Good day, and welcome to the Weatherford Fourth Quarter 2025 Results Conference Call. [Operator Instructions] Please also note today's event is being recorded. I would now like to turn the conference over to Luke Lemoine, Senior Vice President, Corporate Development. Please go ahead.

Welcome, everyone, to the Weatherford International Fourth Quarter and Full Year 2025 Earnings Conference Call. I'm joined today by Girish Saligram, President and CEO; and Anuj Dhruv, Executive Vice President and CFO. We'll start today with our prepared remarks and then open it up for questions. You may download a copy of the presentation slides corresponding to today's call from our website's Investor Relations section. I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our earnings press release or accompanying slide deck, which can be found on our website. As a reminder, today's call is being webcast and a recorded version will be available on our website's Investor Relations section following the conclusion of this call. With that, I'd like to turn the call over to Girish.

Thanks, Luke, and thank you all for joining our call. I'll start with an overview of our financial and operational performance, followed by our outlook on the markets. Anuj will then cover specifics on financial performance, balance sheet, detailed guidance and I will wrap up with some thoughts on Weatherford's strategic plans for 2026 and beyond before opening for Q&A. I want to start by summarizing our Q4 2025 performance. We had sequential revenue growth operating income that was higher sequentially and year-on-year, adjusted EBITDA margins well above 22% and free cash flow conversion of 76%. Overall, I am very pleased with our team's execution, and I would like to thank everyone on our One Weatherford team for clearly demonstrating our ability to perform well even in a soft and challenging market environment. This performance builds on our confidence in the long-term prospects of the company, which is reflected in the significant increase of 10% to the dividend. As illustrated on Slide 3, we delivered 5% sequential revenue growth, driven by higher activity in Latin America, which grew 16% sequentially, led primarily by Mexico and Brazil. North America grew modestly supported by higher Canadian activity and U.S. offshore that was partially offset by a decline in U.S. land activity. The Europe Sub-Sahara Africa and Russia region declined 2% sequentially, and this region continues to exhibit softness. I'm also very pleased with the continued strong performance in the Middle East. The Middle East, North Africa and Asia region delivered 4% sequential growth, led by Kuwait, Oman, the UAE and Indonesia. Activity in Saudi Arabia remained muted, although we are hopeful of a healthy recovery in the back half of 2026. As we have been discussing for a while, 2025 was notably characterized by the significant activity decline in Mexico. For the…

Thank you, Girish. Good morning, and thank you, everyone, for joining us on the call. Girish has already shared an overview of our fourth quarter and full year performance. For a more detailed breakdown of the results please refer to our press release and accompanying slide deck presentation. My comments today will center around cash flow, working capital, balance sheet, liquidity, capital allocation and guidance. Turning to Slide 27 for cash flows and liquidity. In the fourth quarter, we generated $222 million of adjusted free cash flow representing a 76.3% adjusted free cash flow conversion, significantly boosted by collections from a key customer in Mexico that we originally expected to receive in 2026. Although sizable collections remain outstanding, recent payment trends have become more consistent, improving our confidence to project continued strong free cash flow into 2026. For full year 2025, our outstanding collections in Mexico significantly impacted our net working capital efficiency. Our net working capital as a percentage of revenue was 28.9% in 2025 versus 24.5% in 2024, an increase of approximately 450 basis points. However, this number is expected to improve as the pending collections materialize. For context, on a sequential basis, the working capital efficiency improved by around 70 basis points. All things considered, we remain fully committed to our internal initiatives aimed at achieving the goal of 25% or better. As we stay agile and adapt to evolving market conditions, we continue to execute a series of cost improvement actions across the company. In this context, we took an additional restructuring and severance charge of $7 million in Q4, bringing the total charge to $58 million for full year 2025. Our cost optimization efforts are guided by 2 objectives. First, we are rightsizing elements of our cost structure including headcount, real estate and supply chain…

