Weatherford's Q4 2024: Navigating Contradictions in Mexico's Market, Russian Risks, and Global Growth Expectations

These are the key contradictions discussed in Weatherford International's latest 2024Q4 earnings call, specifically including: Market Outlook for Mexico, Russia as a Specific Risk, and Market Growth Expectations:



Revenue and Market Challenges:
- Weatherford International reported a significant reduction in activity, particularly in Latin America, leading to a delta in revenue guidance for Q4.
- The decline in Latin America was primarily driven by cost containment programs, scheduled ships in the North Sea, and other scheduled declines.

Cash Generation and Margin Improvement:
- Despite the reduction in activity, the company achieved adjusted free cash flow of $524 million for the year, with adjusted EBITDA margins of 24.3% in Q4.
- The improvement in margins was attributed to operational efficiency and cost control measures, although the Q4 performance was affected by lower revenues.

Regional Performance and Outlook:
- North America revenue was down 2% sequentially, and the international business was down 6% sequentially, with Mexico and Russia as significant drags.
- The company's outlook for 2025 anticipates a more positive perspective for international regions like Saudi Arabia, Kuwait, and Brazil, but acknowledges declines in Mexico and Russia.

Cost Optimization and Strategic Focus:
- Weatherford initiated a significant cost optimization program, taking a restructuring charge of $32 million in Q4.
- The company is focusing on structural cost reduction, net working capital efficiency, and specific growth vectors like its Motus and well services offerings to navigate market challenges.

Capital Allocation and Shareholder Returns:
- Weatherford has paid two quarterly dividends of $0.25 per share and repurchased approximately $99 million of shares during the second half of 2024.
- The company has committed to a capital return program, exceeding commitments for share repurchases, while maintaining a focus on debt reduction and opportunistic M&A.