Sequential Revenue increased 4%, led by an 8% increase in
North America
Operating Margins improved 273 basis points sequentially
with 68% incrementals
Strong Positive Cash Flow from Operations
BAAR, Switzerland, Feb. 1, 2017 /PRNewswire/ -- Weatherford
International plc (NYSE: WFT) reported a net loss of $549 million, or a loss of $0.59 per share, and non-GAAP net loss of
$303 million before charges and
credits ($0.32 non-GAAP loss per
share) on revenues of $1.41 billion
for the fourth quarter of 2016.
Fourth Quarter 2016 Highlights
- Free cash flow generated from operations (non-GAAP) was
$171 million;
- Operating margins improved by 273 basis points sequentially,
with 68% incrementals; and
- Revenue of $1.41 billion was up
4% sequentially, led by North
America and Middle
East/North
Africa/Asia Pacific
regions.
Full Year 2016 Highlights
- Reduced net debt and extended debt maturities through a series
of capital market transactions;
- Achieved annualized cost savings of $601
million;
- Achieved best safety record in Company history; and
- Reduced nonproductive time in core product lines by 24 percent
year-over-year.
Krishna Shivram, Chief Executive
Officer, stated, "During 2016, we took the necessary steps to
secure our liquidity and provide a runway from which the Company
can become consistently profitable and free cash flow positive. We
also removed a significant level of fixed costs, while still
achieving the best safety record in the company's history and
measurably improving our service quality and performance.
I am pleased with our fourth quarter results. Revenue grew by 4%
sequentially, despite approximately $40
million of lost revenue as we idled our U.S. pressure
pumping business during the quarter. Sequential operating income
incrementals were 68%, easily exceeding our targeted 50%. Excluding
the land drilling rig business, revenue grew 4% with operating
income incrementals of 73%, clearly exhibiting the power of
increased revenue spread over a low and efficient fixed cost
base.
North America revenue grew 8%
and would have increased 17%, if we continued our pressure pumping
activities for the full quarter. Both the U.S. and Canada grew strongly on land while offshore
Gulf of Mexico weakened.
Incrementals in North America were
104% as we removed costs throughout the fourth quarter. Operating
losses in North America were
$58 million including a loss of
$29 million related to the pressure
pumping business, which would have been negatively impacted by
another $20 million had this business
continued through the quarter.
International revenue grew 2% while operating margins improved
slightly. In Latin America,
activity levels were weak in Mexico, Venezuela and Brazil; restructuring of the industry in
Argentina placed downward pressure
on pricing, while activity in Colombia surged. Eastern Hemisphere
revenue grew 4% sequentially with 168 basis point margin
improvement and 39% incrementals. Product sales were approximately
$40 million higher than the normal
quarterly level. The North Sea and Russia experienced a seasonal slowdown.
Sub-Sahara Africa activity declined in Angola and Nigeria while Asia-Pacific benefited from product sales in
Australia and Malaysia. The Middle
East/North Africa region
was positively impacted by higher product sales as well as the
start-up of activities on several of the service contracts won over
the last six months. We expect to start-up on the remaining service
contracts in early 2017.
Free cash flow from operations was $171
million, driven by working capital improvements, and after
successful debt and equity raises totaling $996 million during the quarter, net debt was
reduced by $507 million to
$6.5 billion."
(In Millions, Except
Per Share Amounts)
|
|
Three Months
Ended
|
|
|
Change
|
|
|
|
12/31/2016
|
|
|
9/30/2016
|
|
|
12/31/2015
|
|
|
Sequential
|
|
|
Year-on-Year
|
|
Total Segment
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,406
|
|
|
|
$
|
1,356
|
|
|
|
$
|
2,012
|
|
|
|
4
|
|
%
|
|
(30)
|
|
%
|
Segment Operating
Loss
|
|
$
|
(76)
|
|
|
|
$
|
(111)
|
|
|
|
$
|
(270)
|
|
|
|
31
|
|
%
|
|
72
|
|
%
|
Segment Operating
Margin
|
|
(5.4)
|
|
%
|
|
(8.2)
|
|
%
|
|
(13.4)
|
|
%
|
|
273
|
|
bps
|
|
801
|
|
bps
|
Adjusted Segment
Operating Income (Loss) *
|
|
$
|
(76)
|
|
|
|
$
|
(111)
|
|
|
|
$
|
57
|
|
|
|
31
|
|
%
|
|
(235)
|
|
%
|
Adjusted Segment
Operating Margin *
|
|
(5.4)
|
|
%
|
|
(8.2)
|
|
%
|
|
2.8
|
|
%
|
|
273
|
|
bps
|
|
(824)
|
|
bps
|
Adjusted Segment
Incrementals/(Decrementals ) **
|
|
|
|
|
|
|
|
|
|
|
68
|
|
%
|
|
(22)
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(549)
|
|
|
|
$
|
(1,780)
|
|
|
|
$
|
(1,208)
|
|
|
|
69
|
|
%
|
|
55
|
|
%
|
Adjusted Net Loss
*
|
|
$
|
(303)
|
|
|
|
$
|
(349)
|
|
|
|
$
|
(102)
|
|
|
|
13
|
|
%
|
|
(200)
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss per
Share
|
|
$
|
(0.59)
|
|
|
|
$
|
(1.98)
|
|
|
|
$
|
(1.54)
|
|
|
|
70
|
|
%
|
|
62
|
|
%
|
Adjusted Diluted Loss
per Share *
|
|
$
|
(0.32)
|
|
|
|
$
|
(0.39)
|
|
|
|
$
|
(0.13)
|
|
|
|
16
|
|
%
|
|
(150)
|
|
%
|
|
|
* Adjusted Segment
Operating Income (Loss), Operating Margin, Net Loss and Diluted
Loss per Share here and elsewhere in this filing are non-GAAP
measures and primarily exclude the charges and credits for the
Zubair legacy contract, inventory write-downs and other
charges.
|
** Adjusted Segment
Incrementals/(Decrementals) here and elsewhere in this filing are
calculated by taking the change in adjusted segment operating
income (loss) over the change in revenue.
|
Shivram continued, "After a protracted period of relentless cost
structure transformation, implementation of disciplined financial
metrics and the overall realignment of our Company, Weatherford is
now well positioned with a streamlined portfolio to make material
progress in operating results and to deleverage our balance
sheet.