Thanks, Anuj. I remain highly optimistic about Weatherford's future over the next several years. While 2025 was a challenging year, marked by rapidly changing market conditions, it also represented a year to refine our operating model and demonstrated efficacy on a through-cycle basis. Our margins proved resilient, and the expansion in the second half is a tangible proof point of our operating thesis. Most importantly, our cash flow generation not only remained strong, but conversion improved versus 2024. As we move forward, our internal initiatives will build on the successes of the past, but will also incorporate fresh thinking and new ideas to drive our North Star of generating greater free cash flow. For 2026, we are laser focused on driving cost and CapEx to be at optimal levels for the activity mix we have in front of us. We drove over $150 million of personnel expense reduction in 2025 and believe we have additional opportunities without impacting safety or performance. Concurrently, we have a heightened sense of focus on the performance of each business unit, which we consider to be the intersection of product line and country. We are willing to make revenue trade-offs to ensure a higher quality mix of margin and cash performance. At the same time, we are driving transformational changes to set up the future of the company, and I am very excited about these. We look at this as our 4 Ps of people, portfolio, partnerships and performance. I won't belabor each of these, but we'll share a couple of highlights. Our infrastructure program overhaul is well underway with promising benefits and this will allow us to scale the company through cycles very efficiently and effectively. Product innovations like MARS or Mature Asset Rejuvenation to Surveillance. A fiber optic-enabled solution is providing real-time insights to create a significant opportunity in the production enhancement space with over 1 million wells in over 100 countries that could benefit from this. We rolled out our performance tier MPD solution, Modus. And in the first full year of commercial availability in 2025, we completed over 70 jobs in almost every geography we operate in. Recognizing that we cannot do everything ourselves. We have signed partnership agreements with leaders in this space on technology development, infrastructure provision, customer collaboration and new energy platforms. We have seen over the past few years that Weatherford can deliver top-tier profitability and cash margins in different phases of the OFS cycle. As we look towards the next few years, we see a significant uptick in activity starting in 2027 and believe that our operating model, initiatives and people will propel the company forward to deliver stronger results than ever before. With that, operator, please open the call for questions.

[Operator Instructions] And today's first question comes from David Anderson of Barclays.

I was wondering if you could give us a little bit more detail on how you see Saudi playing out this year. Something like 40 rigs or so have been tendered to come back to work. How does that play in Weatherford's outlook for the year and in 2027 and secondarily, what are you seeing in terms of pricing in salary? Are there any product lines seeing increases or conversely under pressure?

Sure. Look, Saudi continues to be our most significant country internationally. It's our largest one internationally. So an incredibly important one. As I pointed out in our prepared remarks, we are very hopeful of a very healthy recovery going into the second half as these rigs come online. It will take a little bit of time. So it's not going to be immediate, which is why I think we'll see the impact really more in the second half and then going into 2027. I've always maintained that we have a very strong opportunity in Saudi because we are still very underrepresented. Our team has done an outstanding job with just phenomenal support from Aramco, but it's still -- the onus is on us to continue to develop technology. And I'm very excited about what we have in the pipeline, what we are working with Aramco on to drive that. So I'm hopeful that we can continue to have performance that exceeds the market and especially as the volume and activity levels increase, I think there's huge opportunity with some of the things that we are working on. Regarding pricing, I think that is something that is always present and especially in an environment like this, there's a lot more competition, and there's a lot more focus around it. Cost inefficiency is one of the critical parameters for Aramco. So we are looking at every which way to really support and drive that while continuing to maintain margins. So I'm very confident in our ability to deliver a sort of total cost of ownership solution derived value versus just a straight-up discount. So it's been a very collaborative approach and I look forward to this year because I think it will set us up really well going into '27.

And our next question today comes from Scott Gruber at Citigroup.

Following Dave's question, I want to ask about the broader Middle East and North Africa region. There seems to be more tailwinds than headwinds across the region. But Girish, maybe if you can provide some more details on what you're seeing across the broader Middle East and North African market.

