Weatherford International plc 10-Q

Item 1. Financial Statements. WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, (Dollars and shares in millions, except per share amounts) 2024 2023 Revenue: Services $ 865 $ 741 Products 493 445 Total Revenue 1,358 1,186 Costs and Expenses: Cost of Services 527 450 Cost of Products 357 340 Research and Development 31 26 Selling, General and Administrative 205 190 Other Charges (Credits) 5 ( 5 ) Total Costs and Expenses 1,125 1,001 Operating Income 233 185 Other Expense: Interest Expense, Net of Interest Income of $ 14 and $ 16 ( 29 ) ( 31 ) Other Expense, Net ( 22 ) ( 35 ) Income Before Income Taxes 182 119 Income Tax Provision ( 59 ) ( 38 ) Net Income 123 81 Net Income Attributable to Noncontrolling Interests 11 9 Net Income Attributable to Weatherford $ 112 $ 72 Basic Income per Share $ 1.54 $ 1.00 Basic Weighted Average Shares Outstanding 72.9 71.5 Diluted Income per Share $ 1.50 $ 0.97 Diluted Weighted Average Shares Outstanding 74.7 73.5 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 2 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended March 31, (Dollars in millions) 2024 2023 Net Income $ 123 $ 81 Foreign Currency Translation Adjustments ( 24 ) 3 Comprehensive Income 99 84 Net Income Attributable to Noncontrolling Interests 11 9 Comprehensive Income Attributable to Weatherford $ 88 $ 75 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 3 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars and shares in millions, except par value) March 31, 2024 December 31, 2023 (Unaudited) Assets: Cash and Cash Equivalents $ 824 $ 958 Restricted Cash 113 105 Accounts Receivable, Net of Allowance for Credit Losses of $ 16 at March 31, 2024 and $ 16 at December 31, 2023 1,251 1,216 Inventories, Net 850 788 Other Current Assets 274 278 Total Current Assets 3,312 3,345 Property, Plant and Equipment, Net of Accumulated Depreciation of $ 900 at March 31, 2024 and $ 883 at December 31, 2023 988 957 Intangibles, Net of Accumulated Amortization of $ 678 at March 31, 2024 and $ 639 at December 31, 2023 417 370 Operating Lease Assets 135 138 Other Non-Current Assets 238 258 Total Assets $ 5,090 $ 5,068 Liabilities: Current Portion of Long-term Debt $ 101 $ 168 Accounts Payable 716 679 Accrued Salaries and Benefits 298 387 Income Taxes Payable 147 138 Current Portion of Operating Lease Liabilities 47 46 Other Current Liabilities 491 448 Total Current Liabilities 1,800 1,866 Long-term Debt 1,629 1,715 Operating Lease Liabilities 124 131 Non-current Taxes Payable 286 282 Other Non-Current Liabilities 151 152 Total Liabilities $ 3,990 $ 4,146 Shareholders’ Equity: Ordinary Shares - Par Value $ 0.001 ; Authorized 1,356 shares, Issued and Outstanding 73.2 shares at March 31, 2024 and 72.1 at December 31, 2023 $ — $ — Capital in Excess of Par Value 2,985 2,906 Retained Deficit ( 1,842 ) ( 1,954 ) Accumulated Other Comprehensive Loss ( 52 ) ( 28 ) Weatherford Shareholders’ Equity 1,091 924 Noncontrolling Interests 9 ( 2 ) Total Shareholders’ Equity 1,100 922 Total Liabilities and Shareholders’ Equity $ 5,090 $ 5,068 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, (Dollars in millions) 2024 2023 Cash Flows From Operating Activities: Net Income $ 123 $ 81 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 85 80 Foreign Exchange Losses 15 29 Inventory Charges 6 11 Gain on Disposition of Assets ( 7 ) ( 5 ) Deferred Income Tax Provision 14 18 Share-Based Compensation 13 9 Changes in Accounts Receivable, Inventory, and Accounts Payable: Accounts Receivable ( 112 ) ( 96 ) Inventories ( 53 ) ( 45 ) Accounts Payable 99 64 Other Changes, Net ( 52 ) ( 62 ) Net Cash Provided by Operating Activities 131 84 Cash Flows From Investing Activities: Capital Expenditures for Property, Plant and Equipment ( 59 ) ( 64 ) Proceeds from Disposition of Assets 10 7 Business Acquisitions, Net of Cash Acquired ( 36 ) ( 4 ) Proceeds from Sale of Investments 41 — Other Investing Activities ( 10 ) ( 3 ) Net Cash Used in Investing Activities ( 54 ) ( 64 ) Cash Flows From Financing Activities: Repayments of Long-term Debt ( 172 ) ( 66 ) Distributions to Noncontrolling Interests — ( 6 ) Tax Remittance on Equity Awards Vested ( 8 ) ( 52 ) Other Financing Activities ( 7 ) ( 3 ) Net Cash Used in Financing Activities ( 187 ) ( 127 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 16 ) ( 22 ) Net Decrease in Cash, Cash Equivalents and Restricted Cash ( 126 ) ( 129 ) Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,063 1,112 Cash, Cash Equivalents and Restricted Cash at