Weatherford International Ltd.
EANS-Adhoc: Weatherford Reports First Quarter 2013 Results
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ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
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announcement.
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quarterly or semiannual financial statement/quarterly report
03.05.2013
Earnings per Share of $0.15
GENEVA, Switzerland, May 2, 2013 -- Weatherford International Ltd.
(NYSE / Euronext Paris / SIX: WFT) today reported first quarter 2013 revenues of
$3,837 million with net income of $117 million, or $0.15 per diluted share,
excluding after-tax losses of $95 million. On a GAAP basis, our net income for
the first quarter of 2013 was $22 million, or $0.03 per diluted share. The
excluded after-tax losses included:
-- $61 million of foreign exchange losses recognized upon the devaluation
of the Venezuelan bolivar;
-- $18 million in professional fees associated with our income tax
remediation efforts;
-- $8 million associated with legacy lump sum contracts in Iraq; and
-- $8 million in severance, exit and other charges.
(Logo: http://photos.prnewswire.com/prnh/19990308/WEATHERFORDLOGO)
end of ad-hoc-announcement
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The Non-GAAP effective tax rate for the quarter was 28%.
First quarter revenues of $3,837 million were seven percent higher than the same
period last year and down five percent sequentially. International revenues of
$2,145 million were up 17 percent over the same period in 2012 and down ten
percent sequentially. North America revenue of $1,692 million was up one percent
sequentially, and down four percent versus the same quarter of 2012.
Segment operating income was $429 million on a GAAP basis. Adjusted for excluded
items, segment operating income of $432 million was down eight percent
sequentially, and down 23 percent from the same quarter of 2012. On an adjusted
basis, corporate expenses were essentially flat compared to the previous
quarter.
Consistent with previously published views, the company expects the second half
of 2013 to show modest growth in North America revenues and operating income.
Latin America will maintain a steady improvement throughout the year. The
outlook for the Eastern Hemisphere remains positive with continued expansion in
Europe, Sub-Sahara Africa and Russia, with continued recovery in the Middle
East/North Africa and Asia Pacific Region.
The Company maintains its estimate of an annual effective tax rate for 2013 of
34%.
North America
North America revenues for the quarter were $1,692 million, a four percent
decrease over the same quarter in the prior year and up one percent
sequentially. The quarter's operating income was $224 million, down $134
million, or 37 percent from the same quarter in the prior year and down one
percent, sequentially. This result is consistent with the decline in US land rig
count relative to the first quarter of 2012 and the continued oversupply of
hydraulic fracturing capacity. In addition, the bulk sale of our US guar
inventory held at market value reduced North America margins.
Middle East/North Africa/Asia Pacific
First quarter revenues of $785 million were up $190 million, or 32 percent
higher than the first quarter of 2012, and $66 million, or eight percent lower
sequentially. The sequential decline is typical of seasonal effects in Asia. The
current quarter's operating income of $45 million decreased $8 million, or 15
percent from the same quarter in the prior year, and declined 22 percent
sequentially.
Europe/Sub-Sahara Africa/Russia
First quarter revenues of $633 million were eleven percent higher than the first
quarter of 2012 and down five percent from the prior quarter Sequentially, the
decline is attributable to normal winter seasonality, and its first quarter
impact on the North Sea and Russia. The current quarter's operating income of
$65 million was essentially flat when compared to the same quarter in the prior
year, and was up $6 million, or 10 percent from the prior quarter.
Latin America
First quarter revenues of $727 million were up $56 million or eight percent
compared to the first quarter of 2012, and down $129 million, or 15 percent
sequentially. The current quarter's operating income of $98 million increased 18
percent compared to the same quarter in the prior year, and decreased 22 percent
from the prior quarter.
Liquidity and Net Debt
Net debt increased $308 million sequentially, primarily as a result of the
timing of interest payments associated with our senior notes as well as an
increase in working capital of $67 million and certain prepayment items. Driving
the change in working capital, days sales outstanding increased to 90 days and
days sales in inventory increased to 88 days.
