segment, we give consolidated margins.

And.

Speaker 3: And also, you know, what we have done is looked at the balance of precisely how we think the revenue will unfold across these segments more so. So, if there's something specific you want to ask about a particular segment, we're happy to try to feel that.

And also.

What we have done is looked at the balance of.

Precisely how we think the revenue will unfold across these segments more so.

So if there's something specific you want to ask about a particular <unk>.

We're happy to try to feel that.

Speaker 6: I would just be fair to characterize that we see pretty consistent margin progression through the year.

Well just be fair to characterize that we see pretty consistent margin progression through the year in each of the segments.

High level way of framing it.

Speaker 10: Yeah, I think to a certain extent, Doug, we will. Obviously there's going to be some impacts of mix and how that unfolds within the segments because we've also got a balance of that. But I think broadly speaking, what we would look to see is margin expansion each quarter. Looks similar to last year. Now last year was very different in terms of the magnitude that we saw. And then Q3, we had this effect of several one-time items. But as you've seen throughout the year of 2021, we've made steady progress and steady improvements. As we really dig into our initiatives and we get the traction from them, we will expect to see continued improvement over the course of the year with an exit rate that's hopefully better, which is why our overall blended effect for the year is what we've laid out in the guide.

Yes, I think to a certain extent, Doug we will obviously theres going to be some impacts of mix and how that how that unfolds within the segments. Because we've also got a balance of that but I think look broadly speaking what we would look to see is margin expansion.

Each quarter look similar to the.

Last year now last year was very different in terms of the magnitude that we saw.

And then Q3, we had the effect of several one time items, but if you've seen sort of throughout the year of 2021, we have made steady progress and steady improvements as we sort of really dig into our initiatives and we sort of.

The traction from them, we will expect to see continued improvement over the course of the year with an exit rate, that's hopefully better which is why our overall blended effect for the year is is what we've laid out the guidance.

Speaker 6: Okay, and then you highlighted that EBITDA conversion should be pretty high as we...

Okay, and then you highlighted.

EBITDA conversion should be pretty high as we.

Speaker 6: go through the cycle. Just any way to frame that EBITDA conversion and the cash flows we think say three years out.

Go through the cycle, just any way to frame that EBITDA conversion to cash flows we think say three years out.

Well I don't know if I can.

Speaker 3: give three years out of view, but when we think about 2022, you know, we think we'll have strong conversion, but we think we will have less free cash flow than 2021 simply because of the requirements to invest in working capital.

Give three years out view, but when we think about 2022.

We think we will have strong conversion.

But we think we will have less free cash flow, then 2021 simply because of the requirements to invest in working capital requirements to double our capex expenditures and as we've become.

Speaker 4: the requirements to double our capex expenditures. And as we've become a more profitable company in certain...

A more profitable company in certain geographies, we will have more cash taxes, and we will be maintaining about the same level of investment in restructuring so.

Speaker 4: geographies, we'll have more cash taxes, and we'll be maintaining about the same level of investment in restructuring. So you know that

Speaker 4: says that we will still be positive on free cash flow for the year given the interest savings that we have created to help fund these expansionary investments. But we're hoping to maintain that trajectory with given the steadiness of our margin profile across the next two to three years.

That says that we will still be positive on free cash flow for the year given the interest savings that we have created to help fund these expansionary.

Expansionary.

Investments, but we're hoping to maintain that trajectory with given the steadiness of our margin profile across the next two to three years.

Speaker 6: Just to be clear. I wasn't trying to get a specific number three years out world but Maybe what what you consider a high conversion or just a target?

And just to be clear I wasn't trying to get a specific number three years out.

World, but.

Maybe what do you consider a high conversion or just a target.

Just think about.

Over the longer term silver.

Speaker 4: So over the longer term, I would say that, you know, EBITDA to operating cash flow at the moment, we are in the, I think, the 60 to 70% range when I think about that on a four-year basis. I think that's something we can probably easily maintain because that just says that we have to make sure that our working capital mechanics are operating as efficiently as we have them today. So if you look at how we performed over the course of 20...

Over the longer term I would say that.

EBITDA to operating cash flow.

