Q1 2022 Weatherford International PLC Earnings Call

April 28, 2022

Ladies and gentlemen, thank you for standing by.

Welcome to the Weatherford International first quarter 2022 earnings call.

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I would now like to turn the conference over somewhere how would fall below director of Investor Relations. Please.

Please go ahead, Sir welcome everyone to the Weatherford International first quarter 2022 conference call I'm joined today by E. Saudi gum.

It Didnt and CEO .

And Keith Jennings Executive Vice President and CFO , we will start today with our prepared remarks, and then open it up for questions you.

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

I wanted to remind everyone that some of 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.

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

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 first quarter press release, which can be found on our website.

With that I'd like to turn the call over to Girish. Thanks.

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

Im very pleased with our first quarter results and incredibly proud of and grateful to the entire weatherford team for their efforts and outcomes we.

We have made a solid start in Q1 that leaves the firm foundation for our total year outlook of top line growth margin expansion and free cash flow generation.

This quarter, along with the broader industry, we experienced several headwinds driven by inflation and supply chain issues disruptions related to the COVID-19, pandemic and unprecedented challenges caused by geopolitical events.

Foremost in everyone's mind is the ongoing crisis in Ukraine caused by the invasion.

We have over 100 employees in Ukraine, and I am relieved grateful and glad that they are all safe and accounted for.

The safety and well being of all of our employees is our first priority and we have approached this situation with the same mindset.

I want to acknowledge and recognize our employees globally for their support in many different forms for our team in Ukraine.

This is a great example of the one weatherford spirit in action.

On the financial side, Ukraine represented approximately 1% of our revenue in 2021.

In light of the current situation, we have taken an impairment charge on our assets and are not forecasting any revenue for the remainder of the year.

As previously announced we have suspended making any new investments or deploying new technology in Russia.

Our operations in Russia are increasingly challenged as we ensure full compliance with the sanctions from relevant authorities.

Everyone is aware there has also been currency volatility that has had an impact on our first quarter results and could likely have a further bearing on the remainder of the year.

As this landscape continues to evolve we expect additional operational complexities the cumulative effect of currency volatility and operational complexity is driven by sanctions is likely to create downward pressure on our financial results for the rest of the year in Russia, but it's difficult to quantify given the uncertainty.

Despite the pressures from Ukraine, and Russia, we see robust demand growth in other parts of the world and our overall thesis for the year remains intact.

We expect that we will be able to fully offset the impact from Ukraine and to a certain extent potential ruble volatility with pickup in other geographies.

Energy security of supply has become an even greater priority than many countries leading to additional investment plans.

As a result, we continue to anticipate 2022 to be our first year in five to generate top line growth in the high single to low double digit range.

More importantly, we believe we will generate at least 50 basis points of margin expansion and generate positive free cash flow in 2022.

The first quarter is typically the lowest margin quarter and coming in at 16%.

40 basis points above our full year 2021.

380 basis points versus Q1, 2021, and 10 basis points higher than Q4, 2021 is a very encouraging sign of the progress and improvements we have made in our core operations.

In the first quarter overall revenue increased by 13% over the prior year with adjusted EBITDA margins over 16% on the high end of our guidance range and outstanding execution on our focus areas, coupled with commercial initiatives to drive pricing and grow market share helped us achieve an industry, leading adjusted EBITDA margin.

Expansion of 380 basis points compared to last year.

In addition, we also won more than $1 billion of commercial awards during the quarter, excluding Russia significantly ahead of our 2021 run rate.

I am extremely pleased that we are delivering at this level and I'm truly excited about the growth potential we expect in the second half of the year.

Over the past few quarters, we have shared how we have re segmented our business and discuss the successes in our market leading product offerings across the three segments.

While these product offerings of managed pressure drilling tubular running services cementation products and fishing and reentry continue I wanted to spend some time today talking about the rest of the portfolio and the great strides we are making there.

We have refined our portfolio and it is differentiated by innovation across the board with an exaggerated focus towards specialty services.

We have also leveraged the strength in our market leading product offerings to pull through other offerings in a discrete and integrated fashion.

This has helped our customers achieve success in their core oil and gas operations and their energy transition activities.

Some of the key commercial highlights from the first quarter are as follows.

Add knock in the UAE awarded US a five year contract with an optional two year extension to provide wireline logging and perforating services.

We were selected based on our expertise in cased hole reservoir characterization and monitoring extensive pipe recovery capabilities and world class Perforation services.

And artificial lift which has been a traditional strength and bolster a tremendous installed base. We received two awards from Ted we are petroleum in Bahrain to deliver install and service beam pumping units and downhole pumps.

In India can awarded us a five year integrated artificial lift and production automation contract across its will go over in regulus activities invest in India.

The contract, which will commence in the second half of the year.

Will enable greater production optimization and helped drive collaboration between the operator and at service partners.

In our completions portfolio, we received a three year contract to provide cemented liner hangers sort of BP operated business in Azerbaijan with the potential for an increased scope in the future.

Superior running features combined with our high level of service quality and strong presence in the region were instrumental in securing this award.

Supporting our success in the market is the emphasis we have placed on technology expansion in key markets and further innovating in spaces, where we have the potential to deliver critical value to customers.

For example, we recently formed a collaboration with subsea services that will change managed pressure drilling or MPD from an add on to seamlessly integrated part of the drilling rig the.

The collaboration will integrate field proven weatherford technologies, the rotating control device and the annual or isolation device with a remotely operated pooling system from subsea services. The results will be an industry first complete integration of MPV and typical riser auxiliary lines into a single automated connection for all drilling operations.

As we continue to drive innovation in this space, we took out more than five decades of leadership in NPV and expanded those capabilities to every part of the viral lifecycle with a recent commercialization of managed pressure wells.

These new solutions enable our customers to apply the same field proven technology of MPD to deliver high quality wells with fewer surprises by ensuring a stable wellbore with comprehensive pressure management strategy.

With robust pressure control capabilities for every well space, we increased production, while lowering well construction costs and well control risks.

Following the commercialization of our managed pressure solution, we integrated and deployed on the Maersk Viking Ultra deepwater drillship, securing the rigs attractive position in the region, where MPD capabilities are in high demand.

The Maersk Viking is currently drilling with the Weatherford MPD system for a major operator in Malaysia.

This integration shows the strategic importance of collaboration where drilling contractors and provides significant MPD benefits to customers.

Similarly in tubular running services or Trs, we've taken our industry, leading position in field proven technologies, such as a premier offering of Vero automated connection integrity and continue to deliver innovative and differentiated technology offerings.

Our soloist talked on monitoring solution is the latest enhancement to our market leading services to enable single person operation and simplified remote viewing while running tubing casing in the hole.

Traditional talked on monitoring systems require longer rig uptime and personnel must remain near the control cabinet on the rig floor significantly reducing efficiency.

With our solar solution.

Customers get the same accurate torque monitoring without the hassle of largest rig up all from a single Wi Fi enabled tablets.

<unk> service offering enables cross functional work on the rig floor by freeing up personnel to monitor dark while performing other essential rig operations.