As supply and demand fundamentals continue to steadily improve,
we stand at the beginning of a multi-year cycle of increased
spending by our customers, almost entirely focused on developing
mature reservoirs, principally on land. We are perfectly
aligned to benefit from the attributes of this kind of cycle as it
plays to our strengths on land in Well Construction, Completions
and Artificial Lift.
We are now emerging from the downturn as a much stronger
organization. With a transformed cost structure, and a
much-improved balance sheet, we are committed to delivering the
difference for our clients through innovation, collaboration and
fit-for-purpose solutions. Our focus is centered on service
quality, safety, customer engagement, talent management and further
strengthening a culture of accountability. As we execute on this
'Back to the Basics' strategy, we expect stronger financial results
will naturally follow."
Fourth Quarter 2016 Results
Revenue for the fourth quarter of 2016 was $1.41 billion compared with $1.36 billion in the third quarter of 2016 and
$2.01 billion in the fourth quarter
of 2015. Fourth quarter revenue improved 4% sequentially and
declined 30% from the prior year. North
America revenue increased 8% despite the shutdown of the
U.S. pressure pumping business that began in the middle of the
quarter while International revenue improved 2% and Land Drilling
Rigs revenue declined 4% sequentially.
Net loss for the fourth quarter of 2016 was $549 million (diluted net loss of $0.59 per share), compared to a $1.78 billion loss in the third quarter of 2016
(diluted net loss of $1.98 per
share), and a $1.21 billion loss in
the fourth quarter of the prior year (diluted net loss of
$1.54 per share).
Non-GAAP adjusted net loss for the fourth quarter of 2016 was
$303 million (non-GAAP diluted net
loss of $0.32 per share), compared to
a non-GAAP $349 million loss in the
third quarter of 2016 (non-GAAP diluted net loss of $0.39 per share), and a non-GAAP $102 million loss in the fourth quarter of the
prior year (non-GAAP diluted net loss of $0.13 per share).
After-tax charges, net of credits, of $246 million for the fourth quarter include:
- $125 million in severance and
restructuring charges;
- $69 million in pressure pumping
business related shutdown costs and other charges;
- $30 million in litigation
charges;
- $28 million in other charges and
credits;
- $10 million in Egyptian foreign
currency devaluation charges; and
- $16 million of income related to
the fair value adjustment of our outstanding warrants.
Negative segment operating margin of 5.4% for the fourth quarter
improved 273 basis points sequentially, and improved 801 basis
points from the fourth quarter of 2015. Negative adjusted segment
operating margin of 5.4% for the fourth quarter improved 273 basis
points sequentially, and declined 824 basis points from the fourth
quarter of 2015. Sequential adjusted segment operating income
incrementals were 68% on a 4% revenue increase and year-on-year
adjusted operating income decrementals were 22% on a revenue
decline of 30%.
Free Cash Flow and Financial Covenants
Free cash flow generated by operations (non-GAAP) was
$171 million for the fourth quarter
of 2016, including $263 million from
reductions in working capital balances. Capital expenditures of
$68 million were down $72 million, or 51%, versus the same quarter in
the prior year and increased by $6
million, or 10%, from the third quarter of 2016. For 2016,
capital expenditures were down $478
million, or 70%, from 2015 showing continued capital
discipline. Also included in the quarter's free cash flow were
$105 million of debt interest
payments. Additionally, $39 million
of cash severance and restructuring costs were paid this quarter,
thereby reducing operating costs going forward. At the end of the
quarter, we are in compliance with all financial covenants in our
revolving and term loan credit facilities and we expect to remain
in compliance throughout 2017.
Region and Segment Highlights
North America
(In Millions, Except
Per Share Amounts)
|
|
Three Months
Ended
|
|
|
Change
|
|
|
|
12/31/2016
|
|
|
9/30/2016
|
|
|
12/31/2015
|
|
|
Sequential
|
|
|
Year-on-Year
|
|
North
America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
485
|
|
|
|
$
|
449
|
|
|
|
$
|
699
|
|
|
|
8
|
|
%
|
|
(31)
|
|
%
|
Segment Operating
Loss
|
|
$
|
(58)
|
|
|
|
$
|
(95)
|
|
|
|
$
|
(152)
|
|
|
|
39
|
|
%
|
|
62
|
|
%
|
Segment Operating
Margin
|
|
(11.9)
|
|
%
|
|
(21.2)
|
|
%
|
|
(21.8)
|
|
%
|
|
938
|
|
bps
|
|
979
|
|
bps
|
Adjusted Segment
Operating Loss *
|
|
(58)
|
|
|
|
(95)
|
|
|
|
(68)
|
|
|
|
40
|
|
%
|
|
15
|
|
%
|
Adjusted Segment
Operating Margin *
|
|
(11.9)
|
|
%
|
|
(21.2)
|
|
%
|
|
(9.6)
|
|
%
|
|
938
|
|
bps
|
|
(221)
|
|
bps
|
|
|
* Adjusted Segment
Operating Loss and Margin here and elsewhere in this filing are
non-GAAP measures and primarily exclude the charges and credits for
inventory write-downs and other charges.
|
Fourth quarter revenues of $485
million were up $36 million,
or 8% sequentially, and down $214
million, or 31%, over the same period last year. Fourth
quarter segment operating loss improved by $37 million sequentially to $58 million (-11.9% margin). Fourth quarter
segment operating and adjusted segment operating loss improved by
62% and 15%, respectively, from the same quarter of the prior year.
