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Item 1. Financial Statements

2024-07-24 compared with 2024-04-24 · 116 added, 79 removed, 283 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(Dollars and shares in millions, except per share amounts) 2024 2023 2024 2023

2 unchanged sentences

Total Revenue

1,405 1,274 2,763 2,460

Costs and Expenses:

9 unchanged sentences

( 24 ) ( 31 ) ( 53 ) ( 62 )

Loss on Blue Chip Swap Securities ( 10 ) ( 57 ) ( 10 ) ( 57 )

Other Expense, Net ( 20 ) ( 39 ) ( 42 ) ( 74 )

Income Before Income Taxes 210 74 392 193

Income Tax Provision ( 59 ) ( 38 )

Income Tax Benefit (Provision) ( 73 ) 16 ( 132 ) ( 22 )

Net Income 137 90 260 171

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(Dollars in millions) 2024

4 unchanged sentences

Comprehensive Income Attributable to Weatherford

$ 125 $ 72 $ 213 $ 147

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars and shares in millions, except par value) March 31, 2024

(Dollars and shares in millions, except par value) June 30, 2024

December 31, 2023

1 unchanged sentence

Restricted Cash 58 105

Accounts Receivable, Net of Allowance for Credit Losses of $ 16 at March 31, 2024 and $ 16 at December 31, 2023

Accounts Receivable, Net of Allowance for Credit Losses of $ 10 at June 30, 2024 and $ 16 at December 31, 2023

Inventories, Net 884 788

1 unchanged sentence

Total Current Assets 3,362 3,345

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 900 at March 31, 2024 and $ 883 at December 31, 2023

Intangibles, Net of Accumulated Amortization of $ 678 at March 31, 2024 and $ 639 at December 31, 2023

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 934 at June 30, 2024 and $ 883 at December 31, 2023

Intangibles, Net of Accumulated Amortization of $ 718 at June 30, 2024 and $ 639 at December 31, 2023

Operating Lease Assets 138 138

15 unchanged sentences

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

Authorized 1,356 shares, Issued and Outstanding 73.2 shares at June 30, 2024 and 72.1 at December 31, 2023

Capital in Excess of Par Value 2,997 2,906

1 unchanged sentence

Accumulated Other Comprehensive Loss ( 52 ) ( 28 )

Weatherford Shareholders’ Equity 1,091 924

Shareholders’ Equity

Noncontrolling Interests 12 ( 2 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions) 2024 2023

4 unchanged sentences

Foreign Exchange Losses

Loss on Blue Chip Swap Securities 10 57

Inventory Charges 15 11

Gain on Disposition of Assets

Deferred Income Tax Provision

Deferred Income Tax Provision (Benefit)

Share-Based Compensation 25 17

Changes in Accounts Receivable, Inventory, and Accounts Payable:

Changes in Accounts Receivable, Inventory, Accounts Payable and Accrued Salaries and Benefits:

Accounts Receivable

2 unchanged sentences

Accounts Payable

Other Changes, Net

Accrued Salaries and Benefits

( 88 ) ( 72 )

Other Changes, Net ( 44 ) 32

Net Cash Provided by Operating Activities 281 285

2 unchanged sentences

Proceeds from Disposition of Assets 18 14

Purchases of Blue Chip Swap Securities

( 50 ) ( 110 )

Proceeds from Sales of Blue Chip Swap Securities

Business Acquisitions, Net of Cash Acquired

16 unchanged sentences

Income Taxes Paid, Net of Refunds $ 89 $ 64

Supplemental Noncash Information:

844,702 Shares of Common Stock Issued for Acquisitions

17 unchanged sentences

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.

Certain reclassifications have been made to these Condensed Consolidated Financial Statements and accompanying footnotes for the three and six months ended June 30, 2023 to conform to the presentation for the three and six months ended June 30, 2024.

Accounting Standards Issued Not Yet Adopted

8 unchanged sentences

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 results were from non-core business activities (including integrated services and projects).

Corporate includes overhead support and centrally managed or shared facility costs.

All other and corporate do not individually meet the criteria for segment reporting.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions) 2024 2023 2024 2023

12 unchanged sentences

Share-based Compensation

( 12 ) ( 8 ) ( 25 ) ( 17 )

Other Credits (Charges)

( 3 ) ( 1 ) ( 8 ) 4

Operating Income $ 264 $ 201 $ 497 $ 386

1 unchanged sentence

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.

Equipment rental revenues were $ 39 million and $ 73 million in the three and six months ended June 30, 2024, respectively, and $ 39 million and $ 72 million for the three and six months ended June 30, 2023, respectively.

During the three and six months ended June 30, 2024, the U.S.

accounted for 14 % of total revenue in each period, respectively, and the Kingdom of Saudi Arabia accounted for 11 % and 10 % of total revenue, respectively.

In addition, for the three and six months ended June 30, 2024, Mexico accounted for 12 % and 13 % of total revenue, respectively, driven by a customer which accounted for 10 % and 11 %, respectively.

During the three and six months ended June 30, 2023, the U.S.

accounted for 17 % and 18 %, respectively and Mexico accounted for 13 % in each period, respectively.

