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| Statement |
|---|
| My confidence in our ability to perform and execute is stronger than ever |
| So I really think for the next few years, we have got a positive outlook |
| Geographically, our international leverage coupled with share gains and pricing enabled 26% growth |
| And the team has done an outstanding job of execution, which gives us the confidence -- to look to see what else we can do |
| Cost optimization, technology upsell, and business model changes all helped to drive the profitability increase, coupled with our U.S |
| Look, on the MPD side, I am tremendously excited about Modus |
| Both quarter performance of $1.36 billion in revenue, EBITDA margin improvement of 34 basis points sequentially, and $315 million in adjusted free cash flow was delivered on the back of the enormous passion and commitment of the entire One Weatherford team |
| So, we think that’s a huge opportunity |
| So, we think that will be an area of tremendous growth for us, both in the Gulf of Mexico, as well as in the North Sea |
| So, the portfolio that we have, which is really broad spectrum, full scale services, coupled with these specialty services, give us an opportunity to really increase the value proposition that we can offer customers |
| Also, the large majority of these projects, are in countries and regions where Weatherford has invested significantly, and that positions us well, for growth now and in the future |
| We continue to see the most momentum in our DRE segment with high teens growth in 2024 on top of mid-teens growth in 2023, reflective of our belief in the longevity of the cycle with growth in PRI to follow |
| It is a very, very solid number at this point in time |
| It’s about strategic sourcing, moving our supply base closer to where our factories are, making sure we have got better cost controls, we have got better sourcing opportunities |
| I am tremendously excited about what we will see, over the course of this year, and then it will really start to deliver in 2025 |
| Free cash flow continues to surprise the upside |
| Revenue growth of 19%, adjusted EBITDA margins expanding 423 basis points to 23.1%, and adjusted free cash flow of $651 million reflect an accelerated achievement of the short to midterm objectives, we set for ourselves |
| So, we think of them, as a very positive thing overall |
| In addition, we have got our specialty services like MPD that we have got a very strong position in Saudi |
| We have clear line of sight to activity growth in the next few years that, we are excited about and fully committed, to supporting Aramco with our differentiated technology and services |
| To summarize, we see strong activity growth for the next several years, and provide a platform for continued revenue growth |
| Finally, during the fourth quarter of 2023, credit rating upgrades from S&P to B+ with a positive outlook and Moody’s to B1 with a positive outlook and Fitch ratings initiating a rating of B+ reflects the tangible improvements we have made in our operating performance and balance sheet |
| We have expanded margins every single quarter since the first quarter of 2022 |
| That’s eight consecutive quarters of margin expansion, and we remain fully committed to the conversion of those margins to cash, as the primary driver of shareholder value creation |
| And to achieve that, we will continue to drive improvements, efficiencies across billings, collections management, and inventory management, which are key performance drivers |
| Our journey of improving our net working capital efficiency is far from complete, and we remain optimistic about the opportunities to further improve |
| A strong performance on the back of strong profitability and heightened collections |
| But on a full year basis, DRE adjusted EBITDA margins expanded 308 basis points, reflecting the overall improvement in the operating profile of the segment, with higher activity, cost discipline, and increased traction in the marketplace |
| I also want to point out that agreeing to payment for two of these acquisitions, primarily in equity, reflects a strong belief from others in the potential for upward mobility in the stock |
| These results were primarily driven by increased activity, share improvement, pricing across all segments, coupled with solid operational execution |
| Statement |
|---|
| DRE segment adjusted EBITDA of $97 million decreased by $14 million, or 13% sequentially, primarily due to lower activity, and change in mix around drilling-related services |
| We have also had some things that have pressured us on the downside |
| Clearly, there has been sector-related concern over the past week with the announcement on capacity expansion plans in Saudi Arabia |
| The operating income was sequentially down, primarily due to restructuring charges taken in Q4 for right-sizing our footprint in certain locations |
| For the first quarter 2024, we expect consolidated revenues versus the fourth quarter of 2023, to decline by low single-digits driven by seasonality |
| WCC is expected to decline by mid-single-digits and PRI is expected, to decline by high single-digits |
| As previously discussed, Russia continues to be uncertain given the operational complexity, as well as FX volatility |
| Turning to the future, as the events of the past couple of weeks have shown, there is a fair degree of volatility, and concern among the investor community |
| While drilling and evaluation, or DRE, revenues of $382 million, decreased by $6 million, or 2% sequentially, primarily due to lower activity, for drilling-related services in Latin America, as impacted by weather, partially offset by increased wireline activity, full year revenues increased by 16% |
| We expect Russia to continue to decline in revenue, and while it is difficult to predict, at this point, we are expecting a double-digit rate |
| This is down significantly from what used to be the normal, 7% in an up cycle, 10% to sometimes 12% |
| Our net leverage ratio of 0.7x at the end of 2023 marks the lowest ever level in the company in over 15 years |
| The combination of energy demand, growth in emerging economies, reservoir declines, and lack of sustainable investment over the past decade imply that even to maintain current rates of production, there will need to be continued investment and activity for oil and gas projects, at least through the end of the decade |
| The one maybe question mark on the Middle East is Iraq, just given some of the challenges there |
| With high-teens growth expectations for the year in the Middle East, the most significant risk to activity growth, continues to be geopolitical, rather than broader macro themes |
| Simultaneously, our focus on margin expansion and cash flow conversion, will not be dulled |
| So when you have that model, the profitability tends to be lower, but that’s only, because of the pass-through services |
| But for now, a couple of years, we have been clocking up numbers that are in excess on the international side |
| They will create an accelerant to growth |
| And we have stuck to that now for a while |
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