Weatherford International Q3 Earnings Call Highlights

Key Points

• Weatherford delivered resilient Q3 results despite weaker Middle East activity, reporting $1.143 billion in revenue, $254 million in adjusted EBITDA and $155 million in adjusted free cash flow. The adjusted EBITDA margin expanded to 22.2%, while free-cash-flow conversion rose to 61%.
• Management expects Q4 revenue of $1.28 billion to $1.33 billion and adjusted EBITDA of $270 million to $290 million, driven largely by year-end equipment deliveries rather than a broad Middle East recovery. Latin America, Venezuela and offshore operations are expected to support growth, while NCS Multistage integration remains on track.
• Balance-sheet strength and 2027 growth investments remain priorities: Weatherford plans to redeem $236 million of senior notes, cutting annual interest expense by about $20 million, and expects international market activity to improve in 2027. The company also sees continued expansion in managed pressure drilling, offshore services and Venezuela.

Weatherford International NASDAQ: WFRD reported third-quarter 2026 revenue of $1.143 billion, adjusted EBITDA of $254 million and adjusted free cash flow of $155 million, as the company cited resilient performance across its contract portfolio despite weaker-than-expected Middle East activity.

Adjusted EBITDA margin reached 22.2%, expanding 204 basis points sequentially and 39 basis points from a year earlier, even as revenue declined 7% year over year. Adjusted free cash flow represented 61% of adjusted EBITDA, up from a 36.8% conversion rate in the third quarter of 2025.

President and CEO Girish Saligram said the quarter absorbed the first full period without the Saudi LSTK contract, the wind-down of Weatherford's original Marmul contract in Oman, and Middle East activity that remained below pre-conflict levels. “This was an excellent quarter,” Saligram said, pointing to margin expansion and cash generation in a subdued operating environment.

Regional Performance and Fourth-Quarter Outlook

Revenue in the Middle East, North Africa and Asia was flat sequentially, but Saligram said the underlying business grew after accounting for the Saudi contract conclusion and the Oman transition. Growth was led by managed pressure drilling, liner hangers, completions and wireline, while profitability improved across all three company segments.

The Middle East, North Africa and Asia region represented 39% of Weatherford's third-quarter business. Saudi Arabia accounted for 20% of the region during the quarter, while the UAE, Oman and Kuwait collectively represented about 41%. Saligram said activity remained relatively strong in the UAE and Oman, was lower in Kuwait and Saudi Arabia, and was “substantially” lower in Iraq.

Management said it has not incorporated a broader Middle East recovery into its near-term outlook, citing lower rig counts in certain countries, delayed tender cycles and continued operational disruptions. However, Weatherford expects mid- to high-single-digit sequential revenue growth in the region in the fourth quarter, primarily due to year-end deliveries of completions, liner hanger and cementing products rather than a recovery in underlying service activity.

Latin America revenue rose 14% sequentially, driven by Mexico and the Caribbean. Saligram said Weatherford continued to receive regular payments from its largest Mexican customer, marking a significant improvement from conditions 18 months earlier. The company also recorded its first Venezuela revenue in the third quarter and expects a more tangible contribution in the fourth quarter, though startup costs will weigh on results.

Weatherford sees potential for Venezuela to reach triple-digit revenue in 2027, with further growth possible in 2028 if conditions remain stable. Saligram said the outlook is supported by purchase orders, ongoing contracting activity and hiring, although he did not quantify startup costs or identify customers.

Europe, Sub-Saharan Africa and Russia revenue declined 9% sequentially, pressured by lower activity and a Norway labor strike early in the quarter. The company expects the region to remain roughly flat in the fourth quarter. North America increased partly because of a one-month contribution from the NCS Multistage acquisition; Weatherford expects a full-quarter contribution from NCS in the fourth quarter.

For the fourth quarter, Weatherford forecast revenue of $1.28 billion to $1.33 billion and adjusted EBITDA of $270 million to $290 million. Management expects margins to decline modestly from third-quarter levels, reflecting the mix of equipment deliveries, North American year-end sales and Venezuela startup expenses. The company expects adjusted free cash flow of more than $100 million.

Offshore Growth and NCS Integration

Weatherford highlighted offshore activity as a durable multiyear growth theme, particularly in Brazil, West Africa, the Mediterranean and Asia. The company said its managed pressure drilling, tubular running services, interventions and completions offerings are positioned to benefit from rising deepwater project sanctioning.

Its Drilling and Evaluation segment revenue rose 14% sequentially, while margins expanded by more than 700 basis points. Managed pressure drilling capital sales contributed to the increase. Saligram said the company expects some variability from equipment sales but sees a growing aftermarket opportunity as additional deepwater systems are installed.

Weatherford estimates that about 70% of drillships either have or are installing a managed pressure drilling system, and it believes that figure could rise to 85% to 90%. The company projects its managed pressure drilling business will grow by more than 10% this year, with further growth in 2027. Its aftermarket component is expected to more than double in 2026 and could double again over the next several years.

The company also cited offshore completions awards from TotalEnergies in Denmark, Exxon in Nigeria, Equinor on the Norwegian Continental Shelf and Seplat Energy in Nigeria. Weatherford said completions is now its largest product line. Separately, the legacy NCS business secured an award for frac sleeves and service tools in the Deepwater Gulf of America, with work expected to begin in the first quarter of 2027.

Weatherford completed its acquisition of NCS Multistage during the quarter. Management said integration is progressing as planned and cost-synergy initiatives remain on track to deliver at least $15 million within 18 months of closing. The company also cited early cross-selling opportunities in Argentina, the Middle East and the North Sea.

Cash Flow, Balance Sheet and 2027 View

Year-to-date adjusted free cash flow totaled $379 million, up 55% from a year earlier, with a 53% conversion rate. CFO Anuj Dhruv said Weatherford raised its full-year adjusted free cash flow conversion outlook to the high-40% range, from a prior mid- to high-40% range.

Capital expenditures were $45 million in the third quarter, or 3.9% of revenue. Fourth-quarter capital spending is expected to increase to $70 million to $80 million as Weatherford accelerates investments tied to anticipated 2027 demand, while full-year spending remains within the company's 3% to 5% of revenue target range.

Weatherford ended the quarter with about $1.2 billion of cash, approximately $1.8 billion in total liquidity and net leverage of 0.28 times. The company returned $47 million to shareholders during the quarter through $19 million in dividends and $28 million in share repurchases.

On Oct. 20, Weatherford issued notice to redeem all $236 million of its 8.625% senior notes due 2030 using cash on hand. Dhruv said the redemption will reduce annualized cash interest expense by about $20 million and leave the company without debt maturities for the next seven years.

Looking to 2027, management expects international activity outside the Middle East to rise by mid- to high-single digits, led by Latin America and Asia, while North America activity is expected to increase by low single digits. Assuming Middle East activity remains near current levels, Weatherford expects global market activity to increase by the mid-single digits, with a more noticeable improvement beginning in the second quarter.

Saligram said Weatherford expects to outperform that market backdrop through NCS contributions, share gains in selected areas and Venezuela's reopening. The company expects year-over-year margin improvement in 2027 and reiterated its longer-term goal of mid-20% adjusted EBITDA margins and 50% free cash flow conversion.

About Weatherford International (NASDAQ:WFRD)

Weatherford International plc is an energy services company that provides equipment, technology and services to the oil and natural gas industry. Its offerings support the life cycle of a well, from drilling and formation evaluation to completion, production, intervention and abandonment.

The company's product and service portfolio includes drilling systems, well logging and evaluation tools, completion equipment, artificial-lift systems, production optimization technologies, well intervention services and digital solutions.

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