-- Revenues, excluding divestitures, grew 8%
sequentially
-- EPS of $0.32 (non-GAAP) improved 33%
sequentially
-- Incremental operating income of 48% on
sequential revenue growth
-- Reduction in Net Debt of $717 million
BAAR, Switzerland, Oct. 23, 2014 /PRNewswire/ -- Weatherford
International plc (NYSE: WFT) reported net income before charges of
$248 million ($0.32 diluted earnings per share on a non-GAAP
basis) on revenues of $3.88 billion
for the third quarter of 2014.
Logo -
http://photos.prnewswire.com/prnh/19990308/WEATHERFORDLOGO
Third Quarter 2014 Highlights
- Completed the sale of the Russian and Venezuelan land rig
operations;
- Completed the sale of the Pipeline and Specialty Services
business;
- Reduced net debt by $717 million
using proceeds from the successful divestiture of non-core
businesses;
- Improved operating income margins by 145 basis points
sequentially to 15.4% led by a 183 basis point gain in the
international operations; North
America improved by 92 basis points;
- Increased North America
revenues by 9% sequentially and 14% year-over-year; and
- Completed the planned cost reductions in our core
businesses.
Third Quarter 2014 Results
Revenue for the third quarter of 2014 improved 4% sequentially
and was $3.88 billion compared with
$3.71 billion in the second quarter
of 2014 and $3.82 billion in the
third quarter of 2013. Excluding the impact of our divested
businesses, third quarter revenues improved 8% sequentially. GAAP
Net Income for the third quarter of 2014 was $77 million, or $0.10 per diluted share.
After-tax charges of $171 million
for the third quarter included:
- $81 million, net of tax,
consisting of severance, restructuring and exit costs related to
the workforce reduction and closure of businesses in North Africa, principally Libya, that were negatively impacted by recent
disruptions;
- $78 million, net of tax,
consisting of severance, restructuring and exit costs related to
the workforce reduction and the closure of underperforming
operations in specific markets other than North Africa;
- $21 million of other costs, net
of tax, primarily consisting of professional fees and other costs
associated with the divestiture program;
- $4 million, net of tax,
associated with the legacy lump sum contracts in Iraq; and
- Offset by a $13 million gain, net
of tax, associated with the sale of non-core businesses.
Net income on a non-GAAP basis for the third quarter of 2014 was
$248 million compared to $186 million in the second quarter of 2014 and
$177 million in the third quarter of
2013.
Weatherford's operating income margins continued to improve for
the third consecutive quarter, with strong incrementals of 48%,
driven mainly by increases in the core business margins. The
sequential operating income improvements were driven by:
- Europe/Sub-Sahara
Africa/Russia, where a nearly 500
basis point improvement in operating income margins was
attributable to continued growth and new contracts in Sub-Sahara
Africa and higher revenues and operating income from core
businesses in Russia;
- Latin America, driven by
higher unconventional activity in Argentina, increases in Brazil on the start-up of new Well
Construction contracts and increases in overall activity in
Venezuela; and
- North America, where margin
improvements were attributable to higher activity levels in
Canada with the seasonal recovery
following the spring breakup and stronger Formation Evaluation,
Completion and Artificial Lift margins in the U.S.
These improvements were partially offset by Middle East/North
Africa/Asia Pacific, where
disruptions in Northern Iraq and
North Africa weighed slightly on
operating income margins during the third quarter despite an
improvement in overall operating income from higher revenues.
Regional Highlights
•
Europe/Sub-Sahara
Africa/Russia
Third quarter revenues of $644
million were down $106
million, or 14% sequentially, and down $47 million, or 7%, over the same quarter in the
prior year. Third quarter operating income of $140 million (21.8% margin) increased
$14 million, or 11%, sequentially and
was up 36% when compared to the same quarter in the prior year. The
decrease in sequential revenues is due to the sale of the land
drilling and workover rig operations in Russia during the early part of the third
quarter. Adjusting for the divested businesses, revenue was down 1%
sequentially. The improvement in operating income was led by
sequential revenue and operating income growth for Well
Construction and geographically by the remaining core business
operations in Russia.