The moment, we are in the I think the 60% to 70% range. When I think about that on a full year basis, I think thats something we can probably easily maintained because that just says that we have to make sure that we're working capital mechanics are.

Operating as efficiently as we have them today. So if you look at how we performed over the course of 'twenty 'twenty. One we've taken in 2006 days out of our net working capital cycle overall 14 days out of inventory 11 out of that.

Speaker 4: You know, we've taken 26 days out of our net working capital cycle overall, 14 days out of inventory, 11 out of AR. That kind of pushes the boundaries, but we still are pushing the teams to do better. So those are the kind of mechanics that we have to keep monitoring.

Is that kind of pushes the boundaries, but we still are pushing the teams to do better. So those are the kind of the mechanics that we have to keep monitoring.

Fair enough. Thank you.

Yes.

Speaker 1: And our next question today comes from Greg Rudy, Bank of America. Please go at it.

And our next question today comes from Gregg Brody Bank of America. Please go ahead.

Okay.

Speaker 7: Hey guys, good afternoon or good morning. Excuse me.

Hey, guys good afternoon, or good morning, excuse me.

Speaker 7: Just a first question, I didn't hear an update on the credit facility. I'm curious if you can tell us where that stands or how you're thinking about that today.

Just first question I didn't hear an update on the credit facility.

You should tell us where that stands or how youre thinking about that today.

Speaker 4: Sure, so we are working diligently with our banks. We are still working through that process.

Sure. So we are working diligently with our banks.

We are.

Still working through that process.

Speaker 4: They were waiting to see what our Q4 print looks like, of course, and that is out today. So we will get back into the dialogue and discussion with that process. We've looked across the industry as a whole as well, and we've seen very little banking facilities being given back to OFS companies, or ones that we've, you know, I can now point to, saying that there's a loosening of the banking, that's just based off of me, of, you know.

They were waiting to see what our Q4 print looks like of course and that is that is out today.

So we will get back into the dialogue and.

In discussion with that process, we've looked across the industry as a whole as well and we've seen very little banking facilities being given back to oil companies or ones that we have.

I can I'll point to saying that there is a loosening of the banking.

Neil.

<unk>.

Speaker 4: the bank market towards us, but we have positive conversations happening, we're working through it and we should have an update in coming quarters.

The bank market towards us, but we've had positive conversations happening we're working through it and we should have an update.

In coming quarters.

Speaker 7: got it so that nothing it nothing amit here complex you got it here this if it coming quarters that that could be a couple of words to read to have a resolution

Got it so nothing nothing eminent here.

It sounds like you got it.

Just as you said coming quarters, so it could be a couple of quarters.

So we get a resolution here.

Speaker 4: I think it comes down to getting terms and conditions that we find acceptable for the organization. We could probably sign a facility tomorrow, but it probably wouldn't be in the best interest of weather.

I think it comes down to getting terms and conditions that we find acceptable for the organization, we could probably sign a facility tomorrow, but probably wouldn't be in the best interest of Weatherford.

Speaker 10: And look, and that's really the focus here, Greg. As we have demonstrated over the last year, we are very focused on reducing our interest expense. We know we've got to address the capital structure. We've taken a huge set of steps towards that last year and improved where we stand. We've also got the stub hanging out there of 300 million. We know we've got to address that. But we are gonna do everything to make sure that the company is set up and protected for the longer term versus just get it in place for the sake of getting something in place.

And look and Thats really the focus here Greg the business, we have demonstrated over the last year. We are very focused on reducing our interest expense. We know we've got to address the capital structure. We have taken a huge set of steps towards step last year and improved.

Where we stand we've also got the stop hanging out there of 300 million. We know we've got to address that but we are going to do everything to make sure that the company is set up and protected for the longer term versus just get it in place for the sake of getting something in place.

Speaker 4: And the stub will be addressed as we continue to generate free cash flow.

And this drug will be addressed as we.

Continuing to generate free cash flow does that.

Speaker 4: that we don't need to reinvest in the business. We will address the stuff. Last year we generated

You don't need to reinvest in the business, we will address this last year.

We generated $278 million of free cash flow.

Speaker 4: $278 million of free cash flow. We took $200 million of that and repaid the stuff, and we took $100-plus million to pay the fees to fund the refinancing.