This enhancement to our service offerings showcases our commitment to investing in innovation and technology throughout our portfolio.

It also provides incredible cost savings and safety improvements to our customers, while increasing our margins to drive growth and profitability.

We are also focused on leveraging our portfolio to support our customers' energy transition in ESG needs, where we continue to gain traction and prove our ability to adapt to changing industry needs.

We've supported geothermal activity for more than two decades, and our recent project on a geothermal well with Hamburg energy reinforces our competitive advantage.

I had the opportunity to personally visit the site a few weeks ago and came away with even greater excitement about the potential for geothermal in the future.

We deployed our Magnus rotary <unk> system from surface to total depth of the well drilling all three sections first with the system on this well type.

We also used market, leading evaluation tools to analyze and logged both cases open hole sections and Stephen pumps.

This operation is positive proof that our existing market leading portfolio can help drive the energy transition forward.

I am encouraged by the traction we are seeing in these areas and I'm confident in our growing role as a service provider of choice our unique position in the marketplace as demonstrated by our industry, leading and differentiated technologies across the lifecycle and our ability to deliver integrated solutions to our customers leveraging those capabilities, which separates us from our peers.

<unk>.

Now turning to our view on the markets.

The multiyear up cycle is firmly underway driven by limited supply and increasing commodity prices.

The overall macro environment continues to improve and we anticipate growing demand for oilfield services from our customers.

It is encouraging to note that this cycle has thus far been characterized by the prudent deployment of capital by operators and service providers alike. This portends well for the ability to generate returns not just over this cycle, but also on a longer term basis.

In North America, we are strengthening our commercial focus to help drive market share and pricing gains.

We continue to see strong activity growth and increased customer spending supported by a favorable commodity price environment.

However, a combination of capital discipline by public E&ps global supply chain bottlenecks and a tight label labor market will constraint growth somewhat.

For example, as seen in our predominantly product driven production intervention segment of the U S. We continued to experience acute supply chain issues.

Nevertheless, we still expect to deliver positive topline and bottom line growth as our focus remains on going after work where it makes the most economic sense we will.

Recognize that there has been a significant increase in drilling activity in the U S and associated services over the past year.

However, we are not chasing previously unprofitable work as we remain committed to our goal of only pursuing activity, where we believe we can generate margins across cycles.

Turning to international markets, we continue to see the trend of robust growth with increased activity and spending consistent with what we have stated before.

As activity increases in the Middle East and Latin America continue to drive International growth. We also see accelerating demand for our products and services and contract awards in Asia in sub Saharan Africa.

We expect international markets to continue that expansion as we witness capital deployments by growing number of operators.

We have put a significant focus on our Latin America performance, including structure operations and business model and our first quarter revenue growth of 29% year over year reflects the excellent progress we have made.

I'm also encouraged by the acceleration of activity in Asia and sub Saharan Africa.

These two markets were among the toughest hit during the pandemic and a natural pent up demand is being driven forward now.

Our focus continues to be on driving directed growth in our key markets and on the work necessary to drive execution excellence as we scale up for growth now.

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

Thank you <unk> good morning, everyone and thank you for joining us.

I was giving you commented earlier given the headwinds from inflation logistics supply chain challenges and the geopolitical events occurring on the European continent. We are pleased with our first quarter results.

My comments on the first quarter will primarily compare the results of the first quarter of 2021.

<unk> revenues were $938 million, an increase of 13%.

Our operating income was $18 million compared to an operating loss of $13 million.

Net loss was $80 million compared to a net loss of $116 million.

Adjusted EBITDA was $151 million, an increase of 48%.

Before I go into the details of our reporting segments performance I have a few brief comments on the current situation in Russia, and Ukraine, and how it factors into our current quarter and outlook.

We have taken a $19 million charge, primarily related to the write downs of all our assets in Ukraine, excluding cash.

Ukraine was 1% of our revenues in 2021 and was included in our original full year guidance and the revenue has now been removed from 'twenty to 'twenty two guidance.

In Russia, we continue to operate in compliance with all sanctions and are diligently monitoring this situation this dynamic situation.

Consistent with our historical range of 5% to 7% that we have previously disclosed revenues in Russia were 6% of our total revenues in the first quarter of 2022.

Our net book value of our primary assets in Russia, excluding cash and not deducting accounts payable at March 31, 2022, or approximately $140 million.

Our full year outlook does include Russia with lowered expectations from our original guidance.

Given the ongoing uncertainties it is difficult for us to comment further.

As we discussed in our last call. We continue to focus our efforts on improving our operations profile. We believe we can structurally improve our margins by consolidating manufacturing plants and relocating the key nodes of our global repair and maintenance facilities.

This is intended to achieve a more efficient infrastructure to provide.

Excellence in product and service delivery, leading to increased customer satisfaction and growth.

As such we have recorded a restructuring charge of $20 million during the quarter primarily for this initiative.

Now, let's look at our segment breakdown.

During the first quarter drilling and evaluation vre revenues of $292 million increased by $56 million or 24% year over year, largely due to higher demand for managed pressure drilling and wireline services, primarily in Latin America, and the Middle East North Africa and Asia.

Segment, adjusted EBITDA of $59 million increased by $30 million or 103% year over year, primarily due to higher demand for managed pressure drilling and drilling services, mainly in Latin America.

Well construction and completion WCC revenues of $344 million increased by $21 million or 7% year over year increase primarily due to higher demand for cementation product and activity in North America.

Segment, adjusted EBITDA of $67 million increased by $17 million or 34% year over year, mostly due to higher demand for segmentation and completion products with improvements primarily in the middle East North Africa and Asia.

Production of the intervention Cri revenues of $286 million increased by $27 million or 10% year over year due to higher demand for intervention pressure pumping services, primarily in the Middle East North Africa, Asia, and Latin America, respectively.

Segment, adjusted EBITDA of $39 million decreased $2 million or 5% year over year, mainly due to higher logistics costs and supply chain challenges, which impacted our delivery schedule for products in North America. This was partially offset by activity improvements in the middle East North Africa and Asia.

Turning to liquidity and cash flow.

We closed the quarter to first quarter of 2022 with total cash of approximately $1 1 billion as of March 31, 2022 down $57 million sequentially.

Unlevered free cash flows of negative $47 million was down $194 million sequentially and free cash flow of negative $64 million was down $113 million versus the fourth quarter of 2021.

Primarily due to working capital requirements.

The characteristics of an up cycle are reflected in our first quarter working capital requirements as cash flow swung by approximately $140 million versus the fourth quarter of 2021. However, we are confident in our team's ability of the pace of our working capital requirements with our operating performance to capture positive earnings and.

Margin expansion in this cycle.

While we continue to invest in our business, we remain committed to utilizing our asset base more efficiently as such the timing of capital investments may flex between forecast periods shifting our focus to the current year I will share some of our qualitative thoughts on the second quarter of 2022 and the full year.

As we look ahead to the second quarter versus our first quarter of 2022, we expect consolidated revenues to increase by mid to high single digits, driven by higher growth across all of our Geo markets.