•
Latin America
Third quarter revenues of $611
million were up $63 million,
or 11% sequentially, and down $102
million, or 14%, compared to the same quarter in the prior
year. Third quarter operating income of $90
million (14.7% margin) was up $22
million, or 32% sequentially, and down $25 million, or 22%, compared to the same quarter
in the prior year. The sequential improvements in revenue and
operating income were driven by additional activity in Brazil due to the commencement of new Well
Construction contracts, higher unconventional activity in
Argentina and increases in overall
activity in Venezuela, while
Mexico had sequential declines in
the quarter.
•
North America
Third quarter revenues of $1.81
billion were up $155 million,
or 9% sequentially, and up $217
million, or 14%, over the same quarter in the prior year.
Third quarter operating income of $292
million (16.1% margin) increased 16% sequentially and 36%
from the same quarter in the prior year. The sequential revenue and
operating income growth was primarily led by Canada, across all product lines. Both the
revenue and operating margin improvements in North America were led by our Formation
Evaluation, Artificial Lift, Well Construction and Completion
product lines.
•
Middle East/North Africa/Asia
Pacific
Third quarter revenues of $808
million were up $54 million,
or 7% sequentially, and down $11
million, or 1%, over the same quarter in the prior year.
Third quarter operating income of $76
million (9.4% margin) grew 4% sequentially and increased 10%
from the same quarter in the prior year. All core product lines
contributed to the sequential growth in revenue and operating
income, with Completion and Formation Evaluation posting the
strongest results. Geographically, the Gulf Countries and
Malaysia led the growth in
revenue. These improvements were adversely impacted by the
geopolitical disruptions in Northern
Iraq and North Africa,
principally Libya.
Net Debt
Net debt decreased by $717 million
sequentially, primarily from the cash proceeds related to the
divestiture of non-core businesses. Capital expenditures of
$349 million (net of lost-in-hole) in
the third quarter were up sequentially by 1% reflecting investments
for new contract awards, primarily in Well Construction and
Formation Evaluation, and were up 6% versus the prior year
quarter.
Outlook
The Company expects the fourth quarter of 2014 to show higher
revenue and operating income in North
America, with the U.S. benefiting from continuing growth
across all core product lines and also by an improvement in
stimulation margins with higher activity levels driven by increased
well service intensity as well as a lower operating cost structure.
Latin America is expected to show
improvement in both revenue and profitability in the fourth quarter
given higher core business activity in Argentina and Brazil. The outlook for the Eastern Hemisphere
remains positive with increased activity from contract wins in the
North Sea, Sub-Sahara Africa and the Middle East, partly offset by the typical
seasonal slow down in Russia and
some parts of the Asia Pacific
region. Cost reductions will continue to help margin improvements,
benefiting all regions. Overall margins will improve with a higher
level of growth in the core businesses, which should approach 20%
by year-end.
The tax rate for the fourth quarter will be in the mid-twenties
and will be dependent on the geographic mix of earnings.
Weatherford fully expects to generate higher levels of free cash
flow in the fourth quarter resulting in positive free cash flow for
the year. The Company expects to reduce net debt to be in the range
of $7.0 billion to $7.5 billion by
year-end.
Bernard J. Duroc-Danner,
Chairman, President and Chief Executive Officer commented,
"Weatherford's direction remains steadfast. We are executing on our
financial and operating objectives of returns driven growth of our
core and the de-risking of the enterprise."
Weatherford's core operating income margin was 17.9% for the
quarter. This compares with 16.5% for the prior quarter.
Sequentially, our core businesses grew revenue by 8%. All core
product lines delivered sequential increases in revenue with
incremental operating income of 35%. Strong growth is expected in
our core businesses during the remainder of the year and throughout
2015. We continue to project our core operating margins to exit
near 20% in the fourth quarter.