Non-GAAP Performance Measures
Non-GAAP performance measures and corresponding reconciliations to GAAP
financial measures have been provided to offer meaningful comparisons between
current results and results in prior operating periods.
Conference Call
The Company will host a conference call with financial analysts to discuss the
quarterly results on May 3, 2013 at 8:30 a.m. eastern daylight saving time, 7:30
a.m. central daylight saving time. The company invites investors to listen to
the call live via company's website, www.weatherford.com in the Investor
Relations section. A recording of the conference call and transcript of the call
will be available on that section of the website shortly after the call ends.
Weatherford is a Swiss-based, multinational oilfield service company. It is one
of the largest global providers of technology and services for the oil and gas
industry. Weatherford operates in over 100 countries and employs over 70,000
people worldwide.
Contacts: John H. Briscoe +1.713.836.4610
Senior Vice President and Chief
Financial Officer
Karen David-Green +1.713.836.7430
Vice President - Investor Relations
Forward-Looking Statements
This press release and the documents referenced herein contain, and the
conference call announced in this release may include, forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. This includes statements related to future levels of earnings, revenue,
expenses, margins, capital expenditures, changes in working capital, cash flows,
tax expense, effective tax rates and net income, as well as the prospects for
the oilfield service business generally and our business in particular, as well
as statements regarding timing or content of the financial information that will
be filed with the SEC regarding the current period. Forward-looking statements
also include any statements about the resolution or potential future resolution
of our ongoing remediation of our material weaknesses in internal control over
financial reporting for income taxes and our assessment of the degree to which
historical remediation efforts have been successful to date. It is inherently
difficult to make projections or other forward-looking statements in a cyclical
industry and given the current macroeconomic uncertainty. Such statements are
based upon the current beliefs of Weatherford's management, and are subject to
significant risks, assumptions and uncertainties. These include the company's
inability to design or improve internal controls to address identified issues;
the impact upon operations of legal compliance matters or internal controls
review, improvement and remediation, including the detection of wrongdoing,
improper activities or circumvention of internal controls; difficulties in
controlling expenses, including costs of legal compliance matters or internal
controls review, improvement and remediation; impact of changes in management or
staff levels, the effect of global political, economic and market conditions on
the company's projected results; the possibility that the company may be unable
to recognize expected revenues from current and future contracts; the effect of
currency fluctuations on the company's business; the company's ability to manage
its workforce to control costs; the cost and availability of raw materials, the
company's ability to manage its supply chain and business processes; the
company's ability to commercialize new technology; whether the company can
realize expected benefits from its redomestication of its former Bermuda parent
company; the company's ability to realize expected benefits from its
acquisitions and dispositions; the effect of a downturn in its industry on the
company's carrying value of its goodwill; the effect of weather conditions on
the company's operations; the impact of oil and natural gas prices and worldwide
economic conditions on drilling activity; the effect of turmoil in the credit
markets on the company's ability to manage risk with interest rate and foreign
exchange swaps; the outcome of pending government investigations, including the
Securities and Exchange Commission's investigation of the circumstances
surrounding the company's material weakness in its internal control over
financial reporting of income taxes; the outcome of ongoing litigation,
including shareholder litigation related to the company's material weakness in
its internal control over financial reporting of income taxes and its
restatement of historical financial statements; the future level of crude oil
and natural gas prices; demand for our products and services; levels of pricing
for our products and services; utilization rates of our equipment; the
effectiveness of our supply chain; weather-related disruptions and other
operational and non-operational risks that are detailed in our most recent Form
10-K and other filings with the U.S. Securities and Exchange Commission. Should
one or more of these risks or uncertainties materialize, or underlying
assumptions prove incorrect, actual results may vary materially from those
indicated in our forward-looking statements. Specifically, statements regarding
the current period assume that there will be no subsequent events or other
adverse developments after the date of this press release that cause our
financial statements for the current period, when filed with the SEC, to vary
materially from the amounts herein. We undertake no obligation to correct or
update any forward-looking statement, whether as a result of new information,
future events, or otherwise, except to the extent required under federal
securities laws.
