Weatherford International (WFRD) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $1.405 billion, up 10% year-over-year and 3.5% sequentially, with record adjusted EBITDA margin of 26%, the highest in over 15 years, driven by international growth, especially in the Middle East, North Africa, and Asia.

• Net income was $125 million, up 12% sequentially and 52% year-over-year; diluted EPS was $1.66, with operating income at $264 million, up 31% year-over-year.

• Launched first-ever shareholder return program: $1/share annual dividend and $500 million share repurchase over three years, with a regular $0.25/share quarterly dividend starting September 2024.

• Growth was led by Well Construction and Completions (WCC) and Drilling and Evaluation (DRE) segments, with international markets offsetting North America declines.

• Continued focus on pricing discipline, margin expansion, and long-term value creation.

Financial highlights

• Gross margin expanded to 36.6%, with Q2 2024 product revenues up 13% and service revenues up 9% year-over-year.

• Adjusted EBITDA was $365 million, up 9% sequentially and 25% year-over-year, with a margin of 26.0%.

• Adjusted free cash flow was $96 million, with operating cash flow at $150 million and capex at $62 million.

• Net leverage ratio reduced to 0.5x, with total liquidity at $1.2 billion and $920 million in cash and restricted cash.

• Net working capital as a percentage of LTM revenue at 26.3%, a 117 bps improvement year-over-year.

Outlook and guidance

• Full-year 2024 revenue expected to grow double digits to low teens from 2023, with international strength offsetting North America softness.

• FY 2024 adjusted EBITDA margin expected slightly above 25%, with >150 bps YoY improvement in Q3 2024.

• Adjusted free cash flow for the year projected above $500 million, with second-half conversion over 40% and H2 materially stronger than H1.

• CapEx expected at 3-5% of revenue for the year.

• Q3 2024 revenue expected to be flat to up low single digits sequentially, with more pronounced growth in Q4.