We took $200 million of that and repaid the stope and we took a 100 plus million to pay the fees to fund the refinancing. So we are focused on our capital structure. So there's some things that we know we can do ourselves and there is something that we're going to look to the bank market to provide support for.

Speaker 4: So, you know, we are focused on the capital structure. So there's some things that we know we can do ourselves and there's some things that we're gonna look at the bank market to provide support for.

Speaker 7: I appreciate the update there on that. Maybe just turning gears. You mentioned the first question was about inflation, and you highlighted that you have a number of long-term contracts, so you're not necessarily going to see revenues increase as a result of this today. And you did guide to better margins this year. So I'm trying to figure out, do you have the ability to pass inflation through to customers on these older contracts?

I appreciate the update there on that.

Maybe just turning gears.

Mentioned.

The first question was about inflation.

You've highlighted that you have a number of long term contracts, so you're not necessarily going to see revenues increase as a result of this today so.

You did guide to better margins. This year, so I'm trying to figure out is.

Do you have the ability to pass inflation through to customers on these older contracts or are you simply finding ways to to address it through through operating cost savings, yes. So it's a mix.

Speaker 7: Or are you simply finding ways to address it through operating costs?

Speaker 10: Yeah, so it's a mix, Greg. So we've got labor inflation typically that we can pass along and be doing pretty much all circumstances. And then we've got a mix in terms of material inflation, and it really depends, right? If you look at our portfolio mix, we've got a fairly high degree of service-related offering, so it's not really that product dependent, and the product business tends to be a little bit more transactional, if you will. So I think we're overall well protected on that front, but as we get the longer term contracts, the bigger point is really that they sort of really kick in the latter part of the market.

Greg So we have got labor inflation typically.

We can pass along and be doing pretty much all circumstances, and then we've got a mix in terms of material inflation and it really depends right. If you look at our our product.

Portfolio mix, if we've got a fairly high degree of service related offerings. So, it's not really that product dependent and the product business tends to be a little bit more transactional. If you will so I think we are overall well protected on that front, but as we get the longer term contracts. The bigger point is really that they start to really kick in in the latter part of the year.

Speaker 7: Right. And then just on the free cash flow on items that usually get this from me, so I'll just run through the ones that... Restructuring, I think you said it'd be the same similar level of investment this year. Does that mean we should see a $30 million number for Apple this year?

Alright, and then just just on the free cash flow line items that you usually get this from me. So I'll just run through the ones that.

Restructuring I think you said it would be the same similar level of investment. This year does that mean, we should see a $30 million number.

Sure.

Speaker 3: I would think it would be higher than the 30, but I don't think it will be much higher than the 30. So I would put that number between 30 and 50 at this time. And so, you know, we're still working through our plans. As Giris says in his opening, one of our major strategic focuses this year is our fulfillment system.

I would think it would be higher than the 30.

I don't think it will be much higher than the 30%. So I would put that number between $30 50 at this time.

And so.

We're still working through our plans.

<unk> says in his opening one of our major strategic focuses this year is our fulfillment system.

Speaker 4: And that could mean that we are working through how we make things and deliver things, consolidating footprint, working on the back end of our warehouses and so forth. So there's probably going to be some restructuring investment that we will have to make into that.

And that could mean that we are working through how we make things and deliver things consolidating footprint working on.

The backend of our warehouses and so forth. So there's probably going to be some restructuring investment that we will have to make in.

Speaker 10: And again, Greg, look, the other thing I would just add is we talked about multiple times.

And to that yes.

And again, Greg look the other thing I would just add as we've talked about multiple times our focus on restructuring is dramatically different we really looking at a very rigorous set of business cases, and it's all about payback and until we're absolutely sure and we're doing it inside of the metered approach, where we fund a little bit we get the benefit and that sort of leads to <unk>.

Speaker 10: Our focus on restructuring is dramatically different. We're really looking at a very rigorous set of business cases and it's all about payback and until we're absolutely sure and we're doing it in sort of a metered approach where we fund a little bit, we get the benefits, then that sort of leads to the next piece, et cetera. So we're being very thoughtful, very careful, and very deliberate about where we do it. It is just like any other investment that we put into the company with us having a high degree of confidence that it's gonna pay off.

