Weatherford International PLC (WFRD) Earnings & Analysis

Latest quarter

Weatherford’s third-quarter revenue beat the consensus by 1.03%, while adjusted earnings per share of $1.66 beat the $1.21 consensus by 37.2%. Revenue was $1.1 billion, compared with $1.2 billion a year earlier; diluted earnings per share rose to $1.66 from $1.12.

The company’s filing attributed the revenue decline primarily to market disruptions caused by the Iran conflict and lower North American activity. It reported lower revenue across all three segments, with service revenue down 8% and product revenue down 6% year over year. The filing said the Middle East, North Africa and Asia region led the geographic decline, partly offset by growth in Latin America.

Weatherford reported a gross margin of 32.7%, up from 31.5%, while operating margin was 13.4%, compared with 14.4% a year earlier. The filing attributed lower operating income primarily to declining revenue, partly offset by lower costs. CFO Anuj Dhruv said adjusted free cash flow rose to $155 million, helped by collections and capital spending discipline.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Girish Saligram said third-quarter revenue grew 3% from the preceding quarter even as Weatherford completed its first full quarter without the Saudi LSDK contract and wound down its original Marmool contract in Oman. He cautioned that Middle East “upstream activity has not recovered fully,” with lower rig counts, delayed tenders and operational disruptions.

Pressed on why regional revenue could rise while underlying activity remained subdued, Saligram pointed to the seasonal timing of completions, liner hanger and cementing product deliveries. He said Weatherford had purchase orders for those deliveries but was assuming no change in the base level of service activity.

Saligram said Latin American revenue rose 14% sequentially, led by Mexico and the Caribbean, and that collections from the largest Mexican customer had been consistent. Weatherford began generating revenue in Venezuela during the quarter, he said, and expects a contribution in the fourth quarter alongside startup costs. Asked about those costs, Saligram described facility refurbishment, hiring and inventory needs but declined to quantify them by country or project.

On margins, Saligram said managed pressure drilling equipment sales helped expand Drilling and Evaluation segment margins. In response to a question about the fourth quarter, he cited Venezuela startup costs and typically lower-margin North American year-end sales; CFO Anuj Dhruv said the expected revenue mix would leave adjusted EBITDA margin modestly below the third quarter.

Saligram said the integration of NCS Multistage was tracking toward at least $15 million in cost synergies within 18 months of closing, while Weatherford was pursuing international cross-selling opportunities. Asked about potential revenue synergies, he described offshore, reservoir monitoring and geothermal opportunities but declined to put a specific number on them.

Dhruv said fourth-quarter capital spending would increase as Weatherford prepares for demand in 2027. He added that the timing of payments from its largest Mexican customer remains a variable in quarterly free cash flow.

Guidance

Dhruv said Weatherford raised its full-year 2026 adjusted free cash flow conversion outlook to the high 40% range, from the mid to high 40% range given in July. Saligram said the company also narrowed its full-year adjusted EBITDA range around a midpoint slightly below the one it gave in July.