Sure, Scott. The Middle East, North Africa region has historically been a very strong one for us. It is our largest region. It is one where we have historically had the largest share relative to some of the other regions and have done really well and really have the entire portfolio of the company that comes to bear. So as I look at the region, over the last few years, our team has done an outstanding job. Clearly, there's been a lot of market support and activity levels that supported that. But we have had exaggerated performance. We've been able to go in and drive share through technology advancements and just outstanding operational execution. As I look at the rest of this year, I think there's a bit of variability in some of the countries, and that's very natural. We see continued strong momentum in places like the UAE, to some extent, Kuwait, et cetera, but we will probably see a bit of a decline in countries like Qatar and that's just a natural function of the life cycle of their development campaigns that they're going through as it relates to our products and services. We have had tremendous growth in Oman over the last several years. I'm very excited about the opportunity set that we have in front of us in Oman, but we also have our large integrated service contract that is going to come to an end. So we will likely see a little bit of variability based on that with plenty of other stuff that comes in to offset that. But that's a great example of just outstanding execution where we've been able to finish that well, well, well ahead of schedule. That's been a huge factor in driving customer satisfaction. I'm very encouraged by places like Egypt. I think in the second half, we're going to see a lot more activity and opportunity there. So I've addressed Saudi already. So I think, look, broadly speaking, this is the region that we continue to see as providing sort of the foundational baseload for driving activity levels and growth in the coming years.

And our next question today comes from James West at Melius Research.

I wanted to touch on Mexico in particular. And a few items there. One, 2025, how did the business trend? It seems like you continue to build on activity in fourth quarter, probably your best quarter. Secondarily, collections obviously picked up pretty significantly. How do you kind of feel about that going forward here? And then lastly, for '26, how do you see activity levels trending in one of that kind of key market for you?

Yes. Look, so maybe I'll start with the market a bit and ask Anuj to talk about payments and collections. We've seen 3 consecutive quarters now of sequential improvements in Mexico. So Q1 into Q2 into Q3 into Q4, so as we said earlier, we think the worst is certainly behind us, and we think we've reached a point of stability. That stability is likely going to result in a slight degree of growth year-on-year as we look at the total year. And really, I think, sort of a rough order of magnitude, sort of a second half amalgamated view is sort of what we expect. We don't expect there to be a dramatic increase this year, but I think that stability is really important, and that now allows us to have an operating cadence that is solid. We're also continuing to do a lot more in Mexico outside of just one large customer. We announced some of the other awards, especially on the Trion deepwater development. So we're excited about that. Again, it's a country that has been very important for us. We are very glad that activity levels have stabilized and we look to build on from here. So Anuj, payments?

Yes. So on the payments front, we did collect multiple payments throughout the course of 2025 and in Q4 of '25, we had multiple tranches that came in. And we had 1 tranche that came in, I believe, on the last day or the second to last day of December. And so some ambiguity there around timing of when within the quarter and the month we'll get the collections. However, we did get ample collections, if you will, in 2025. And as we look through 2026, we're optimistic given the cadence that recently has been in place. Once there are the mechanisms and structure in place to make the payments, there's been clear communication. It's been transparent. Generally, we get about a 2-week heads up before we get the payments in our account, and it's been like clockwork. And so the mechanisms have been working well. And as we take a step back and we combine the recent collection activity with the overall structural reforms we're seeing with the government of Mexico supporting the capitalization thereof, we are even more confident in the ability or the continuation, if you will, of these collections into 2026.

And our next question comes from Saurabh Pant with Bank of America.

Girish, maybe let's touch on Venezuela a little bit, if you don't mind. You gave some color in your prepared remarks. I think you said at the peak, Venezuela was north of $500 million for you. Now that's 10% of your 2025 revenue. I don't want anybody to get ahead of their skis, right? So maybe Girish, just talk to us a little bit about -- what needs to happen on the ground for Weatherford for your customers to really start to move forward over there? And then how quickly can you move operationally, what product lines benefit? Maybe just a little walk through on what to expect?