Across the segments <unk> forecasted to deliver mid single digit growth WCC to deliver in the mid to high single digits.

<unk> in the high single digits adjusted EBIT margins are currently expected to be 16% to 65%.

Unlevered free cash flow is expected to be positive, we're targeting breakeven free cash flow onto our current activity forecast, which could turn negative if the <unk>.

Indications for activity levels in the second half of the year exceed our current expectations.

We expect capex to be in the range of $30 million to $40 million in the second quarter.

Full year 2022 consolidated revenues are expected to grow by high single low double digits above 2021 levels.

Across the segments DRA is forecasted to deliver low teens growth WCC to deliver in the high single digits and PR in the mid to high teens.

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

As noted in our fourth quarter remarks, Capex will be at least double 2021, spending and will range from $175 million to $200 million.

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

You expect to come mainly from the second half of 2022.

This outlook incorporates the impact of changes for Ukraine, and Russia previously commented on.

Notably this outlook reinforces the strength of our franchise and the broadening of the increasing demand for oilfield services, which has enabled us to maintain our original guidance by already offsetting this impact with demand from our other regions.

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

Thanks Keith.

We are excited about our growth prospects as we continue to see strong macro trends and are gearing up on our commercial focus to drive pricing and share gains in the coming quarters.

And I want to update you on our 2022 focus areas, which will continue to drive rigor and discipline across the organization.

We are on a multiyear journey to evolve our fulfillment mechanisms currently each product line has a fulfillment network that has developed independently over several years, we are moving away from that and rethinking our inventory supply chain and logistics functions as we contemporize our network to serve customers more efficiently.

Throughout the quarter, we continued the work of evaluating our business and making critical and essential changes that resulted in a onetime restructuring charge to help us evolve our operations further and create efficiencies in our organizational structure.

We have been very clear that we treat restructuring as an investment and have a roadmap to drive improvements over the coming quarters and years.

In our directed growth focus area, leveraging our technology differentiation increased investment in innovation and the value proposition to drive pricing and market share growth, where it makes economic sense.

Rather than pursuing share at a global level, we are focused on areas of critical mass in driving the intersection of geography and product line to have each be economically independent.

Our third focus area is excellence in execution are critical component of supporting our growth.

Built a new quality function to instill the discipline accountability needed to execute with a lean mindset throughout our enterprise.

Finally simplification remains an enduring focus area for our company, we continue to evaluate our organizational and operational structure to maximize efficiencies.

I believe like our peers that we are in a multiyear up cycle driven by global energy security concerns and economic growth.

While there are clear risks caused by inflation, increasing interest rates supply chain bottlenecks isolated, but serious COVID-19, lockdowns and geopolitical conflict. We believe energy security of supply will remain a focus priority as a result, we should see further momentum in the second half of 2022 and 2002.

23.

Weatherford unique position in the marketplace creates a competitive advantage that will allow us to capture additional market share and to successfully deliver on our goals of sustainable profitability and positive free cash flow.

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

Thank you we will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad.

If you were using a speaker phone.

Please refer to handset before pressing the keys.

Charter question, please first starting to.

Brody.

Today's first question comes from.

First one.

Please go ahead.

Thank you good morning.

Good morning, Ian.

Recently, we've heard more.

Commentary from your peers this quarter that.

The improved pricing environment.

Internationally certainly not on the same frequency is.

The very big price increase that we're seeing in the more cyclical.

Service lines, but.

There has been a change of more positive change in town with international pricing and I just wanted to get your perspective on that it would seem to me that youre not youre still not dialing in at least from surface appearances significant price increase into the margin guidance that you've given us for this year.

So is that I.

I guess two recalls and then where do you think maybe the upside could be as we get.

Deeper into the cycle and maybe in the second half of this year is that environment feeds through into the system more broadly.

Sure. So Ian look I think first of all the tone is getting more constructive.

Look we've been talking about this for a while we've seen green shoots across the second half of last year coming into the first quarter as well and we are having a lot of discussions with customers and the overall tone is constructive there is a a I'll call it a supply crunch, especially in critical spur.

<unk> services, and where we have differentiation that's something that we really have the ability to push pricing forward.

Would say they'll look.

As I mentioned in some of my prepared remarks, the margin expansion that we have seen in Q1 is.

Part of it is from pricing its not we havent broken it out explicitly because there are a lot of confounding in office getting factors, but our pricing has certainly been a contributor to that and we expect it to continue to be a contributor to that.

Two other things, though that I think are relevant as we think about the rest of the year look. The first is we do have across the board are significant inflation challenge that all of US are working through and our perspective has always been to be a bit more prudent responsible about that because we don't know the full extent of that it has been.

Something that has been on the radar now for at least nine months and it has escalated it has not yet really decelerated and so it's a very fast moving very evolving situation and.

And when you couple that with the supply chain bottlenecks that you have it does create a tough situation, especially on logistics costs and stuff like that so we do expect a part of that pricing.

Our movement upward to get offset by inflation and that's still baked into our guidance which is.

Remember, we have said at least 50 basis points of margin expansion I think the second thing is in the first quarter going into the second quarter as we have updated our guidance in totality. It is still pretty much the same but you have to consider that we have had some significant headwind from Ukraine, and Russia that we have factored in and so we have put in a little bit.

More of the call. It additional juice that we were going to get from pricing into that to make sure that the overall thesis remains intact.

Thank you and our next question comes from Doug Brooks.

Please go ahead.

Thanks.

To touch base on the DRG revenue guidance, just taking a look at it.

Full year guidance for low teens growth seems to imply very modest growth from the second quarter level.

Of the year.

Anything in particular, you'd point to that drives that outlook, because achieving mid teens seems very very realistic if second quarter revenue growth say mid single digits.

So I think it's a function of this business has done very well over the past year. It is probably one of our wireless <unk>.

Spanned in margin businesses, we have done.

They're a bit to reposition this business outside the U S move assets as you know, particularly for our drilling services business. So it's not that we are.

Forecasting it to stop growing it's just a higher base and so we have.

We have taken that into consideration we have also seen that the <unk>.

Assets in Drs.

Now almost fully.

Deployed the ones that we have we have a fair bit of Capex in the pipeline two to come through which will then get deployed more towards Q4 than in Q1 of 2023. So yes, I think we appreciate that we stepped up and really improve the DRA business, but we're also looking to maintain that.

Through the year, but it won't be the same kind of growth rate that you've seen yes, and if I could just add Doug look I think <unk>.

First of all I think we're living in a world, where a low teens growth.

Third modest as kind of a nice change.

But look we have been very clear and deliberate on the fact that we are not going to go chase volume and what we're not doing in the company anymore is building up capex with the expectation that we will get the volume and we certainly could but we recognize that we've got to manage the business through cycles. So we are being very very prudent about where we deploy.

<unk> capital and we really want to make sure it's profitable to me the more interesting part of that DIY is the year on year margin expansion of 750 basis point margin expansion year over year is what I would like everyone to.

Our focus on and Thats, what we are focusing the company on.

No that's fair.