Weatherford International Ltd.
Consolidated Condensed Statements of Operations
(Unaudited)
(In Millions)
Three Months Ended
------------------
3/31/2013 3/31/2012
--------- ---------
Net Revenues:
North America $1,692 $1,754
Middle East/North Africa/Asia 785 595
Europe/SSA/Russia 633 571
Latin America 727 671
3,837 3,591
----- -----
Operating Income (Expense):
North America 224 358
Middle East/North Africa/Asia 45 53
Europe/SSA/Russia 65 66
Latin America 98 83
Research and Development (67) (62)
Corporate Expenses (48) (50)
Other Items (38) (78)
---- ----
279 370
Other Income (Expense):
Interest Expense, Net (131) (112)
Devaluation of Venezuelan Bolivar (100) -
Other, Net (13) (18)
----- ----
Income (Loss) Before Income Taxes 35 240
Benefit (Provision) for Income Taxes:
Provision for Operations (48) (116)
Adjustments to Provision 43 6
--- -----
(5) (110)
Net Income (Loss) 30 130
Net Income Attributable to Noncontrolling
Interests (8) (7)
---- -----
Net Income (Loss) Attributable to Weatherford $22 $123
=== ====
Earnings Per Share Attributable to Weatherford
Basic $0.03 $0.16
Diluted $0.03 $0.16
Weighted Average Shares Outstanding:
Basic 769 760
Diluted 773 766
Weatherford International Ltd.
Selected Statements of Operations Information
(Unaudited)
(In Millions)
Three Months Ended
------------------
3/31/2013 12/31/2012 9/30/2012
--------- ---------- ---------
Net Revenues:
North America $1,692 $1,682 $1,725
Middle East/North Africa/Asia 785 851 700
Europe/SSA/Russia 633 669 626
Latin America 727 856 768
$3,837 $4,058 $3,819
====== ====== ======
Three Months Ended
------------------
3/31/2013 12/31/2012 9/30/2012
--------- ---------- ---------
Operating Income (Expense):
North America $224 $226 $297
Middle East/North Africa/Asia 45 58 36
Europe/SSA/Russia 65 59 88
Latin America 98 125 97
Research and Development (67) (63) (68)
Corporate Expenses (48) (49) (48)
Goodwill and Equity
Investment Impairment - - -
Sanctioned Country
Loss Contingency - - -
Other Items (38) (111) (87)
$279 $245 $315
==== ==== ====
Three Months Ended
------------------
3/31/2013 12/31/2012 9/30/2012
--------- ---------- ---------
Product Line Revenues:
Formation Evaluation and
Well Construction(1) $2,273 $2,348 $2,128
Completion and Production(2) 1,564 1,710 1,691
$3,837 $4,058 $3,819
====== ====== ======
Three Months Ended
------------------
3/31/2013 12/31/2012 9/30/2012
--------- ---------- ---------
Depreciation and Amortization:
North America $108 $108 $108
Middle East/North Africa/Asia 93 94 90
Europe/SSA/Russia 71 71 63
Latin America 68 63 61
Research and Development
and Corporate 6 7 7
$346 $343 $329
==== ==== ====
Three Months Ended
------------------
6/30/2012 3/31/2012
--------- ---------
Net Revenues:
North America $1,663 $1,754
Middle East/North Africa/Asia 649 595
Europe/SSA/Russia 653 571
Latin America 782 671
$3,747 $3,591
====== ======
Three Months Ended
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6/30/2012 3/31/2012
--------- ---------
Operating Income (Expense):
North America $226 $358
Middle East/North Africa/Asia 24 53
Europe/SSA/Russia 102 66
Latin America 90 83
Research and Development (64) (62)
Corporate Expenses (49) (50)
Goodwill and Equity
Investment Impairment (793) -
Sanctioned Country Loss Contingency (100) -
Other Items (68) (78)
$(632) $370
===== ====
Three Months Ended
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6/30/2012 3/31/2012
--------- ---------
Product Line Revenues:
Formation Evaluation and
Well Construction(1) $2,058 $2,034
Completion and Production(2) 1,689 1,557
$3,747 $3,591
====== ======
Three Months Ended
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6/30/2012 3/31/2012
--------- ---------
Depreciation and Amortization:
North America $101 $95
Middle East/North Africa/Asia 85 83
Europe/SSA/Russia 60 61
Latin America 59 55
Research and Development and Corporate 6 5
$311 $299
==== ====
(1) Formation Evaluation and Well Construction includes Drilling
Services, Well Construction, Integrated Drilling, Wireline and
Evaluation Services, Drilling Tools and Fishing and Re-entry.