The increase in sequential revenue in the region was attributed to
the increase in average rig count of 50% in Canada and 23% in the U.S., positively
impacting our Well Construction, Drilling Services and Completion
product lines.
Key operational successes in U.S. land and offshore include:
- In the Bakken Shale, a client contracted Weatherford to replace
electric submersible pumps (ESPs) with Rotaflex® 1100 long-stroke
pumping units on a group of wells to mitigate downhole failures and
increase production while lowering utility costs. Weatherford
provided classroom and field training for client personnel to help
ensure a smooth transition. The results have been outstanding and
the client has now committed to the installation of an additional
40 Rotaflex units.
- In the U.S. Gulf of Mexico,
Weatherford won a one-year extendable contract to provide managed
pressure drilling (MPD) services on challenging offset wells that
the operator deemed to be "undrillable" without MPD. Weatherford
will provide a turnkey solution, working with the drilling
contractor to integrate a fit-for-purpose MPD package onto the
rig.
International Operations
(In Millions, Except
Per Share Amounts)
|
|
Three Months
Ended
|
|
|
Change
|
|
|
|
12/31/2016
|
|
|
9/30/2016
|
|
|
12/31/2015
|
|
|
Sequential
|
|
|
Year-on-Year
|
|
International
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
827
|
|
|
|
$
|
809
|
|
|
|
$
|
1,166
|
|
|
|
2
|
|
%
|
|
(29)
|
|
%
|
Operating Income
(Loss)
|
|
$
|
7
|
|
|
|
$
|
3
|
|
|
|
$
|
(75)
|
|
|
|
133
|
|
%
|
|
109
|
|
%
|
Adjusted Segment
Operating Income *
|
|
$
|
7
|
|
|
|
$
|
3
|
|
|
|
$
|
142
|
|
|
|
133
|
|
%
|
|
(96)
|
|
%
|
Adjusted Segment
Operating Margin *
|
|
0.7
|
|
%
|
|
0.5
|
|
%
|
|
12.1
|
|
%
|
|
23
|
|
bps
|
|
(1,138)
|
|
bps
|
|
* Adjusted Segment
Operating Income and Margin here and elsewhere in this filing are
non-GAAP measures and primarily exclude the charges and credits for
the Zubair legacy contract, inventory write-downs and other
charges.
|
Fourth quarter revenues of $827
million were up 2% sequentially and down 29%
year-on-year. Fourth quarter adjusted segment operating income was
$7 million (0.7% margin), up from
$3 million (0.5% margin) in the prior
quarter and down from $142 million
(12.1% margin) from the same quarter in the prior year.
Fourth quarter revenues of $250
million were down $5 million,
or 2% sequentially, and down $126
million, or 34%, compared to the same quarter in the prior
year. Fourth quarter adjusted segment operating income of
$6 million (2.3% margin) was down
$8 million sequentially and down 90%
compared to the same quarter in the prior year. Sequentially,
adjusted segment decrementals were 125% for the quarter. The
primary contributors to the revenue decrease were reduced activity
in Venezuela, lower offshore
activity in Mexico, and further
reductions of offshore operations in Brazil, which were partly offset by increased
activity in Colombia on a higher
active rig count. The decrease in adjusted operating margin was
primarily due to the product line mix which negatively impacted
adjusted operating income.
In Colombia, Weatherford
delivered cost savings to a client through efficient technologies
and services by deploying Drilling with Casing (DwC) systems in a
well with high mud losses, which reduced operating costs by 40%
compared to conventional drilling.
- Europe/Sub-Sahara
Africa/Russia
Fourth quarter revenues of $214
million were down $11 million,
or 5% sequentially, and down $123
million, or 37%, over the same quarter in the prior year.
Fourth quarter adjusted segment operating loss of $8 million (-4.0% margin) was down from a loss of
$3 million (-1.0% margin)
sequentially, and down from income of $38
million (11.4% margin) year-on-year. Continued activity
reductions in offshore West Africa
and the beginning of the seasonal decline in the North Sea and
Russia drove the sequential
revenue.
Highlights for the region include the following:
- Weatherford won a three-year contract for integrated services
on a drilling rig in the North Sea by demonstrating the capability
to efficiently provide services across multiple product lines,
reduce personnel on board (POB) and lower costs. The scope of
service includes Tubular Running Services, liner hangers and rental
tools. Additionally, Weatherford will provide training to help
assure that the operations can be executed safely and efficiently
with minimal POB.
- In a separate area of the North Sea, Weatherford installed
inverse gas-lift systems in a mature well with integrity issues.
The well had previously used conventional gas lift. Driven by
regulatory changes, the operator needed to find an alternative
enhanced oil recovery (EOR) method. Technologies from the
Renaissance® family of brownfield solutions, including safety
valves, enabled continuous gas injection to maximize production and
minimize cost.
