WEATHERFORD NET LOSS $777 MLN
Third Quarter 2015 Highlights:
- Net debt decreased by $28 million and positive free cash flow from operations was $123 million;
- Operating income increased 3% and by 47 basis points sequentially, driven mostly by improvements in North America where revenue increased by 2% and operating margins increased 493 basis points with the modest recovery from spring break up in Canada and continued cost reduction measures;
- Best-in-class sequential incrementals of 2% and year-on-year decrementals of 29%;
- Completed the previous reduction in force target of 11,000 employees by September 30, 2015, with realized annualized savings of $803 million; and
- Repurchased $236 million of long-term debt through open market transactions generating a gain of $35 million.
Weatherford International plc Condensed Consolidated Statements of Operations (Unaudited)
(In Millions, Except Per Share Amounts)
Bernard J. Duroc-Danner, Chairman of the Board, President and Chief Executive Officer, stated, "We continue to make rapid and deep cost progress and drive structural change, while effectively redirecting our culture and strengthening our talent bench. Our actions remain centered around perennially improving our cost structure through cycles and intensifying capital allocation and cash generation as a company-wide discipline. Our direction is steadfast.
Our free cash flow from operations in the third quarter increased to $123 million. We are confident in our ability to generate positive free cash flow every quarter going forward and on a full year basis this year and beyond. Our path further takes us towards operating excellence and a strict focus on our industrial core."
Third Quarter 2015 Results
Revenue for the third quarter of 2015 was $2.24 billion compared with $2.39 billion in the second quarter of 2015 and $3.88 billion in the third quarter of 2014. Third quarter revenues declined 6% sequentially and 42% from the prior year. Sequentially, North America and Land Drilling Rigs improved, and were offset by the decline in International revenues.
Net loss on a non-GAAP basis for the third quarter of 2015 was $42 million (net loss of $0.05 per share), compared to a net loss of $77 million in the second quarter of 2015 (net loss of $0.10 per share), and a net income of $248 million in the third quarter of the prior year (net income of $0.32 per share).
GAAP net loss for the third quarter of 2015 was $170 million, or a net loss of $0.22 per share.
After-tax charges of $128 million for the third quarter include:
- $47 million (pre-tax $40 million), net of legacy contract charges;
- $40 million (pre-tax $51 million), of costs mostly related to severance and facility closures from our 2015 cost reduction plan;
- $26 million (pre-tax $26 million), due to foreign currency devaluation and related charges primarily in Angola; and
- $15 million (pre-tax $26 million), working capital true-ups related to our 2014 divestiture activity and other professional fees.
Operating income margin of 5.4% for the third quarter increased by 47 basis points sequentially, reflecting the benefits from our aggressive cost cutting measures in response to decreased pricing and activity and decreased by 1,008 basis points compared to the third quarter of 2014. Despite the 6% reduction in revenue, operating income improved sequentially with 2% incrementals and low decrementals of 29% compared to the third quarter of 2014. For the first nine months of this year, our decrementals were a best-in-class 28% compared with 140% in 2009, clearly reflecting our ability to match activity declines with structural cost reductions, while balancing our market share position.
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