(2) Completion and Production includes Artificial Lift Systems,
Stimulation and Chemicals, Completion Systems and Pipeline
and Specialty Services
We report our financial results in accordance with generally accepted
accounting principles (GAAP). However, Weatherford's management
believes that certain non-GAAP financial measures and ratios (as
defined under the SEC's Regulation G) may provide users of this
financial information additional meaningful comparisons between
current results and results in prior periods. The non-GAAP financial
measures we may present from time to time include: (1) operating
income or income from continuing operations excluding certain charges
or amounts, (2) the provision for income taxes excluding discrete
items and (3) the resulting non-GAAP net income and per share amounts.
These adjusted amounts are not measures of financial performance under
GAAP. Accordingly, these amounts should not be considered as a
substitute for operating income, provision for income taxes, net income
or other data prepared and reported in accordance with GAAP. See the
table below for supplemental financial data and corresponding
reconciliations to GAAP financial measures for the three months ended
March 31, 2013, December 31, 2012, and March 31, 2012. Non-GAAP
financial measures should be viewed in addition to, and not as an
alternative to, the Company's reported results prepared in accordance
with GAAP.
Weatherford International Ltd.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In Millions, Except Per Share Amounts)
Three Months Ended
------------------
3/31/2013 12/31/2012 3/31/2012
--------- ---------- ---------
Operating Income:
GAAP Operating
Income $279 $245 $370
Tax Remediation and Restatement
Expenses 21 50 15
Legacy Contracts (a) 3 30 31
Other Adjustments 14 31 32
Non-GAAP
Operating Income $317 $356 $448
Income (Loss) Before Income Taxes:
GAAP Income
(Loss) Before
Income Taxes $35 $89 $240
Devaluation of Venezuelan
Bolivar 100 - -
Tax Remediation and Restatement
Expenses 21 50 15
Legacy Contracts 3 30 31
Other Adjustments 14 31 29
Non-GAAP Income
(Loss) Before
Income Taxes $173 $200 $315
Benefit (Provision) for Income Taxes:
GAAP Benefit
(Provision) for
Income Taxes $(5) $(203) $(110)
Devaluation of Venezuelan
Bolivar (39) - -
Tax Remediation and Restatement
Expenses (3) (7) (3)
Legacy Contracts 5 34 -
Other Adjustments (6) (8) (3)
Non-GAAP Benefit
(Provision) for
Income Taxes $(48) $(184) $(116)
Net Income (Loss) Attributable
to Weatherford:
GAAP Net Income
(Loss) $22 $(122) $123
Total Charges, net of tax 95 (b) 130 (c) 69 (d)
Non-GAAP Net
Income $117 $8 $192
Diluted Earnings (Loss) Per Share
Attributable to Weatherford:
GAAP Diluted
Earnings (Loss)
per Share $0.03 $(0.16) $0.16
Total Charges, net of tax 0.12 0.17 0.09
---- ---- ----
Non-GAAP Diluted
Earnings per
Share $0.15 $0.01 $0.25
GAAP Effective
Tax Rate (e) 14% 228% 46%
Annual Effective
Tax Rate (f) 28% 92% 37%
Note (a): The revenues associated with the legacy lump sum contracts
in Iraq were $166 million, $177 million and $51 million in each of
the three months ended March 31, 2013, December 31, 2012, and March
31, 2012, respectively.