During the third quarter, we completed our planned headcount
reductions and the closures of underperforming operating locations.
We have achieved the $500 million
annualized pre-tax cost savings goal we set for ourselves early
this year. These cost savings will continue to support our results
throughout 2015. From our fundamentally strong industrial core, we
plan to extract further efficiencies by focusing our future cost
reduction objectives in the area of procurement and variable costs.
Our determination to run an efficient organization will help
underpin our operating income margin improvements throughout
2015.
During the quarter, we completed the sale of our Russian and
Venezuelan land rig operations as well as the Pipeline and
Specialty Services business. As planned, all proceeds were used to
reduce debt. Our continued drive to divest non-core assets and
reduce net debt will be unabated throughout 2015.
In 2015, Weatherford will remain committed to the fundamental
direction of core, cost and cash. The Company will focus on
execution and quality. In addition, Weatherford will remain highly
committed to technology. The joint effect of continuing to divest
non-core businesses, further optimizing the cost structure,
increasing free cash flow, and an unencumbered focus on core
businesses, should result in improved profitability and lower debt
levels.
Non-GAAP Financial Measures
Unless explicitly stated to the contrary, all financial measures
used throughout this document are non-GAAP. Corresponding
reconciliations to GAAP financial measures have been provided in
the following pages to offer meaningful comparisons between current
results and results in prior periods.
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's product and service
portfolio spans the lifecycle of the well, and includes Well
Construction, Formation Evaluation, Completion and Artificial Lift.
Weatherford is Irish-based, operates in over 100 countries, and
currently employees approximately 56,000 people worldwide. For more
information, visit www.weatherford.com.
Conference Call
The Company will host a conference call with financial analysts
to discuss the quarterly results on October
23, 2014, at 8:30 a.m. eastern
daylight time (EDT), 7:30 a.m.
central daylight time (CDT). Weatherford invites investors
to listen to the call live via the Company's website,
www.weatherford.com, in the Investor Relations section. 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:
|
|
Krishna
Shivram
|
+1.713.836.4610
|
|
|
Executive Vice
President and Chief Financial Officer
|
|
|
|
|
|
|
|
Karen
David-Green
|
+1.713.836.7430
|
|
|
Vice President –
Investor Relations
|
|
Forward-Looking Statements
This press release contains, and the conference call announced
in this release may include, forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
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, and capital expenditures, and are
also generally identified by the words "believe," "project,"
