Weatherford International(US:WFRD)2022-10-26 18:35Financial Data and Key Metrics Changes - Third quarter 2022 revenue was $1.12 billion, up 5% sequentially and 19% year-over-year, driven by higher drilling and evaluation activity [7][24] - Operating income was $121 million, compared to $104 million in Q2 2022 and $71 million in Q3 2021 [24] - Net income was $28 million, compared to $6 million in Q2 2022 and a net loss of $95 million in Q3 2021 [25] - Adjusted EBITDA was $214 million, an increase of 15% sequentially and 20% year-over-year, with adjusted EBITDA margins at 19.1%, up over 160 basis points sequentially [25][31] Business Line Data and Key Metrics Changes - Drilling and Evaluation (DRE) revenues were $348 million, up 10% sequentially, with segment adjusted EBITDA of $85 million, an increase of 23% sequentially [26][27] - Well Construction and Completion (WCC) revenues were $391 million, up 2% sequentially, with segment adjusted EBITDA of $78 million, an increase of 16% sequentially [28] - Product and Intervention (PRI) revenues were $357 million, up 3% sequentially, but segment adjusted EBITDA decreased by 3% to $66 million due to a change in product mix [29] Market Data and Key Metrics Changes - North America business grew 11%, while international growth was 3% [7] - The company expects moderate growth in 2023, with strong fundamentals in the Middle East and Latin America [20][41] Company Strategy and Development Direction - The company is focused on margin expansion, free cash flow generation, and operational improvements, with a goal of achieving high-teens EBITDA margins [8][40] - A new business model has been developed to leverage technology differentiation and improve customer outcomes [17][38] - The company is committed to addressing structural issues and improving capital allocation decisions [57][69] Management's Comments on Operating Environment and Future Outlook - Management acknowledges inflationary pressures and supply chain bottlenecks but remains confident in the ability to deliver margin expansion and growth [8][19] - The outlook for 2023 includes expectations of double-digit revenue growth and continued margin expansion [41][42] Other Important Information - The company generated $133 million in free cash flow in Q3 2022, bringing year-to-date free cash flow to $128 million [10][31] - A new credit facility was established, allowing for improved liquidity and flexibility in capital allocation [32][33] Q&A Session Summary Question: How much of the recent awards are incremental versus extensions? - Management indicated that the recent awards are a mix of both, with many being extensions but with increased share and margins due to better costs and pricing [45][46] Question: How do supply chain issues affect growth next year? - Management stated that they do not foresee supply chain issues constraining growth, emphasizing a targeted approach to capital allocation [60][62] Question: What are the capital allocation priorities moving forward? - Management highlighted a focus on operational flexibility, optimizing working capital, and potential returns to shareholders in the future [56][57] Question: Any updates on operations in Russia? - Management confirmed that there are no changes in operations in Russia, maintaining the previously stated position [70] Question: Will OPEC production cuts impact long-term decisions? - Management believes that OPEC decisions will not significantly impact long-term investment plans, citing ongoing investment in the Middle East [71]