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    WFRD
    Earnings call· Mar 2026(Q1 FY26)

    Weatherford International Q1 FY26 earnings call WFRD

    Apr 22, 2026 Source

    Executive summary

    Weatherford Q1 FY26 — Strong International Performance and Positive Outlook Despite Middle East Headwinds

    Weatherford navigated a challenging first quarter marked by seasonal declines and geopolitical conflict in the Middle East, which impacted revenue and margins. Despite these headwinds, the company delivered strong free cash flow and improved working capital efficiency, supported by consistent collections in Mexico. Management expressed a significantly more constructive outlook for the second half of 2026 and into 2027, citing structural tailwinds from energy security priorities and anticipated reacceleration of activity, particularly in international and offshore markets.

    Highlights

    4

    • Adjusted free cash flow of $85 million, representing a 36.5% conversion, up from 26.1% in Q1 2025.

    • Adjusted net working capital improved by approximately 100 basis points sequentially to 27.9% of revenues.

    • Secured key contracts including a multiyear integrated completions contract with TotalEnergies in Denmark and a 5-year TRS contract with Phu Quoc POC in Vietnam.

    • Achieved a new global record for extended reach wireline work in Saudi Arabia, logging over 29,000 feet measured depth.

    Concerns

    4

    • Revenue declined 11% sequentially to $1.152 billion, primarily due to typical Q1 seasonality and the Iran conflict.

    • Middle East conflict is expected to result in a $30 million to $50 million profit impact over the first half of the year.

    • North America was modestly softer with U.S. land activity remaining under pressure.

    • Q2 2026 revenue guidance of $1.017 billion to $1.110 billion and adjusted EBITDA of $195 million to $220 million reflect sequential decline due to Middle East disruptions.

    Guidance & targets

    9
    CategoryTargetConfidence
    Q2 2026 Revenue
    $1.017 billion to $1.110 billion
    high materiality
    High
    Q2 2026 Adjusted EBITDA
    $195 million to $220 million
    high materiality
    High
    Q2 2026 Adjusted Free Cash Flow
    broadly in line with first-quarter levels
    medium materiality
    Medium
    Full-year 2026 Revenue
    $4.5 billion to $4.95 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $945 million to $1.075 billion
    high materiality
    High
    Full-year 2026 Adjusted Free Cash Flow Conversion
    mid-40% range
    high materiality
    High
    Full-year 2026 Effective Tax Rate
    low to mid-20% range
    medium materiality
    High
    Second Half 2026 International Revenues
    possibly be up year-on-year
    medium materiality
    Medium
    2027 Growth
    a year of growth
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    WCC (Well Construction and Completions)
    Revenue was largely flat year-over-year, with higher Liner Hanger activity partly offsetting lower cement position products and TRS activity in MENA.
    Liner Hanger activity: higherCement position products activity: lowerTRS activity in MENA: lower
    		largely flat———
    DRE (Drilling and Evaluation)
    Revenue declined 8% year-over-year, primarily from lower activity in Latin America, MENA, and North America, partly offset by higher wireline and drilling services activity in Europe.
    Activity in Latin America: lowerActivity in MENA: lowerActivity in North America: lowerWireline and drilling services activity in Europe: higher
    		declined 8%-8%——
    PRI (Production and Reservoir)
    Revenue declined 11% year-over-year, mostly driven by the sale of the Pressure Pumping business in Argentina, partly offset by higher subsea intervention activity.
    Sale of Pressure Pumping business in Argentina: impact on revenueSubsea intervention activity: higher
    		declined 11%-11%——
    Latin America
    Declined sequentially as expected, but partly offset by higher artificial lift in Argentina. Mexico saw meaningful progress with strong and consistent collections.
    Artificial lift in Argentina: higher
    		——declined sequentially—

    Operational metrics

    14
    Adjusted EBITDA margin
    20.2%
    Q1 FY26

    Typical Q1 seasonality and the Iran conflict exacerbated lower margins.

