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    WFRD
    Earnings call· Jun 2026(Q2 FY26)

    Weatherford International plc WFRD

    Jul 22, 2026 Source

    Executive summary

    Weatherford Q2 FY26 — Strong Margins and Cash Flow Amidst Geopolitical Headwinds

    The company delivered robust Q2 FY26 margins and exceptional free cash flow conversion, demonstrating strong operational discipline amidst persistent geopolitical challenges in the Middle East and activity declines in Mexico. Management is strategically enhancing its portfolio through the NCS Multistage acquisition and focusing on technology differentiation to capitalize on a strengthening multi-year demand cycle, while maintaining a strong balance sheet and commitment to shareholder returns.

    Highlights

    5

    • Achieved adjusted EBITDA margin of 20.2% in Q2 FY26, essentially flat sequentially despite significant headwinds.

    • Generated adjusted free cash flow of $139 million, representing a 62.3% conversion on adjusted EBITDA.

    • Improved adjusted net working capital as a percentage of revenues to 27% in Q2 FY26.

    • Reduced net leverage ratio to 0.34x, maintaining investment-grade equivalent ratios.

    • Increased full-year 2026 adjusted free cash flow conversion outlook to the mid- to high 40% range.

    Concerns

    4

    • Middle East activity profile not returning to pre-conflict levels, resulting in a $30 million to $50 million profit impact in H1 FY26, expected to increase for the full year.

    • Experienced revenue decline in Saudi Arabia due to the conclusion of the LSTK contract, with further visibility expected in H2 FY26.

    • Latin America revenue declined sequentially, driven by Mexico activity below expectations and deferred wells.

    • A union strike in Norway impacted activity late in Q2 FY26 and is anticipated to remain a headwind into Q3 FY26.

    Guidance & targets

    8
    CategoryTargetConfidence
    Q3 FY26 Revenue
    $1.105 billion to $1.155 billion
    high materiality
    High
    Q3 FY26 Adjusted EBITDA
    $235 million and $265 million
    high materiality
    High
    Q3 FY26 Adjusted Free Cash Flow
    more than $100 million
    high materiality
    Medium
    Full-year 2026 Revenue
    $4.54 billion to $4.80 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $951 million to $1.046 billion
    high materiality
    High
    Full-year 2026 Adjusted Free Cash Flow Conversion
    mid- to high 40% range
    high materiality
    High
    Full-year 2026 Effective Tax Rate
    low to mid-20% range
    medium materiality
    High
    Annual Cash Savings
    approximately $20 million to $30 million
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Well Construction and Completions (WCC)
    Primarily due to lower activity in MENA, partly offset by higher completions activity in Latin America.
    		—declined 5%——
    Drilling and Reservoir Evaluation (DRE)
    Primarily from lower wireline and drilling-related services activity in MENA, partly offset by higher managed pressure drilling activity in ESSR (Europe, sub-Saharan Africa, and Russia).
    		—declined 13%——
    Production and Reservoir Integrity (PRI)
    Primarily from lower artificial lift activity in North America and Latin America.
    		—declined 3%——
    Latin America
    Driven predominantly by Mexico, where activity came in below expectations. Cost structure aligned to current activity levels. Venezuela showing tangible contribution potential to revenue and margins in 2027.
    		——declined sequentially—
    Europe, sub-Saharan Africa and Russia (ESSR)
    Grew on higher activity despite labor strike in Norway impacting activity late in Q2. Norway strike will remain a headwind into Q3. Russia revenues as a percent of enterprise revenue increased due to decline in rest of world.
    		——grew sequentially—
    North America
    Decline driven by seasonal spring breakup in Canada. U.S. land had positive sequential quarter with slight rig count increase.
    		——declined—

    Operational metrics

    10
    Adjusted EBITDA
    $223 millionessentially flat to Q1
    Q2 FY26

    Despite incremental pressures from Middle East activity, Indonesia declines, pricing headwinds, and Norway strike.

    Adjusted Net Working Capital as % of Revenues
    27%sequential improvement of approximately 90 basis points
    Q2 FY26

    Second consecutive quarter of improvement, driven by better receivables and payables management. Goal is 25% or better.