Jumping to <unk> margins, they were down year over year.

Just hoping you could expand on the logistical challenge you are seeing particularly in North America, just to try and get a better perspective for the trajectory of margins over the course of the year.

Sure. So look I think a couple of things on that.

First is the whole industry is having supply chain bottlenecks are and we're not immune to that we have had a couple of specific things regarding our operations as well one of the Lockdowns in China that have affected some of our sources of supply and has caused a bit of a perturbation look secondly.

<unk> freight and getting ships booked and ship sailing has been a challenge and that has been something that affected us fairly significantly in the first quarter. We had one particular incident.

Was fairly significant that has pushed our shipments out to the second quarter and then beyond so it's really a combination of China Lockdowns logistics, and then just sort of broader industry challenges, but look we hope that by the second half of the year. These do get alleviated we've looked at alternative sources.

Where possible getting more of a longer range forecast and working with our customers to prioritize shipments and manage through that.

Okay, and then a final one just on working capital I think it's very understandable.

Sizable use of cash in the first quarter, just given the seasonality and expected growth.

Just hoping to get some context, how to frame the potential outcomes for working capital and free cash flow for the year.

Sure.

So.

Our thesis still holds.

At this point from a forecast that we should have net positive free cash flow for 2022.

We are.

Like everyone else in the industry.

Investing in working capital in Q1, and I think that as we get more indications about what the second half looks like then we should also probably expect further investments in Q2, but not to this too.

Roughly the same significance as Q1, because it was it was really a star.

<unk> step up in.

In Q1.

When we think about it in terms of the.

The full year.

We're thinking that net working capital across the full year.

It's probably going to be a use.

And so we were thinking that that could probably be somewhere in the.

Yes, probably a $20 million to $40 million use across the year.

We're still trying to sort it through to.

To ensure that all of the things that we're doing operationally to manage inventory the Singapore, where we've kicked off the the fulfillment initiative, which is to realign or nodes that should also start to take effect in the second half of the year. So that's what we see from where we are today, but everything is.

Still positive for the organization because this is all activity an upside room.

So it sounds like free cash flow could still approach 100 million for the year is that a fair character.

I think that's still where we're looking at it.

We've kind of.

Set that target out there.

Models say that we should be able to achieve it. It's now a question of who do we grow with it depends on.

Of course, NOC versus IOC growth those are different payment terms. So it is a range of things that affect that but we still see a.

The range of.

Towards the $100 million of center cut for the full year of 2000 and again.

What I would say is look again, we've got to factor in that.

That we have considered the Ukraine, and Russia, which is obviously significant downward pressure and so we are still aiming to make that up. So I think the range is still accurate, but some of the pieces might move a little bit below what we want to be very conscious about is the growth that we expect to see in the second half as well as in 2023.

We put in our prepared remarks, we've got a really modulate that and be careful about it. We are still very committed to positive free cash flow for the year. We are confident that you're going to get there, but a little bit of that timing due to the Q3 might might get affected just a tad bit.

Thank you.

Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press Star then one today's next question comes from Gregg Brody.

Bank of America. Please go ahead.

Good morning, Greg.

Good morning, This is Dan Leonard Andre Gregg Brody.

For taking my question.

So first question is there do you guys have any update on refinancing the credit facility and the remaining 2024 hours or could you just give us some detail on how youre thinking about that today.

Sure.

So susanna.

Great question as usual.

We're really.

Now more confident than ever that we are closer to getting the type of facility that we desire.

We're working through with our banks and given that the structure of the industry has now kind of shifted right. So we have.

More demand than supply for the underlying commodity we have investments coming back to drive.

And then for security so all markets are feeling like energy in its current form.

There is probably.

A place to invest and so were feeling fairly good about that I think the underlying question, though is.

The better question I would say as Ken Weatherford afford to participate in this up cycle effectively and the question and the answer to that question is yes. So we are working through for the facility, we're getting closer to what we desire and what we want and at the same time.

Even without the facility in.

In place, we have the balance sheet liquidity to fund and grow into the cycle.

Yeah.

In terms of the 2024 is the stub.

That's a function of free cash flow generation, we're thinking that we would rather.

Pay that off from free cash flow over the next few years if thats.

Still out there, but at the same time if markets.

Re rate all of us again or.

A weatherford based on this performance the way it did last fall and we see the opportunities for liability management, we will absolutely take it but I think our first priority as we said with <unk> is to de lever and we hope to take that down either free cash flow or if the revolver comes in and then we can use some of the cash on the balance sheet.

Then we will do that so the thesis is still the same and Savannah. Those girish look I think as we have pointed out I know youre, all aware, but I think it's.

It's worth repeating.

<unk> been very very clear about where we're going to use the cash that remains our first priority. We're going to we're going to drive that we have seen a demonstrable proof of that last year and at the same time look we are very very clear that we are not going to put in place an instrument that doesn't work for the company longer term. So this is not a question of Hey, we can just go get something and we want to.

Make sure that we are really getting something in place that works for us across cycles fits the profile of the company that we are today, which is predominantly an international company with a lot more focus there but operates a significant portion of North America as well. So it has to work, but we are.

And a much better place today, where we are not in a position where we have a forcing function to drive that so we want to make sure that we are focused on the long term and getting the best outcome for everyone from that standpoint.

Okay. Thank you so much sounds good.

I have some questions on cash flow items on.

On the last earnings call you had said.

Number between 30% to $50 million for restructuring charges is that still how we should be thinking about it for the full year.

I think when we think about it.

Still the right number for the full year.

I think you can keep that there.

<unk>.

Gone out this quarter and taken a $20 million charge for a new restructuring program.

It's a smaller charge when compared to prior year, so there's probably less the fixed but probably more targeted.

Fixing our fulfillment areas so with.

One 2 million charge, we don't see the need to step up the cash forecast outflow.

For that so I think that that our original a number of sales calls.

March towards $100 million of positive free cash flow.

Okay. Thank you and then my last question is on cash taxes, how should we think about that for the rest of the year.

So I think we haven't changed our viewpoint, we do see it stepping up.

Year to year.

Last year, I think we spent about 60% to $65 million in cash taxes. This year.

We've said, it's going to be somewhere in the.

82 <unk>.

Hundreds of million dollars range.

In terms of the step up so and that was a function of the way our cash taxes flow in terms of deemed.

The profit taxes off revenues in some of the markets that we operate so as we expand that should go up but I think it should be commensurate where.

Sure.

It wont go up unless there's more revenues for people to withhold from.

Okay awesome. Thank you guys. So much thank you.

Yes.

Ladies and gentlemen, our next question is a follow up from an <unk> with Piper Sandler. Please go ahead.

Thanks for bringing me back I'm, sorry, My line dropped.

The middle of answered my first question.

<unk> I was interested in your comments around the integrated MPD approach and I wanted to ask if you could expand on that and what the upside is to weatherford and going with MPD and integrated.

Ponant of.

The rig as opposed to an Ala carte add on it and how that changes.

Yes.

How about you capture.

That upside.

Yes.

Great question, and it's something that we're very excited about.