Sure. So yes, look, it's certainly not going to be overnight and to be very explicit and clear, we have not assumed any Venezuela uptick in the guidance that we have given. So that on top. I think the other thing that's important to just sort of note, Saurabh is, yes, at the peak, it was $500 million. There will be a natural question. The company was very different back then. But a lot of the technologies, a lot of the product lines that operate in Venezuela are things that we still have and are very central to the company. So it's something that I think will actually fit in well with the portfolio. And as we pointed out, things like interventions, well services, artificial lift, et cetera, is where especially initially will be the biggest impact. So look, what we need to see is pretty much what a lot of other people have been talking about and it's no different, right? It's a really clear view on governance, what are the laws, the rules that are going to be followed. How are we going to ensure the safety and security of our teams. What is really the regulatory environment, especially from a licensing standpoint, et cetera, how do we work with customers around that. And we've got to have a line of sight to payment. So I think, look, this is stuff that is moving very rapidly. It's evolving in multiple different dimensions. We are staying very close to what is happening, trying to understand and making sure we have plans in place so that as we see the right opening and the right framework, we're ready to move on it. But again, I don't expect it to be overnight.

And our next question today comes from Doug Becker at Capital One.

Girish, you've always been careful not to provide specific numbers for Weatherford's offshore-related revenue, but you did mention early signs of improvement in offshore deepwater activity and some of your larger product lines like TRS, MPD and completions have significant offshore applications. So with offshore activity looking to be ramping later this year and into 2027, just expand on your offshore outlook for Weatherford.

Yes. Doug, the MPD and TRS businesses are very natural, and I think that's an obvious thing. I'm especially excited about MPD from a standpoint of getting more rigs that are MPD enabled to actually have MPD packages on them. I think we've got multiple different opportunities. So that's something that we continue to focus on. On TRS, for us, it's really about how do we continue to drive margins up, get more efficiency, more automation that's something that we're driving. In addition to that, though, look, I'm really excited about some of the other product lines. We've made tremendous improvements and advancements in completions, for example. So having a much broader portfolio now. A few quarters ago, we announced part of the award with Petrobras and some of their cycle 10 works. So that's something that's well underway. Things like that, that I think we will continue to see in basins across the world. We've got the full gamut, everything from drilling to completions then, of course, MPD and TRS. Interventions is another really big focus area for us on the offshore space. So there's a lot of different things. And I think as the market really sort of fully rebounds and gets back into high gear, I think we're going to be very well positioned.

And our next question comes from Jim Rollyson with Raymond James.

Girish, maybe circling back around on North America, I think you said the activity outlook you guys have, which kind of fits, I think, with most is down mid- to high single digits in '26. Maybe just talk about how Weatherford is kind of positioned and how that has evolved over time. Your business model has evolved over time to maybe do better than a down mid- to high single digits revenues relative [indiscernible].

Yes. Jim, look, we have talked about our North America business, especially U.S. land being far more production-oriented, so that is something that actually helps us. Artificial lift is a very big product line for us in U.S. land. That's something we'll continue to exploit. Obviously, we do get impacted with rig count and well count on products like cementing products, our liners and completions business, et cetera. What we are really trying to do is a couple of things. First is to make sure that our footprint is optimized for the current environment, and we can be more efficient serving customers with the responsiveness that the North America market expects. The second is really making sure that we are driving differentiation and innovation. That has always been our go-to for how do we combat market pressure. So I think, look, we will continue to see some of the decline, but our focus is on making sure that we keep our margins intact in the business. And we have had several examples of where we've been able to drive growth through innovation. Some of our well construction products is a great example. Our digital business is another really good example. Production optimization, for example, that really gets enabled through our digital business. That's something that's a huge focus for us, and we think will become even more important in this North America landscape, but we are not immune at all to the decline in activity, but our focus is how do we offset that by making sure we get higher quality revenue with better EBITDA contribution and cash contribution.

And our next question today comes from Derek Podhaizer at Piper Sandler.

Hoping you could just maybe dig into the first morning -- maybe dig into the first quarter guidance a bit more, implies the top line decline of about 11% quarter-over-quarter, 200 basis point margin contraction. I know you've been hearing a lot about more pronounced seasonality from your peers, but could you maybe elaborate on some of the puts and takes, the different moving pieces that's impacting your guide?

