Weatherford Reports First Quarter 2013 Results

GENEVA, Switzerland, May 2, 2013 /PRNewswire/ -- 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.

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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.

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.

SOURCE Weatherford International Ltd.