One of the things about services like MPD as they have always been one of the challenges with adoption for customers has been it's been a complete discrete add on and especially when you are talking about an offshore kind of an environment. It's something that they have to buy separately, it's more people that need to go with limited or <unk>.

Commendation, and just make the whole thing becomes a significant challenge.

And it's a significant capital deployment. There has also been the set of commercial contract between drilling operators the end user and service providers like ourselves on.

How do you manage that whole thing so I think the integration solved a lot of issues.

And it really becomes a better customer outcome first of all you've got.

The rigs that are already deployed with the right capital out there you can now cross trained personnel to reduce the demands off back and you've got the ability to.

Engineer and design the product so that you set it up in a way that is most conducive for longer term efficiencies for the customer and look for US. We really think this is a great approach and.

This is incremental to the way, we think about MPD from a financial standpoint.

It reduces our capital outlay, because you've got a better planning around it you've got an ability to share to a certain extent and the commercial construct becomes one of efficiency sharing and so we are really creating a different value proposition for customers. So we think this will pay off in significant dividends over the next.

Coming quarters and years and we are excited just given some of the examples we've seen so far.

Super Thanks for expanding on that.

Last one for me Keith.

You have a few adjustments on EBITDA this quarter.

We've identified obviously the restructuring.

The $19 million that was mainly the impairment.

In Ukraine, but the other one was the $16 million of other expense I wanted to ask about that and if you could guide on any other exceptional add backs that we should think about the rest of the year. Thanks.

Sure. So the other expense went up a little bit from the.

The prior quarter with where we were.

Our roughly a 10% to 16 and part of that was driven by a few more charges for Lcs in one of the things and also we had some FX volatility.

That had to go.

Flow through that line.

Got it thanks and then.

Going forward that should be.

So less material items.

It is a less material item I think.

If we look at where it was.

A year ago quarter at four we closed the year with a 10, it's a small it's a small line item, but it.

It should not surprise us going forward.

Got it.

Thank you gentlemen, appreciate it.

Thanks Ian.

Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to management for any closing comments.

Alright, well. Thank you everyone for joining the call hopefully you have got a good sense of where the company's position and share our excitement about the path forward and we look forward to updating you again next quarter. Thank you.

Thank you Sir This concludes today's conference call. Thank you all for attending today's presentation you may disconnect.

Your lines and have a wonderful day.

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I would now like to turn the conference over so that whole, it's all below director of Investor Relations. Please.

Please go ahead, Sir welcome everyone to the Weatherford International first quarter 2022 conference call I'm joined today by Geely, Saudi gum.

It Didnt and CEO .

And he'd Jennings executive Vice President and CFO . He will start today with our prepared remarks, and then open it up for questions you.

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

I want to remind everyone that some of 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.

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

Mohammed and thank you all for joining the call today.

I am very pleased with our first quarter results and incredibly proud of and grateful to the entire weatherford team for their efforts and outcomes.

We have made a solid start in Q1 that lays the foundation for our total year outlook of topline growth margin expansion and free cash flow generation.

This quarter, along with the broader industry, we experienced several headwinds.

Driven by inflation and supply chain issues disruptions related to the COVID-19, pandemic and unprecedented challenges caused by geopolitical events.

Almost in everyone's mind is the ongoing crisis in Ukraine caused by the invasion.

We have over 100 employees in Ukraine, and I am relieved grateful and glad that they are all safe and accounted for.

The safety and well being of all of our employees is our first priority and we have approached this situation with the same mindset.

I want to acknowledge and recognize our employees globally for their support in many different forms for our team in Ukraine.

This is a great example of the one weatherford spirit in action.

On the financial side, Ukraine represented approximately 1% of our revenue in 2021.

In light of the current situation, we have taken an impairment charge on our assets and are not forecasting any revenue for the remainder of the year.

As previously announced we have suspended making any new investments or deploying new technology in Russia.

Our operations in Russia are increasingly challenged as we ensure full compliance with the sanctions from relevant authorities as everyone is aware. There has also been currency volatility that has had an impact on our first quarter results and could likely have a further bidding on the remainder of the year.

Despite the pressures from Ukraine, and Russia, we see robust demand growth in other parts of the world and our overall thesis for the year remains intact.

We expect that we will be able to fully offset the impact from Ukraine and to a certain extent potential ruble volatility with pickup in other geographies.

Energy security of supply have become an even greater priority than many countries leading to additional investment plans.

As a result, we continue to anticipate 2022 to be our first year in five that generate topline growth in the high single to low double digit range.

More importantly, we believe we will generate at least 50 basis points of margin expansion and generate positive free cash flow in 2022.

The first quarter is typically the lowest margin quarter and coming in at 16%.

40 basis points above our full year 2021.

380 basis points versus Q1, 2021, and 10 basis points higher than Q4, 2021 is a very encouraging sign of the progress and improvements we have made in our core operations.

In the first quarter overall revenue increased by 13% over the prior year with adjusted EBITDA margins over 16% on the high end of our guidance range.

Our outstanding execution on our focus areas, coupled with commercial initiatives to drive pricing and grow market share helped us achieve an industry, leading adjusted EBITDA margin expansion of 380 basis points compared to last year.

In addition, we also won more than $1 billion of commercial awards during the quarter, excluding Russia.

Significantly ahead of our 2021 run rate.

I am extremely pleased that we are delivering at this level and I'm truly excited about the growth potential we expect in the second half of the year.

Over the past few quarters, we have shared how we have re segmented our business and discuss the successes in our market leading product offerings across the three segments.

These product offerings of managed pressure drilling tubular running services cementation products and fishing and reentry continue I wanted to spend some time today talking about the rest of the portfolio and the great strides we are making there.

We have refined our portfolio and it is differentiated by innovation across the board with an exaggerated focus towards specialty services.

We have also leveraged the strength in our market leading product offerings to pull to other offerings in a discrete and integrated fashion.

This has helped our customers achieve success in their core oil and gas operations and their energy transition activities.

Some of the key commercial highlights from the first quarter are as follows.

And knock in the UAE awarded US a five year contract with an optional two year extension to provide wireline and perforating services with.

We were selected based on our expertise in cased hole reservoir characterization that monitoring extensive pipe recovery capabilities and world class preparation services.

In artificial lift which has been a traditional strength and bolster a tremendous installed base. We received two awards from Ted we are petroleum in Bahrain to deliver install and service beam pumping units and downhole pumps.

In India can awarded us a five year integrated artificial lift and production automation contract across its will go over in regulus activities invest in India.

The contract, which will commence in the second half of the year.

Will enable greater production optimization and helped drive collaboration between the operator and at service partners.

In our completions portfolio, we received a three year contract to provide cemented liner hanger sort of BP operated business in Azerbaijan with the potential for an increased scope in the future.

Superior running features combined with a high level of service quality and strong presence in the region were instrumental in securing this award.

For example, we recently formed a collaboration with subsea services that will change managed pressure drilling or MPD from an add on to seamlessly integrated part of the drilling rate.