"expect," "anticipate," "estimate," "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. 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, 2013, as amended, 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
|
|
Nine Months
Ended
|
|
|
9/30/2014
|
|
9/30/2013
|
|
9/30/2014
|
|
9/30/2013
|
Net
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
1,814
|
|
|
$
|
1,597
|
|
|
$
|
5,083
|
|
|
$
|
4,818
|
Middle East/North
Africa/Asia
|
|
808
|
|
|
819
|
|
|
2,343
|
|
|
2,523
|
Europe/SSA/Russia
|
|
644
|
|
|
691
|
|
|
2,058
|
|
|
2,005
|
Latin
America
|
|
611
|
|
|
713
|
|
|
1,700
|
|
|
2,179
|
Total Net
Revenues
|
|
3,877
|
|
|
3,820
|
|
|
11,184
|
|
|
11,525
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
292
|
|
|
215
|
|
|
745
|
|
|
606
|
Middle East/North
Africa/Asia
|
|
76
|
|
|
69
|
|
|
203
|
|
|
180
|
Europe/SSA/Russia
|
|
140
|
|
|
103
|
|
|
320
|
|
|
251
|
Latin
America
|
|
90
|
|
|
115
|
|
|
251
|
|
|
303
|
Research and
Development
|
|
(72)
|
|
|
(65)
|
|
|
(216)
|
|
|
(203)
|
Corporate
Expenses
|
|
(45)
|
|
|
(45)
|
|
|
(137)
|
|
|
(142)
|
Long-Lived Asset and
Goodwill Impairment
|
|
4
|
|
|
—
|
|
|
(264)
|
|
|
—
|
Restructuring and
Exited Business Charges
|
|
(175)
|
|
|
—
|
|
|
(345)
|
|
|
—
|
U.S. Government
Investigation Loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(153)
|
Gain on Sale of
Businesses
|
|
38
|
|
|
—
|
|
|
38
|
|
|
8
|
Other
Items
|
|
(30)
|
|
|
(153)
|
|
|
(122)
|
|
|
(277)
|
Total Operating Income
|
|
318
|
|
|
239
|
|
|
473
|
|
|
573
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense,
Net
|
|
(122)
|
|
|
(129)
|
|
|
(376)
|
|
|
(388)
|
Devaluation of
Venezuelan Bolivar
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100)
|
Other, Net
|
|
(9)
|
|
|
(30)
|
|
|
(37)
|
|
|
(61)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Before
Income Taxes
|
|
187
|
|
|
80
|
|
|
60
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes
|
|
(98)
|
|
|
(49)
|
|
|
(136)
|
|
|
(74)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
89
|
|
|
31
|
|
|
(76)
|
|
|
(50)
|
Net Income
Attributable to Noncontrolling Interests
|
|
(12)
|
|
|
(9)
|
|
|
(33)
|
|
|
(24)
|
Net Income (Loss)
Attributable to Weatherford
|
|
$
|
77
|
|
|
$
|
22
|
|
|
$
|
(109)
|
|
|
$
|
(74)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Per
Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.10
|
|
|
$
|
0.03
|
|
|
$
|
(0.14)
|
|
|
$
|
(0.10)
|
Diluted
|
|
$
|
0.10
|
|
|
$
|
0.03
|
|
|
$
|
(0.14)
|
|
|
$
|
(0.10)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
777
|
|
|
773
|
|
|
776
|
|
|
771
|
Diluted
|
|
784
|
|
|
779
|
|
|
776
|
|
|
771
|
Weatherford
International plc
|
Selected
Statements of Operations Information
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
9/30/2014
|
|
6/30/2014
|
|
3/31/2014
|
|
12/31/2013
|
|
9/30/2013
|
Net
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
1,814
|
|
|
$
|
1,659
|
|
|
$
|
1,610
|
|
|
$
|
1,572
|
|
|
$
|
1,597
|