The next piece et cetera. So we are being very thoughtful very careful and very deliberate about where we do it is just like any other investment that we put into the company.

With us having a high degree of confidence that it's going to pay off.

Speaker 7: Alrighty. And just a few others here. So working capital, that's trend, we should expect the trend with revenues and where you've been seeing payables and just set and receivable days, right?

Alright, and just just a few others here so working capital that should trend.

You should expect to trend with revenues in.

<unk> been seeing payables in gist.

And receivables days right.

Yes.

Speaker 7: The ENO inventory charge, is that...

The inventory charge.

Is that is that.

Speaker 7: Is there some number we should be thinking about there as an add-back or deduction or is that to have it in your margins and you're sort of taking it out? In our margins, it's included in our EBITDA margins. We just have to adjust it for cash flow purposes.

Is there some number we should be thinking about there add backwards deduction or was that to have it in your margins and your.

Sort of taking it out.

In our margins it's not.

Included in our EBITDA margins, we just have to adjusted for cash flow purposes.

Speaker 7: So is there going to be an adjustment that we should be thinking about this year when we run our free cash flow number?

So yes.

So is there going to be an adjustment that we should be we should.

If you're thinking about the sheer when we've.

To open our free cash flow numbers.

Speaker 4: So when I think about E&O at the moment, I think about it more so in terms of where are we now with the run rate. And I think the second half...

So when I think about at the moment I think about it more so in terms of where are we now with the run rate and I think the second.

Second half.

Speaker 4: 21 run rate is probably where I'm thinking that we will start 22 and probably take it through the year until we get through our inventory planning and fulfillment initiatives further and get a better rate.

'twenty one run rate is probably where I am thinking that we will start 'twenty, two and probably taken through the year until we get through our inventory planning and fulfillment initiatives further and can get a better rate because really it's just about working off.

Speaker 4: things that are obsolete and slow moving. And also as we think about what new demand is coming in, then that will also work with the calculations. It's a very specific calculation that looks at movement by plant. And so it's one of those things where I always, you know, the best way to think of it is where are we running at now.

That are obsolete and slow moving.

And also as we think about what new demand is coming in then that will also work with the calculations is a very.

Specific calculation that looks at.

Movement by plant and so it's one of those things where I always the best way to think of it as where are we running at now and so if I take the second half of 'twenty, one as kind of what I would guide to use for the full year until we got to get an update can you remind us what the second half of 'twenty one was.

Speaker 3: And so if I take the second half of 21, that's kind of what I would guide to use for the full year until we get an update. Can you remind us what the second half of 21 is?

Speaker 3: It's in the back of the deck. I think We were 12 million for the quarter probably about the same in Q3. So that makes it about 24 or 25 for the half.

So it's in the back of the deck I think.

We're $12 million for the quarter, probably about the same in Q3, so that makes it about 'twenty four 'twenty five.

For the half.

Speaker 7: And we should annualize that number or we should just assume? Just annualize that number for now.

And we should annualize that number or if we should just assume.

Just just annualized that number for now and.

And that's going to be.

A benefit to cash flow this year.

Speaker 3: That's a benefit, yeah, because it's an adbac.

That's a benefit yet because of the ad market.

Speaker 7: Great, so I got it, so I add 50 back. And then the cash taxes, how should we think about that this year?

Sure.

Great So I got it.

So add 50 back.

And then the cash taxes, how should we think about that.

<unk>.

This year.

Speaker 3: So I think cash taxes this year was total what?

So I think cash taxes this year was.

What was total was $6 65 or 70.

Speaker 3: And I think that we should see that step up closer to you know night somewhere between 80

And I think that we should see that step up.

Closer to.

Somewhere between 80 and 100.

Speaker 7: Got it. And then last question for me, any thoughts on additional asset sales or what you categorize as dispositions? We don't forecast that. We think that just comes in as a bump. Most of the covering analysts tend to remove it from the cash flow calculation anyway. So we just don't.

Got it and then last question for me.

Any thoughts on additional asset sales or what's your chatter about dispositions software, we don't forecast that.

We think that Thats just comes in as a bump most of the covering analyst tend to remove it from the cash flow calculation anyway. So we just don't focus on that.

