Weatherford International plc (WFRD)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $1.193B, down 12% YoY and 11% QoQ; diluted EPS was $1.03. Adjusted EBITDA was $253M (21.2% margin), reflecting broad market softening, especially Mexico, UK and North America .
• Management lowered FY 2025 guidance: revenue to $4.6–$5.0B (from $5.1–$5.35B) and adjusted EBITDA to $975M–$1.1B (from $1.2–$1.35B), citing uncertainty from tariffs, OPEC+ supply and Mexico; Q2 guidance: revenue $1.165–$1.195B, adjusted EBITDA $245–$265M .
• Cost actions accelerated: >1,000 headcount reductions since Q3’24 and $29M restructuring in Q1; net leverage remains ~0.5x with ~$1.3B liquidity. Dividend of $0.25/share maintained and ~$53M of buybacks in Q1 .
• The quarter modestly beat S&P Global consensus on both revenue ($1.193B vs $1.192B*) and EPS ($1.03 vs $1.00*); estimate cuts likely near term given lowered FY guidance and macro uncertainty. Values retrieved from S&P Global.
• Strategic pivots: divested Argentina Pressure Pumping and certain wireline operations; signed AI partnerships (AIQ, AWS) to enhance digital production optimization and software distribution .

What Went Well and What Went Wrong

• What Went Well

  • Middle East/North Africa/Asia held up YoY (+1%) with continued contract wins and technology deployments (e.g., Petrobras OptiROSS RFID sleeve, ForeSite power regenerative drives) .
  • Strong cash discipline: Cash from operations $142M and adjusted free cash flow $66M despite revenue declines; net working capital efficiency improved to 25.2% (from 26.1% in Q1’24) per call .
  • Capital returns continued: $71M returned (dividends + buybacks) in Q1; dividend reaffirmed ($0.25/share), opportunistic debt repurchase ($34M of 8.625% 2030 notes) .
  • Quote: “Margins must be defended… The dividend is sacrosanct [and] will be maintained” — CEO Girish Saligram .

• What Went Wrong

  • Mexico activity fell ~60% YoY vs prior expectation of 30–50%, driving steep LatAm declines (Latin America revenue -35% YoY and -23% QoQ) .
  • Broader softening: North America down 4% QoQ; Europe weakness amid UK policy backdrop; sequential international revenue -13% .
  • Margin compression: Adjusted EBITDA margin fell to 21.2% (from 24.3% in Q4’24 and 24.7% in Q1’24) on lower volumes, project start-up costs and partial under-absorption of headcount .

Financial Results

Values retrieved from S&P Global for cells marked with *.

Segment performance (Revenue and Segment Adj. EBITDA):

Geographic revenue mix:

Cash flow and balance KPIs:

Estimate vs. Actual Comparison (S&P Global consensus):

Values retrieved from S&P Global for cells marked with *.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “The first quarter was marked by significant market softening across key geographies… delivering results inline with expectations.” — CEO Girish Saligram .
• “Recent U.S. tariffs along with retaliatory tariffs have added significant uncertainty… we are in a distinctly different phase of the cycle.” — CEO Girish Saligram .
• “Since Q3 2024, we have reduced our head count by over 1,000 and our annualized personnel expenses are already down by over $100 million.” — CEO Girish Saligram .
• “The dividend is sacrosanct and will be maintained… Our share repurchase program is pragmatic, and we aren’t retreating.” — CEO Girish Saligram .
• “Liquidity at approximately $1.3 billion… net leverage ~0.5x; confident in managing through the cycle.” — IR Luke Lemoine .
• Strategic moves: divestitures in Argentina pressure pumping and wireline; AIQ and AWS agreements to scale AI-enabled production optimization and cloud modernization .

Q&A Highlights

• International/MENA outlook: Stability in Kuwait/UAE/Oman; potential Saudi rig count reductions; ex-Mexico international could be down low single digits at high end of guidance .
• Mexico trajectory & collections: Assumes flattish at current low levels; potential uptick late-year; collections timing remains the biggest working capital variable .
• Tariff impacts: Hard to quantify; most pronounced risk in PRI (Artificial Lift) with import cost spikes; DRE tools movement could face CapEx/timing pressure; modest WCC impact .
• Cost program runway: Beyond headcount — fulfillment, shared services, ERP-enabled process efficiencies; margin lift potential 25–75 bps per year over next 2–3 years if flat environment .
• Capital deployment: Continue dividend and buybacks; opportunistic debt repurchases; consider small tuck-in M&A as uncertainty may create opportunities .

Estimates Context

• Q1 2025: Revenue beat ($1.193B vs $1.192B*), EPS beat ($1.03 vs $1.00*). Values retrieved from S&P Global.
• Prior quarters: Q4 2024 revenue miss but EPS beat; Q3 2024 revenue miss but EPS beat. Values retrieved from S&P Global.
• Implications: With FY guidance lowered and macro uncertainty (tariffs, OPEC+ supply, Mexico), sell-side models likely to reset down for 2H’25 revenue/EBITDA, while preserving margin resilience assumptions (~low-20s EBITDA margins) given cost actions .

Key Takeaways for Investors

• Near-term: Expect muted 2Q sequential trends as divestitures and Canada breakup offset Middle East/Asia project startups; stock reaction likely driven by FY guide-down magnitude and tariff headlines; watch Mexico payment cadence .
• Medium-term margin defense: Management is prioritizing margin protection, structural cost and working capital — despite lower volumes, EBITDA margins guided to low-20s for FY’25 .
• Portfolio quality upgrade: Argentina pressure pumping exit reduces capital intensity and supports FCF conversion; remaining Argentina focus on Vaca Muerta with MPD, completions and artificial lift .
• Digital optionality: AIQ and AWS partnerships position WFRD to monetize high-margin digital/production optimization at scale (Modern Edge, Unified Data Model, Launchpad) — potential counter-cyclical tailwind .
• Capital returns resilient: Dividend maintained; buybacks continue under $500M authorization; liquidity ~$1.3B and net leverage ~0.5x provide flexibility through the cycle .
• Risk monitor: Tariff regime and retaliatory measures, UK policy drag, Saudi rig activity, Mexico collections. These are the key levers behind FY’25 ranges and estimate revisions .
• Actionable: Position for estimate cuts but watch for upside surprise if tariffs ease and Mexico stabilizes; digital wins and Middle East project start-ups could support sentiment into 2H’25 .