Weatherford International(US:WFRD)2024-02-07 18:37Financial Data and Key Metrics Changes - Weatherford reported a revenue growth of 19% for the full year 2023, with total revenues reaching $5.14 billion and net income of $417 million, reflecting a significant improvement of over 1500% year-over-year [34][7] - Adjusted EBITDA for the year was approximately $1.2 billion, with an adjusted EBITDA margin of 23.1%, an increase of 423 basis points [34][7] - In Q4 2023, revenue was $1.36 billion, a 4% sequential increase and a 13% year-over-year increase, with adjusted EBITDA of $321 million, up 5% sequentially and 21% year-over-year [34][36] Business Line Data and Key Metrics Changes - Drilling and Evaluation (DRE) segment revenues were $382 million in Q4, a decrease of 2% sequentially but a 16% increase for the full year [38] - Well Construction and Completion (WCC) segment revenues increased by 5% sequentially to $480 million, driven by higher activity in the Middle East, North Africa, and Asia [40] - Production and Intervention (PRI) segment revenues were $386 million, up 4% sequentially, primarily due to higher activity in digital solutions and international artificial lift [41] Market Data and Key Metrics Changes - International operations saw a 26% growth, while North America experienced margin growth despite a revenue decline in a weaker market [8][7] - Latin America was the highest growth region in 2023, with expectations for continued growth in the mid to high single-digit range in 2024 [16] - The Middle East is expected to lead growth in 2024, with high-teens growth anticipated, while Russia is expected to decline due to operational complexities [18][17] Company Strategy and Development Direction - The company aims for continued revenue growth and margin expansion, targeting 25% EBITDA margins by 2025 [21][22] - Weatherford is focusing on inorganic growth through selective acquisitions, having recently acquired two technology companies in the wireline space and a leader in well-decommissioning technology [24][23] - The strategic priorities for 2024 include organizational vitality, customer experience, lean operations, and financial performance [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued activity growth driven by international customer investment, despite recent market volatility [11] - The company anticipates a long-term upcycle in the energy sector, supported by significant investments in large projects [12][13] - Management highlighted the importance of geopolitical risks over broader macroeconomic themes as the primary concern for activity growth [18] Other Important Information - Weatherford's gross debt was reduced to $1.7 billion, with a net leverage ratio of 0.7x, marking the lowest level in over 15 years [31][47] - The company received credit rating upgrades from S&P and Moody's, reflecting improvements in operating performance and balance sheet [49] - CapEx for 2023 was $209 million, or 4.1% of revenue, with expectations for CapEx to remain around 5% of revenue in 2024 [46][52] Q&A Session Summary Question: Can you provide updates on projects in Saudi Arabia? - Management confirmed involvement in various projects, emphasizing a strong position in onshore services and integrated projects [56][57] Question: What are the strategic priorities moving forward? - Management indicated a shift towards a more offensive strategy, focusing on capital allocation, shareholder returns, and selective M&A opportunities [66][70] Question: How do you see margin expansion progressing in 2024? - Management expects gradual margin improvements throughout the year, with a target of exiting 2024 at around 25% EBITDA margins [86][88] Question: What is the outlook for offshore growth? - Management highlighted significant growth opportunities in offshore markets, particularly in intervention services and decommissioning [99][100] Question: How will acquisitions impact revenue growth? - Management clarified that while acquisitions contribute to growth, the overall revenue increase is primarily driven by existing operations and market opportunities [93][94]