No other country accounted for more than 10% of our revenue in the periods presented.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions) 2024 2023 2024 2023

1 unchanged sentence

North America (a)

$ 252 $ 265 519 551

International

1,153 1,009 2,244 1,909

Middle East/North Africa/Asia 542 421 1,039 797

6 unchanged sentences

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

The following table summarizes these balances as of June 30, 2024 and December 31, 2023:

(Dollars in millions) June 30, 2024 December 31, 2023

Receivables for Product and Services in Accounts Receivable, Net $ 1,288 $ 1,182

6 unchanged sentences

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

Inventories, net of reserves of $ 114 million and $ 121 million as of June 30, 2024 and December 31, 2023, respectively, are presented by category in the table below:

(Dollars in millions) June 30, 2024 December 31, 2023

Finished Goods $ 750 $ 688

1 unchanged sentence

Inventories, Net $ 884 $ 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.

The change in inventory reserves includes 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 $ 9 million and $ 15 million in the three and six months ended June 30, 2024, respectively, and nil and $ 11 million in the three and six months ended June 30, 2023, respectively.

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

Trade Names, Net of Accumulated Amortization of $ 170 at March 31, 2024 and $ 160 at December 31, 2023

Intangibles, Net of Accumulated Amortization of $ 678 at March 31, 2024 and $ 639 at December 31, 2023

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.

(Dollars in millions) June 30, 2024 December 31, 2023

Developed and Acquired Technology, Net of Accumulated Amortization of $ 538 at June 30, 2024 and $ 479 at December 31, 2023

Trade Names, Net of Accumulated Amortization of $ 180 at June 30, 2024 and $ 160 at December 31, 2023

Intangibles, Net of Accumulated Amortization of $ 718 at June 30, 2024 and $ 639 at December 31, 2023

Amortization expense was $ 41 million and $ 82 million in the three and six months ended June 30, 2024, respectively, and $ 40 million and $ 80 million for the three and six months ended June 30, 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.

1 unchanged sentence

6 – Borrowings and Other Debt Obligations

(Dollars in millions) March 31, 2024 December 31, 2023

(Dollars in millions) June 30, 2024 December 31, 2023

Current Portion of 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes”

9 unchanged sentences

(“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.

Interest was 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.

The remaining principal of our 2028 Senior Secured Notes was redeemed and paid in full on May 23, 2024.

2030 Senior Notes

1 unchanged sentence

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.

At June 30, 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.

Credit Agreement

2 unchanged sentences

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.

At 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).

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 June 6, 2024, an additional lender joined the Credit Agreement, providing an increase in total commitments from $ 680 million to $ 720 million (performance letters of credit increased to $ 327 million and revolving loan borrowings or additional performance or financial letters of credit increased to $ 393 million).

In addition, we amended the Credit Agreement to allow for future increases in total commitments of up to $ 1 billion.

As of June 30, 2024, we had zero borrowings outstanding under the Credit Agreement and $ 389 million of letters of credit outstanding.

The letters of credit consisted of $ 289 million for performance letters of credit and $ 48 million for financial letters of credit under the Credit Agreement and $ 52 million letters of credit under various uncommitted bi-lateral facilities ($ 44 million of which was 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.

The letters of credit consisted of $ 218 million for performance letters of credit and $ 52 million for financial letters of credit under the Credit Agreement and $ 106 million letters of credit under various uncommitted bi-lateral facilities ($ 101 million of which was cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors.

2 unchanged sentences

The table below presents the fair value and carrying value of our long-term debt (excluding finance leases).

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value

10 unchanged sentences

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:

Shares issued and outstanding on our Condensed Consolidated Balance Sheets increased from 72.1 million as of December 31, 2023 to 73.2 million as of June 30, 2024.

The change was due to equity awards granted, vested, and exercised, net of shares withheld for taxes, which also included the issuance of 844,702 of our ordinary shares in connection with acquisitions during the six months ended June 30, 2024.

The following summarizes our shareholders’ equity activity for the three and six months ended June 30, 2024 and 2023:

(Dollars in millions) Capital in Excess of Par Value Retained

Income (Deficit)

Comprehensive Loss

Noncontrolling Interests Total Shareholders’ Equity

Income (Deficit) Accumulated

Comprehensive Loss Noncontrolling Interests Total Shareholders’ Equity

Balance at December 31, 2023

6 unchanged sentences

$ 2,985 $ ( 1,842 ) $ ( 52 ) $ 9 $ 1,100

Net Income — 125 — 12 137

Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes 12 — — — 12

Distributions to Noncontrolling Interests — — — ( 9 ) ( 9 )

Balance at June 30, 2024

$ 2,997 $ ( 1,717 ) $ ( 52 ) $ 12 $ 1,240

(Dollars in millions) Capital in Excess of Par Value Retained

Income (Deficit)

Income (Deficit) Accumulated

Comprehensive Income (Loss) Noncontrolling Interests Total Shareholders’ Equity

3 unchanged sentences

Distributions to Noncontrolling Interests — — — ( 6 ) ( 6 )