    Adjusted free cash flow conversion
    36.5%vs 26.1% in Q1 FY25
    Q1 FY26

    Compares favorably to the prior year, driven by improved collections.

    Adjusted net working capital as percentage of revenues
    27.9%sequential improvement of ~100 bps
    Q1 FY26

    Driven largely by improved collections relative to the revenue base, supported by Mexico payments.

    CapEx as percentage of revenues
    4.7%
    Q1 FY26

    CapEx was $54 million in Q1 FY26.

    CapEx
    $54 milliondown ~$23 million vs Q1 FY25
    Q1 FY26

    Aligning budgets with current market conditions; full year 2026 midpoint expected to decline relative to 2025.

    CapEx range
    3% to 5%
    through-cycle

    Company remains within this stated range for CapEx.

    Shareholder returns (Q1 FY26)
    $30 million
    Q1 FY26

    Reflects a 10% increase in the quarterly dividend announced in January.

    Cumulative shareholder returns
    more than $330 million
    since inception

    Returned via share repurchases and dividends since the inception of the program.

    Cash and restricted cash
    $1.05 billion
    Q1 FY26 end

    Balance sheet remains very strong.

    Net leverage ratio
    well below 0.5x
    Q1 FY26 end

    Reflects focus on strengthening the capital structure over time.

    Mexico outstanding balance
    $283 million
    March 31

    Company is constructive on continued collections over time.

    Interest expense reduction
    $35+ millionvs 2025
    run rate

    Expected benefits from lower interest due to debt deleveraging and refinancing in 2025.

    MPD market opportunity (drillships)
    30+
    next couple of years

    Significant opportunity for drillships to be equipped with MPD systems.

    Supply chain diversification
    —
    past couple of years

    Team has done a fabulous job in continuing to diversify supply chain, having multiple sources of supply, and moving to lower-cost countries.

    Industry KPIs

    5
    MetricValueDetails
    FCF CAPEX leverage36.5%%
    M a integration progress—
    Aftermarket installed base—
    Orders bookings by segment—
    Segment adjusted EBITDA margin20.2%%

    Deals & partnerships

    5
    TotalEnergiesMultiyear integrated completions contractmultiyear

    Contract for operations in Denmark.

    Phu Quoc POCTRS (Tubular Running Services) contract5-year

    Contract for operations in Vietnam.

    ShellMultiyear artificial lift contractmultiyear

    Contract to provide artificial lift in Argentina.

    ArgentinaSale of Pressure Pumping business

    Divestiture of the Pressure Pumping business in Argentina, which was capital-intensive and not technology differentiated for Weatherford.

    Ireland / United States (Texas)Proposal to re-domesticate corporate structure

    Proposal to re-domesticate from Ireland to the United States, specifically Texas, subject to shareholder vote. This is a corporate structural change, not impacting day-to-day operations.

    Capital programs

    1
    IT-related spend on ERP systemsunderway
    Period spend: increase

    The mix of CapEx spend in 2026 will see an increase in IT-related spend on ERP systems, while product and service line assets decline.

    Risks & headwinds

    4
    Iran conflict / Middle East geopolitical conflictH1 FY26

    $30 million to $50 million profit impact over the first half of the year

    Mitigation: Prioritizing employee safety, ensuring business continuity, coordinating with customers and local authorities, leveraging strong manufacturing and supply chain base in the region, working through alternative logistics routes.

    Logistical disruptions and elevated freight costsQ1 FY26 and Q2 FY26

    Freight costs have risen dramatically; 60% revenue impact / 40% cost impact split for Middle East profit impact

    Mitigation: Utilizing built-in inventory levels, working out alternative logistics routes, diversifying supply chain, moving to lower-cost countries for sources of supply.

    North America market softnessQ1 FY26

    Modestly softer; U.S. land activity remained under pressure

    Mitigation: Portfolio is well-positioned to benefit from the production side of growth; Canada and U.S. offshore are positive.