Speaker 7: And maybe this last one strategically, how are you looking at the M&A environment? Obviously, you're in a much better position than you were last year.

And maybe just last one strategically how are you looking at the M&A environment obviously.

Things are much better positioned than you were last year or is there other opportunities for you to add to your portfolio.

Speaker 7: Are there opportunities for you to add to your portfolio? Yeah, so look, we'll look at it, as you said, sort of opportunistically. Greg, our focus really continues to be on writing the ship. We think we've got a tremendous amount of opportunity within the company both to fix

Yes. So look we will look at it as you said sort of Opportunistically, Greg our focus really continues to be on writing. The ship, we think they've got a tremendous amount of opportunity within the company both to fix our underlying operating processes, but also to drive innovation and organic growth within the portfolio. So that's our our overall priority.

Speaker 10: our underlying operating processes, but also to drive innovation and organic growth within the portfolio. So that's our overall priority, but look if there's something that comes along that makes a compelling sense from a shareholder value perspective, we'll most definitely look at it. So we're staying open and willing to engage in.

But look if there's something that comes along that makes compelling sense from a shareholder value perspective will most definitely look at it. So we are staying open and.

Willing to engage in conversations.

Speaker 7: That's very helpful. I appreciate the time guys. I'll yield to you.

That's very helpful.

Appreciate the time guys.

Youll see Ya.

Thank you Greg Thanks, Greg.

Speaker 1: Anyway, my question today comes from Connor Lionel with Morgan Stanley . Please go ahead.

The next question.

Connor Lynagh with Morgan Stanley . Please go ahead.

Speaker 8: Yeah, thanks. Two higher level questions that are pretty related here, so I'll ask them together. As you look at your CapEx budget that you're increasing, if you think about the new segment allocation here, where are you deploying most of your incremental capital? Is there a noticeable directional trend within the businesses? And then more sort of structurally and long-term, as you look at the cycle, where do you see the greatest opportunity for growth and maybe less part of that in terms of revenue and margin?

Yes. Thanks.

Two higher level questions that are pretty related here, so asking them together.

As you look at your Capex budget.

But you are increasing if you think about the new segmented allocation here, where are you deploying most of your incremental capital is there.

Noticeable directional trend within the businesses and then more sort of structurally and long term as you look at the cycle, where do you see the greatest opportunity for growth.

Maybe let's parse that in terms of revenue and margin.

Thank you Connor really great question.

Speaker 3: So if you think about our business and the way it's currently set up and the way we've made it out, if you start with drilling and evaluation or DRI, that business is heavily service oriented where we take our tools out and we perform work.

So if you think about our business and the way. It is currently setup, where we have made it out.

If you start with drilling and evaluation of our DIY that business is heavily service oriented where we take our tools out and if we perform work as you get down to well construction.

Speaker 3: as you get down to well construction, it's a really good mix of services and product sales. So liner hangers that go into the whole cementation products and so forth. And then when you get down to the production and intervention business, it's much more products oriented. So we are building systems and leaving them behind and so forth. So when you look at our cap.

Really good mix of services and product sales. So a liner hangers that go into the whole segmentation products and so forth and then when you get down to.

The production and intervention business is much more products oriented. So we are building systems, and leaving them behind and so forth. So when you look at when you look at our Capex you will see that.

Speaker 11: you will see that as we look at it, we would say that easily 35 to 40 percent of our Catholics right now is focused on the drilling and evaluation segment because that's where we need new toys to talk about.

As we look at it we would say that easily 35% to 40% of our Capex right. Now is focus on the drilling and evaluation segment, because that's where we'd be neutralized and do things.

Speaker 3: And then you can split the remaining 60 or so between the other two product lines. And that's kind of been the long-term trend as we've gone through and recycled.

And then you can split.

The remaining 60 or so between the other two product lines and Thats kind of been the the long term trend as we've gone through and re segment. This the the challenge we have at the moment now is we're going to have to think about how we.

Speaker 3: The challenge we have at the moment now is we're going to have to think about how we change our fulfillment practices. So there may be bigger investments in changing the footprint of our plants. And so the infrastructure capex may change and that may be for in the near term. But that should smooth itself out and go back to this how do we build the toolkit for the segments that we

Change our fulfillment practices, so there may be bigger investments.

