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Weatherford International PLC (WFRD) Q1 2024 Earnings Call Transcript Highlights: Strong ...

  • Revenue: $1.36 billion in Q1 2024, up 15% year-over-year, flat sequentially.

  • Operating Income: $233 million in Q1 2024, up from $185 million in Q1 2023.

  • Net Income: $112 million in Q1 2024, compared to $72 million in Q1 2023.

  • Adjusted EBITDA: $336 million in Q1 2024, a 25% increase year-over-year.

  • Adjusted EBITDA Margin: 24.7% in Q1 2024, improvement of 206 basis points year-over-year.

  • Operating Cash Flow: $131 million in Q1 2024, up $47 million year-over-year.

  • Adjusted Free Cash Flow: $82 million in Q1 2024, up $55 million year-over-year.

  • CapEx: $59 million in Q1 2024, representing 4.3% of revenues.

  • Total Cash: Approximately $937 million as of Q1 2024.

  • Net Leverage Ratio: 0.6x at the end of Q1 2024.

Release Date: April 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Girish, with a little rounding, you hit 25% margins in 1Q, which has been an aspirational target for some time now. Can you talk about what you see the company doing outside of overall market revenue growth over the next 2 to 3 years? A: Girishchandra K. Saligram, President, CEO & Director of Weatherford International plc, highlighted that the company's confidence in pulling the margin target forward is due to the greater magnitude of outcomes from ongoing initiatives. He mentioned that once the 25% margin goal is stabilized, the company will continue to drive margins upward, focusing on productivity and commercialization of technology solutions.

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Q: Can you expand on the prospects for the OpEx versus the drilling and completion spending cycle as it relates to the company, particularly thinking about the longer-term growth prospects for PRI? A: Girishchandra K. Saligram discussed that OpEx spend is expected to continue increasing, with PRI eventually following the growth seen in DRE. He emphasized the focus on interventions, digital solutions, and plug-in abandonment, highlighting these areas as significant for future growth.

Q: How should we think about your M&A strategy going forward? Are there larger targets you might be interested in, or will it still be more of the tuck-ins? A: Girishchandra K. Saligram explained that Weatherford's M&A strategy remains focused on strategic fit, margin accretion, and cash generation, rather than pursuing specific sizes of acquisitions. Integration remains a priority to ensure any acquired company can be effectively incorporated into Weatherford's operations.

Q: How are you thinking about potentially returning capital to shareholders now that the balance sheet is in great shape? A: Arunava Mitra, Executive VP & CFO, indicated that Weatherford plans to announce a comprehensive capital allocation framework later in the year, which will include shareholder returns and continued debt reduction.

Q: Could you provide some color in terms of revenue synergies or cost synergies from the recent acquisitions? A: Girishchandra K. Saligram mentioned that the focus with recent acquisitions is on growth and scaling their solutions with Weatherford's international footprint. He highlighted the goal of building these acquisitions into significant platforms, leveraging Weatherford's existing capabilities and market presence.

Q: What are the next steps in your initiatives to drive margin expansion over the next 12 to 18 months? A: Girishchandra K. Saligram outlined that the focus would be on improving supply chain efficiencies and repair and maintenance processes to enhance cycle times and asset utilization. These improvements are expected to contribute to revenue growth and better return on invested capital.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.