    Storage capacity constraints in Middle EastQ2 FY26

    Storage capacity is essentially running out and there's nowhere to go with the barrels

    Mitigation: Waiting for the Strait of Hormuz to fully open and for a permanent ceasefire to allow full normalization of operations.

    What to watch in Q2 FY26

    5

    Middle East operations normalization

    over the course of Q2 FY26 and into H2 FY26
    CurrentDisrupted, with $30M-$50M profit impact expected in H1 FY26
    TargetReturn to pre-conflict levels, with activity ramping up significantly

    Why it matters

    Resolution of the conflict is crucial for the company to achieve its second-half growth expectations and capitalize on structural market tailwinds.

    However, it goes without saying that the conflict in the Middle East must conclude and operations must normalize to pre-conflict levels.

    Q&A highlights

    7

    Asked about the structural shift in the market, areas of excellence, and the nature of conversations with customers regarding the positive outlook.

    Management confirmed the positive shift, attributing it to the need to restart production, additional intervention work for wells, and increased drilling. They highlighted the fundamental rewriting of energy security as a strategic priority, leading to customers expanding strategic reserves and emphasizing local operations to reduce import reliance. This is expected to lead to structurally higher oil and LNG prices and increased demand for services.

    “But from a business standpoint, as this conflict comes to an end, we think it's going to really result in structural dynamics that are very beneficial.”

    asked by John Anderson · answered by Girish Saligram

    2 min read6 chapters

    Detailed Narrative

    01

    Middle East Conflict Impact and Navigation

    The Iran conflict significantly impacted Q1, driving delays, dropped drilling/workover activity, and project suspensions in multiple Middle East countries. While Q1 financial impact was offset by other international regions, the prolonged nature of the conflict is expected to show more clearly in Q2 due to lead times, inventory drawdowns, and logistical bottlenecks. Management estimates a $30 million to $50 million profit impact over the first half of the year, assuming normalization towards the latter part of Q2.

    02

    Mexico Collections and Working Capital Efficiency

    Weatherford continued to make meaningful progress in Mexico, with collections remaining strong and consistent, reinforcing confidence in new payment mechanisms. This contributed to a sequential improvement in working capital efficiency by approximately 100 basis points. The company's largest customer in Mexico has made payments like clockwork through a $13 billion mechanism from Banobras, leading to optimism for full-year free cash flow generation.

    03

    Structural Market Dynamics and Outlook

    Management believes the industry is entering a period of multiyear visibility, driven by a fundamental rewriting of energy security as a strategic priority. Conversations with national oil companies and independents are now focused on adding productive capacity, redundancy, and hardening infrastructure. The demand destruction seen in Q1 is viewed as cyclical, while the required supply response is structural and multiyear, leading to a constructive outlook for H2 2026 and 2027.

    04

    Portfolio Pruning Strategy

    The company is taking further actions to fine-tune its portfolio through a series of small, noncore divestitures, each smaller than the Argentina Pressure Pumping divestiture. These divestitures aim to remove lower-margin revenue, reduce capital intensity, and align with strategic priorities focused on technology differentiation, capital-light businesses, and value-add operations. The process is systematic, aiming to monetize these assets.

    05

    Offshore and MPD Growth Potential

    Offshore deepwater activity is showing early signs of improvement, particularly in core basins like the Gulf of America, Brazil, the Caribbean, and the Caspian Sea. The company sees significant growth potential in Managed Pressure Drilling (MPD), with an estimated opportunity for 30-odd drillships to be equipped with MPD systems in the coming years. Weatherford is well-positioned with its rental fleet, capital sales, aftermarket service agreements, and technology differentiation in deepwater MPD.

    06

    Re-domestication to the United States

    Weatherford announced a proposal to re-domesticate from Ireland to the United States, specifically Texas. This move is intended to simplify the corporate structure, enhance capital management flexibility, and support long-term shareholder value creation. It is also expected to improve the company's position from an M&A and tax perspective, contributing to the target of 50% free cash flow conversion.

    AI-generated summary of the company’s earnings call. Not investment advice.