Item 1. Financial Statements
Item 1. Financial Statements.
WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars and shares in millions, except per share amounts) 2024 2023 2024 2023
Revenue:
Services $ 862 $ 794 $ 1,727 $ 1,535
Products 543 480 1,036 925
Total Revenue
1,405 1,274 2,763 2,460
Costs and Expenses:
Cost of Services 500 499 1,027 949
Cost of Products 391 348 748 688
Research and Development 31 27 62 53
Selling, General and Administrative 216 198 421 388
Other Charges (Credits)
3 1 8 ( 4 )
Total Costs and Expenses 1,141 1,073 2,266 2,074
Operating Income 264 201 497 386
Other Expense:
Interest Expense, Net of Interest Income of $ 17 , $ 16 , $ 31 , and $ 32
( 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 Benefit (Provision) ( 73 ) 16 ( 132 ) ( 22 )
Net Income 137 90 260 171
Net Income Attributable to Noncontrolling Interests 12 8 23 17
Net Income Attributable to Weatherford $ 125 $ 82 $ 237 $ 154
Basic Income per Share $ 1.71 $ 1.14 $ 3.25 $ 2.14
Basic Weighted Average Shares Outstanding 73.2 72.1 73.1 72.1
Diluted Income per Share $ 1.66 $ 1.12 $ 3.16 $ 2.11
Diluted Weighted Average Shares Outstanding 75.3 73.4 75.0 73.4
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in millions) 2024
2023
2024 2023
Net Income $ 137 $ 90 $ 260 $ 171
Foreign Currency Translation Adjustments — ( 10 ) ( 24 ) ( 7 )
Comprehensive Income 137 80 236 164
Net Income Attributable to Noncontrolling Interests 12 8 23 17
Comprehensive Income Attributable to Weatherford
$ 125 $ 72 $ 213 $ 147
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars and shares in millions, except par value) June 30, 2024
December 31, 2023
(Unaudited)
Assets:
Cash and Cash Equivalents $ 862 $ 958
Restricted Cash 58 105
Accounts Receivable, Net of Allowance for Credit Losses of $ 10 at June 30, 2024 and $ 16 at December 31, 2023
1,319 1,216
Inventories, Net 884 788
Other Current Assets 239 278
Total Current Assets 3,362 3,345
Property, Plant and Equipment, Net of Accumulated Depreciation of $ 934 at June 30, 2024 and $ 883 at December 31, 2023
1,007 957
Intangibles, Net of Accumulated Amortization of $ 718 at June 30, 2024 and $ 639 at December 31, 2023
384 370
Operating Lease Assets 138 138
Other Non-Current Assets 220 258
Total Assets $ 5,111 $ 5,068
Liabilities:
Current Portion of Long-term Debt $ 20 $ 168
Accounts Payable 771 679
Accrued Salaries and Benefits 293 387
Income Taxes Payable 143 138
Current Portion of Operating Lease Liabilities 46 46
Other Current Liabilities 418 448
Total Current Liabilities 1,691 1,866
Long-term Debt 1,628 1,715
Operating Lease Liabilities 127 131
Non-current Taxes Payable 278 282
Other Non-Current Liabilities 147 152
Total Liabilities $ 3,871 $ 4,146
Shareholders’ Equity:
Ordinary Shares - Par Value $ 0.001 ; 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
Retained Deficit ( 1,717 ) ( 1,954 )
Accumulated Other Comprehensive Loss ( 52 ) ( 28 )
Shareholders’ Equity
1,228 924
Noncontrolling Interests 12 ( 2 )
Total Shareholders’ Equity 1,240 922
Total Liabilities and Shareholders’ Equity $ 5,111 $ 5,068
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30,
(Dollars in millions) 2024 2023
Cash Flows From Operating Activities:
Net Income $ 260 $ 171
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization 171 161
Foreign Exchange Losses
23 58
Loss on Blue Chip Swap Securities 10 57
Inventory Charges 15 11
Gain on Disposition of Assets
( 32 ) ( 7 )
Deferred Income Tax Provision (Benefit)
27 ( 53 )
Share-Based Compensation 25 17
Changes in Accounts Receivable, Inventory, Accounts Payable and Accrued Salaries and Benefits:
Accounts Receivable
( 73 ) ( 83 )
Inventories
( 92 ) ( 75 )
Accounts Payable
79 68
Accrued Salaries and Benefits
( 88 ) ( 72 )
Other Changes, Net ( 44 ) 32
Net Cash Provided by Operating Activities 281 285
Cash Flows From Investing Activities:
Capital Expenditures for Property, Plant and Equipment ( 121 ) ( 100 )
Proceeds from Disposition of Assets 18 14
Purchases of Blue Chip Swap Securities
( 50 ) ( 110 )
Proceeds from Sales of Blue Chip Swap Securities
40 53
Business Acquisitions, Net of Cash Acquired
( 36 ) ( 4 )
Proceeds from Sale of Investments
41 33
Other Investing Activities
( 7 ) ( 8 )
Net Cash Used in Investing Activities ( 115 ) ( 122 )
Cash Flows From Financing Activities:
Repayments of Long-term Debt
( 259 ) ( 230 )
Distributions to Noncontrolling Interests
( 9 ) ( 6 )
Tax Remittance on Equity Awards Vested ( 9 ) ( 54 )
Other Financing Activities ( 12 ) ( 7 )
Net Cash Used in Financing Activities ( 289 ) ( 297 )
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 20 ) ( 56 )
Net Decrease in Cash, Cash Equivalents and Restricted Cash ( 143 ) ( 190 )
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,063 1,112
Cash, Cash Equivalents and Restricted Cash at End of Period $ 920 $ 922
Supplemental Cash Flow Information:
Interest Paid $ 81 $ 95
Income Taxes Paid, Net of Refunds $ 89 $ 64
Supplemental Noncash Information:
844,702 Shares of Common Stock Issued for Acquisitions
$ 75 $ —
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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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 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
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.