    Capital Expenditures
    $42 milliondown approximately $12 million compared to Q2 2025
    Q2 FY26

    Company remains within target range, making prudent trade-offs with cash returns guiding decisions.

    Total Shareholder Returns
    $36 million
    Q2 FY26

    Part of the shareholder return program.

    Cumulative Shareholder Returns
    more than $370 million
    Since inception

    Via share repurchases and dividends.

    Cash and Restricted Cash
    $1.14 billion
    End of Q2 FY26

    Part of the company's strong balance sheet.

    Total Liquidity
    $1.7 billion
    End of Q2 FY26

    Provides degrees of freedom for strategic opportunities.

    Middle East Conflict Financial Impact
    $30 million to $50 million
    H1 FY26

    Within outlined range, but expected to increase over the course of the year due to recent flare-up.

    Venezuela Revenue and Margin Contribution
    tangible contribution
    2027

    Pipeline of opportunities growing with multiple customers; expecting to close some in H2 FY26. At its peak, Venezuela was about $0.5 billion for Weatherford.

    Adjusted Free Cash Flow Conversion
    around 49%
    Q1+Q2 FY26 combined

    Gives confidence to revise full-year outlook higher.

    Industry KPIs

    5
    MetricValueDetails
    FCF CAPEX leverage62.3%%
    M a integration progressat least $15 millionUSD
    Digital recurring revenue—
    Aftermarket installed base—
    Orders bookings by segmentMultiple deepwater awards (Brazil, West Africa, Australia), 2x 5-year contracts (Kuwait), 22-month contract (Thailand), 3-year Marmul extension (Oman)

    Deals & partnerships

    10
    NCS MultistageExpands completions portfolio and deepens exposure to unconventional resources.Consideration structured predominantly in equity

    Approved by boards of both companies and NCS' controlling shareholder. Subject to regulatory approvals and customary closing conditions. Industrial logic: technology spans completions design, execution, production optimization, late-life intervention; enhances well construction products; deepens exposure to unconventional resources in North America, Middle East, Argentina, and offshore.

    PDO3-year contract to provide integrated drilling services covering 247 wells in the Marmul field.3 years

    Supports both production and injection operations, following successful completion of 837 wells contract awarded in 2022. Commences in Q3 FY26.

    Constellation Oil Services2 contracts for offshore well intervention and MPD in deep water.

    Part of building momentum with new contract wins.

    Ventura OffshoreComplete MPD solution for the SSV Victoria.

    Part of building momentum with new contract wins.

    Valaris2-year contract for MPD equipment and services offshore.2 years

    Part of building momentum with new contract wins.

    Global CorporationMultiple MPD contracts and a global aftermarket agreement.

    Part of building momentum with new contract wins.

    Esso Exploration and Production NigeriaDeepwater integrated completions contract covering upper and lower completion solutions.

    Part of building momentum with new contract wins.

    Chevron5-year framework contract for tubular running services, casing accessories and other tools.5 years

    Supports a deepwater development project.

    KOC2 5-year contracts for cementation products and completion services.5 years

    Part of building momentum with new contract wins.

    PTTEP22-month downhole deployment out contract.22 months

    Part of building momentum with new contract wins.

    Risks & headwinds

    5
    Middle East geopolitical conflictOngoing, H2 FY26

    Financial impact in H1 FY26 was within $30 million to $50 million profit range; expected to increase over the course of the year.

    Mitigation: Tightly managing costs, ensuring safety and business continuity, adapting to evolving market conditions, adjusting guidance.

    Revenue decline from Saudi LSTK contract conclusionH2 FY26

    Revenue decline in Q2 FY26, further visible in H2 FY26.

    Mitigation: Comfortable not having LSTK contract given pricing levels; focus on technology differentiation and higher quality revenue; strong presence in Saudi for value-added services.

    Latin America (Mexico) activity below expectationsQ2 FY26, potential for H2 FY26

    Latin America declined sequentially; several wells deferred.