Yes, yes, happy to. So I'll maybe break this down into a few parts. First, I'll answer your question around Q4 to Q1. And then I'll talk a bit about Q1 '25 versus Q1 '26 because I think that context is important. And so from Q4 to Q1, you alluded to the typical seasonality we see that regardless of where we are in the cycle. We're seeing that now from Q4 to Q1. The other piece though, however, that we're seeing is we had in Q4, a few of our orders from our customers pulled in from Q1 into Q4, particularly or specifically one in Brazil and the second in the Gulf of America. And so that combination of seasonality plus orders being pulled in is really some of the key drivers of the difference you're seeing. And then lastly, there has been some weather impact here in Texas. Production has been down for a few days because of that. And so that does have a slight impact in our Q1 numbers. And now taking a step back and looking at the sequential year-over-year from a Q1 '25 to Q1 2026. In Q1 2025, we did have the benefit of having our Argentina divestiture fully baked into our numbers. And in Q1 of 2026, we have a slight impact of tariffs, which we did not have in Q1 2025. We do think our team has done an excellent job in managing the impact of the tariffs and has protected margin very well. However, if you combine those 2 and really focus on the divestiture and you normalize for that, you look at top line, Q1 '25 to top line Q1 '26 are generally flat. And the reason I bring this up is, if you look at the trend in Q1 through Q4 2025, we had a significant ramp-up in the second half of 2025. And this is our expectation for 2026 is as you start seeing some of these areas that Girish and I alluded to in our prepared remarks, hitting, if you will, in the second half of 2026, you'll see that sequential ramp-up in our view and really create that solid foundation leading into 2027 and beyond.

And our next question today comes from Phillip Jungwirth with BMO.

You pointed to lower CapEx year-on-year despite the increased ERP spend. I was just hoping you could talk more about what product lines you're taking a harder look at and where CapEx will be focused now versus the past? And is business mix also helping like how you called outgrowth in lower capital-intensive businesses like completions and also divested higher capital-intensive businesses in Argentina last year.

Sure, I'll start with that. So we will continue to have CapEx within the 3% to 5% range. This is -- this will be true in 2026 as well. But we are taking a very hard look at where we are spending. For us, in order for us to deploy that capital, there has to be tangible line of sight versus speculating. And so we'll continue to evaluate our CapEx in that light. To that end, we are, as you alluded to, doubling, if you will, to spend in 2026 versus 2025 on our ERP. Very excited as to the efficiencies we can gain from the ERP, it is a multiyear journey for us. However, we have teams deployed and are confident and looking at driving further efficiencies kind of later in '27, 2028 as we fully implement this and it goes live. On our current asset base, we are looking at where we can improve our asset utilization and so how do we do more without spending more is absolutely key. And then lastly, we're looking for areas where we can trade CapEx to OpEx or specifically leveraging our CapEx that we've spent to drive incremental business without the capital outlay. An example of this would be recently here in '24, 25-ish, we had some capital outlay with Petrobras for a large contract with them. And here, we have incremental business that we will drive without that incremental capital outlay. And so the key for us is to look to see how we can optimize cash and margin on the capital we deploy and we are heavily focused on the return on invested capital as we seek to deploy more CapEx.

And our next question today comes from Josh Silverstein with UBS.

It was a really nice year for cost cuts for you guys. I think it totaled around $150 million and showed a really nice margin improvement. And then even for the outlook for 2026, you're showing still slight margin improvement despite some revenue headwinds. Can you just talk about what the initiatives are that were driving this and then where you think margins could start to go longer term?