And changing the footprint of our plants and so the infrastructure Capex may change and that may be.

Before in the near term, but that should smooth itself out and go back to this how do we build a toolkit for the segments that we service.

Speaker 10: Yours? Yeah, no, I completely agree. And Connor, to your second part of your question on where we see the long-term growth. Look, part of the reason we segmented the way we did is that's the way the business operates, really. And it really highlights, though, that we've got traction in each one of these segments. Look, in the short term, I think we will, in the short to mid term, I would say, in this sort of cycle, we'll probably see a little bit more growth in our production business, but also our drilling business. But then there's always a lag effect because it sort of follows the well life cycle. So we'll see construction and completions pick up where drilling takes off. Look, on the long term, we believe, like many others in the industry, that you're...

Yes, no I completely agree and quantity of second part of your question on where we see long term growth.

Part of the way part of the reason we segmented the way we did is thats the way the business operates really been it really highlights that we've got traction in each one of these segments. You know look into short term I think we will.

Charter midterm I would say in this sort of cycle, we will probably see a little bit more growth.

In our production business, but also our drilling.

Business, but then there is always a lag effect because it sort of follows the Val lifecycle. So we will see construction completions pick.

Pick up where we're drilling takes so look on the on the long term.

We believe like many others in the industry.

Yes.

Speaker 10: Oil and gas will continue to be a very significant portion of the energy supply of the world for a while to come and so the production piece of it really...

Oil and gas will continue to be a very significant portion of the energy supply the world for a while to comment so the production piece of it really.

Speaker 10: will be something that's significant, but as we look at what we are doing with respect to digital solutions across the spectrum, we look at energy transition offerings, I would say all segments really are ones that we are excited about and think we've got strong growth prospects, and you look at it with this here, right, in terms of the guidance that we laid out, so it is a little bit more skewed towards PRI, especially towards the back end, but really we've got good growth in all of them, but it's also geography specific, because we are not playing in every single market with every single.

We will will be something thats significant but as we look at what we're doing with respect to digital solutions across the spectrum. We look at energy transition offerings I would say all segments really are ones that we're excited about it and think we've got strong growth prospects and you look at it for this year right in terms of the guidance that we laid out so it is a little bit more skewed towards <unk>.

PRA towards especially towards the.

The backend, but really we've got good growth in all of them, but it's also geography specific because we are not playing in every single market with every single product line.

Speaker 8: It's all helpful context. Thanks very much for the call. I'll be right back.

That's all helpful context, thanks, very much for the color I'll turn it back.

Speaker 1: And our next question today comes from Sean Mitchell and Daniel Energy.

And our next question comes from Sean Mitchell Energy. Please go ahead.

Speaker 9: Hey guys, thanks for taking the question. Obviously in the US, we're seeing a huge problem with labor, especially with shortage of truck drivers and whatnot. And you guys mentioned in your opening kind of narrative that you're seeing supply chain and issues and bottlenecks internationally as well, given your exposure to the international market. Can you talk a little bit more about specifically, what do you see as two Rotary

Hey, guys. Thanks for taking the question.

Obviously in the U S.

We're seeing a huge problem with labor, especially with shortage of truck drivers and whatnot and you guys mentioned in your opening.

Narrative that you are seeing supply chain issues and bottlenecks internationally as well given your exposure to the international markets can you talk a little bit more about specifically.

Speaker 9: internationally what's going on from a supply chain or bottleneck or labor issues maybe that you're seeing in the international markets? Is it similar to what we're seeing in the US, do you think, or is it other things?

Internationally, what's going on from a supply chain or bottleneck or labor issues, maybe that youre seeing in the international markets is it similar to what we're seeing in the U S. Do you think or is it or is it other things.

Speaker 10: Sure. Hey look, so I'll start with supply chain. I think those issues truly are global. It's not restricted to the US alone. The logistics challenges are a little bit different just given in the US the transportation infrastructure that we've got and a lot of the trucking capabilities across. But look, we are seeing very significant shortages and constraints around shipping lanes and freight charges and stuff like that. So overall, getting raw materials to factories, especially where you've got electronics components and we do in a lot of our high-tech applications, etc. That is a challenge for us today on a global basis.