The collaboration will integrate field proven Weatherford technologies, the rotating control device on the annual or isolation device with a remotely operated coolant system from subsea services. The results will be an industry first complete integration of MPV and typical riser auxiliary lines into a single automated connection for all drilling operations.

As we continue to drive innovation in this space, we took on more than five decades of leadership in MPD and expanded those capabilities to every part of the lifecycle with our recent commercialization of managed pressure wells.

These new solutions enable our customers to apply the same field proven technology of MPD to deliver high quality wells with fewer surprises by ensuring a stable wellbore with a comprehensive pressure management strategy.

With robust pressure control capabilities for every well phase, we increased production, while lowering well construction costs and well control risks.

The Maersk Viking is currently drilling with the Weatherford MPD system for a major operator in Malaysia.

This integration shows the strategic importance of collaboration where drilling contractors and provide significant MPD benefits to customers.

Similarly in tubular running services or Trs, we've taken our industry, leading position in field proven technologies, such as our premier offering of Barrow automated connection integrity and continue to deliver innovative and differentiated technology offerings.

Our soloist talked on monitoring solution is the latest enhancements to our market leading services to enable single person operation and simplified remote viewing while running tubing casing in the hole.

Traditional talked on monitoring systems require longer rig uptime and personnel must remain near the control cabinet on the rig floor significantly reducing efficiency.

With our solar solution.

Customers get the same accurate dark monitoring without the hassle of <unk> rig up all from a single Wi Fi enabled tablets.

<unk> service offering enables cross functional work on the rig floor by freeing up personnel to monitor dark while performing other essential rig operations.

This enhancement to our service offerings showcases our commitment to investing in innovation and technology throughout our portfolio.

It also provides incredible cost savings and safety improvements to our customers, while increasing our margins to drive growth and profitability.

We are also focused on leveraging our portfolio to support our customers' energy transition in ESG needs, where we continue to gain traction and prove our ability to adapt to changing industry needs.

We've supported geothermal activity for more than two decades, and our recent project on a geothermal well with Hamburg energy reinforces our competitive advantage.

I had the opportunity to personally visit the site a few weeks ago and came away with even greater excitement about the potential for geothermal in the future.

We deployed our Magnus rotary <unk> system from surface to total depth of the well drilling all three sections first with the system on this well type.

We also used market, leading evaluation tools to analyze and log both case and open hole sections and Siemens bumps.

This operation is positive proof that our existing market leading portfolio can help drive the energy transition forward.

<unk>.

Now turning to our view on the markets.

The multiyear up cycle is firmly underway driven by limited supply and increasing commodity prices.

The overall macro environment continues to improve and we anticipate growing demand for oilfield services from our customers.

In North America, we are strengthening our commercial focus to help drive market share and pricing gains.

We continue to see strong activity growth and increased customer spending supported by a favorable commodity price environment.

However, a combination of capital discipline by public E&ps global supply chain bottlenecks and a tight label labor market will constraint growth somewhat.

For example, as seen in our predominantly product driven production intervention segment of the U S. We continued to experience acute supply chain issues.

Nevertheless, we still expect to deliver positive topline and bottom line growth as our focus remains on growing up the work where it makes the most economic sense.

We recognize that there has been a significant increase in drilling activity in the U S and associated services over the past year. However, we are not chasing previously unprofitable work as we remain committed to our goal of only pursuing activity, where we believe we can generate margins across cycles.

Turning to international markets, we continue to see the trend of robust growth with increased activity and spending consistent with what we have stated before.

We expect international markets to continue that expansion as we witness capital deployments by growing number of operators.

We have put a significant focus on Latin America performance, including structure operations and business model and our first quarter revenue growth of 29% year over year.

Reflects the excellent progress we have made.

I'm also encouraged by the acceleration of activity in Asia and sub Saharan Africa.

These two markets were among the toughest hit during the pandemic and a natural pent up demand is being driven forward now.

Our focus continues to be on driving directed growth in our key markets and on the work necessary to drive execution excellence as we scale up for growth.

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

Thank you <unk> good morning, everyone and thank you for joining us.

My comments on the first quarter were primarily compare the results of the first quarter of 2021.

Consolidated revenues were $938 million, an increase of 13%.

Our operating income was $18 million compared to an operating loss of $13 million.

Net loss was $80 million compared to a net loss of $116 million adjusted.

Adjusted EBITDA was $151 million, an increase of 48%.

We have taken a $19 million charge, primarily related to the write downs of all our assets in Ukraine, excluding cash UK.

Ukraine was 1% of our revenues in 2021 and was included in our original full year guidance and the revenue has now been removed from 2022 guidance.

In Russia, we continue to operate in compliance with all sanctions and are diligently monitoring this situation this dynamic situation.

Consistent with our historical range of 5% to 7% that we have previously disclosed revenues in Russia were 6% of our total revenues in the first quarter of 2022.

Our net book value of our primary assets in Russia, excluding cash and not deducting accounts payable at March 31, 2022, or approximately $140 million.

Our full year outlook does include Russia with lowered expectations from our original guidance.

Given the ongoing uncertainties it is difficult for us to comment further.

This is intended to achieve a more efficient infrastructure to provide.

Excellent and product and service delivery, leading to increased customer satisfaction and growth.

As such we have recorded a restructuring charge of $20 million during the quarter primarily for this initiative.

Now, let's look at our segment breakdown.

During the first quarter drilling on evaluation vre revenues of $292 million increased by $56 million or 24% year over year, largely due to higher demand for managed pressure drilling and wireline services, primarily in Latin America, and the Middle East North Africa and Asia.

Segment, adjusted EBITDA of $59 million increased by $30 million or 103% year over year, primarily due to higher demand for managed pressure drilling and drilling services, mainly in Latin America.

Well construction and completion WCC revenues of $344 million increased by $21 million or 7% year over year increase primarily due to higher demand for segmentation products and activity in North America.

Segment, adjusted EBITDA of $67 million increased by $17 million or 34% year over year, mostly due to higher demand for segmentation.

And completion products with improvements primarily in the Middle East North Africa and Asia.

Turning to liquidity and cash flow.

We closed the quarter first quarter of 2022 with total cash of approximately $1 1 billion as of March 31, 2022 down $57 million sequentially.

Unlevered free cash flows of negative $47 million was down $194 million sequentially and free cash flow of negative $64 million was down $113 million versus the fourth quarter of 2021.

Primarily due to working capital requirements.

The characteristics of an up cycle are reflected in our first quarter working capital requirements as cash flow swung by approximately $140 million versus the fourth quarter of 2021. However, we are confident in our team's ability to peso of working capital requirements with our operating performance to capture positive earnings and.

Margin expansion in this cycle.

Across the segments <unk> forecasted to deliver mid single digit growth WCC to deliver in the mid to high single digits and PR in the high single digits. Adjusted EBIT margins are currently expected to be 16% to 65%.

Unlevered free cash flow is expected to be positive.

We are targeting breakeven free cash flow onto our current activity forecast, which could turn negative if the indications for activity levels in the second half of the year exceed our current expectations.

