Weatherford International plc (NYSE:WFT) Q4 2018 Earnings Conference Call Transcript

Oct 29, 2018 • 08:30 am ET

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Weatherford International plc (NYSE:WFT) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning. My name is Carol, and I will be your conference operator today. At this time, I would like to welcome everyone to the Weatherford International Third Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. (Operator Instructions) As a reminder, ladies and gentlemen, today's call is being recorded.

I would now like to turn the conference over to Karen David-Green, Vice President of Investor Relations, Marketing and Communications. Ma'am, you may begin your conference.

Executive
Karen David-Green

Thank you, Carol. Good morning, and welcome to the Weatherford International third quarter conference call. With me on today's call, we have Mark McCollum, President and Chief Executive Officer; and Christoph Bausch, Executive Vice President and Chief Financial Officer. Today's call is being recorded, and a replay will be available on Weatherford's website for 10 days.

Before we begin with our prepared statements, I'd like to remind our audience that some of today's comments may include forward-looking statements. These matters may involve risks and uncertainties that could cause our actual results to differ materially from our forward-looking statements. Please refer to our latest Form 10-K, 8-K and other SEC filings for risk factors and cautions regarding forward-looking statements.

A reconciliation of GAAP to non-GAAP financial measures is included in our third quarter press release and accompanying presentation, which can be found on our website. Christoph will now provide an overview of our third quarter results, followed by Mark's comments on our strategy and progress of our transformation. Following these prepared statements, we welcome your questions.

And now, I'd like to turn the call over to Christoph.

Executive
Christoph Bausch

Thank you, Karen. Revenue in the third quarter of 2018 was $1.44 billion, essentially flat compared to the second quarter of 2018 and slightly lower than the $1.46 billion of revenue reported for the third quarter of 2017. Sequentially, seasonal improvements in Canada, activity increases in Continental Europe and deliveries of liner hangers delayed from the previous quarter were offset by lower activity levels in the United States and foreign exchange impacts in Latin America.

On a year-over-year basis, higher revenues associated with integrated services projects in Latin America were offset by lower activity levels in Canada as crude oil differentials expanded, reducing demand for completions and production services and products. Results in Russia were also negatively impacted by adverse foreign exchange rate effects although activity levels remain broadly flat.

Operating loss for the third quarter of 2018 was $13 million. Segment operating income in the third quarter of 2018 was $116 million, up $47 million or 68% sequentially and up $123 million year-over-year. The sequential improvement was mainly driven by seasonal activity increases in Canada and higher margins across all segments on reduced costs and improved efficiencies as a result of our transformation efforts.

Significant year-over-year operating income improvements were due to improved operating efficiencies and reduced expenses as a result of our transformation. Higher revenues in Latin America produced solid incremental margins, which more than offset relatively weak results