Weatherford’s Q4 Growth Hinges on Latin America, Not U.S. Momentum

Date of Call: Feb 4, 2026

Financials Results

• Revenue: 5% sequential growth in Q4 2025
• Operating Margin: EBITDA margin of 22.6% in Q4 2025, a sequential improvement of 74 basis points

Guidance:

• Q1 2026 revenue expected in the range of $1.125B to $1.165B.
• Q1 2026 adjusted EBITDA expected between $230M to $240M.
• Full year 2026 revenue expected in the range of $4.6B to $5.05B.
• Full year 2026 adjusted EBITDA expected in the range of $980M to $1.12B.
• Adjusted free cash flow conversion expected in the low to mid-40% range for 2026.
• North America spending expected to decline in 2026; international activity levels expected to be flat to slightly down compared to the prior year, with potential for second half growth.
• 2026 CapEx expected to be $190M to $230M.

Business Commentary:

Revenue and Activity Trends:

• Weatherford International reported 5% sequential revenue growth in Q4 2025, with Latin America activity increasing by 16%.
• Growth was driven by higher activity in Mexico and Brazil, partially offset by declines in U.S. land activity.

Financial Performance and Cash Flow:

• The company achieved an adjusted EBITDA margin of 22.6% in Q4 2025, with a free cash flow conversion of 76%.
• This performance was supported by collections from a key customer in Mexico and strong operational execution.

Market Outlook and Strategic Focus:

• For 2026, North America spending is expected to decline with mid- to high single-digit declines in activity levels, while international activity is projected to be flat to slightly down.
• Weatherford is focusing on strategic initiatives such as cost optimization, transformational changes, and new product innovations to enhance profitability and cash flow.

Sentiment Analysis:

Overall Tone: Positive

• CEO Girish Saligram expressed being 'very pleased' with team execution and 'highly optimistic about Weatherford's future.' He noted 'strong operational performance,' 'significant improvement' in margins, and 'strong free cash flow generation.' The company increased its dividend by 10% and returned $173M to shareholders in 2025.

Q&A:

• Question from John Anderson (Barclays Bank PLC): I was wondering if you could give us a little bit more detail on how you see Saudi playing out this year... and what are you seeing in terms of pricing?
  Response: Saudi is the largest international market; recovery is hoped for in second half 2026/2027 as rigs come online. Pricing is competitive; focus is on total cost of ownership solutions to maintain margins and drive efficiency.

• Question from Scott Gruber (Citigroup Inc.): ...provide some more details on what you're seeing across the broader Middle East and North African market.
  Response: The Middle East/North Africa is the largest region, with strong performance historically. Expect some variability in 2026 but continued strong momentum in countries like UAE and Egypt, with a baseload for future growth.

• Question from James West (Melius Research LLC): I wanted to touch on Mexico... how do you kind of feel about that going forward here? And then lastly, for '26, how do you see activity levels trending...
  Response: Mexico saw three consecutive quarters of sequential improvement; worst is behind, with stability expected and slight growth year-on-year. Activity levels are stabilizing, allowing a solid operating cadence.

• Question from Saurabh Pant (BofA Securities): ...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...
  Response: Venezuela was a $500M peak revenue market. For a restart, needs include clear governance, regulatory environment, and payment visibility. Weatherford is monitoring but not assuming any uptick in 2026 guidance; it would likely be a multiyear process.

• Question from Doug Becker (Capital One Securities, Inc.): ...expand on your offshore outlook for Weatherford.
  Response: Offshore deepwater activity is showing early signs of improvement. Product lines like MPD, TRS, completions, and interventions are key. Weatherford is well-positioned to benefit as the market rebounds.

• Question from James Rollyson (Raymond James & Associates, Inc.): ...talk about how Weatherford is kind of positioned and how that has evolved over time.
  Response: North America activity is expected to be down mid- to high-single digits in 2026. Weatherford is optimizing footprint for efficiency and focusing on differentiation and innovation, such as in digital business and production optimization, to maintain margins.

• Question from Derek Podhaizer (Piper Sandler & Co.): ...maybe elaborate on some of the puts and takes, the different moving pieces that's impacting your guide?
  Response: Q4 to Q1 decline driven by typical seasonality and some orders pulled into Q4 from Q1. Year-over-year Q1 2026 vs Q1 2025 is roughly flat when normalizing for Argentina divestiture and tariff impacts, with an expected sequential ramp in second half 2026.

• Question from Phillip Jungwirth (BMO Capital Markets Equity Research): ...talk more about what product lines you're taking a harder look at and where CapEx will be focused now versus the past?
  Response: CapEx will remain in 3-5% range, focusing on tangible line of sight. Increased spend on ERP system for efficiencies; evaluating asset utilization and opportunities to trade CapEx to OpEx to optimize return on invested capital.