- Middle East/North Africa/Asia
Pacific
Fourth quarter revenues of $363
million were up 10% sequentially and down 20% from the same
quarter in the prior year. Adjusted segment operating income
of $9 million (2.4% margin) improved
versus a loss of $8 million (-2.2%
margin) in the prior quarter and down from $45 million (10.0% margin) in the same quarter of
the prior year. Revenues increased from year-end product deliveries
in Completions and Artificial Lift across the region and also due
to higher service activity in Algeria, and the Gulf Countries. Adjusted
operating income increased due to lower operating costs and higher
margin product sales.
During the quarter, Weatherford also recorded several notable
wins in the Middle East:
- A three-year coiled-tubing services contract for a large NOC in
the region. Additionally, the Company gained market share with the
win of a three-year contract for Open and Cased-Hole Completion.
For both awards, Weatherford was selected based on technical
differentiation, ability to swiftly deploy resources and extensive
client engagement.
In addition, Weatherford experienced a significant uptick in MPD
contract wins across the region:
- In a large Middle Eastern market, MPD has rapidly grown from a
special application used only in extreme well conditions to a
standard technique used in multiple well types. Weatherford
experienced wide adoption of MPD in land operations and increasing
interest in deploying rotating control devices in complex offshore
wells. These technologies offer benefits including mitigating
drilling hazards, reducing costs, improving safety, efficiently
reaching target depth, and increasing reservoir access.
- Elsewhere in the Middle East,
Weatherford successfully reached total depth in a high-pressure
well in less than 10 days using MPD. The operator had expected to
drill the last two hole sections in 36 days. No kicks or losses
were encountered, and the client experienced total savings of
approximately $1.3 million. Based on
this success, the client will likely deploy MPD on additional
wells.
- Weatherford received its first NOC contract for offshore MPD in
the Gulf Region. This three year contract covers several offshore
wells with challenges including depleted reservoirs, fractures,
high-pressure water zones, high temperatures and deep gas. MPD
systems offer significant benefits in deep-gas wells, including
reducing kicks and differential sticking.
Land Drilling Rigs
Fourth quarter revenues of $94
million were down $4 million,
or 4% sequentially and down $53
million, or 36%, compared to the same quarter in the prior
year. Fourth quarter segment operating loss of $25 million (-26.1% margin) was down $6 million sequentially and down $8 million from the same quarter in the prior
year. The main factors affecting the decrease in revenue and
operating income were a reduction in active rigs as several units
rolled off contract while others were en route to other contract
locations.
Reclassifications
Certain prior year amounts have been reclassified to conform to
the current year presentation related to the adoption of new
accounting standards.
About Weatherford
Weatherford is one of the largest multinational oilfield service
companies providing innovative solutions, technology and services
to the oil and gas industry. The Company operates in over 90
countries and has a network of approximately 900 locations,
including manufacturing, service, research and development, and
training facilities and employs approximately 30,000 people. For
more information, visit www.weatherford.com and connect
with Weatherford on LinkedIn, Facebook, Twitter and YouTube.
Conference Call
The Company will host a conference call with financial analysts
to discuss the quarterly results on February 2, 2017, at
8:30 a.m. eastern time (ET),
7:30 a.m. central time (CT).
Weatherford invites investors to listen to the call live via the
Company's website, at
http://ir.weatherford.com/conference-call-details. A recording of
the conference call and transcript of the call will be available in
that section of the website shortly after the call ends.
Contacts:
|
|
Christoph
Bausch
|
+1.713.836.4615
|
|
|
Executive Vice
President and Chief Financial Officer
|
|
|
|
|
|
|
|
Karen
David-Green
|
+1.713.836.7430
|
|
|
Vice President –
Investor Relations, Marketing and Communications
|
|
Forward-Looking Statements
This news release contains, and the conference call announced in
this release may include, forward-looking statements. These
forward-looking statements include, among other things, the
Company's quarterly non-GAAP earnings per share, effective tax
rate, free cash flow, net debt, forecasts or expectations regarding
business outlook, and capital expenditures, and are also generally
identified by the words "believe," "project," "expect,"
"anticipate," "estimate," "outlook," "budget," "intend,"
"strategy," "plan," "guidance," "may," "should," "could," "will,"
"would," "will be," "will continue," "will likely result," and
similar expressions, although not all forward-looking statements
contain these identifying words. Such statements are based upon the
current beliefs of Weatherford's management, and are subject to
significant risks, assumptions and uncertainties. Should one or
more of these risks or uncertainties materialize, or underlying
assumptions prove incorrect, actual results may vary materially
from those indicated in our forward-looking statements. Readers are
also cautioned that forward-looking statements are only predictions
and may differ materially from actual future events or results,
including possible changes in the expected savings associated with
prior workforce reduction and prior and ongoing facility closures;
and risks associated with the Company's ability to achieve the
benefits and cost savings of such activities. Forward-looking
statements are also affected by the risk factors described in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2015, the Company's
Quarterly Reports on Form 10-Q, and those set forth from
time-to-time in the Company's other filings with the Securities and
Exchange Commission ("SEC"). We undertake no obligation to correct
or update any forward-looking statement, whether as a result of new
information, future events, or otherwise, except to the extent
required under federal securities laws.