Middle East/North
Africa/Asia
|
808
|
|
|
754
|
|
|
781
|
|
|
821
|
|
|
819
|
Europe/SSA/Russia
|
644
|
|
|
750
|
|
|
664
|
|
|
688
|
|
|
691
|
Latin
America
|
611
|
|
|
548
|
|
|
541
|
|
|
657
|
|
|
713
|
Total Net
Revenues
|
$
|
3,877
|
|
|
$
|
3,711
|
|
|
$
|
3,596
|
|
|
$
|
3,738
|
|
|
$
|
3,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
9/30/2014
|
|
6/30/2014
|
|
3/31/2014
|
|
12/31/2013
|
|
9/30/2013
|
Operating Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
292
|
|
|
$
|
252
|
|
|
$
|
201
|
|
|
$
|
216
|
|
|
$
|
215
|
Middle East/North
Africa/Asia
|
76
|
|
|
73
|
|
|
54
|
|
|
50
|
|
|
69
|
Europe/SSA/Russia
|
140
|
|
|
126
|
|
|
54
|
|
|
47
|
|
|
103
|
Latin
America
|
90
|
|
|
68
|
|
|
93
|
|
|
62
|
|
|
115
|
Research and
Development
|
(72)
|
|
|
(75)
|
|
|
(69)
|
|
|
(63)
|
|
|
(65)
|
Corporate
Expenses
|
(45)
|
|
|
(45)
|
|
|
(47)
|
|
|
(58)
|
|
|
(45)
|
Long-Lived Asset and
Goodwill Impairment
|
4
|
|
|
(268)
|
|
|
—
|
|
|
—
|
|
|
—
|
Restructuring and
Exited Business Charges
|
(175)
|
|
|
(86)
|
|
|
(84)
|
|
|
—
|
|
|
—
|
Gain on Sale of
Businesses
|
38
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
Other
Items
|
(30)
|
|
|
(20)
|
|
|
(72)
|
|
|
(320)
|
|
|
(153)
|
Total Operating
Income (Expense)
|
$
|
318
|
|
|
$
|
25
|
|
|
$
|
130
|
|
|
$
|
(50)
|
|
|
$
|
239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
9/30/2014
|
|
6/30/2014
|
|
3/31/2014
|
|
12/31/2013
|
|
9/30/2013
|
Product Service
Line Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Formation Evaluation
and Well Construction (a)
|
2,238
|
|
|
2,202
|
|
|
2,164
|
|
|
2,307
|
|
|
2,330
|
Completion and
Production (b)
|
1,639
|
|
|
1,509
|
|
|
1,432
|
|
|
1,431
|
|
|
1,490
|
Total Product Service
Line Revenues
|
$
|
3,877
|
|
|
$
|
3,711
|
|
|
$
|
3,596
|
|
|
$
|
3,738
|
|
|
$
|
3,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
9/30/2014
|
|
6/30/2014
|
|
3/31/2014
|
|
12/31/2013
|
|
9/30/2013
|
Depreciation and
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
108
|
|
|
$
|
107
|
|
|
$
|
107
|
|
|
$
|
106
|
|
|
$
|
108
|
Middle East/North
Africa/Asia
|
98
|
|
|
103
|
|
|
102
|
|
|
104
|
|
|
101
|
Europe/SSA/Russia
|
54
|
|
|
76
|
|
|
72
|
|
|
78
|
|
|
69
|
Latin
America
|
61
|
|
|
64
|
|
|
64
|
|
|
69
|
|
|
71
|
Research and
Development and Corporate
|
6
|
|
|
5
|
|
|
6
|
|
|
6
|
|
|
3
|
Total Depreciation
and Amortization
|
$
|
327
|
|
|
$
|
355
|
|
|
$
|
351
|
|
|
$
|
363
|
|
|
$
|
352
|
|
|
(a)
|
Formation Evaluation
and Well Construction includes Controlled Pressure Drilling and
Testing, Drilling Services, Tubular Running Services, Drilling
Tools, Integrated Drilling, Wireline Services, Re-entry and
Fishing, Cementing, Liner Systems, Integrated Laboratory Services
and Surface Logging.
|
(b)
|
Completion and
Production includes Artificial Lift Systems, Stimulation and
Chemicals, Completion Systems and Pipeline and Specialty Services.
In September 2014, we completed
the sale of our pipeline and specialty services
business.