Sure Hey, look so I'll start with supply chain I think those issues truly our global it's not restricted to the U S alone the logistics challenges that a little bit different just given in the U S. B.

Our expectation infrastructure of it we've got a lot of the trucking capabilities across our but look we are seeing very significant.

Just any constraints around shipping lanes and freight charges and stuff like that so overall getting raw materials do factories, especially where you've got electronics components side, we're doing a lot of our hi tech applications et cetera that is a challenge for us today on a global basis from a labor labor side of it.

Speaker 10: From a labor side of it, look, it is a little bit different. I would say the US has a much more fluid labor market than the rest of the world, generalizing to a very large extent. We've also got different dynamics in terms of the unionization piece, et cetera. So I would say the labor side is a tad bit more challenging in the US and a little bit more stable in the rest of the world, but you've got inflation aspects that are very different again by country.

Look at this a little bit different I would say the U S has a much more fluid labor market than the rest of the world.

Generalizing to a very large extent.

<unk> also got different dynamics in terms of the utilization piece et cetera. So I would say the labor side is a tad bit more challenging in the U S and a little bit more stable in the rest of the world, but you've got inflation aspects that are very different again by country.

Thank you.

Speaker 1: Anyways, ladies and gentlemen, our next question today comes from Ian McPherson with Piper Sandler. Hi, I'm Ian McPherson.

Ladies and gentlemen, our next question today comes from Ian.

Piper Sandler. Please go ahead.

Speaker 5: Thanks for the follow up, Keith. I'm sorry to put you back in the hot seat with the model questions. I think the one that we didn't revisit was the step up in stock comp that was in your EBITDA in the fourth quarter. And I was wondering if you could just re-baseline that for us for our free cash flow estimates for 2022. Thanks. Sure. Thank you, Ian.

Thanks for the follow up Keith I'm, sorry to put you back in the hot seat model questions. I think the one that we didn't revisit was the step up in stock comp that was in your EBITDA in the fourth quarter and I was wondering if you could just re baseline that for us for our free cash flow estimates.

For 2022 thanks.

Sure.

Yes.

Speaker 4: So the fourth quarter was a confluence of a few things. The step-up related to two primary catch-up calculations. One was some smoke and smoke cut-out, but weBig cause it's more complex millions of calls.

So the fourth quarter with the confluence of a few things.

The step up.

Rated to two primary of ketchup calculations one was some.

Speaker 4: phantom share program that we had. It was supposed to be paid out after two years, however the target was hit early.

Phantom.

Sure program that we had it was supposed to be paid out over two years. However, the target was hit early and that was so.

Speaker 4: And that was so we have to accelerate the second half of the payment and the calculation into 2021.

So we have to accelerate the second half of the payment and the calculation into 2021 and then we also have to true up some long term incentive compensation programs for.

Speaker 4: And then we also have to true up some long-term incentive compensation programs for, you know, being you know, based upon the revised outlook for 2022, we are more confident that we will hit the targets on that as well. And so that brought it up.

Being <unk>.

Based upon the revised outlook for 2022, we are more confident that we will hit the targets on that as well and so that brought it up when you look at the stock comp.

Speaker 4: When you look at the stock comp, you know, the equity adjustment back to EBITDA on the quarter, I think that should normalize back in Q1 of this year back to the 4 or 5 where we're usually at each quarter.

The equity adjustment back to EBITDA on the quarter I think that should normalize back in Q1 of this year back to the 405, where we're usually.

At each quarter.

Perfect. Thanks, Keith I appreciate it guys.

Speaker 1: Thank you. Ladies and gentlemen, this concludes our question and answer session. I'll leave the chairman's office back over to management for final remarks.

Thank you.

Ladies and gentlemen, this concludes our question and answer session.

The result is back over to management for final remarks.

Speaker 10: Great. Thank you everyone for joining us today. I really appreciate the engagement of the dialogue and I look forward to speaking to you again at the conclusion of the first quarter.

Great Hey, Thank you everyone for joining us today really appreciate the engagement of the dialog and I look forward to speaking to you again at the conclusion of the first quarter.

Speaker 1: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.