Weatherford
International plc
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In Millions, Except
Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
|
12/31/2016
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2015
|
|
Net
Revenues:
|
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
485
|
|
|
$
|
699
|
|
|
$
|
1,878
|
|
|
$
|
3,494
|
|
|
Middle East/North
Africa/Asia Pacific
|
|
363
|
|
|
453
|
|
|
1,453
|
|
|
1,947
|
|
|
Europe/SSA/Russia
|
|
214
|
|
|
337
|
|
|
939
|
|
|
1,533
|
|
|
Latin
America
|
|
250
|
|
|
376
|
|
|
1,059
|
|
|
1,746
|
|
|
Land Drilling
Rigs
|
|
94
|
|
|
147
|
|
|
420
|
|
|
713
|
|
|
Total
Net Revenues
|
|
1,406
|
|
|
2,012
|
|
|
5,749
|
|
|
9,433
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
North
America
|
|
(58)
|
|
|
(68)
|
|
|
(382)
|
|
|
(224)
|
|
|
Middle East/North
Africa/Asia
|
|
9
|
|
|
45
|
|
|
7
|
|
|
211
|
|
|
Europe/SSA/Russia
|
|
(8)
|
|
|
38
|
|
|
(11)
|
|
|
217
|
|
|
Latin
America
|
|
6
|
|
|
59
|
|
|
65
|
|
|
315
|
|
|
Land Drilling
Rigs
|
|
(25)
|
|
|
(17)
|
|
|
(87)
|
|
|
13
|
|
|
Adjusted
Segment Operating Income (Loss)
|
|
(76)
|
|
|
57
|
|
|
(408)
|
|
|
532
|
|
|
Research and
Development
|
|
(40)
|
|
|
(52)
|
|
|
(159)
|
|
|
(231)
|
|
|
Corporate
Expenses
|
|
(32)
|
|
|
(47)
|
|
|
(139)
|
|
|
(194)
|
|
|
Other Charges,
Net
|
|
(251)
|
|
|
(992)
|
|
|
(1,545)
|
|
|
(1,653)
|
|
|
Total Operating
Loss
|
|
(399)
|
|
|
(1,034)
|
|
|
(2,251)
|
|
|
(1,546)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Expense:
|
|
|
|
|
|
|
|
|
|
Interest Expense,
Net
|
|
(136)
|
|
|
(117)
|
|
|
(499)
|
|
|
(468)
|
|
|
Bond Tender Premium,
Net
|
|
—
|
|
|
—
|
|
|
(78)
|
|
|
—
|
|
|
Warrant Fair Value
Adjustment
|
|
16
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
Currency Devaluation
Charges
|
|
(10)
|
|
|
(17)
|
|
|
(41)
|
|
|
(85)
|
|
|
Other, Net
|
|
(8)
|
|
|
20
|
|
|
(24)
|
|
|
3
|
|
|
Net Loss Before
Income Taxes
|
|
(537)
|
|
|
(1,148)
|
|
|
(2,877)
|
|
|
(2,096)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
(Provision) Benefit
|
|
(7)
|
|
|
(52)
|
|
|
(496)
|
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
(544)
|
|
|
(1,200)
|
|
|
(3,373)
|
|
|
(1,951)
|
|
|
Net Income
Attributable to Noncontrolling Interests
|
|
5
|
|
|
8
|
|
|
19
|
|
|
34
|
|
|
Net Loss Attributable
to Weatherford
|
|
$
|
(549)
|
|
|
$
|
(1,208)
|
|
|
$
|
(3,392)
|
|
|
$
|
(1,985)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Per Share
Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
Basic &
Diluted
|
|
$
|
(0.59)
|
|
|
$
|
(1.54)
|
|
|
$
|
(3.82)
|
|
|
$
|
(2.55)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
Basic &
Diluted
|
|
937
|
|
|
782
|
|
|
887
|
|
|
779
|
|
|
Weatherford
International plc
|
Selected
Statements of Operations Information
|
(Unaudited)
|
(In
Millions)
|
|
Three Months
Ended
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
Net
Revenues:
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
485
|
|
|
$
|
449
|
|
|
$
|
401
|
|
|
$
|
543
|
|
|
$
|
699
|
|
Middle East/North
Africa/Asia Pacific
|
363
|
|
|
329
|
|
|
400
|
|
|
361
|
|
|
453
|
|
Europe/SSA/Russia
|
214
|
|
|
225
|
|
|
243
|
|
|
257
|
|
|
337
|
|
Latin
America
|
250
|
|
|
255
|
|
|
249
|
|
|
305
|
|
|
376
|
|
Land Drilling
Rigs
|
94
|
|
|
98
|
|
|
109
|
|
|
119
|
|
|
147
|
|
Total Net
Revenues
|
$
|
1,406
|
|
|
$
|
1,356
|
|
|
$
|
1,402
|
|
|
$
|
1,585
|
|
|
$
|
2,012
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
(58)
|
|
|
$
|
(95)
|
|
|
$
|
(101)
|
|
|
$
|
(128)
|
|
|
$
|
(68)
|
|
Middle East/North
Africa/Asia Pacific
|
9
|
|
|
(8)
|
|
|
—
|
|
|
6
|
|
|
45
|
|
Europe/SSA/Russia
|
(8)
|
|
|
(3)
|
|
|
1
|
|
|
(1)
|
|
|
38
|
|
Latin
America
|
6
|
|
|
14
|
|
|
1
|
|
|
44
|
|
|
59
|
|
Land Drilling
Rigs
|
(25)
|
|
|
(19)
|
|
|
(17)
|
|
|
(26)
|
|
|
(17)
|
|
Adjusted
Segment Operating Income (Loss)
|
(76)
|
|
|
(111)
|
|
|
(116)
|
|
|
(105)
|
|
|
57
|
|
Research and
Development
|
(40)
|
|
|
(33)
|
|
|
(41)
|
|
|
(45)
|
|
|
(52)
|
|
Corporate
Expenses
|
(32)
|
|
|
(30)
|
|
|
(34)
|
|
|
(43)
|
|
|
(47)
|
|
Other Charges,
Net
|
(251)
|
|
|
(771)
|
|
|
(269)
|
|
|
(254)
|
|
|
(992)
|
|
Total Operating
Loss
|
$
|
(399)
|
|
|
$
|
(945)
|
|
|
$
|
(460)
|
|
|
$
|
(447)
|
|
|
$
|
(1,034)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
Product Service
