Weatherford International plc (WFRD)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 revenue was $1.232B (+2% q/q, -13% y/y) with adjusted EBITDA of $269M and margin expansion to 21.8% (+74 bps q/q), while diluted EPS was $1.12 (down 40% q/q), reflecting stronger operations but higher tax and other expense; results were above management’s guidance range per CEO commentary.
• Geography mix: International revenue rose 3% q/q to $989M, led by Latin America (+10% q/q) and MENA/Asia (+2% q/q); North America was +1% q/q, with Canada offsetting U.S. Land softness.
• Balance sheet/liquidity strengthened: credit facility expanded to $1.0B, new $1.2B 2033 notes and tender for $1.3B 2030 notes, ratings upgraded; liquidity ~$1.6B and net leverage ~0.5x.
• Q4 2025 guidance: revenue $1.245–$1.280B, adjusted EBITDA $274–$287M, FCF flat to slightly up vs Q3, capex trending to 3–5% of revenue; management noted midpoint EBITDA improved versus prior.
• Near-term stock catalyst: execution despite soft macro, visible Q4 revenue/EBITDA trajectory, progress on Mexico collections (first payment since early 2025), and digital/AI launches (Industrial Intelligence) could drive sentiment; pricing pressure pockets and Latin America/Mexico cash timing remain watch items.

What Went Well and What Went Wrong

What Went Well

• EBITDA margin expanded >70 bps q/q to 21.8% on cost actions and mix, exceeding guidance commentary; adjusted free cash flow reached $99M despite Mexico payment delays. “Our swift and decisive actions… ramp up of margins… exceeded our guidance range.”
• DRE margins improved q/q (24.0% vs 20.6%), with Latin America and Wireline strength; CEO highlighted fall-through in service-oriented segments.
• Strategic/tech momentum: 20+ product launches; “Weatherford Intelligence” digital platform; Petrobras $147M TRS contract and multiple MENA/Asia wins underpin pipeline.

What Went Wrong

• EPS fell to $1.12 (-40% q/q) and net income margin compressed to 6.6% amid higher tax and other expense; operating income declined 25% q/q.
• Year-over-year revenue decline (-13%) with segment pressure: WCC -8% y/y margins -296 bps; PRI -12% y/y margins -427 bps, reflecting Latin America divestiture and demand softness.
• Pricing/tariff pressures and pockets of weakness (e.g., UK; undifferentiated services in Middle East) are diluting margins; management flagged rising pricing pressure and tariff pass-throughs.

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

Segment Breakdown (Revenue, Segment Adj. EBITDA, Margin)

Revenue by Geography

KPIs and Cash Metrics

Results vs S&P Global Consensus

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO on execution and beat vs guidance: “Our swift and decisive actions… provided momentum… ramp up of margins and commercial wins. The financial performance, which exceeded our guidance range, was a direct result of the rigor and effectiveness of our operating paradigm.”
• On digital strategy: “I am particularly excited about Intelligent Completions and the introduction of Weatherford Intelligence, a single, powerful platform that drives efficiency, automation, and smarter decision-making.”
• On market outlook and cost discipline: “We are absolutely committed to not chasing market share at the expense of unfavorable cash outcomes… pricing pressure in commodity services, notably in the Middle East, but less in differentiated lines.”
• On liquidity actions: “We expanded our credit facility to $1,000,000,000… announced $1,200,000,000 notes due 2033… lowered our cash interest by approximately $31,000,000 per year.”
• On free cash flow trajectory: “We’ve set $100M as a floor for Q4 FCF… reasonable path to be higher as Mexico payments normalize; aiming for FCF conversion well north of 40% into 2026.”

Q&A Highlights

• Pricing pressure and margin protection: Management will avoid competing on undifferentiated services; margin expansion remains priority despite Middle East pricing pressure.
• Saudi outlook: Bottoming through 1H26 with gas-led recovery; rebound expected in 2H26; Saudi remains the largest long-term opportunity.
• Mexico payments/working capital: First collection since early 2025 received in October; government support for customer; working capital targeted at 25% of revenue post-normalization.
• Q4 FCF guide: $100M+ with conservatism; upside tied to Mexico receipts; longer-term FCF conversion targeted >40% and ultimately ~50% with structural improvements.
• Cost optimization/ERP: ~2,000 headcount reduction and ~$145M support cost savings; multi-year cloud ERP roll-out (2027–2028) to enhance efficiency and margins.

Estimates Context

• Revenue beat vs S&P Global consensus by ~$55M; EPS modest miss (-$0.035); EBITDA slight beat. Estimates breadth: 8 revenue and 6 EPS contributors. Adjustments to EPS estimates likely reflect higher tax and other expense vs prior models. Values retrieved from S&P Global.*
• Implication: Sell-side models should raise Q4 revenue/EBITDA midpoint and incorporate working capital normalization cadence and tariff/pricing pressure into segment/geography assumptions.

Key Takeaways for Investors

• Margin defense is working: cost actions and mix lifted adjusted EBITDA margin to 21.8% amid macro softness; watch for continued margin stability in Q4 as guidance implies further improvement.
• Revenue trajectory improving sequentially with Latin America stabilization and MENA/Asia growth; Q4 guide calls for slight top-line uptick led by Brazil, North America offshore, Kuwait, Oman, Iraq.
• Liquidity and capital structure optionality increased (facility expansion, refinancing, ratings upgrades), lowering cash interest and supporting continued buybacks/dividends.
• Digital/AI portfolio (Industrial Intelligence, Weatherford Intelligence) plus intelligent completions product cycle offer margin-accretive, capital-light growth vectors over the next 12–24 months.
• Mexico collections are the swing factor for FCF near-term; first payment received, but management maintains conservative posture—upside exists if cadence accelerates.
• Segment playbook: DRE margin sensitivity to volume favors upside as activity stabilizes; WCC and PRI require vigilance on pricing/tariff impacts, particularly in Middle East and Latin America.
• 2026 setup: Management expects soft 1H26 with 2H26 rebound driven by offshore/international; focus remains on sustaining >20% margins and pushing FCF conversion >40%.

Additional Context: Q3-Specific Press Releases and Commercial Highlights

• FWRD 2025 conference and Industrial Intelligence launch showcase edge-enabled automation, unified data models, and AI-powered tools (WASP, MetaFlow VFM, Synsera, Canvas, Doppl Digital Twin), reinforcing digital strategy.
• Strategic MPD training partnership with Maersk Training to deliver IADC-accredited programs widens capability and customer adoption of Managed Pressure Wells.

Notes:
- All document-based figures and statements include precise citations.
- Consensus estimates are from S&P Global; values retrieved from S&P Global.*