End of Period $ 937 $ 983 Supplemental Cash Flow Information: Interest Paid $ 8 $ 18 Income Taxes Paid, Net of Refunds $ 35 $ 29 844,702 Shares of Common Stock Issued for Acquisitions $ 75 $ — The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1 – Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of Weatherford International plc (the “Company,” “Weatherford,” “we,” “us,” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”). The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from our estimates. In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments considered necessary by management to fairly state the results of operations, financial position and cash flows of Weatherford and its subsidiaries for the periods presented and are not necessarily indicative of the results that may be expected for a full year. Our financial statements have been prepared on a consolidated basis. Under this basis, our financial statements consolidate all wholly owned subsidiaries and controlled joint ventures. All intercompany accounts and transactions have been eliminated. Summary of Significant Accounting Policies Please refer to “Note 1 – Summary of Significant Accounting Policies” of our Consolidated Financial Statements from our 2023 Form 10-K for the discussion on our significant accounting policies. Certain reclassifications have been made to these Condensed Consolidated Financial Statements and accompanying footnotes for the three months ended March 31, 2023 to conform to the presentation for the three months ended March 31, 2024. Accounting Standards Issued Not Yet Adopted Please refer to “Note 1 – Summary of Significant Accounting Policies” of our Consolidated Financial Statements from our 2023 Form 10-K for the discussion on accounting pronouncements that have been issued but not yet effective for the interim periods presented that are not expected to have a material impact on our financial position or results of operations. Evaluations of all other new accounting pronouncements that have been issued, but not yet effective are on-going, and at this time are not expected to have a material impact on our Condensed Consolidated Financial Statements. 6 Table of Contents 2 – Segment Information Financial information by segment is summarized below. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as presented in our 2023 Form 10-K. We have three reportable segments: (1) Drilling and Evaluation “DRE”, (2) Well Construction and Completions “WCC”, and (3) Production and Intervention “PRI”. Our primary measure of segment profitability is segment adjusted EBITDA, which is based on segment earnings before interest, taxes, depreciation, amortization, share-based compensation expense and other adjustments. Research and development expenses are included in segment adjusted EBITDA. All other includes results from non-core business activities (including integrated services and projects), and corporate includes overhead support and centrally managed or shared facilities costs. All other and corporate do not individually meet the criteria for segment reporting. Three Months Ended March 31, (Dollars in millions) 2024 2023 Revenues: DRE Revenues $ 422 $ 372 WCC Revenues 458 421 PRI Revenues 348 349 All Other 130 44 Total Revenues $ 1,358 $ 1,186 Operating Income: DRE Segment Adjusted EBITDA $ 130 $ 108 WCC Segment Adjusted EBITDA 120 96 PRI Segment Adjusted EBITDA 73 68 All Other 27 9 Corporate ( 14 ) ( 12 ) Depreciation and Amortization ( 85 ) ( 80 ) Share-based Compensation ( 13 ) ( 9 ) Other Credits (Charges) ( 5 ) 5 Operating Income $ 233 $ 185 7 Table of Contents 3 – Revenue Disaggregated Revenue The following table disaggregates our revenue from contracts with customers by geographic area and includes equipment rental revenue. Equipment rental revenue was $ 34 million in the three months ended March 31, 2024 and $ 33 million for the three months ended March 31, 2023. During the three months ended March 31, 2024, the U.S. and the Kingdom of Saudi Arabia accounted for 15 % and 10 %, respectively, of total revenue. In addition, Mexico accounted for 14 % of total revenue, driven by our largest customer, which accounted for 12 % of our total revenue. During the three months ended March 31, 2023, the U.S. and Mexico accounted for 18 % and 12 %, respectively, of total revenue. No other country accounted for more than 10% of our revenue in the periods presented. Three Months Ended March 31, (Dollars in millions) 2024 2023 Revenue by Geographic Areas: North America (a) $ 267 $ 286 International 1,091 900 Middle East/North Africa/Asia 497 376 Latin America 370 317 Europe/Sub-Sahara Africa/Russia 224 207 Total Revenue $ 1,358 $ 1,186 (a) North America consists of the U.S. and Canada. Contract Balances The timing of our revenue recognition, billings, and cash collections results in the recording of accounts receivable, contract assets, and contract liabilities. The following table summarizes these balances as of March 31, 2024 and December 31, 2023: (Dollars in millions) March 31, 2024 December 31, 2023 Receivables for Product and Services in Accounts Receivable, Net $ 1,221 $ 1,182 Receivables for Equipment Rentals in Account Receivable, Net $ 30 $ 34 Accounts Receivable, Net $ 1,251 $ 1,216 Contract Assets in Other Current Assets $ 52 $ 61 Contract Assets in Other Non-Current Assets $ 26 $ 24 Contract Liabilities in Other Current Liabilities $ 66 $ 58 Contract Liabilities in Other Non-Current Liabilities $ 4 $ 5 8 Table of Contents 4 – Inventories, Net Inventories, net of reserves of $ 119 million and $ 121 million as of March 31, 2024 and December 31, 2023, respectively, are presented by category in the table below: (Dollars in millions) March 31, 2024 December 31, 2023 Finished Goods $ 725 $ 688 Work in Process and Raw Materials, Components and Supplies 125 100 Inventories, Net $ 850 $ 788 The change in inventory reserves includes the inventory charges primarily offset by the disposal of inventory previously reserved. The net charges are recorded in “Cost of Products” on our Condensed Consolidated Statements of Operations in the amount of $ 6 million and $ 11 million during the three months ended March 31, 2024 and March 31, 2023, respectively. 9 Table of Contents 5 – Intangibles, Net The components of intangible assets, net were as follows: (Dollars in millions) March 31, 2024 December 31, 2023 Developed and Acquired Technology, Net of Accumulated Amortization of $ 508 at March 31, 2024 and $ 479 at December 31, 2023 $ 192 $ 135 Trade Names, Net of Accumulated Amortization of $ 170 at March 31, 2024 and $ 160 at December 31, 2023 225 235 Intangibles, Net of Accumulated Amortization of $ 678 at March 31, 2024 and $ 639 at December 31, 2023 $ 417 $ 370 Amortization expense was $ 41 million and $ 40 million for the three months ended March 31, 2024 and March 31, 2023, respectively, and is reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations. The increase was primarily related to intangibles acquired in connection with acquisitions during the three months ended March 31, 2024. Please refer to “Note 12 – Acquisitions”. 6 – Borrowings and Other Debt Obligations (Dollars in millions) March 31, 2024 December 31, 2023 Current Portion of 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” $ 80 $ 151 Current Portion of Finance Leases 21 17 Current Portion of Long-term Debt $ 101 $ 168 8.625 % Senior Notes due 2030 “2030 Senior Notes” $ 1,588 $ 1,587 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” — 92 Finance Leases 41 36 Long-term Debt $ 1,629 $ 1,715 2028 Senior Secured Notes On September 30, 2021, Weatherford International Ltd. (“Weatherford Bermuda”) issued 6.50 % senior secured notes in aggregate principal amount of $ 500 million maturing September 15, 2028 (the “2028 Senior Secured Notes”). Interest is payable semiannually on September 15 and March 15 of each year, and commenced on March 15, 2022. Proceeds from the issuance were reduced by debt issuance costs. In the first quarter of 2024 we repurchased $ 167 million in principal of our 2028 Senior Secured Notes. At March 31, 2024, the carrying value was reclassified as short-term and represents the remaining unpaid principal of $ 82 million offset by unamortized deferred issuance cost of $ 2 million. At December 31, 2023, the carrying value represented unpaid principal of $ 248 million offset by unamortized deferred issuance cost of $ 5 million. 2030 Senior Notes On October 27, 2021, Weatherford Bermuda issued 8.625 % senior notes in aggregate principal amount of $ 1.6 billion maturing April 30, 2030 (the “2030 Senior Notes”). Interest is payable semiannually on June 1 and December 1 of each year, and commenced on June 1, 2022. On December 1, 2022, the indenture related to our 2030 Senior Notes was amended and supplemented to add Weatherford International, LLC (“Weatherford Delaware”) as co-issuer and co-obligor, and concurrently releases the guarantee of Weatherford Delaware. At March 31, 2024 and December 31, 2023, the carrying value represents the remaining unpaid principal of $ 1.6 billion at each date, offset by unamortized deferred issuance cost of $ 12 million and $ 13 million, respectively. 10 Table of Contents Credit Agreement Weatherford Bermuda, Weatherford Delaware, Weatherford Canada Ltd. (“Weatherford Canada”) and WOFS International Finance GmbH (“Weatherford Switzerland”), together as borrowers, and the Company as parent, have an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement is guaranteed by the Company and certain of our subsidiaries and secured by substantially all of the personal property of the Company and those subsidiaries. At March 31, 2024 and December 31, 2023, the Credit Agreement allowed for a total commitment amount of $ 550 million, maturing on the earlier of October 24, 2028 and 91 days prior to the maturity of the 2028 Senior Secured Notes. Financial covenants in the Credit Agreement include a $ 250 million minimum liquidity covenant (which may increase up to $ 400 million dependent on the nature of transactions we may decide to enter into), a minimum interest coverage ratio of 2.50 to 1.00, a maximum total net leverage ratio of 3.50 to 1.00, and a maximum secured net leverage ratio of 1.50 to 1.00. On March 24, 2023, we amended the Credit Agreement to permit unlimited prepayments and other redemptions of indebtedness subject to (i) the ratio of funded debt (net of unrestricted cash in excess of $ 400 million to consolidated adjusted EBITDA as defined in the Credit Agreement, not exceeding 2.50 to 1.00, (ii) no default or event of default existing and (iii) aggregate proforma liquidity in the event of a debt reduction equaling or exceeding $ 300 million. On October 24, 2023, we amended the Credit Agreement to, among other things, (i) allow for an increase in total commitment amount from $ 400 million to $ 550 million ($ 250 million for performance letters of credit and $ 300 million for either borrowings or additional performance or financial letters of credit), (ii) extend maturity to October 24, 2028, subject to certain conditions, (iii) allow for dividends, share buybacks, and acquisitions which combined with other permitted transactions, are not to exceed a total net leverage ratio of 2.00 to 1.00 and an aggregate liquidity not less than $ 400 million, (iv) remove the minimum book value of assets requirement, (v) add Weatherford Switzerland as a borrower, and (vi) modify certain pricing provisions and eliminate secured overnight financing rate exposure to certain letters of credit. The amendment also gives the ability to request an increase in total commitments by up to $ 200 million, upon satisfaction of certain conditions. We further amended the Credit Agreement on December 20, 2023, to permit a certain specified swap transaction. As of March 31, 2024, we had zero borrowings outstanding under the Credit Agreement, and $ 374 million of letters of credit outstanding, consisting of the $ 273 million ($ 223 million for performance letters of credit and $ 50 million for financial letters of credit) under the Credit Agreement and another $ 101 million under various uncommitted bi-lateral facilities (of which there was $ 100 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets). As of December 31, 2023, we had zero borrowings outstanding under the Credit Agreement, and $ 376 million of letters of credit outstanding, consisting of the $ 270 million ($ 218 million for performance letters of credit and $ 52 million for financial letters of credit) under the Credit Agreement and another $ 106 million under various uncommitted bi-lateral facilities (of which there was $ 101 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets). Fair Value The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will be less than the carrying value when the market rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. The table below presents the fair value and carrying value of our long-term debt (excluding finance leases). March 31, 2024 December 31, 2023 (Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value 6.50 % Senior Secured Notes due 2028 $ 80 $ 84 $ 243 $ 258 8.625 % Senior Notes due 2030 1,588 1,672 1,587 1,673 Long-Term Debt (excluding Finance Leases) $ 1,668 $ 1,756 $ 1,830 $ 1,931 11 Table of Contents 7 – Disputes, Litigation and Legal Contingencies We are subject to lawsuits and claims arising out of the nature of our business. We have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability. It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, which would result in a liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material. If one or more negative outcomes were to occur relative to these cases, the aggregate impact to our financial condition could be material. 12 Table of Contents 8 – Shareholders’ Equity The change in shares issued and outstanding on our Condensed Consolidated Balance Sheets from 72.1 million as of December 31, 2023 to 73.2 million as of March 31, 2024, was due to equity awards granted, vested, and exercised, net of shares withheld for taxes. The change in shares also included the issuance of 844,702 of our ordinary shares in connection with acquisitions during the quarter. See “Note 12 – Acquisitions” in our Notes to Condensed Consolidated Financial Statements for further details. The following summarizes our shareholders’ equity activity for the three months ended March 31, 2024 and 2023: (Dollars in millions) Capital in Excess of Par Value Retained Income (Deficit) Accumulated Other Comprehensive Loss Noncontrolling Interests Total Shareholders’ Equity Balance at December 31, 2023 $ 2,906 $ ( 1,954 ) $ ( 28 ) $ ( 2 ) $ 922 Net Income — 112 — 11 123 Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes 4 — — — 4 Other Comprehensive Loss — — ( 24 ) — ( 24 ) Equity Issued for Acquisitions 75 — — — 75 Balance at March 31, 2024 $ 2,985 $ ( 1,842 ) $ ( 52 ) $ 9 $ 1,100 (Dollars in millions) Capital in Excess of Par Value Retained Income (Deficit) Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests Total Shareholders’ Equity Balance at December 31, 2022 $ 2,928 $ ( 2,371 ) $ ( 22 ) $ 16 $ 551 Net Income — 72 — 9 81 Distributions to Noncontrolling Interests — — — ( 6 ) ( 6 ) Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes ( 43 ) — — — ( 43 ) Other Comprehensive Income — — 3 — 3 Balance at March 31, 2023 $ 2,885 $ ( 2,299 ) $ ( 19 ) $ 19 $ 586 The following table presents the changes in our accumulated other comprehensive income (loss) by component for the three months ended March 31, 2024 and 2023: (Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Total Balance at December 31, 2023 $ ( 43 ) $ 15 $ ( 28 ) Other Comprehensive Loss ( 24 ) — ( 24 ) Balance at March 31, 2024 $ ( 67 ) $ 15 $ ( 52 ) Balance at December 31, 2022 $ ( 41 ) $ 19 $ ( 22 ) Other Comprehensive Income 3 — 3 Balance at March 31, 2023 $ ( 38 ) $ 19 $ ( 19 ) 13 Table of Contents 9 – Income per Share A reconciliation of the number of shares used for the basic and diluted income per share calculation was as follows: Three Months Ended March 31, (Dollars and shares in millions, except per share amounts) 2024 2023 Net Income Attributable to Weatherford $ 112 $ 72 Basic Weighted Average Shares Outstanding 72.9 71.5 Dilutive Effect of Awards Granted in Stock Incentive Plan 1.8 2.0 Diluted Weighted Average Shares Outstanding 74.7 73.5 Basic Income per Share $ 1.54 $ 1.00 Diluted Income per Share $ 1.50 $ 0.97 Antidilutive Weighted Average Shares: Warrants — 7.8 Equity Awards 0.5 0.8 Total Antidilutive Weighted Average Shares 0.5 8.6 Basic income per share for all periods presented equals net income divided by our weighted average shares outstanding during the period. Diluted income per share is computed by dividing net income by our weighted average shares outstanding during the period including potential dilutive ordinary shares. Antidilutive weighted average shares represent securities that could potentially dilute income per share in the future, which are excluded from the computation as their impact was antidilutive. Warrants to purchase 7.8 million ordinary shares at $ 99.96 per share were issued on December 13, 2019 and expired on December 13, 2023. For the three months ended March 31, 2023 warrants were excluded from the diluted weighted average shares outstanding as the exercise price of the warrants was greater than the average market price of the Company’s ordinary shares. 14 Table of Contents 10 – Income Taxes We recognized a tax expense of $ 59 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 where we recognized tax expense of $ 38 million. During the three months ended March 31, 2024, income tax expense was higher primarily due to increased earnings before taxes. We calculate income tax provision using the estimated annual effective tax rate method in accordance with Accounting Standards Codification “ASC” 740 - Income Taxes. The relationship between our pre-tax income or loss and our income tax provision or benefit varies from period to period due to 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 and in our operating structure. 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 residents for income tax purposes. Our income tax provisions are primarily driven by income in certain jurisdictions and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss. Certain charges and impairments recognized do not result in significant tax benefit as a result of being attributed to a non-income tax jurisdiction or our inability to forecast realization of the tax benefit of such losses. This is partially offset by the utilization of previously unbenefited deferred tax assets, such as net operating loss carryforwards. In December 2023, Ireland enacted tax legislation that models the Organization of Economic Cooperation and Development reform plans focused on global profit allocation and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as “Pillar Two.” This is not expected to materially increase the taxes we owe. We routinely undergo tax examination in various jurisdictions. We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements. As of March 31, 2024, we anticipate that it is reasonably possible that our uncertain tax positions of $ 286 million, including interest and penalties offset by net operating losses and other tax attributes if settled, may decrease by up to $ 12 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations. 11 – Credit Default Swap During the fourth quarter of 2023, we entered into a credit default swap (“CDS”) with a third-party financial institution terminating in February of 2026 related to a secured loan between that third-party financial institution and our largest customer in Mexico. The secured loan was utilized by this customer to pay certain of our outstanding receivables and accordingly, in the fourth quarter of 2023 and January of 2024, we received $ 140 million and $ 142 million, respectively. Under the CDS terms, within five business days upon notification of default, we could be required to pay the then outstanding notional balance net of recoveries. As of December 31, 2023, we had a notional balance of $ 130 million outstanding under the CDS, which increased to $ 260 million in January of 2024, following the receipt of the $ 142 million payment. As of March 31, 2024, the notional balance under the CDS was $ 242 million. Management expects the total notional balance under the CDS to decrease to $ 161 million, $ 54 million and nil by December 31, 2024, December 31, 2025 and March 31, 2026, respectively. The fair value of this derivative was not material as of March 31, 2024 and December 31, 2023. As of the date of this report, we are not aware of any events of default under the loan agreement between that third-party financial institution and our largest customer in Mexico. 15 Table of Contents 12 – Acquisitions During the three months ended March 31, 2024, we closed on acquisitions with total consideration of $ 136 million, which includes $ 36 million in cash net of cash acquired and 844,702 of our ordinary shares valued at $ 75 million on the closing dates. The purchases were accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification “ASC” 805 Business Combinations and the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values measured in accordance with the guidance under ASC 820 Fair Value Measurement. The fair value measurements of the intangible assets were based on inputs not observable in the market and therefore represent Level 3 measurements. The fair value of intangible assets recorded at the acquisition date was $ 85 million and an immaterial amount was recorded for the goodwill and contingent considerations. Acquisition-related costs incurred by the Company are expensed as incurred. The operating results of the acquired businesses were included in the Company’s results of operations from the date of acquisition. See also “Note 5 – Intangibles, Net” and “Note 8 – Shareholders’ Equity” in our Notes to Condensed Consolidated Financial Statements . 13 – Subsequent Events Our Credit Agreement gives us the right, subject to certain terms and conditions, to effectuate from time to time an increase in total commitments by up to $ 200 million. As such, on April 22, 2024, additional lenders joined the Credit Agreement, providing an increase in total commitments from $ 550 million to $ 680 million (performance letters of credit increased from $ 250 million to $ 309 million and borrowings or additional performance or financial letters of credit increased from $ 300 million to $ 371 million). On April 23, 2024, we issued a notice to redeem the remainder of our 6.5 % Senior Secured Notes due 2028 on May 23, 2024. 16 Table of Contents