Line Revenues:
|
|
|
|
|
|
|
|
|
|
Formation Evaluation
and Well Construction (a)
|
$
|
773
|
|
|
$
|
765
|
|
|
$
|
806
|
|
|
$
|
890
|
|
|
$
|
1,087
|
|
Completion and
Production (b)
|
539
|
|
|
493
|
|
|
487
|
|
|
576
|
|
|
778
|
|
Land Drilling
Rigs
|
94
|
|
|
98
|
|
|
109
|
|
|
119
|
|
|
147
|
|
Total Product Service
Line Revenues
|
$
|
1,406
|
|
|
$
|
1,356
|
|
|
$
|
1,402
|
|
|
$
|
1,585
|
|
|
$
|
2,012
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
Depreciation and
Amortization:
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
41
|
|
|
$
|
55
|
|
|
$
|
58
|
|
|
$
|
54
|
|
|
$
|
73
|
|
Middle East/North
Africa/Asia Pacific
|
52
|
|
|
60
|
|
|
60
|
|
|
61
|
|
|
61
|
|
Europe/SSA/Russia
|
41
|
|
|
45
|
|
|
48
|
|
|
48
|
|
|
46
|
|
Latin
America
|
55
|
|
|
56
|
|
|
56
|
|
|
61
|
|
|
63
|
|
Land Drilling
Rigs
|
22
|
|
|
22
|
|
|
23
|
|
|
22
|
|
|
26
|
|
Research and
Development and Corporate
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
6
|
|
Total Depreciation
and Amortization
|
$
|
215
|
|
|
$
|
242
|
|
|
$
|
249
|
|
|
$
|
250
|
|
|
$
|
275
|
|
|
|
(a)
|
Formation Evaluation
and Well Construction includes Managed-Pressure Drilling, Drilling
Services, Tubular Running Services, Drilling Tools and Rental
Equipment, Wireline Services, Testing and Production Services,
Re-entry and Fishing Services, Cementing Products, Liner Systems,
Integrated Laboratory Services and Surface Logging.
|
(b)
|
Completion and
Production includes Artificial Lift Systems, Stimulation and
Completion Systems.
|
We report our financial results in accordance with U.S.
generally accepted accounting principles (GAAP). However,
Weatherford's management believes that certain non-GAAP financial
measures and ratios (as defined under the SEC's Regulation G) may
provide users of this financial information, additional meaningful
comparisons between current results and results of prior periods.
The non-GAAP amounts shown below should not be considered as
substitutes for operating income, provision for income taxes, net
income or other data prepared and reported in accordance with GAAP,
but should be viewed in addition to the Company's reported results
prepared in accordance with GAAP.
Weatherford
International plc
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
(Unaudited)
|
(In Millions, Except
Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
|
12/31/2016
|
|
9/30/2016
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2015
|
|
Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Loss
|
|
$
|
(399)
|
|
|
$
|
(945)
|
|
|
$
|
(1,034)
|
|
|
$
|
(2,251)
|
|
|
$
|
(1,546)
|
|
|
Severance,
Restructuring and Exited Businesses
|
|
130
|
|
|
22
|
|
|
68
|
|
|
280
|
|
|
232
|
|
|
Litigation Charges,
Net
|
|
30
|
|
|
9
|
|
|
4
|
|
|
220
|
|
|
116
|
|
|
Impairments, Asset
Write-Downs and Other (a) (b) (c) (d)
|
|
91
|
|
|
740
|
|
|
838
|
|
|
1,043
|
|
|
1,105
|
|
|
Legacy Contracts and
Other
|
|
—
|
|
|
—
|
|
|
82
|
|
|
2
|
|
|
200
|
|
|
Total Non-GAAP
Adjustments
|
|
251
|
|
|
771
|
|
|
992
|
|
|
1,545
|
|
|
1,653
|
|
|
Non-GAAP Adjusted
Operating Income (Loss)
|
|
$
|
(148)
|
|
|
$
|
(174)
|
|
|
$
|
(42)
|
|
|
$
|
(706)
|
|
|
$
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income
Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Loss Before
Income Taxes
|
|
$
|
(537)
|
|
|
$
|
(1,084)
|
|
|
$
|
(1,148)
|
|
|
$
|
(2,877)
|
|
|
$
|
(2,096)
|
|
|
Operating Income
Adjustments
|
|
251
|
|
|
771
|
|
|
992
|
|
|
1,545
|
|
|
1,653
|
|
|
Bond Tender Premium,
Net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
Warrant Fair Value
Adjustment
|
|
(16)
|
|
|
—
|
|
|
—
|
|
|
(16)
|
|
|
—
|
|
|
Currency Devaluation
Charges
|
|
10
|
|
|
—
|
|
|
17
|
|
|
41
|
|
|
85
|
|
|
Non-GAAP Loss Before
Income Taxes
|
|
$
|
(292)
|
|
|
$
|
(313)
|
|
|
$
|
(139)
|
|
|
$
|
(1,229)
|
|
|
$
|
(358)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision)
Benefit for Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP (Provision)
Benefit for Income Taxes
|
|
$
|
(7)
|
|
|
$
|
(692)
|
|
|
$
|
(52)
|
|
|
$
|
(496)
|
|
|
$
|
145
|
|
|
Tax Effect on
Non-GAAP Adjustments
|
|
1
|
|
|
660
|
|
|
97
|
|
|
600
|
|
|
(7)
|
|
|
Non-GAAP (Provision)
Benefit for Income Taxes
|
|
$
|
(6)
|
|
|
$
|
(32)
|
|
|
$
|
45
|
|
|
$
|
104
|
|
|
$
