Weatherford International plc — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This filing reports full-year results; it does not provide a standalone fourth-quarter income statement. Weatherford provides energy equipment and services across drilling, well construction, production and intervention, operating in approximately 75 countries.
Financial results and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $4.331 billion | $3.645 billion |
| Operating income | $412 million | $116 million |
| Net income (loss) attributable to Weatherford | $26 million | ($450 million) |
| Diluted earnings (loss) per share | $0.36 | ($6.43) |
| Segment adjusted EBITDA | $884 million | $633 million |
| Cash provided by operating activities | $349 million | $322 million |
| Capital expenditures | $132 million | $85 million |
| Cash and cash equivalents at year-end | $910 million | $951 million |
| Total debt carrying value | $2.248 billion | $2.428 billion |
Operating margin was approximately 9.5%, versus 3.2% in 2021. Cost of products and services declined to 69.7% of revenue from 74.5%. Interest expense, net, was $179 million; cash interest paid was $220 million. The company recorded an $87 million income tax provision despite $138 million of pretax income. It reported total current assets of $3.043 billion and current liabilities of $1.470 billion.
Year-end restricted cash was $202 million, primarily collateral for letters of credit. Debt included $125 million principal of 11% Exit Notes due 2024, $482 million of 6.5% Senior Secured Notes due 2028, and $1.6 billion of 8.625% Senior Notes due 2030, plus finance leases. The company had $395 million of letters of credit outstanding and $415 million of surety bonds. Approximately $177 million of cash and cash equivalents could not be immediately repatriated.
Material changes versus 2021
- Revenue rose 19%, reflecting increased activity, market-share gains and pricing improvements. Product revenue increased 26% and service revenue 15%.
- All three segments grew: Drilling and Evaluation revenue increased 25% to $1.328 billion; Well Construction and Completions rose 12% to $1.521 billion; Production and Intervention grew 24% to $1.395 billion.
- Segment adjusted EBITDA increased 40%, and operating income improved by $296 million. Weatherford attributed gains to better utilization, pricing, cost control and product/service mix.
- Operating cash flow increased to $349 million, while cash and cash equivalents declined by $41 million. The company used $248 million in financing activities, including debt repayments and $30 million of dividends to noncontrolling interests.
- Debt carrying value declined by $180 million. Weatherford repaid $175 million principal of Exit Notes during 2022 and reported an additional $20 million repayment after year-end; it also repurchased $8 million of 2028 notes in 2022 and another $11 million after year-end.
- No goodwill or long-lived asset impairment was recorded in 2022 or 2021; 2020 included $1.053 billion of impairment charges. 2022 included $22 million of restructuring charges for a multi-year footprint and workforce efficiency initiative.
Outlook, risks and contingencies
- Management expects customer activity to continue improving and sees generally positive macroeconomic conditions, while noting recession concerns, inflation, supply-chain disruption, escalating costs and logistical constraints. It gave no specific revenue or earnings guidance in the provided filing text.
- 2023 capital spending was projected at $200 million to $230 million. Management expects to fund requirements from operating cash flow and cash on hand, subject to business conditions.
- Key business risks include oil and gas price volatility and customer spending changes; geopolitical conflict and sanctions; supply-chain and inflation pressures; foreign currency losses; cybersecurity and technology disruptions; severe weather; and environmental, climate and energy-transition regulation.
- Russia generated approximately 7% of revenue in each of 2020–2022. At year-end 2022, Russia operations included $30 million cash, $98 million other current assets, $65 million property, plant and equipment and other non-current assets, and $52 million liabilities. Further sanctions or escalation could reduce revenue or lead to impairments.
- Environmental compliance costs in 2022 were not material. A Texas groundwater remediation obligation is estimated at up to $11 million over 20–30 years and is recorded undiscounted.
- Accrued litigation and settlements were $41 million at year-end. A shareholder securities lawsuit remains on appeal; the company says it cannot reliably predict its outcome. Other claims could exceed recorded reserves or insurance.
- The credit agreement includes a $250 million minimum liquidity covenant, interest-coverage and funded-debt ratio tests, and a conditional maturity date tied to remaining Exit Notes. Covenants and secured debt may constrain financial flexibility.
- Weatherford reported effective disclosure controls and internal control over financial reporting; KPMG issued unqualified opinions on the financial statements and internal controls.
Investor verification priorities
- Confirm the drivers and sustainability of revenue growth, segment margins and pricing, particularly if activity or commodity prices weaken.
- Review cash conversion and working-capital needs: receivables increased to $989 million from $825 million, and 2022 operating cash flow included receivables factoring and monetization proceeds.
- Check debt maturities, interest costs, covenant headroom and post-year-end repayments, including the Exit Notes due 2024 and conditional credit-agreement maturity.
- Assess Russia exposure, sanction compliance and recoverability of assets, as well as currency risk and the $90 million of other expense, net, in 2022.
- Monitor the uncertain tax position balance of $191 million, the $1.3 billion deferred-tax valuation allowance, litigation developments and remediation obligations.