|
|
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
|
|
Nine Months
Ended
|
|
|
9/30/2014
|
|
6/30/2014
|
|
9/30/2013
|
|
9/30/2014
|
|
9/30/2013
|
Operating
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Income
|
|
$
|
318
|
|
|
$
|
25
|
|
|
$
|
239
|
|
|
$
|
473
|
|
|
$
|
573
|
Long-Lived
Asset and Goodwill Impairment
|
|
(4)
|
|
|
268
|
|
|
—
|
|
|
264
|
|
|
—
|
North Africa
Restructuring (a)
|
|
81
|
|
|
—
|
|
|
—
|
|
|
81
|
|
|
—
|
Other
Restructuring, Exited Businesses and Severance Cost
(b)
|
|
94
|
|
|
86
|
|
|
20
|
|
|
264
|
|
|
64
|
Gain on Sale
of Businesses
|
|
(38)
|
|
|
—
|
|
|
—
|
|
|
(38)
|
|
|
(8)
|
Legacy
Contracts (c)
|
|
2
|
|
|
2
|
|
|
107
|
|
|
50
|
|
|
131
|
U.S. Government
Investigation Loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153
|
Tax Remediation and
Restatement Expenses
|
|
—
|
|
|
—
|
|
|
8
|
|
|
5
|
|
|
35
|
Professional Fees and
Other (d)
|
|
28
|
|
|
18
|
|
|
18
|
|
|
67
|
|
|
47
|
Total Non-GAAP
Adjustments
|
|
163
|
|
|
374
|
|
|
153
|
|
|
693
|
|
|
422
|
Non-GAAP Operating
Income
|
|
$
|
481
|
|
|
$
|
399
|
|
|
$
|
392
|
|
|
$
|
1,166
|
|
|
$
|
995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Income (Loss)
Before Income Taxes
|
|
$
|
187
|
|
|
$
|
(122)
|
|
|
$
|
80
|
|
|
$
|
60
|
|
|
$
|
24
|
Operating
Income Adjustments
|
|
163
|
|
|
374
|
|
|
153
|
|
|
693
|
|
|
422
|
Devaluation of
Venezuelan Bolivar
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
Non-GAAP Income
Before Income Taxes
|
|
$
|
350
|
|
|
$
|
252
|
|
|
$
|
233
|
|
|
$
|
753
|
|
|
$
|
546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Provision
for Income Taxes
|
|
(98)
|
|
|
(11)
|
|
|
(49)
|
|
|
(136)
|
|
|
(74)
|
Tax Effect on
Non-GAAP Adjustments
|
|
8
|
|
|
(43)
|
|
|
2
|
|
|
(51)
|
|
|
(38)
|
Non-GAAP
Provision for Income Taxes
|
|
$
|
(90)
|
|
|
$
|
(54)
|
|
|
$
|
(47)
|
|
|
$
|
(187)
|
|
|
$
|
(112)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
(Loss)
|
|
$
|
77
|
|
|
$
|
(145)
|
|
|
$
|
22
|
|
|
$
|
(109)
|
|
|
$
|
(74)
|
Long-Lived
Asset and Goodwill Impairment
|
|
(4)
|
|
|
246
|
|
|
—
|
|
|
242
|
|
|
—
|
North Africa
Restructuring (a)
|
|
81
|
|
|
—
|
|
|
—
|
|
|
81
|
|
|
—
|
Restructuring,
Exited Businesses and Severance Cost
|
|
78
|
|
|
68
|
|
|
17
|
|
|
217
|
|
|
48
|
Gain on Sale
of Businesses
|
|
(13)
|
|
|
—
|
|
|
—
|
|
|
(13)
|
|
|
(9)
|
Legacy
Contracts
|
|
4
|
|
|
3
|
|
|
113
|
|
|
54
|
|
|
152
|
U.S.
Government Investigation Loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153
|
Devaluation of
Venezuelan Bolivar
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
Tax
Remediation and Restatement Expenses
|
|
—
|
|
|
—
|
|
|
7
|
|
|
4
|
|
|
30
|
Professional
Fees and Other
|
|
25
|
|
|
14
|
|
|
18
|
|
|
57
|
|
|
49
|
Total Charges,
net of tax
|
|
171
|
|
|
331
|
|
|
155
|
|
|
642
|
|
|
484
|
Non-GAAP Net
Income
|
|
$
|
248
|
|
|
$
|
186
|
|
|
$
|
177
|
|
|
$
|
533
|
|
|
$
|
410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Earnings
(Loss) per Share
|
|
$
|
0.10
|
|
|
$
|
(0.19)
|
|
|
$
|
0.03
|
|
|
$
|
(0.14)
|
|
|
$
|
(0.10)
|
Total Charges,
net of tax
|
|
0.22
|
|
|
0.43
|
|
|
0.20
|
|
|
0.82
|
|
|
0.63
|
Non-GAAP Diluted
Earnings per Share
|
|
$
|
0.32
|
|
|
$
|
0.24
|
|
|
$
|
0.23
|
|
|
$
|
0.68
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Effective Tax
Rate (e)
|
|
52%
|
|
|
(10)%
|
|
|
61%
|
|
|
226%
|
|
|
308%
|
Non-GAAP Effective
Tax Rate (f)
|
|
26%
|
|
|
22%
|
|
|
20%
|
|
|
25%
|
|
|
21%
|
(a)
|
Responsive to the
recent disruptions in North Africa, principally Libya, the Company
incorporated the restructuring of the affected markets into the our
overall restructuring plan recognizing in the three months ended
September 30, 2014, $67 million in asset impairments, $8 million in
severance and $6 million in operating losses related to the exited
businesses.