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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 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 June 30, Six Months Ended June 30,
(Dollars in millions) 2024 2023 2024 2023
Revenues:
DRE Revenues $ 427 $ 394 $ 849 $ 766
WCC Revenues 504 440 962 861
PRI Revenues 369 366 717 715
All Other 105 74 235 118
Total Revenues $ 1,405 $ 1,274 $ 2,763 $ 2,460
Operating Income:
DRE Segment Adjusted EBITDA $ 130 $ 106 $ 260 $ 214
WCC Segment Adjusted EBITDA 145 109 265 205
PRI Segment Adjusted EBITDA 85 81 158 149
All Other 23 9 50 18
Corporate ( 18 ) ( 14 ) ( 32 ) ( 26 )
Depreciation and Amortization ( 86 ) ( 81 ) ( 171 ) ( 161 )
Share-based Compensation
( 12 ) ( 8 ) ( 25 ) ( 17 )
Other Credits (Charges)
( 3 ) ( 1 ) ( 8 ) 4
Operating Income $ 264 $ 201 $ 497 $ 386
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3 – Revenue
Disaggregated Revenue
The following table disaggregates our revenue from contracts with customers by geographic area and includes equipment rental 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 June 30, Six Months Ended June 30,
(Dollars in millions) 2024 2023 2024 2023
Revenue by Geographic Areas:
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
Latin America 353 371 723 688
Europe/Sub-Sahara Africa/Russia 258 217 482 424
Total Revenue
$ 1,405 $ 1,274 $ 2,763 $ 2,460
(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 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
Receivables for Equipment Rentals in Account Receivable, Net $ 31 $ 34
Accounts Receivable, Net $ 1,319 $ 1,216
Contract Assets in Other Current Assets $ 53 $ 61
Contract Assets in Other Non-Current Assets $ 28 $ 24
Contract Liabilities in Other Current Liabilities $ 35 $ 58
Contract Liabilities in Other Non-Current Liabilities $ 3 $ 5
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4 – Inventories, Net
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
Work in Process and Raw Materials, Components and Supplies 134 100
Inventories, Net $ 884 $ 788
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.
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5 – Intangibles, Net
The components of intangible assets, net were as follows:
(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
$ 165 $ 135
Trade Names, Net of Accumulated Amortization of $ 180 at June 30, 2024 and $ 160 at December 31, 2023
219 235
Intangibles, Net of Accumulated Amortization of $ 718 at June 30, 2024 and $ 639 at December 31, 2023
$ 384 $ 370
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. Please refer to “Note 13 – Acquisitions.”
6 – Borrowings and Other Debt Obligations
(Dollars in millions) June 30, 2024 December 31, 2023
Current Portion of 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes”
$ — $ 151
Current Portion of Finance Leases 20 17
Current Portion of Long-term Debt $ 20 $ 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
40 36
Long-term Debt $ 1,628 $ 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 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. 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
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 release the guarantee of Weatherford Delaware. 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.
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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 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 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).
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).
June 30, 2024 December 31, 2023
(Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value
6.50 % Senior Secured Notes due 2028
$ — $ — $ 243 $ 258
8.625 % Senior Notes due 2030
1,588 1,658 1,587 1,673
Long-Term Debt (excluding Finance Leases) $ 1,588 $ 1,658 $ 1,830 $ 1,931
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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.
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8 – Shareholders’ Equity
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) 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
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) 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
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
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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
Balance at December 31, 2023
$ ( 43 ) $ 15 $ ( 28 )
Other Comprehensive Loss ( 24 ) — ( 24 )
Balance at June 30, 2024
$ ( 67 ) $ 15 $ ( 52 )
Balance at December 31, 2022
$ ( 41 ) $ 19 $ ( 22 )
Other Comprehensive Loss $ ( 7 ) — ( 7 )
Balance at June 30, 2023
$ ( 48 ) $ 19 $ ( 29 )
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 June 30, Six Months Ended June 30,
(Dollars and shares in millions, except per share amounts) 2024 2023 2024 2023
Net Income Attributable to Weatherford $ 125 $ 82 $ 237 $ 154
Basic Weighted Average Shares Outstanding 73.2 72.1 73.1 72.1
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
Basic Income per Share $ 1.71 $ 1.14 $ 3.25 $ 2.14
Diluted Income per Share $ 1.66 $ 1.12 $ 3.16 $ 2.11
Anti-dilutive Weighted Average Shares:
Warrants
— 7.8 — 7.8
Equity Awards
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. 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 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.
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10 – Income 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.
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 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
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. 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
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million, respectively.
13 – Acquisitions
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 $ 88 million and an immaterial amount was recorded for 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 .
14 – Subsequent Events
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.
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