Weatherford International PLC (NYSE:WFT) Q3 2015 Earnings Conference Call - Final Transcript

Oct 22, 2015 • 08:30 am ET


Weatherford International PLC (NYSE:WFT) Q3 2015 Earnings Conference Call - Final Transcript


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Good morning. My name is Lori and I will be your conference operator today. At this time I would like to welcome everyone to the Weatherford International Third Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be question-and-answer session. [Operator Instructions]. As a reminder, ladies and gentlemen, today's call is being recorded. Thank you.

I would now like to turn the conference over to Karen David-Green, Vice President, Investor Relations and Corporate Communications. Ms. David-Green, you may begin your conference.

Karen David-Green

Thank you, Lori, and good morning, everyone. With me on today's call from Houston we have Bernard Duroc-Danner, Chairman, President, and Chief Executive Officer, and Krishna Shivram, Executive Vice President and Chief Financial Officer.

Before we start our comments, I'd like to remind our audience some of today's comments may include forward-looking statements and non-GAAP financial measures. Please refer to our third quarter press release for the customary caution on forward-looking statements and a reconciliation of GAAP to nonGAAP financial measures.

And now I'd like to hand over the call to Krishna.

Krishna Shivram

Thank you, Karen. Good morning, everyone. Today I'm going to focus most of my comments on the cash flow and the balance sheet, including debt and debt covenants. I will start with a brief recap of our operating performance in the third quarter.

Sequential incrementals were 2% and year-over-year decrementals were 29%, which are not only excellent but also leagues ahead of the decrementals registered in 2009. On a full nine-month basis, year-to-date decrementals were a best-in-class 28% and easily beat our larger peers, whose decrementals range between 31% and 40%. These low decrementals are a testament to the effectiveness of the cost-management efforts made by the Company this year in response to the down cycle.

Loss per share for the quarter before charges and credits was $0.05. Revenue of $2.24 billion for the quarter decreased 6% sequentially and 42% year-on-year. Operating income margins before R&D and corporate expenses improved by 47 basis points sequentially to 5.4%. On an overall basis, sequential improvements in our North American operations and our international Land Drilling Rigs business more than offset a decline in our international performance. Below operating margins, both our R&D and corporate costs show sequential declines, reflecting cost-reduction steps that were taken. Going forward, both R&D and corporate costs will continue to trend down from third quarter levels.

Foreign-exchange losses consumed $0.02 of EPS, and asset write-offs in sub-Sahara Africa of $0.01 completely offset a gain of $0.03 on repurchasing long-dated bonds that were quoting well below par during the third quarter. In addition, this repurchase will reduce annual interest cost by $15 million in 2016 and beyond. The tax benefit recorded in the third quarter reflected the tax benefit on the losses in the US primarily, which are recoverable, partly offset by tax provisions internationally, where we continue to be profitable. The weighted average tax rate for the year will be in the