|
(b)
|
Other Restructuring,
Exited Businesses and Severance Cost includes severance and
restructuring costs of $79 million and $59 million for the three
months ended September 30, 2014 and June 30, 2014, respectively,
associated with our 2014 workforce and cost reduction initiatives,
as well as $15 million and $27 million in operating losses related
to businesses exited for the three months ended September 30, 2014
and June 30, 2014, respectively. These results are presented in
comparison to the severance amounts recognized in the prior
periods.
|
(c)
|
The revenues
associated with the legacy lump sum contracts in Iraq were $76
million, $43 million and $80 million for the three months ended
September 30, 2014, June 30, 2014 and September 30, 2013, and $214
million and $460 million for the nine months ended September 30,
2014 and 2013, respectively.
|
(d)
|
Professional Fees and
Other, during the three months ended September 30, 2014, includes
the cost of our divestiture program, the restatement related
investigation and litigation costs and other charges.
|
(e)
|
GAAP Effective Tax
Rate is 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.
|
Weatherford
International plc
|
Selected Balance
Sheet Data
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/2014
|
|
6/30/2014
|
|
3/31/2014
|
|
12/31/2013
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
582
|
|
|
$
|
571
|
|
|
$
|
367
|
|
|
$
|
435
|
Accounts Receivable,
Net
|
|
3,315
|
|
|
3,340
|
|
|
3,531
|
|
|
3,399
|
Inventories,
Net
|
|
3,317
|
|
|
3,365
|
|
|
3,321
|
|
|
3,290
|
Property, Plant and
Equipment, Net
|
|
7,460
|
|
|
7,588
|
|
|
7,486
|
|
|
7,592
|
Goodwill and
Intangibles, Net
|
|
3,905
|
|
|
4,044
|
|
|
4,013
|
|
|
4,105
|
Equity
Investments
|
|
266
|
|
|
262
|
|
|
297
|
|
|
296
|
Current Assets Held
for Sale
|
|
240
|
|
|
1,034
|
|
|
1,261
|
|
|
1,311
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
1,784
|
|
|
1,822
|
|
|
1,879
|
|
|
1,956
|
Short-term Borrowings
and Current Portion of Long-term Debt
|
|
1,715
|
|
|
2,404
|
|
|
2,283
|
|
|
1,653
|
Long-term
Debt
|
|
7,004
|
|
|
7,021
|
|
|
7,039
|
|
|
7,061
|
Current Liabilities
Held for Sale
|
|
—
|
|
|
189
|
|
|
236
|
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherford
International plc
|
Net
Debt
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
Change in Net Debt
for the Three Months Ended 9/30/2014:
|
|
|
|
|
|
|
|
|
Net Debt at
6/30/2014
|
|
|
|
|
|
|
|
$
|
(8,854)
|
Operating
Income
|
|
|
|
|
|
|
|
318
|
Depreciation
and Amortization
|
|
|
|
|
|
|
|
327
|
Capital
Expenditures
|
|
|
|
|
|
|
|
(383)
|
Restructuring
Charges
|
|
|
|
|
|
|
|
138
|
Increase in
Working Capital
|
|
|
|
|
|
|
|
(121)
|
Income Taxes
Paid
|
|
|
|
|
|
|
|
(86)
|
Interest
Paid
|
|
|
|
|
|
|
|
(177)
|
Acquisitions
and Divestitures of Assets and Businesses, Net
|
|
|
|
|
|
|
|
755
|
