Weatherford International(US:WFRD)2025-04-23 13:30Financial Data and Key Metrics Changes - The first quarter results were in line with earlier expectations, but activity levels softened further in key segments and geographies [9] - Adjusted free cash flow for the quarter was $66 million, with a free cash flow conversion rate of 26.1% compared to 24.4% in Q1 2024 [10][23] - Adjusted EBITDA margins for Q1 were 21.2%, impacted by lower revenues and project startup costs [11] Business Line Data and Key Metrics Changes - North America saw a sequential decline of 4%, while Europe softened due to operator cutbacks in the UK [10] - The Middle East and Asia regions experienced year-on-year growth, demonstrating resilience [10] - The company successfully delivered advanced services in the UK North Sea and deepwater Brazil, showcasing technology adoption [12] Market Data and Key Metrics Changes - Activity in Mexico is expected to decline around 60% year-on-year, worse than the previously anticipated 30% to 50% [10] - The overall international market has softened, with significant drops in Mexico and continued reductions in U.S. land activity levels [14] - The company anticipates a broad-based slowdown in the second half of the year due to global trade reductions and increased supply [18] Company Strategy and Development Direction - The company is focused on maintaining margins and not chasing market share without value [29] - A significant reduction in gross debt by approximately $1 billion has strengthened the balance sheet [30] - The company is adapting its cost structure and has reduced headcount by over 1,000, with annualized personnel expenses down by over $100 million [16][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future but acknowledged the changed market conditions and uncertainty [29] - The outlook for 2025 includes expected revenue declines of high single to mid double digits in North America and low double to mid double digits internationally [20] - Management remains hopeful for a milder spending reduction compared to previous cycles due to industry discipline [16] Other Important Information - The company has divested its Argentina pressure pumping and wireline businesses to focus on the Vaca Muerta region [19] - The proceeds from divestitures will be used to enhance the portfolio and return cash to shareholders [19] - The company plans to maintain its quarterly dividend of $0.25 per share and continue its share repurchase program [11][30] Q&A Session Summary Question: Insights on international markets and MENA trends - Management noted that international markets, particularly MENA, tend to be more stable, with ongoing robust spending patterns in regions like Kuwait and the UAE [37][40] Question: Duration and severity of the downturn - Management indicated that the current downturn is expected to be milder and not universal, with different causes in different regions [43][44] Question: Impact of divestitures on guidance - The divestitures are expected to impact revenue by approximately 100 to 300 basis points, with adjustments made for North America and other regions [55][56] Question: Use of proceeds from divestitures - Proceeds will enhance overall liquidity, support dividends, and allow for opportunistic debt reduction and potential acquisitions [61][62] Question: Potential tariff impacts - Management stated that quantifying tariff impacts is difficult at this stage, but they expect a degree of uncertainty leading to reduced activity levels [106][107] Question: Digital spending outlook - Management believes that digital products focused on production optimization will remain a significant opportunity, despite potential reductions in discretionary spending [110]