Weatherford International(WFRD) - 2020 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements The unaudited statements show a significant net loss and asset impairments, raising substantial doubt about the company's going concern status Condensed Consolidated Statements of Operations | (Dollars in millions, except per share) | Three Months Ended 3/31/2020 (Successor) | Three Months Ended 3/31/2019 (Predecessor) | | :--- | :--- | :--- | | Total Revenues | $1,215 | $1,346 | | Operating Loss | $(822) | $(301) | | Net Loss Attributable to Weatherford | $(966) | $(481) | | Basic & Diluted Loss Per Share | $(13.80) | $(0.48) | Condensed Consolidated Balance Sheet Summary | (Dollars in millions) | 3/31/2020 | 12/31/2019 | | :--- | :--- | :--- | | Total Current Assets | $3,374 | $3,453 | | Total Assets | $6,165 | $7,293 | | Total Current Liabilities | $1,644 | $1,672 | | Total Liabilities | $4,302 | $4,377 | | Total Shareholders' Equity | $1,863 | $2,916 | Condensed Consolidated Statements of Cash Flows Summary | (Dollars in millions) | Three Months Ended 3/31/2020 (Successor) | Three Months Ended 3/31/2019 (Predecessor) | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $30 | $(249) | | Net Cash Provided by (Used in) Investing Activities | $(47) | $36 | | Net Cash Provided by (Used in) Financing Activities | $(8) | $208 | - The company recorded significant long-lived asset impairments of $640 million and goodwill impairments of $167 million during Q1 2020[38] - Management raises substantial doubt about the Company's ability to continue as a going concern within the next 12 months[23][28][30] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) The company's performance was severely impacted by the pandemic and oil market turmoil, leading to revenue decline and cost-cutting measures - The company's outlook is materially negative due to the dual impact of the COVID-19 pandemic and OPEC+ actions creating an oversupply of oil[101][102][104] - In response to the market crisis, Weatherford has implemented aggressive cost-saving actions, including a 20% pay reduction for management and a 50% cut in planned 2020 capital expenditures[107] - Despite cost-saving measures, the company expects a forthcoming breach of its ABL Revolving Credit Agreement covenants, raising substantial doubt about its ability to continue as a going concern[105][113][114] Segment Performance vs. Prior Year | (Dollars in millions) | Q1 2020 Revenues | Q1 2019 Revenues | % Change | Q1 2020 Operating Income | Q1 2019 Operating Income | | :--- | :--- | :--- | :--- | :--- | :--- | | Western Hemisphere | $588 | $726 | (19)% | $29 | $9 | | Eastern Hemisphere | $627 | $620 | 1% | $18 | $20 | | Total Segments | $1,215 | $1,346 | (10)% | $47 | $29 | - Total revenues for Q1 2020 were $1.2 billion, a 10% decrease from Q1 2019, primarily driven by a 19% decline in the Western Hemisphere[121][129] Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure has not materially changed, except for a significant decrease in the fair value of its debt - There have been no material changes in market risk exposure since year-end 2019, other than a significant decrease in the fair value of the company's debt, which fell from $2,252 million to $1,260 million[177][69] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2020[178] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[179] PART II – OTHER INFORMATION Legal Proceedings Ongoing litigation matters, including shareholder and patent lawsuits, have been delayed due to the COVID-19 pandemic - Details regarding ongoing legal proceedings are provided in Note 12 of the financial statements[181] - The company is involved in shareholder litigation, and many ongoing matters have been delayed due to court closures from the COVID-19 pandemic[73][75][78] Risk Factors The COVID-19 pandemic has severely impacted demand and liquidity, with an expected debt covenant breach threatening going concern status - The COVID-19 pandemic has significantly weakened demand and is expected to continue to have a substantial negative impact on financial condition[184] - The company expects to breach covenants under its ABL Revolving Credit Agreement within the next twelve months, which raises substantial doubt about its ability to continue as a going concern[191][192] - A breach of covenants could trigger an event of default, leading to an acceleration of debt obligations and potentially forcing the company into bankruptcy or liquidation[196][198] - The company faces extremely limited access to additional financing beyond its existing credit agreements[191][194] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the reporting period - None[198] Defaults Upon Senior Securities The company reports no defaults upon senior securities during the reporting period - None[199] Mine Safety Disclosures This section is not applicable as the company has no mining operations - Not applicable[200] Other Information Presentation materials used in discussions with senior note holders are filed as exhibits with this report - Presentation materials used in discussions with holders of unsecured senior notes are filed as Exhibits 99.1 and 99.2[201] Exhibits This section lists all exhibits filed with the report, including certifications and presentation materials - Lists all exhibits filed with the report, including Sarbanes-Oxley certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and presentation materials (Exhibits 99.1, 99.2)[203]