— — — ( 6 ) ( 6 )

Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes ( 43 ) — — — ( 43 )

( 43 ) — — — ( 43 )

Other Comprehensive Income — — 3 — 3

1 unchanged sentence

$ 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:

Net Income — 82 — 8 90

Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes 6 — — — 6

Other Comprehensive Loss — — ( 10 ) — ( 10 )

Balance at June 30, 2023

$ 2,891 $ ( 2,217 ) $ ( 29 ) $ 27 $ 672

The following table presents the changes in our accumulated other comprehensive income (loss) by component for the six months ended June 30, 2024 and 2023:

(Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Total

2 unchanged sentences

Other Comprehensive Loss ( 24 ) — ( 24 )

Balance at March 31, 2024

Balance at June 30, 2024

$ ( 67 ) $ 15 $ ( 52 )

1 unchanged sentence

$ ( 41 ) $ 19 $ ( 22 )

Other Comprehensive Income 3 — 3

Balance at March 31, 2023

Other Comprehensive Loss $ ( 7 ) — ( 7 )

Balance at June 30, 2023

$ ( 48 ) $ 19 $ ( 29 )

1 unchanged sentence

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,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars and shares in millions, except per share amounts) 2024 2023 2024 2023

2 unchanged sentences

Dilutive Effect of Awards Granted in Stock Incentive Plan

2.1 1.3 1.9 1.3

Diluted Weighted Average Shares Outstanding 75.3 73.4 75.0 73.4

1 unchanged sentence

Diluted Income per Share $ 1.66 $ 1.12 $ 3.16 $ 2.11

Antidilutive Weighted Average Shares:

Anti-dilutive Weighted Average Shares:

Equity Awards

Total Antidilutive Weighted Average Shares

0.5 1.0 0.5 0.9

Total Anti-dilutive Weighted Average Shares

0.5 8.8 0.5 8.7

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.

Anti-dilutive 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 anti-dilutive.

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.

For the three and six months ended June 30, 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.

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 recognized a tax expense of $ 73 million and $ 132 million for the three and six months ended June 30, 2024, respectively, and a tax benefit of $ 16 million and tax expense of $ 22 million for the three and six months ended June 30, 2023, respectively.

Income tax expense was higher in the three and six months ended June 30, 2024 compared to the same periods in 2023, primarily due to increased earnings before taxes.

In addition, during the three and six months ended June 30, 2023, we had a release of valuation allowances and the recognition of a benefit from previously uncertain tax positions in the second quarter.

Those benefits were offset by the establishment of a valuation allowance of approximately $ 20 million related to the sale of Blue Chip Swap securities in Argentina.

We calculate income tax provision using the estimated annual effective tax rate method in accordance with Accounting Standards Codification “ASC” 740 - Income Taxes.

7 unchanged sentences

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.

As of June 30, 2024, we anticipate that it is reasonably possible that our uncertain tax positions of $ 278 million, including interest and penalties offset by net operating losses and other tax attributes if settled, may decrease by up to $ 13 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

11 – Credit Default Swap

3 unchanged sentences

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.

The agreement was modified during the second quarter of 2024 to reduce the notional balance and as of June 30, 2024, the notional balance under the CDS was $ 108 million.

The fair value of this derivative was not material as of June 30, 2024 and December 31, 2023.

The CDS agreement was terminated on July 17, 2024 and the remaining notional balance was eliminated.

12 – Blue Chip Swap Securities - Argentina

The functional currency for our Argentine operations is the U.S.

dollar and we use Argentina’s official exchange rate to remeasure our Argentine peso-denominated net monetary assets into U.S.

dollars at each balance sheet date.

The Central Bank of Argentina has maintained certain currency controls that limit our ability to access U.S.

dollars in Argentina and remit cash from our Argentine operations.

As such, we have used an indirect foreign exchange mechanism known as a Blue Chip Swap (“BCS”) which allows entities to remit U.S.

dollars from Argentina through the purchase and sale of securities.

During the second quarter of 2024 and 2023, we completed a series of BCS transactions at implied exchange rates (“BCS rates”) that were approximately 26 % and 106 % higher, respectively, than the official exchange rate, resulting in a loss of $ 10 million and $ 57

million, respectively.

13 – 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.

During the six months ended June 30, 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.

The fair value of intangible assets recorded at the acquisition date was $ 88 million and an immaterial amount was recorded for goodwill and contingent considerations.

Acquisition-related costs incurred by the Company are expensed as incurred.

2 unchanged sentences

14 – 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.

On July 23, 2024, we announced that our Board declared a cash dividend of $ 0.25 per share of the Company’s ordinary shares, payable on September 12, 2024 to shareholders of record as of August 13, 2024.

We also announced that our Board has authorized a dividend program under which we intend to pay regular quarterly cash dividends, subject to our Board’s discretion and continuing determination that it is in the best interest of the Company and complies with applicable legal requirements.

Also on July 23, 2024, we announced our Board’s approval of a new $ 500 million share repurchase program.

The CDS agreement at “Note 11 – Credit Default Swap” was terminated on July 17, 2024 and the remaining notional balance was eliminated.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements