Weatherford International plc 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. As used in this item, “Weatherford”, “the Company,” “we,” “us” and “our” refer to Weatherford International plc, a public limited company organized under the laws of Ireland, and its subsidiaries on a consolidated basis. The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in “Item 1. Financial Statements.” Our discussion includes various forward-looking statements about our markets, the demand for our products and services and our future results. These statements include assumptions, certain risks and uncertainties. For information about these assumptions, risks and uncertainties, refer to the section “Forward-Looking Statements” and the section “Part II – Other Information – Item 1A. – Risk Factors.” Business We are a leading global energy services company providing equipment and services used in the drilling, evaluation, well construction, completion, production, intervention and responsible abandonment of wells across the broad spectrum of energy sources. Many of our businesses, including those of our predecessor companies, have been operating for more than 50 years. We conduct operations in approximately 75 countries, answering the challenges of the energy industry with 350 operating locations including manufacturing, research and development, service, and training facilities. Our principal business is to provide equipment and services to the oil and natural gas exploration and production industry as well as new energy platforms across our three product line segments: (1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention. All of our segments are enabled by a full suite of digital, monitoring, optimization and artificial intelligence solutions providing services throughout the well life cycle, including responsible abandonment. Drilling and Evaluation (“DRE”) offers a suite of services including managed pressure drilling, drilling services, wireline and drilling fluids. DRE offers services ranging from early well planning to reservoir management through innovative tools and expert engineering to optimize reservoir access and productivity. Well Construction and Completions (“WCC”) offers products and services for well integrity assurance across the full life cycle of the well. The primary offerings are tubular running services, cementation products, completions, liner hangers and well services. WCC deploys conventional to advanced technologies, providing safe and efficient services in any environment during the well construction phase. Production and Intervention (“PRI”) offers production optimization technologies through the Company’s ability to design and deliver a complete production ecosystem to boost productivity and responsible abandonment for our customers. The primary offerings are intervention services & drilling tools, artificial lift, production automation & software, sub-sea intervention and pressure pumping services. PRI utilizes a suite of reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in conventional and unconventional wells, deep water, and aging reservoirs. 16 Table of Contents Industry Trends The level of spending in the energy industry is heavily influenced by the current and expected future prices of oil and natural gas, but is also impacted by environmental, social and governance (“ESG”) initiatives, and ongoing supply chain shortages as well as geopolitical events like the ongoing military conflict between Russia and Ukraine (“Russia Ukraine Conflict”). These recent events, in addition to the reopening of the global economy around the relaxing of public restrictions related to the COVID-19 pandemic, have caused commodity prices to increase year-over-year. The industry is also impacted by sanctions. Most notably, several countries including the United States, the European Union and the United Kingdom, have imposed broad sanctions against Russia, certain Russian individuals and certain activities involving Russia or Russian individuals. These factors may result in an increase or decrease in demand for our products and services. The table below shows the average oil and natural gas prices for West Texas Intermediate (“WTI”) and Brent North Sea (“Brent”) crude oil and Henry Hub natural gas during the three months ended March 31, 2022 and 2021. Three Months Ended 3/31/2022 3/31/2021 Oil price - WTI (1) $94.45 $57.79 Oil price - Brent (1) $100.30 $60.82 Natural gas price - Henry Hub (2) $4.66 $3.56 (1) Oil price measured in dollars per barrel (rounded to the nearest $0.01) (2) Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu Rig count is an indicator of the level of spending for the exploration and production of oil and natural gas reserves and the increase year-over-year are due to similar reasons described above. The table below shows historical average rig counts based on the weekly Baker Hughes Company rig count information. Three Months Ended 3/31/2022 12/31/2021 3/31/2021 North America 831 719 538 International 823 817 698 Worldwide 1,654 1,536 1,236 Consolidated Statements of Operations - Operating Income Summary Revenues of $938 million in the three months ended March 31, 2022, increased 13% year-over-year, driven primarily by increased customer activity in DRE and PRI, higher adoption of our technology offerings and greater demand for our services. Cost of products and services of $682 million in the three months ended March 31, 2022, increased $46 million, or 7%, compared to the three months ended March 31, 2021, primarily reflecting increased customer activity, increased cost for supplies and logistics and impacts from inflation. Our cost of products and services as a percentage of revenues was 73% in the three months ended March 31, 2022, an improvement compared to 76% in the three months ended March 31, 2021, reflecting increasing volumes, diligent procurement to address inflationary impacts, cost initiative improvements and operational efficiency gains implemented over the past year. Selling, general, administrative and research and development costs of $199 million in the three months ended March 31, 2022, decreased $10 million, or 5%, compared to the three months ended March 31, 2021, due to cost improvement initiatives to reduce overhead and corporate costs that were implemented during 2021. These costs as a percentage of revenues were 21% in the three months ended March 31, 2022, an improvement compared to 25% in the three months ended March 31, 2021, also reflecting our focus on simplification. 17 Table of Contents Operating income of $18 million improved $31 million in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to the above-mentioned improvements. Consolidated Statements of Operations - Non-Operating Expenses Summary Interest Expense, Net Interest expense, net was $48 million and $70 million for the first three months ended March 31, 2022 and 2021, respectively, and primarily represented interest on our outstanding long-term debt (see “Note 7 – Borrowings and Other Debt Obligations” to our Condensed Consolidated Financial Statements for additional details). The year-over-year decrease was due to partial repayments of principal and the refinancing initiatives in the second half of 2021 to reduce our interest rates. Other Expense, Net Other expense, net was $16 million for the first three months ended March 31, 2022 compared to $4 million for the first three months ended March 31, 2021. Other expense, net is comprised of letter of credit fees, other financing charges, and foreign exchange losses. The year-over-year increase was primarily due to changes in fair value and settlements of certain foreign currency forward contracts. We enter into these contracts to hedge our exposure to currency fluctuations in certain foreign currencies. At March 31, 2022 and December 31, 2021, we had outstanding foreign currency forward contracts with notional amounts aggregating to $86 million and $349 million, respectively. Income Taxes We provide for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes. The relationship between our pre-tax income or loss from continuing operations and our income tax benefit or provision varies from period to period as a result of various factors, which include changes in total pre-tax income or loss, the jurisdictions in which our income is earned, the tax laws in those jurisdictions, the impacts of tax planning activities and the resolution of tax audits. Our effective rate differs from the Irish statutory tax rate as the majority of our operations are taxed in jurisdictions with different tax rates. In addition, we are generally unable to recognize tax benefit on our losses. Please see “Note 11 – Income Taxes” to our Condensed Consolidated Financial Statements for additional details. 18 Table of Contents Segment Results of Operations Financial information by segment is summarized below. Favorable (Unfavorable) Three Months Ended $ % (Dollars in millions) 3/31/2022 3/31/2021 Change Revenues: Drilling and Evaluation $ 292 $ 236 $ 56 24 % Well Construction and Completions 344 323 21 7 % Production and Intervention 286 259 27 10 % Segment Revenues 922 818 104 13 % All Other 16 14 2 14 % Total Revenues $ 938 $ 832 $ 106 13 % Segment Adjusted EBITDA: Drilling and Evaluation $ 59 $ 29 $ 30 103 % Well Construction and Completions 67 50 17 34 % Production and Intervention 39 41 (2) (5) % Segment Adjusted EBITDA $ 165 $ 120 $ 45 38 % Corporate and Other (14) (18) 4 22 % Depreciation and Amortization (87) (111) 24 22 % Share-based Compensation Expense (7) (4) (3) (75) % Other Adjustments (39) — (39) n/m Operating Income (Loss) $ 18 $ (13) $ 31 238 % Segment Revenues Segment revenues of $922 million in the three months ended March 31, 2022, increased 13% year-over-year, driven primarily by increased customer activity in DRE and PRI, higher adoption of our technology offerings and greater demand for our services. DRE revenues of $292 million in the three months ended March 31, 2022, increased 24% compared to the three months ended March 31, 2021 largely due to higher demand for managed pressure drilling and wireline services, primarily in Latin America, and the Middle East/North Africa/Asia (“MENA+ASA”). WCC revenues of $344 million in the three months ended March 31, 2022, increased 7% compared to the three months ended March 31, 2021 largely due to higher demand for cementation products and activity in North America. PRI revenues of $286 million in the three months ended March 31, 2022, increased 10% compared to the three months ended March 31, 2021 largely due to higher demand for intervention and pressure pumping services primarily in MENA+ASA and Latin America, respectively. 19 Table of Contents Segment Adjusted EBITDA Our primary measure of segment profitability is segment adjusted EBITDA. Segment adjusted EBITDA was $165 million in the three months ended March 31, 2022, an increase of 38% compared to the three months ended March 31, 2021, primarily due to cost improvement initiatives that were implemented during 2021, increased activity levels, increase in services and product mix, higher adoption of our technology offerings and greater demand for services globally. DRE segment adjusted EBITDA of $59 million in the three months ended March 31, 2022, increased 103% compared to the three months ended March 31, 2021, largely due to higher demand for managed pressure drilling and drilling services primarily in Latin America. WCC segment adjusted EBITDA of $67 million in the three months ended March 31, 2022, increased 34% compared to the three months ended March 31, 2021, mostly due to higher demand for cementation and completions products, with improvement primarily in MENA+ASA. PRI segment adjusted EBITDA of $39 million in the three months ended March 31, 2022, decreased 5% compared to the three months ended March 31, 2021 mainly due to higher logistics costs and supply chain challenges impacting our delivery schedule for products in North America, partially offset by activity improvements in MENA+ASA. Depreciation and Amortization Depreciation and amortization was $87 million and $111 million for the first three months ended of 2022 and 2021, respectively. The year-over-year decrease was primarily from a combination of impairments taken in 2020 during the peak of the COVID-19 pandemic reducing the carrying value of our assets, combined with lower capital expenditures in the periods following the peak. Share-based Compensation We record share-based compensation in “Selling, General and Administrative” on the accompanying Consolidated Statements of Operations. We recognized $7 million and $4 million in the three months ended March 31, 2022 and 2021, respectively. The year-over-year increase was due to additional awards granted. Other Adjustments Other adjustments include $20 million of restructuring charges in the three months ended March 31, 2022 (see “Note 4 - Restructuring Charges” for additional information) and $19 million of other charges, net, primarily related to the write-down of all of our assets in Ukraine, excluding cash. There were no other adjustments in the three months ended March 31, 2021. Business Outlook Growth in the energy services industry is highly dependent on many external factors. These include but are not limited to, the impact from geopolitical conflicts, the global response to the COVID-19 pandemic, our customers’ capital expenditures, ESG driven changes, world economic, political and weather conditions, the price of oil and natural gas, and member-country quota compliance within the Organization of Petroleum Exporting Countries and the expanded alliance (“OPEC+”). We expect continued improvements in our customer activity levels with the relaxing of COVID-19 pandemic restrictions and generally improved macroeconomic conditions, all of which are expected to provide a pathway to a multi-year energy demand expansion. We continue to closely monitor the ongoing operational and manufacturing disruptions, escalating costs, logistical constraints and travel restrictions. We believe that industry activity will continue to grow, and our 2022 consolidated revenues are anticipated to increase by high single digits to the low-teens above 2021 levels. Russia Ukraine Conflict On February 24, 2022, the broad Russia Ukraine Conflict began and in response, we evaluated our operations and have taken a number of actions, with the first being centered on the safety and well-being of our employees in the impacted regions. Additionally, the United States, the European Union, the United Kingdom and other countries have imposed broad sanctions against Russia, certain Russian individuals and certain activities involving Russia or Russian individuals. While 20 Table of Contents global events continue to evolve rapidly, we continue to monitor and intend to remain in full compliance with the fast evolving sanctions landscape and will continue to fulfill existing contractual obligations within applicable international laws and sanctions. Revenues in Russia were 6% of our total revenues in the first quarter of 2022. Excluding cash, net assets in Russia were $106 million as of March 31, 2022, and is comprised of $73 million in current assets, $62 million in property, plant and equipment, $3 million in other non-current assets, and $32 million in liabilities. Further prolonging or escalation of the conflict and related sanctions may negatively impact our business, potentially lowering revenues or triggering asset impairments. Opportunities and Challenges As production decline rates persist and reservoir productivity complexities increase, our customers continue to face challenges in balancing the cost of extraction activities with securing desired rates of production while achieving acceptable rates of return on investment. These challenges increase our customers’ requirements for technologies that improve productivity and efficiency and pressures us to deliver our products and services at competitive rates. In addition, as consolidation of the energy services industry continues due to market conditions, there has been an increased demand for companies to provide specialized products, services and technologies. We believe we are well positioned to satisfy our customers’ needs, but the level of improvement in our businesses in the future will depend heavily on pricing, volume of work, our ability to offer technology solutions to more efficiently extract oil and gas while controlling costs, and our success in penetrating new and existing markets with our newly developed technologies. Over the long-term, we expect the world’s demand for energy to continue to rise and require more advanced technology from the energy service industry. We remain focused on delivering innovative and cost-efficient solutions for customers to assist them in achieving their operational, safety and environmental objectives. Our challenges also include market conditions that could make it more difficult to obtain our targeted cost reduction benefits and to recruit, motivate and retain employees, including key personnel. Escalations of sanctions and other events around the Russia Ukraine Conflict, in addition to any other geopolitical events, increasing investor and government focus on ESG factors, the cyclicality of the energy industry and the ongoing but waning COVID-19 pandemic restrictions may negatively impact demand for our products and services. We are following our long-term strategy aimed at achieving sustainable profitability in our businesses, servicing our customers and creating value for our shareholders. Our long-term success will be determined by our ability to manage effectively the cyclicality of our industry, including potential prolonged industry downturns, our ability to respond to industry demands in periods of over-supply or uncertain oil prices, and ultimately to generate consistent positive cash flow and positive returns on the invested capital. 21 Table of Contents Liquidity and Capital Resources At March 31, 2022, we had total cash and cash equivalents plus restricted cash of $1.1 billion, of which $215 million was restricted cash, compared to $1.1 billion at December 31, 2021, of which $162 million was restricted cash. The following table summarizes cash flows provided by (used in) each type of business activity in the periods presented: Three Months Ended March 31, (Dollars in millions) 2022 2021 Net Cash Provided by (Used in) Operating Activities $ (64) $ 74 Net Cash Provided by (Used in) Investing Activities $ 9 $ (3) Net Cash Used in Financing Activities $ (5) $ (9) Operating Activities Cash used in operating activities was $64 million for the three months ended March 31, 2022. The primary uses of cash in operating activities were from seasonal working capital requirements. Cash provided by operating activities was $74 million for the three months ended March 31, 2021. The primary sources of cash provided by operating activities were driven by collections on our accounts receivables and inventory utilization, partially offset by higher interest payments. Investing Activities Cash provided by investing activities was $9 million for the three months ended March 31, 2022. The primary investing activities included proceeds from a settlement of escrow related to the sale of business for $9 million, cash used for capital expenditures of $20 million, which was offset by proceeds from sale of assets of $20 million. Cash used in investing activities was $3 million for the three months ended March 31, 2021. The primary uses of cash in investing activities were capital expenditures of $15 million for property, plant and equipment, offset by proceeds of $11 million from other asset dispositions. Financing Activities Cash used in financing activities was $5 million for the three months ended March 31, 2022. The primary uses of cash in financing activities were for finance lease payments. Cash used in financing activities was $9 million for the three months ended March 31, 2021. The primary uses of cash in financing activities were for finance lease payments. Sources of Liquidity Our sources of available liquidity include cash generated by our operations, cash and cash equivalent balances, and accounts receivable factoring. From time to time, we may enter into transactions to dispose of businesses or capital assets that no longer fit our long-term strategy. We historically have accessed banks for short-term loans and the capital markets for debt and equity offerings. Based upon current and anticipated levels of operations and our recent refinancing transactions, we expect to have sufficient cash from operations and cash on hand to fund our cash requirements (discussed below) and financial obligations, both in the short-term and long-term. Our cash and cash equivalents of $841 million (which excludes restricted cash) remain our primary source of funds to manage any liquidity event risks. 22 Table of Contents LC Credit Agreement We have a senior secured letter of credit agreement (the “LC Credit Agreement”) in an aggregate amount of $215 million maturing on May 29, 2024, which is used by the Company and certain of its subsidiaries for the issuance of bid and performance letters of credit. At March 31, 2022, we had approximately $169 million in outstanding letters of credit under the LC Credit Agreement (“LC Credit Agreement letters of credit”) and availability of $46 million. Ratings Services’ Credit Ratings Our credit ratings at March 31, 2022 were maintained since December 31, 2021. • Moody’s Investors Service (“Moody’s”) corporate family rating is at B2, our senior unsecured notes rating is at B3, and our senior secured notes and LC Credit Agreement ratings are at Ba3. The outlook is stable. • Standard and Poor’s (“S&P”) corporate family and senior unsecured notes ratings are at B-, and our senior secured notes and LC Credit Agreement ratings are B+. The outlook is stable. Cash Requirements Our cash requirements will continue to include payments for capital expenditures, payments for short-term working capital needs, interest payments on our long-term debt, repayment on finance leases, operating costs associated with our business and restructuring payments. In 2021, operating cash flow benefited from the monetization of working capital accumulated in 2020. As business activity rises to pre-COVID-19 pandemic levels we expect that we will utilize cash to invest in capital assets and working capital growth. Our cash requirements may also include awards under our employee incentive programs and other amounts to settle litigation related matters. As of March 31, 2022, we had outstanding debt of $300 million in aggregate principal amount for our Exit Notes due 2024, $500 million in aggregate principal amount for our 2028 Senior Secured Notes and $1.6 billion in aggregate principal amount of the 2030 Senior Notes. Please see “Note 7 – Borrowings and Other Debt Obligations” for additional details. Our capital spending for 2022 is currently projected to be between $175 million to $200 million. Capital expenditures are expected to be used primarily to support the ongoing activities and commitments in our core business. We expect to make $215 million in interest payments in 2022 and approximately $204 million in interest payments annually until the maturity of our long-term debt (excluding finance leases). Our payments on operating leases and operating purchase obligations this year are expected to be approximately $74 million and $177 million, respectively. Cash and cash equivalents plus restricted cash are held by subsidiaries outside of Ireland. At March 31, 2022 we had approximately $168 million of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations. Based on the nature of our structure, other than the restrictions noted above, we foresee we will be able to redeploy cash with minimal to no incremental tax. Customer Receivables We may experience delayed customer payments and payment defaults due to, among other reasons, a weaker economic environment, reductions in our customers’ cash flow from operations, our customers’ inability to access credit markets, as well as unsettled political conditions. Accounts Receivable Factoring From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions for cash proceeds net of discount and hold-back. The programs we factor under are uncommitted and thus we cannot assure they will be available as a source of liquidity. Our factoring transactions were recognized as sales, and the proceeds are included as operating cash flows in our Condensed Consolidated Statements of Cash Flows. During the three months ended March 31, 2022 and 2021, we sold accounts receivable balances of $17 million and $6 million, respectively, and received cash proceeds of $15 million and $5 million, respectively. 23 Table of Contents Guarantees Weatherford International plc, the ultimate parent of the Weatherford group, guarantees the obligations of its subsidiaries – Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”), including the notes and credit facilities listed below. Our Exit Notes, 2028 Senior Secured Notes and 2030 Senior Notes were issued by Weatherford Bermuda and guaranteed by Weatherford International plc and Weatherford Delaware and other subsidiary guarantors party thereto. Please see “Note 7 – Borrowings and Other Debt Obligations” for additional details. Letters of Credit and Surety Bonds As of March 31, 2022, we had $382 million of letters of credit outstanding, consisting of the $169 million under the LC Credit Agreement letters of credit and another $213 million under various uncommitted bi-lateral facilities (of which there was $212 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets). Our letters of credit under various uncommitted bi-lateral facilities increased “Restricted Cash” since December 31, 2021 due to a requirement from a new multi-year contract. We utilize surety bonds as part of our customary business practice in Latin America. As of March 31, 2022, we had surety bonds outstanding of $300 million. Any of our outstanding letters of credit or surety bonds could be called by the beneficiaries should we breach certain contractual or performance obligations. If the beneficiaries were to call the letters of credit under our LC Credit Agreement or surety bonds, our available liquidity would be reduced by the amount called. Forward-Looking Statements This report contains various statements relating to future financial performance and results, business strategy, plans, goals and objectives, including certain projections, business trends and other statements that are not historical facts. These statements constitute forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “budget,” “strategy,” “plan,” “guidance,” “outlook,” “may,” “should,” “could,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, although not all forward-looking statements contain these identifying words. Forward-looking statements reflect our beliefs and expectations based on current estimates and projections. While we believe these expectations, and the estimates and projections on which they are based, are reasonable and were made in good faith, these statements are subject to numerous risks and uncertainties. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. The forward-looking statements included herein are only made as of the date of the filing of this report, and we undertake no obligation to correct, update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws. The following, together with disclosures under “Part II – Other Information – Item 1A. Risk Factors”, sets forth certain risks and uncertainties relating to our forward-looking statements that may cause actual results to be materially different from our present expectations or projections: • global political, economic and market conditions, political disturbances, war, terrorist attacks, changes in global trade policies, weak local economic conditions and international currency fluctuations (including the Russia Ukraine Conflict; • failure to ensure on-going compliance with current and future laws and government regulations and sanctions, including but not limited to those related to the Russia Ukraine Conflict, and environmental and tax and accounting laws, rules and regulations; • changes in, and the administration of, treaties, laws, and regulations, including in response to issues related to the Russia Ukraine Conflict and the potential for such issues to exacerbate other risks we face, including those related to the other risks and uncertainties listed or referenced in this Forward-Looking Statements section and in the Risk Factors section below; • our ability to comply with, and respond to, climate change, ESG and other “sustainability” initiatives and future legislative and regulatory measures both globally and in the specific geographic regions in which we and our customers operate; • our ability to effectively and timely address the need to conduct our operations and provision of services to our customers more sustainably and with a lower carbon footprint; 24 Table of Contents • risks associated with disease outbreaks and other public health issues, including the COVID-19 pandemic, their impact on the global economy and the business of our company, customers, suppliers and other partners; • further spread and potential for a resurgence of the COVID-19 pandemic in a given geographic region and related disruptions to our business, employees, customers, suppliers and other partners and additional regulatory measures or voluntary actions that may be put in place to limit the spread of the COVID-19 pandemic, including vaccination requirements and the associated availability of vaccines, restrictions on business operations or social distancing requirements, and the duration and efficacy of such restrictions; • the price and price volatility of, and demand for, oil, natural gas and natural gas liquids; • member-country quota compliance within the Organization of Petroleum Exporting Countries (“OPEC”); • our ability to realize expected revenues and profitability levels from current and future contracts; • our ability to generate cash flow from operations to fund our operations; • our ability to effectively and timely adapt our technology portfolio, products and services to address and participate in changes to the market demands for the transition to alternate sources of energy such as geothermal, carbon capture and responsible abandonment, including our digitalization efforts; • increases in the prices and lack of availability of our procured products and services; • our ability to timely collect from customers; • our ability to realize cost savings and business enhancements from our revenue and cost improvement efforts; • our ability to attract, motivate and retain employees, including key personnel; • our ability to access to capital markets on terms that are commercially acceptable to the Company; • our ability to manage our workforce, supply chain and business processes, information technology systems and technological innovation and commercialization, including the impact of our organization restructure, business enhancements, improvement efforts and the cost and support reduction plans; • our ability to service our debt obligations; • potential non-cash asset impairment charges for long-lived assets, intangible assets or other assets; and • adverse weather conditions in certain regions of our operations. Many of these factors are macro-economic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, affect us in ways or to an extent that we currently do not expect or consider to be significant, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this report as anticipated, believed, estimated, expected, intended, planned or projected. Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in our current and past filings with the SEC under the Exchange Act and the Securities Act of 1933, as amended. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Other than the change in fair value of our debt as discussed in “Note 7 – Borrowings and Other Debt Obligations” in the Notes to Condensed Consolidated Financial Statements, our exposure to market risk has not changed materially since December 31, 2021.