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Loss
|
|
$
|
(549)
|
|
|
$
|
(1,780)
|
|
|
$
|
(1,208)
|
|
|
$
|
(3,392)
|
|
|
$
|
(1,985)
|
|
|
Total Charges, net of
tax
|
|
246
|
|
|
1,431
|
|
|
1,106
|
|
|
2,248
|
|
|
1,731
|
|
|
Non-GAAP Net
Loss
|
|
$
|
(303)
|
|
|
$
|
(349)
|
|
|
$
|
(102)
|
|
|
$
|
(1,144)
|
|
|
$
|
(254)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss Per
Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Loss per
Share
|
|
$
|
(0.59)
|
|
|
$
|
(1.98)
|
|
|
$
|
(1.54)
|
|
|
$
|
(3.82)
|
|
|
$
|
(2.55)
|
|
|
Total Charges, net of
tax
|
|
0.27
|
|
|
1.59
|
|
|
1.41
|
|
|
2.53
|
|
|
2.22
|
|
|
Non-GAAP Diluted Loss
per Share
|
|
$
|
(0.32)
|
|
|
$
|
(0.39)
|
|
|
$
|
(0.13)
|
|
|
$
|
(1.29)
|
|
|
$
|
(0.33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Effective Tax
Rate (e)
|
|
(1)%
|
|
|
(64)%
|
|
|
(5)%
|
|
|
(17)%
|
|
|
7
|
%
|
|
Non-GAAP Effective
Tax Rate (f)
|
|
(2)%
|
|
|
(10)%
|
|
|
32
|
%
|
|
8
|
%
|
|
39
|
%
|
|
|
|
(a)
|
Impairments, asset
write-downs and other of $91 million in the fourth quarter of 2016
include $69 million in pressure pumping business related shutdown
costs and other charges, and $22 million of other charges and
credits.
|
(b)
|
Impairments, asset
write-downs and other of $1.0 billion for the year ended December
31, 2016 include $710 million related to long-lived asset
impairments asset write-downs and other charges and credits, $219
million of inventory write-downs, and $114 million of pressure
pumping business related charges.
|
(c)
|
Impairments, asset
write-downs and other of $838 million in the fourth quarter 2015
include $514 million of long-lived asset impairments, $217 million
of inventory write-downs, $46 million of supply contract related
charges, $31 million of bad debt expense charges and $30 million of
other charges.
|
(d)
|
Impairments, asset
write-downs and other of $1.1 billion for the year ended December
31, 2015 include $638 million of long-lived asset impairments, $226
million of inventory write-downs, $130 million of supply contract
related charges, $31 million of bad debt expense charges and $80
million of other charges.
|
(e)
|
GAAP Effective Tax
Rate is the GAAP provision for income taxes divided by GAAP income
before income taxes.
|
(f)
|
Non-GAAP Effective
Tax Rate is the Non-GAAP provision for income taxes divided by
Non-GAAP income before income taxes and calculated in
thousands.
|
Weatherford
International plc
|
Selected Balance
Sheet Data
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
1,037
|
|
|
$
|
440
|
|
|
$
|
452
|
|
|
$
|
464
|
|
|
$
|
467
|
|
Accounts Receivable,
Net
|
|
1,383
|
|
|
1,414
|
|
|
1,484
|
|
|
1,693
|
|
|
1,781
|
|
Inventories,
Net
|
|
1,802
|
|
|
1,917
|
|
|
2,195
|
|
|
2,302
|
|
|
2,344
|
|
Property, Plant and
Equipment, Net
|
|
4,480
|
|
|
4,708
|
|
|
5,247
|
|
|
5,471
|
|
|
5,679
|
|
Goodwill and
Intangibles, Net
|
|
3,045
|
|
|
3,104
|
|
|
3,182
|
|
|
3,216
|
|
|
3,159
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
845
|
|
|
666
|
|
|
790
|
|
|
934
|
|
|
948
|
|
Short-term Borrowings
and Current Portion of Long-term Debt
|
|
179
|
|
|
555
|
|
|
290
|
|
|
1,212
|
|
|
1,582
|
|
Long-term
Debt
|
|
7,403
|
|
|
6,937
|
|
|
6,943
|
|
|
5,846
|
|
|
5,852
|
|
Weatherford
International plc
|
Net
Debt
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
Change in Net Debt
for the Three Months Ended 12/31/2016:
|
|
|
|
|
|
|
Net Debt at
9/30/2016
|
|
|
|
|
|
$
|
(7,052)
|
|
Operating
Loss
|
|
|
|
|
|
(399)
|
|
Depreciation
and Amortization
|
|
|
|
|
|
215
|
|
Capital
Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
(68)
|
|
Proceeds from
Dispositions and Insurance Recoveries
|
|
|
|
|
|
21
|
|
Decrease in
Working Capital
|
|
|
|
|
|
263
|
|
Equity
Issuance Proceeds, Net
|
|
|
|
|
|
448
|
|
Proceeds from
Note Receivable
|
|
|
|
|
|
43
|
|
Litigation
Payments
|
|
|
|
|
|
(33)
|
|
Asset
Write-Downs and Other Charges
|
|
|
|
|
|
64
|
|
Currency
Devaluation Charges
|
|
|
|
|
|
10
|
|
Income Taxes
Paid
|
|
|
|
|
|
(21)
|
|
Interest
Paid
|
|
|
|
|
|
(105)
|
|
Other
|
|
|
|
|
|
69
|
|
Net Debt at
12/31/2016
|
|
|
|
|
|
$
|
(6,545)
|
|
|
|
|
|
|
|
|
Change in Net Debt
for the Twelve Months Ended 12/31/2016:
|
|
|
|
|
|
|
Net Debt at
12/31/2015
|
|
|
|
|
|
$
|
(6,967)
|
|
Operating
Loss
|
|
|
|
|
|
(2,251)
|
|