Note (b): Non-GAAP adjustments are comprised of (i) a charge for
the devaluation of the Venezuelan Bolivar of $61 million, (ii) tax
restatement and remediation expenses of $18 million, (iii) $8
million in operating losses and tax expense related to legacy lump
sum contracts in Iraq, (iv) $8 million in other adjustments
consisting of severance and other charges including $3 million in
investigation related expenses.
Note (c): Non-GAAP adjustments are comprised of (i) tax
restatement and remediation expenses of $43 million, (ii) $64
million in operating losses and tax expense related to legacy lump
sum contracts in Iraq, (iii) $23 million in other adjustments
consisting of severance and other charges including $7 million in
investigation related expenses.
Note (d): Non-GAAP adjustments are comfprised of (i) tax
restatement and remediation expenses of $15 million, (ii) $31
million in operating losses and tax expense related to legacy lump
sum contracts in Iraq, (iii) $29 million in other adjustments
consisting of severance and other charges including $2 million in
investigation related expenses.
Note (e): GAAP Effective Tax Rate is GAAP provision for income taxes
divided by GAAP income before income taxes.
Note (f): Annual Effective Tax Rate is the Non-GAAP provision
for income taxes divided by Non-GAAP income before income taxes.
Weatherford International Ltd.
Selected Balance Sheet Data
(Unaudited)
(In Millions)
3/31/2013 12/31/2012 9/30/2012 6/30/2012 3/31/2012
--------- ---------- --------- --------- ---------
Assets:
Cash and
Cash
Equivalents $286 $300 $365 $381 $339
Accounts
Receivable,
Net 3,850 3,885 3,911 3,608 3,358
Inventories,
Net 3,744 3,675 3,676 3,399 3,301
Property,
Plant and
Equipment,
Net 8,299 8,299 8,122 7,733 7,591
Goodwill and
Intangibles,
Net 4,485 4,637 4,653 4,581 5,152
Equity
Investments 660 646 642 629 634
Liabilities:
Accounts
Payable 2,191 2,108 2,023 1,635 1,684
Short-term
Borrowings
and Current
Portion
of Long-term Debt 1,896 1,585 1,606 1,263 1,902
Long-term
Debt 7,032 7,049 7,300 7,311 5,989
Weatherford International Ltd.
Net Debt
(Unaudited)
(In Millions)
Change in Net Debt for the Three Months
Ended 3/31/2013:
Net Debt at
12/31/2012 $(8,334)
Operating Income 279
Depreciation and Amortization 346
Other Items 38
Capital Expenditures (400)
Increase in Working Capital (67)
Income Taxes Paid (124)
Interest Paid (183)
Acquisitions and Divestitures of
Assets and Businesses, Net 81
Other (278)
----
Net Debt at
3/31/2013 $(8,642)
Components of
Net Debt 3/31/2013 12/31/2012
Cash $286 $300
Short-term Borrowings and
Current Portion of Long-term
Debt (1,896) (1,585)
Long-term Debt (7,032) (7,049)
------ ------
Net Debt $(8,642) $(8,334)
======= =======
"Net Debt" is debt less cash. Management believes that Net Debt
provides useful information regarding the level of Weatherford
indebtedness by reflecting cash that could be used to repay debt.
Working capital is defined as accounts receivable plus inventory
less accounts payable.
SOURCE Weatherford International Ltd.
Further inquiry note:
Contacts: John H. Briscoe +1.713.836.4610
Senior Vice President and Chief
Financial Officer
Karen David-Green +1.713.836.7430
Vice President - Investor Relations
end of announcement euro adhoc
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issuer: Weatherford International Ltd.
Rue Jean-Francois Bartholoni 4-6
CH-1204 Geneva
phone: +41.22.816.1500
FAX: +41.22.816.1599
mail: karen.david-green@weatherford.com
WWW: http://www.weatherford.com
sector: Oil & Gas - Upstream activities
ISIN: CH0038838394
indexes:
stockmarkets: Main Standard: SIX Swiss Exchange, stock market: New York, Euronext
Paris
language: English