• Question from Joshua Silverstein (UBS Investment Bank): ...talk about what the initiatives are that were driving this and then where you think margins could start to go longer term?
  Response: Cost-cutting initiatives included a workforce reduction of over 2,000, saving ~$150M in 2025, helping protect EBITDA margins. Ongoing structural improvements, like ERP implementation, aim for further efficiencies and margin expansion when market conditions improve.

• Question from Ati Modak (Goldman Sachs Group, Inc.): ...would love to hear more on the nature of the new initiatives?
  Response: Initiatives focus on new ERP system for automation and data transparency, developing new products in lower capital intensity areas, and continuous operating model improvements to target margin expansion even in flat markets.

• Question from Joshua Jayne (Daniel Energy Partners, LLC): ...talk about why you had the success you did in 2025 and how you're thinking about growth...
  Response: Modus Managed Pressure Wells solution was successful due to accessing a new performance tier and shallow water markets. Growth is expected to be significant as the technology extends to more applications, with strong customer interest.

Contradiction Point 1

Implementation Timeline and Benefits of ERP System

Timeline for ERP benefits shifts from 2024-2025 acceleration to being part of a multi-year journey.

Which product lines are under review given lower CapEx YoY despite increased ERP spend? Where will CapEx be focused, and is business mix helping (e.g., growth in lower-capex businesses like completions)? - Phillip Jungwirth (BMO Capital Markets Equity Research)

2025Q4: Investments are doubling in ERP system implementation... The focus is on improving asset utilization and trading CapEx for OpEx... The goal is to optimize return on invested capital. - [Anuj Dhruv](CFO)

What is the current status of the fulfillment initiative and its potential long-term impact on margins? - Doug Becker (Capital One)

2023Q3: The fulfillment initiative... The company is about 1-1.5 years into the process... Initial benefits are expected to be seen in 2024, with significant benefits accelerating in 2025, contributing to margin expansion. - [Girish Saligram](CEO)

Contradiction Point 2

Outlook for International Revenue Growth

Specificity and confidence in international growth guidance shift from a broad, mixed outlook to a more defined, optimistic forecast.

What are the key drivers of the MENA region's performance amid current tailwinds? - Scott Gruber (Citigroup Inc., Research Division)

2025Q4: MENA is the largest region... Strong momentum continues... A major integrated services contract in Oman is ending... Overall, this region provides a foundational baseload for future growth. - [Girish Saligram](CEO)

Will next year's revenue growth be in the double digits, with the low end as the baseline or a potential path to ~15%? - Doug Becker (Capital One)

2023Q3: International growth is expected to be double-digit, but the outlook is mixed by region and faces geopolitical uncertainties. - [Girish Saligram](CEO)

Contradiction Point 3

Contribution of Offshore Activity to Growth

Characterization of offshore revenue's significance evolves from being a "significant and growing part" to being a foundational, high-growth driver.

Can you elaborate on Weatherford's offshore outlook, particularly regarding the impact of larger product lines like TRS and MPD on offshore applications? - Doug Becker (Capital One Securities, Inc., Research Division)

2025Q4: Offshore deepwater activity is showing early signs of improvement. Weatherford is well-positioned... As the market rebounds, Weatherford expects to be very well-placed to capitalize. - [Girish Saligram](CEO)

What percentage of revenue comes from offshore operations? - James Rollyson (Raymond James & Associates, Inc., Research Division)

2023Q3: The company does not break out a specific number for offshore revenue due to variability... Offshore is a significant and growing part of the business... - [Girish Saligram](CEO)

Contradiction Point 4

Saudi Arabia Recovery Timeline

Contradiction on when significant recovery is expected in Saudi Arabia.

How do you expect Saudi Arabia's 40 tendered rigs to return impacting Weatherford's 2026 and 2027 outlook? - John Anderson (Barclays Bank PLC)

2025Q4: A healthy recovery is hoped for in the second half of 2026 as rigs come online, with significant growth expected in 2027. - [Girish Saligram](CEO)

Can you provide more details on the expected improvement in Saudi's performance and the potential for year-on-year growth in the second half? - Scott Gruber (Citigroup Inc.)

2025Q3: The expected rebound... is driven predominantly by gas activity... Weatherford is cautiously optimistic for an inflection in the second half of 2026, but year-on-year comparisons in the first half of 2026 will still be down relative to 2025. - [Girish Saligram](CEO)

Contradiction Point 5

Mexico Collections and Cash Flow Expectations

Contradiction on the certainty and timing of receivables collections from Mexico.

How did Mexico's business trend in 2025, and how have collections progressed with their outlook? - James West (Melius Research LLC)

2025Q4: Collections in Q4 2025 were significant... Confidence is high that collections will continue into 2026... - [Anuj Dhruv](CFO)

What factors influence the Q4 free cash flow guide with the $100 million plus mark, and how critical are Pemex receivables? - James West (Melius Research LLC)

2025Q3: The Q4 free cash flow guidance of approximately $100 million is conservative and assumes no significant payments from Mexico. - [Anuj Dhruv](CFO)