    Mitigation: Aligned cost structure and footprint to current activity levels; positioned to respond quickly as activity increases; strong collections from largest customer.

    Labor strike in NorwayQ2 FY26, headwind into Q3 FY26

    Impacted activity late in Q2 FY26.

    Mitigation: Adjusting operations and logistics.

    Activity declines in Indonesia and pockets of pricing headwindsQ2 FY26

    Contributed to pressures in Q2 FY26.

    Mitigation: Focus on technology differentiation and competitive cost base to offset pricing weakness.

    What to watch in Q3 FY26

    5

    Middle East Conflict Financial Impact

    Next quarter (Q3 FY26)
    Current$30 million to $50 million profit impact in H1 FY26
    TargetModeration of financial impact, not increasing.

    Why it matters

    The ongoing geopolitical situation significantly impacts profitability and operational stability in a key region.

    The financial impact in the first half was within the $30 million to $50 million profit range we outlined on our last call. And given the recent flare up, we expect that to increase over the course of the year and have incorporated that into our guidance.

    Q&A highlights

    6

    How will Weatherford balance top-line growth with margin discipline, especially given walking away from low-margin contracts like the Saudi LSTK?

    Girish emphasized the need for top-line growth but reiterated the discipline of walking away from low-margin work if it doesn't provide strategic returns or capability addition. He highlighted the confidence in current backlog and pipeline for higher-margin work, evidenced by resilient Q2 margins and Q3 guidance.

    “there are contracts that we will be okay walking away from if it doesn't provide the right returns.”

    asked by John Anderson · answered by Girish Saligram

    2 min read6 chapters

    Detailed Narrative

    01

    Middle East Impact and Recovery Dynamics

    The Middle East region experienced significant disruption in Q2 FY26 due to geopolitical events, leading to activity suspensions, project deferrals, and elevated logistics costs. The financial impact in H1 FY26 was within the previously outlined $30 million to $50 million profit range, and this is expected to increase for the full year. While signs of recovery emerged late in the quarter, recent flare-ups introduce uncertainty, though management expects moderation in the financial impact.

    02

    Strategic Portfolio Enhancement and M&A

    Weatherford is actively enhancing its portfolio through technology differentiation, exemplified by the proposed acquisition of NCS Multistage. This acquisition expands the completions portfolio, deepens exposure to unconventional resources, and leverages Weatherford's global footprint for distribution. The deal is structured predominantly in equity, preserving balance sheet strength, and is expected to generate at least $15 million in annual cost synergies within 18 months.

    03

    Mexico and Venezuela Activity Trends

    Latin America saw a sequential decline, primarily due to Mexico where activity was below expectations and several wells were deferred. However, collections from the largest customer in Mexico were strong, supporting working capital. In contrast, Venezuela has shown surprising progress, with growing opportunities and anticipation of tangible revenue and margin contributions in 2027, potentially building from a few million to tens of millions of dollars.

    04

    Strengthening Offshore Market and Restructuring

    Management highlighted a strengthening offshore cycle, with several new contract wins across deepwater well intervention, managed pressure drilling (MPD), and integrated completions in regions like Brazil, West Africa, and Australia. The company is restructuring its offshore operations to provide consistent execution and commercialization across geographies, coupled with centers of excellence like the Managed Pressure Wealth Center.

    05

    Redomestication to Delaware Update

    The company is pursuing redomestication to Delaware after a prior proposal to Texas fell short of the required 75% approval. A definitive proxy statement has been filed for a September 3 shareholder vote. This move is expected to generate $20 million to $30 million in annual cash savings starting in 2027, without impacting global footprint or operations.

    06

    Sustained Focus on Free Cash Flow and Returns

    Weatherford continues its focus on free cash flow generation, achieving $139 million in adjusted free cash flow at a 62.3% conversion in Q2 FY26. This is attributed to structural improvements in working capital discipline, capital intensity (CapEx at 3.8% of revenue), and asset utilization. The full-year 2026 free cash flow conversion outlook has been raised to the mid- to high 40% range, nearing the 50% through-cycle target.

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