We expect capex to be in the range of $30 million to $40 million in the second quarter.

Full year 2022 consolidated revenues are expected to grow by high single low double digits above 2021 levels.

Across the segments DRA is forecasted to deliver low teens growth WTC to deliver in the high single digits and PRA in the mid to high teens.

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

As noted in our fourth quarter remarks, Capex will be at least double 2021 spending and will range from 175 million to $200 million full.

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

Expect to come mainly from the second half of 2022.

This outlook incorporates the impact of changes for Ukraine, and Russia previously commented on notably this outlook reinforces the strength of our franchise and the broadening of the increasing demand for oilfield services, which has enabled us to maintain our original guidance by already offsetting this impact with demand from our other regions.

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

Thanks Keith.

We are excited about our growth prospects as we continue to see strong macro trends and are gearing up on our commercial focus to drive pricing and share gains in the coming quarters.

And I want to update you on our 2022 focus areas, which will continue to drive rigor and discipline across the organization.

We have been very clear that we treat restructuring as an investment and have a roadmap to drive improvements over the coming quarters and years.

Rather than pursuing share at a global level, we are focused on areas of critical mass in driving the intersection of geography and product line to have each be economically independent.

Our third focus area is excellent in execution are critical component of supporting our growth.

Built a new quality function to instill the discipline accountability needed to execute with a lean mindset throughout our enterprise.

Finally simplification remains an enduring focus area for our company, we continue to evaluate our organizational and operational structure to maximize efficiencies.

We believe like our peers that we are in a multiyear up cycle driven by global energy security concerns and economic growth.

While there are clear risks caused by inflation, increasing interest rates supply chain bottlenecks isolated, but serious COVID-19, lockdowns and geopolitical conflict, we believe energy security and supply will remain a focus priority as a result, we should see further momentum in the second half of 2022 and 2023.

Thank you we will now begin the question and answer sessions.

To ask a question you May press Star then one on your telephone keypad.

So just to reconfirm, we ask that you. Please pickup your handset before pressing the keys.

The charter question. Please first starting to.

Brody.

First question comes from Edward <unk> with Piper Sandler. Please go ahead.

Thank you good morning.

Good morning Ann.

Recently, we've heard more.

Commentary from your peers this quarter that.

The improved pricing environment.

Internationally certainly not on the same frequency is.

The very big price increase that we're seeing in the more cyclical.

Yes service lines, but.

There has been a change of more positive change in town with international off as pricing and I just wanted to get your perspective on that it would seem to me that youre not youre still not dialing in at least from surface appearances significant price increase into the margin guidance that you've given us for this year.

So as that.

I guess two are false and then where do you think maybe the upside could be as we get.

Deeper into the cycle and maybe in the second half of this year is that environment feeds through into the system more broadly.

Sure. So Ian look I think first of all the tone is getting more constructive look we've been talking about this for a while we've seen green shoots across the second half of last year coming into the first quarter as well and we are having a lot of discussions with customers and the overall tone is constructive.

There is a I'll call it a supply crunch, especially in critical specialty services and where we have differentiation that's something that we really have the ability to push pricing forward.

I would say they'll look as I mentioned in some of my prepared remarks, the margin expansion that we have seen in Q1 is yellow.

Part of it is from pricing its not we havent broken it out explicitly because there are a lot of confounding in office gating factors, but pricing has certainly been a contributor to that and we expect it to continue to be a contributor to that.

Two other things, though that I think are relevant as we think about the rest of the year.

First is we do have across the board are significant inflation challenge that all of US are working through and I. Our perspective has always been to be a bit more prudent and responsible about that because we don't know the full extent of that it has been something that has been on the radar now for at least nine months and it has escalated it has not yet.

It really decelerated and so it's a very fast moving very evolving situation and.

And when you couple that with the supply chain bottlenecks that youll have it does create a tough situation, especially on logistics costs and stuff like that so we do expect a part of that pricing.

Movement upward two will get offset by by inflation and that's still baked into our guidance which is.

More of the call. It additional juice that we were going to get from pricing into that to make sure that the overall thesis remains intact.

Thank you and our next question comes from Doug <unk>.

Please go ahead.

Thanks, I wanted to touch base on the DRG revenue guidance, just taking a look at it.

Full year guidance for low teens growth seems to imply very modest growth from the second quarter level the.

The rest of the year is there anything in particular you'd point to that drives that outlook, because achieving mid teens seems very very realistic gift second quarter revenue growth say mid single digits.

So I think it's a function of this business has done very well over the past year. It is probably one of our white has expanded margin businesses, we've done a fair bit to reposition this business outside the U S move assets as you know, particularly for our drilling services business.

So it's not that we are <unk>.

Forecasting.

To stop growing it's just a higher base and so we have.

<unk> taken that into consideration. We are also seeing that the MPD assets, India are now almost fully.

Deployed the ones that we have we have a fair bit of Capex in the pipeline to come through which will then get deployed more towards Q4 and Q1 of 2023. So yes, I think we appreciate that we stepped up and really improve the DRA business, but we're also looking to maintain that.

Through the year, but it won't be the same kind of growth rate that you've seen and if I could just add Doug look I think.

First of all I think living in a world where low teens growth.

Considered modest.

Have a nice change.

But look we have been very clear and deliberate and the fact that we are not going to go chase volume and what we're not doing in the company anymore is building up capex with the expectation that we will get the volume and we certainly could but we recognize that we've got to manage the business through cycles. So we are being very very prudent about where we did.

Focus on and Thats, what we are focusing the company on.

Okay, that's fair.

Jumping to Prs <unk> margins, they were down year over year.

Sure. So look I think a couple of things on that.

First is the whole industry is having supply chain bottlenecks.

And we are not immune to that we have had a couple of specific things regarding our operations as well one of the Lockdowns in China that have affected some of our sources of supply and has caused a bit of a perturbation look secondly, freight and getting ships booked and ship sailing.

<unk> has been a challenge and that has been something that affected us fairly significantly in the first quarter. We had one particular incident.

Fairly significant that has pushed shipments out to the second quarter and then beyond so it's really a combination of China Lockdowns logistics, and then just sort of broader industry challenges, but look we hope that by the second half of the year. These do get alleviated we've looked at alternative.

Sources, where possible getting more of a longer range.

Forecast and working with our customers to prioritize shipments and manage through that.

Okay, and then final one just on working capital I think its very understandable that it was a sizable use of cash in the first quarter, just given the seasonality and expected growth.

Just hoping to get some context, how to frame the potential outcomes.

For working capital and free cash flow for the year.

Sure.

So.

Our thesis still holds at.

At this point from a forecast that we should have net positive free cash flow for 2022.

We are.

Like everyone else in the industry.

Investing in working capital in Q1, and I think that as we get more indications about what the second half looks like then we should also probably expect further investments in Q2, but not to do.

Probably the same significance as Q1, because it was it was really a <unk>.

Strong step up.

In Q1.

When we think about it in terms of the.

For the full year.

We're thinking that networking capital across the full year.

It's probably going to be a use.

And so we're thinking that that could probably be somewhere in the.