Sure. Sure. Happy to take this one. So yes, we did right-size the ship, if you will, here in 2025. I tell the folks on the team, the hardest thing to do is to have a workforce reduction. And we -- in our business, given the cyclicality of the -- the cyclicality nature of the business, this is a necessity and something we need to do, and we did. We reduced around 2,000-plus of our workforce here in 2025. This resulted in about $150 million of run rate if you will, purely on the margin standpoint. And so we moved fast to avoid margin degradation. And I do believe that we were early to diagnose the environment and the market in 2025. We were the first ones to initially lower guidance in early 2025, and that enabled us internally to move with speed. And those actions are reflected in our full 2025 full year margins where we were able to protect here and landed at the 21-plus percent EBITDA margin for the full year. And so we will continue evaluating and rightsizing and matching activity with our footprint throughout the world, and we'll make those changes as we -- as we see. And then second, on the structural side. And so on the structural side, I've alluded to this before, but we are a continuous improvement organization. There is no finish line. The finish line keeps getting pushed forward and forward. And so for us, it's evaluating how are we structured organizationally as a company. What materials or what processes and people do we -- and tasks do we tackle in-house? versus what do we outsource and potentially move to a lower-cost jurisdiction. And so these organizational evaluations are constantly going on. I alluded to our ERP. Again, this is…

And our next question today comes from Ati Modak with Goldman Sachs Company.

Girish, you talked about transformational changes, gave some highlights also, but would love to hear more on the nature of the new initiatives? Is this something that could drive changes in revenue mix, portfolio mix over time as well, if you can give any more color?

Yes, sure, Ati. Look, I think transformation is almost sort of a consistent and constant theme for us, but the nature of what we are doing has changed. So as Anuj just talked about, look, one of the most significant changes is our new ERP system, and this is going to give us a degree of automation in our processes, AI enablement truly seamless integration that we have never had before in the company to data transparency, et cetera. So I think that's going to allow us to navigate cycles dramatically differently and leverage best practices from around the world, share resources are a lot better. In addition, the portfolio changes that we have been making, the first few years or the last few years, if you will, our portfolio focus was really on, hey, what we have, how do we do better with it, where do we get more penetration. Now it's all about the new products that we are developing, the new technologies that are coming at and those have been very specifically targeted towards where we think we have significant market opportunity, lower capital intensity businesses, things of that nature. So I think, look, as we bring all of this together, what has also remained constant in the company is a focus on the operating model how do we just consistently get better on an everyday basis, kind of the basic blocking and tackling. We're not going to let go of that. So I look at it and look, our philosophy of saying, we will always plan for a flat market. And in that flat market, we want to get 25 to 75 basis points of margin improvement. And when we have activity increases, that actually just increases the amplitude. When we have activity decreases that allows us to be more resilient on the margins. I think that's going to remain very true for us, and I think that will serve us really well as we get into the next few years.

And our final question today comes from Josh Jayne at Daniel Energy Partners.

I just wanted to follow up on your Modus Managed Pressure Wells Solution. I think at the end of your prepared remarks, you highlighted 70 jobs in almost every geography. Maybe if you could talk about why you had the success you did in 2025 and how you're thinking about growth, not only in 2026, but beyond?

Yes. Josh, look, this is a technology. I continue to be very, very excited about our team listening on the call probably Chuck will speak is I'm constantly internally saying we need to do even more, but I think it's a tremendous breakthrough for us for a couple of reasons. One is that it allows us to hit a tier of the market that we really didn't have access to before in that performance tier, where our high-end systems are too complex and potentially cost prohibitive for the kinds of wells. It gives us foray into shallow water markets. So there is a huge swath of opportunities. And then as we extend the concept of our Managed Pressure Regime from just Managed Pressure Drilling to this concept of Managed Pressure Wells, different applications like cementing, like setting liner hangers, a lot of other things that you can do using this technology I think the growth is going to be even greater. So now we've got a full complement of packages out there so we have the tools in place in the different geographies. The customer interest has been very significant and very, very encouraging. So I'm really looking forward to a year where this becomes another very significant part of the overall product line.

That concludes the question-and-answer session. I'd like to turn the conference back over to the company for any closing remarks.

Thank you all again for joining our call. Again, I remain very excited about the prospects of the company. Thank you all for listening, and we'll be back in April to share our first quarter results. Operator, you may close the call. Thank you.

Thank you, sir. Everyone, this concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.