Net Change in
Billing in Excess/Costs in Excess
|
|
|
|
|
|
|
|
(35)
|
Other
|
|
|
|
|
|
|
|
(19)
|
Net Debt at
9/30/2014
|
|
|
|
|
|
|
|
$
|
(8,137)
|
|
|
|
|
|
|
|
|
|
Change in Net Debt
for the Nine Months Ended 9/30/2014:
|
|
|
|
|
|
|
|
|
Net Debt at
12/31/2013
|
|
|
|
|
|
|
|
$
|
(8,279)
|
Operating
Income
|
|
|
|
|
|
|
|
473
|
Depreciation
and Amortization
|
|
|
|
|
|
|
|
1,033
|
Capital
Expenditures
|
|
|
|
|
|
|
|
(1,045)
|
Long-Lived
Asset and Goodwill Impairment
|
|
|
|
|
|
|
|
264
|
Restructuring
Charges
|
|
|
|
|
|
|
|
138
|
Increase in
Working Capital
|
|
|
|
|
|
|
|
(314)
|
Income Taxes
Paid
|
|
|
|
|
|
|
|
(291)
|
Interest
Paid
|
|
|
|
|
|
|
|
(436)
|
FCPA /
Sanctioned Country Matters Payment
|
|
|
|
|
|
|
|
(253)
|
Acquisitions
and Divestitures of Assets and Businesses, Net
|
|
|
|
|
|
|
|
795
|
Proceeds from
Sale of Executive Deferred Compensation Treasury
Shares
|
|
|
|
|
|
|
|
22
|
Net Change in
Billing in Excess/Costs in Excess
|
|
|
|
|
|
|
|
(179)
|
Other
|
|
|
|
|
|
|
|
(65)
|
Net Debt at
9/30/2014
|
|
|
|
|
|
|
|
$
|
(8,137)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net
Debt
|
|
9/30/2014
|
|
6/30/2014
|
|
12/31/2013
|
Cash
|
|
$
|
582
|
|
|
$
|
571
|
|
|
$
|
435
|
Short-term
Borrowings and Current Portion of Long-term Debt
|
|
(1,715)
|
|
|
(2,404)
|
|
|
(1,653)
|
Long-term
Debt
|
|
(7,004)
|
|
|
(7,021)
|
|
|
(7,061)
|
Net
Debt
|
|
$
|
(8,137)
|
|
|
$
|
(8,854)
|
|
|
$
|
(8,279)
|
|
"Net Debt" is defined
as debt less cash. Management believes that Net Debt provides
useful information regarding the level of Weatherford indebtedness
by reflecting cash that could be used to repay debt.
|
|
Working capital is
defined as accounts receivable plus inventory less accounts
payable.
|
|
Net Debt above
excludes $13 million and $4 million of short-term debt classified
in current liabilities held for sale at December 2013 and June
2014, respectively.
|
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
|
|
Nine Months
Ended
|
|
|
9/30/2014
|
|
6/30/2014
|
|
9/30/2013
|
|
9/30/2014
|
|
9/30/2013
|
Net Cash Provided by
Operating Activities
|
|
350
|
|
|
$
|
435
|
|
|
$
|
326
|
|
|
$
|
379
|
|
|
567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Capital
Expenditures for Property, Plant and Equipment
|
|
(383)
|
|
|
(376)
|
|
|
(365)
|
|
|
(1,045)
|
|
|
(1,211)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
$
|
(33)
|
|
|
$
|
59
|
|
|
$
|
(39)
|
|
|
$
|
(666)
|
|
|
$
|
(644)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow is defined as net cash provided by or used in
operating activities less capital expenditures. Free cash flow is
an important indicator of how much cash is generated or used by our
normal business operations, including capital expenditures.
Management uses free cash flow as a measure of progress on its
capital efficiency and cash flow initiatives.