Depreciation
and Amortization
|
|
|
|
|
|
956
|
|
Capital
Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
(204)
|
|
Proceeds from
Dispositions and Insurance Recoveries
|
|
|
|
|
|
88
|
|
Decrease in
Working Capital
|
|
|
|
|
|
453
|
|
Equity
Issuance Proceeds, Net
|
|
|
|
|
|
1,071
|
|
Proceeds from
Note Receivable
|
|
|
|
|
|
43
|
|
Bond Tender
Premium, Net
|
|
|
|
|
|
(78)
|
|
Payment for
Leased Asset Purchase
|
|
|
|
|
|
(87)
|
|
Litigation
Charges, Net
|
|
|
|
|
|
157
|
|
Long-lived
Asset Impairments, Asset Write-Downs and Other Charges
|
|
|
|
|
|
630
|
|
Inventory
Charges
|
|
|
|
|
|
219
|
|
Currency
Devaluation Charges
|
|
|
|
|
|
41
|
|
Income Taxes
Paid
|
|
|
|
|
|
(161)
|
|
Interest
Paid
|
|
|
|
|
|
(467)
|
|
Net Change in
Billings in Excess/Costs in Excess
|
|
|
|
|
|
51
|
|
Other
|
|
|
|
|
|
(39)
|
|
Net Debt at
12/31/2016
|
|
|
|
|
|
$
|
(6,545)
|
|
|
|
|
|
|
|
|
Components of Net
Debt
|
|
12/31/2016
|
|
9/30/2016
|
|
12/31/2015
|
Cash
|
|
$
|
1,037
|
|
|
$
|
440
|
|
|
$
|
467
|
|
Short-term Borrowings
and Current Portion of Long-term Debt
|
|
(179)
|
|
|
(555)
|
|
|
(1,582)
|
|
Long-term
Debt
|
|
(7,403)
|
|
|
(6,937)
|
|
|
(5,852)
|
|
Net Debt
|
|
$
|
(6,545)
|
|
|
$
|
(7,052)
|
|
|
$
|
(6,967)
|
|
|
"Net Debt" is defined
as debt less cash. Management believes that it provides useful
information regarding our level of indebtedness by reflecting cash
that could be used to repay debt.
|
Working capital is
defined as accounts receivable plus inventory less accounts
payable.
|
We report our financial results in accordance with U.S.
generally accepted accounting principles (GAAP). However,
Weatherford's management believes that certain non-GAAP financial
measures and ratios (as defined under the SEC's Regulation G) may
provide users of this financial information, additional meaningful
comparisons between current results and results of prior periods.
The non-GAAP amounts shown below should not be considered as
substitutes for cash flow information prepared and reported in
accordance with GAAP, but should be viewed in addition to the
Company's reported cash flow statements prepared in accordance with
GAAP.
Weatherford
International plc
|
Selected Cash Flow
Data
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
|
12/31/2016
|
|
9/30/2016
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2015
|
|
Net Cash Provided by
(Used In) Operating Activities
|
|
$
|
136
|
|
|
$
|
(106)
|
|
|
$
|
323
|
|
|
$
|
(314)
|
|
|
$
|
706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
for Property, Plant and Equipment
|
|
(68)
|
|
|
(62)
|
|
|
(140)
|
|
|
(204)
|
|
|
(682)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from
Dispositions and Insurance Recoveries*
|
|
21
|
|
|
21
|
|
|
16
|
|
|
88
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
$
|
89
|
|
|
$
|
(147)
|
|
|
$
|
199
|
|
|
$
|
(430)
|
|
|
$
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted for
Litigation Payments (Reimbursements)**
|
|
82
|
|
|
—
|
|
|
(15)
|
|
|
78
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Provided by (Used In) Operations
|
|
$
|
171
|
|
|
$
|
(147)
|
|
|
$
|
184
|
|
|
$
|
(352)
|
|
|
$
|
166
|
|
|
|
"Free Cash Flow" is
defined as net cash provided by or used in operating activities
less capital expenditures plus proceeds from dispositions and
insurance recoveries. "Free Cash Flow Provided by (Used In)
Operations" is defined as net cash provided by or used in operating
activities less capital expenditures plus proceeds from
dispositions and insurance recoveries and adjusted for litigation
reimbursements. Management uses the two free cash flow metrics to
measure progress on capital efficiency and cash flow
initiatives.
|
|
*As of December 31,
2016, the $88 million includes proceeds from disposal of property,
plant, and equipment of $49 million and $39 million of insurance
reimbursements received on a land drilling rig loss.
|
|
**As of December 31,
2016, the $78 million includes payments of $82 million primarily
related to the SEC settlement offset by $4 million in insurance
proceeds received in the first quarter 2016 that reimburses a
portion of a shareholder derivative litigation settlement payment
of $120 million made in the third quarter of 2015.
|
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