Probably a $20 million to $40 million use across the year.

We're still trying to sort it through to.

To ensure that all of the things that we're doing operationally to manage inventory the Singapore, where we are.

Kickoff the the fulfillment initiative, which is to realign or nodes that should also start to take effect in the second half of the year. So that's what we see from where we are today, but everything is still positive for the organization. Because this is all activity an upside driver.

So it sounds like free cash flow could still approach $100 million for the year is that a fair characteristic that's still where we're looking at it.

We've kind of.

Set that target out there.

Models say that we should be able to achieve it.

A question of who do we grow with it depends on.

Of course, NOC versus Iot growth those are different payment terms. So if there is a range of things that affect that but we still see at a range of.

Towards the $100 million of center cut for the full year of 2002 and again Doug.

Doug what I would say is look again, we've got to factor in.

We put in our prepared remarks, we've got a really modulate that and be careful about it we are still very committed to positive free cash flow for the year. We are confident we're going to get there, but a little bit of that timing due to the Q3 might might get affected just a tad bit.

Thank you.

And ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press Star then the one today's next question comes from Gregg Brody Bank of America. Please go ahead.

Good morning, Greg.

Good morning, This is Dan Leonard on for Gregg Brody.

For taking my questions.

So first question is there do you guys have any update on refinancing the credit facility and the remaining 2024 or could you just give us some details on how youre thinking about that today.

Sure.

So this is on a bit.

Great question as usual.

We're really.

Now more confident than ever that we are closer to getting the type of facility that we desire.

We're working through with our banks and given that the structure of the industry has now kind of shifted right. So we have.

More demand than supply for the underlying commodity we have investments coming back to drive.

And then for security so all markets are feeling like energy in its current form.

There is probably a.

A place to invest and so were feeling fairly good about that I think the underlying question, though is.

And at the same time.

Even without the facility in.

In place, we have the balance sheet liquidity to fund and grow into the cycle.

In terms of the 'twenty 'twenty four is the stub.

That's a function of free cash flow generation.

We're thinking that we would rather.

Pay that off from free cash flow over the next few years if thats.

Still out there, but at the same time if markets.

Re rate all of us again.

Weatherford based on this performance the way it did last fall and we see the opportunity for liability management, we will absolutely take it but I think our first priority as we said with the stub is to de lever and we hope to take that down at a free cash flow or if the revolver comes in and then we can use some of the cash on the balance sheet.

Then we will do that so the thesis is still the same and Savannah Skittish look I think as we have pointed out I know youre all aware, but I think it's worth repeating we've been very very clear about where we're going to use the cash that remains our first priority. We're going to we're going to drive that we have seen a demonstrable proof of that last year and at the same time look we are very.

Very clear that we are not going to put in place an instrument that doesn't work for the company longer term. So this is not a question of Hey, we can just go get something and we want to make sure that we are really getting something in place that works for us across cycles fits the profile of the company that we are today, which is predominantly an international company with them.

A lot more focus there but operates a significant portion of North America as well. So it has to work, but we are.

In a much better place today, where we are not in a position where we have a forcing function to drive that so we want to make sure that we are focused on the long term and getting the best outcome for everyone from that standpoint.

Okay. Thank you so much sounds good.

I have some questions on cash flow items on.

On the last earnings call you had said.

Number between 30% to $50 million for restructuring charges is that still how we should be thinking about it for the full year.

I think when we think about it.

Still the right number for the full year.

I think you can keep that there.

<unk>.

Gone out this quarter and taken out $20 million charge for a new restructuring program.

I mean, it's a smaller charge and compared to prior year, So there's probably less the fixed but probably more targeted.

Fixing our fulfillment areas so with the.

The $20 million charge, we don't see the need.

Need to step up the cash forecast outflow for that so I think that that our original number of sales calls.

March towards the $100 million of positive free cash flow.

Okay. Thank you and then my last question is on.

On cash taxes, how should we think about that for the rest of the year.

So I think we haven't changed our viewpoint, we do see a stepping up year to year.

Last year, I think we spent about 60% to $65 million in cash taxes. This year.

I think we've said, it's going to be somewhere in the.

No.

$80 million to $100 million range.

In terms of the step up.

And that is a function of the way our cash taxes flow in terms of beams.

In property taxes off revenues in some of the markets that we operate so as we expand that should go up but I think it should be commensurate.

<unk>.

It wont go up unless there's more revenues for people to withhold from.

Okay.

Thank you guys. So much thank you.

Yes.

Our next question is a follow up from an <unk> with Piper Sandler. Please go ahead.

Thanks for bringing me back I'm, sorry, My line dropped.

In the middle of answering my first question.

<unk> I was interested in your comments around the integrated MPD approach and I wanted to ask if you could expand on that and what the upside is to weatherford and going with MTV as an integrated <unk>.

Component of.

The rig as opposed to an Ala carte add on and how that changes.

Yes.

How about you capture.

That upside.

Yeah look great Great question, Ian and something that we are very excited about.

One of the things about services like MPD as they've always been one of the challenges with adoption for customers has been it's been a complete discrete add on and especially when you are talking about an offshore kind of an environment. It's something that they have to buy separately, it's more people that need to go with limited or <unk>.

Commendation, and just make the whole thing becomes a significant challenge.

And it's a significant capital deployment. There has also been the set of commercial contracts between drilling operators the end user and service providers like ourselves on.

Sort of how do you manage that whole thing. So I think the integration solved a lot of issues and.

And it really becomes a better customer outcome first of all you've got.

The rigs that are already deployed with the right capital out there you can now cross trained personnel to reduce the demands all facts and you've got the ability to.

Engineer and design the product so that you set it up in a way that is most conducive for longer term efficiencies for the customer and look for US. We really think this is a great approach and.

This is incremental to the way, we think about MPD from a financial standpoint.

It reduces our capital outlay, because you've got a better planning around it you have got an ability to share to a certain extent and the commercial construct becomes one of efficiency sharing and so we are really creating a different value proposition for customers. So we think this will pay off in significant dividends over the next.

Coming quarters and years and we are excited just given some of the examples we've seen so far.

Super Thanks for expanding on that.

Last one for me Keith.

You have a few adjustments on EBITDA this quarter.

We have identified obviously the restructuring.

The $90 million that was mainly the impairment.

In Ukraine, but the other one was the $16 million of other expense. So I wanted to ask about that and if you could guide on any other exceptional add backs that we should think about the rest of the year. Thanks.

Sure. So the other expense went up a little bit from the.

The prior quarter was where we were.

Our roughly 10 to 16 and part of that was driven by a few more charges for Lcs in one of the things and also we had some FX volatility.

That had to go.

Flow through that line.

Got it thanks and then.

Going forward that should be.

So less material item.

It is a less material item I think.

If we look at where it was.

A year ago quarter at four we closed the year with a 10, it's a small it's a small line item, but it.

It should not surprise us going forward.

Got it.

Gentlemen, I appreciate it.

Thanks Ian.

Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to management for any closing comments.

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

Q1 2022 Weatherford International PLC Earnings Call

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