What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-23 compared with 2024-10-23 · 181 added, 179 removed, 153 unchanged (70% of the section changed)

19 unchanged sentences

Lower oil and natural gas prices and lower rig count generally correlate to lower exploration and production spending, and higher oil and natural gas prices and higher rig count generally correlate to higher exploration and production spending.

Therefore, our financial results are significantly affected by oil and natural gas prices as well as rig counts.

Therefore, our financial results can be significantly affected by oil and natural gas prices as well as rig counts.

As shown in the following tables, as of March 31, 2025 oil prices and rig counts were notably lower than at March 31, 2024.

The drop in oil prices and rig counts since the quarter ended March 31, 2024 has coincided with reduced activity levels across our industry.

Oil prices and rig counts may continue to trend lower throughout the remainder of 2025, resulting in flat to lower activity levels.

In addition to the impact of lower commodity prices and reduced rig counts there may be future impacts and effects on our industry or us relating to the new U.S.

Presidential administration and Congress in areas relating to trade policy and tariffs, global conflicts and sanctions, environmental regulations and others.

For example, on April 2, 2025, the U.S.

announced sweeping new tariffs, prompting retaliatory actions by affected countries, followed by a 90-day pause in the effectiveness of some tariffs.

We have seen significant volatility in the energy markets subsequent to the tariff announcements, including a continued decline in oil prices, and anticipate increased supply chain challenges, as well as increased economic pressures on our customers.

The Company continues to monitor these developments, but the impact and timing of these changes on our business is uncertain.

The table below shows the average oil and natural gas prices for West Texas Intermediate (“WTI”), Brent North Sea (“Brent”) crude oil and Henry Hub natural gas.

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Oil price - WTI (1)

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The table below shows historical average rig counts based on the weekly Baker Hughes Company rig count information.

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

North America 803 831

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In February 2022, the military conflict between Russia and Ukraine (“Russia Ukraine Conflict”) began and in response we evaluated, and continue to evaluate, our operations, with the priority being centered on the safety and well-being of our employees in the impacted regions, as well as operating in full compliance with applicable international laws and sanctions.

Revenues in Russia were approximately 6% and 5% of our total revenues for the three and nine months ended September 30, 2024, compared to 6% of our total revenues for both the three and nine months ended September 30, 2023.

As of September 30, 2024, our Russia operations included $94 million in cash, $98 million in other current assets, $69 million in property, plant and equipment and other non-current assets, and $51 million in liabilities.

Revenues in Russia were approximately 6% of our total revenues for the three months ended March 31, 2025, compared to 5% of our total revenue for the three months ended March 31, 2024.

As of March 31, 2025, our Russia operations included $113 million in cash, $131 million in other current assets, $72 million in property, plant and equipment and other non-current assets, and $53 million in liabilities.

As of December 31, 2024, our Russia operations included $82 million in cash, $95 million in other current assets, $56 million in property, plant and equipment and other non-current assets, and $45 million in liabilities.

7 unchanged sentences

• potential nationalization of the business.

Conflicts in the Middle East

We are monitoring the recent escalation of conflicts in the Middle East as there is a renewed and heightened risk of operational disruption, including personnel movement, supply chain and logistics.

Consolidated Statements of Operations - Operating Summary

Revenues of $1.4 billion and $4.2 billion in the three and nine months ended September 30, 2024, increased 7% and 11% compared to $1.3 billion and $3.8 billion in the three and nine months ended September 30, 2023, respectively.

Year-over-year in the third quarter, product revenues increased 6% and service revenues increased 8%.

WCC and DRE contributed 52% and 49% of the increase in revenues, respectively, with PRI essentially flat.

Year-over-year in the nine months ended September 30, 2024, product revenues increased 10% and service revenues 11%.

WCC, DRE, and PRI contributed 38%, 33%, and 1% of the increase in revenues, respectively.

The remaining revenue increase year-over-year year-to-date was due to higher activity in integrated services and projects.

Geographically, the year-over-year third quarter revenue growth was led by improvements in the Middle East/North Africa/Asia, Europe/Sub-Sahara Africa/Russia and Latin America regions, which contributed to 74%, 28% and 1% of the increase, respectively, partly offset by a revenue decline in North America.

Year-over-year in the nine months ended September 30, 2024, revenue growth was led by improvements in the Middle East/North Africa/Asia, Europe/Sub-Sahara Africa/Russia, and Latin America regions, which contributed to 78%, 21% and 9% of the increase, respectively, partly offset by a revenue decline in North America.

Operating income of $243 million and $740 million in the three and nine months ended September 30, 2024, increased 11% and 23% compared to $218 million and $604 million in the three and nine months ended September 30, 2023, respectively, primarily driven by improved operational efficiencies from increased resource utilization in addition to gains on sales of used rental equipment.

Cost of products and services of $917 million and $2.7 billion in the three and nine months ended September 30, 2024, increased 7% and 8% compared to $859 million and $2.5 billion in the three and nine months ended September 30, 2023, respectively.

Our cost of products and services as a percentage of revenues was 65% in both the three and nine months ended September 30, 2024 compared to 65% and 66% in the three and nine months ended September 30, 2023, respectively.

Average oil prices in the three months ended September 30, 2024 decreased by 7% for West Texas Intermediate crude oil and 8% for Brent North Sea crude oil, and in the nine months ended September 30, 2024 increased by 1% for both West Texas Intermediate crude oil and Brent North Sea crude oil compared to the same periods in 2023, respectively.

Average Henry Hub natural gas prices in the three months ended September 30, 2024 decreased by 19% and in the nine months ended September 30, 2024, decreased by 15%, compared to the same periods in 2023, respectively.

Global rig counts for the three and nine months ended September 30, 2024 decreased by 3% and 5% compared to the same periods in 2023, respectively, driven by a decrease in North America.

The year-over-year decrease in both the Henry Hub natural gas prices and North America rig count reflects the lower market demand and oversupply of natural gas in the region.

Selling, general, administrative and research and development costs of $236 million and $719 million in the three and nine months ended September 30, 2024, decreased 2% and increased 5% compared to $241 million and $682 million in the three and nine months ended September 30, 2023, respectively.

The third quarter decrease year-over-year was primarily due to a decrease in employee incentive programs.

The year-to-date increase year-over-year primarily reflects an increase in overhead to support organization growth and an increase in research and development on newer technologies.

Selling, general, administrative and research and development costs as a percentage of revenues was 17% in both the three and nine months ended September 30, 2024, and 18% in both the three and nine months ended September 30, 2023.

Other charges (credits) in the three and nine months ended September 30, 2024 were $13 million and $21 million in net charges, respectively, and primarily includes fees to third-party financial institutions to facilitate loans between those financial institutions and our largest customer in Mexico, who in turn paid certain of our outstanding receivables.

Other charges (credits) in the three and nine months ended September 30, 2023 were $5 million and $9 million in net credits, respectively.

Revenues of $1.2 billion in the three months ended March 31, 2025, decreased 12% compared to $1.4 billion in the three months ended March 31, 2024.

Year-over-year in the first quarter, product revenues decreased 8% and service revenues decreased 14%.

Revenues declined in all segments with DRE, WCC and PRI impacting 44%, 10%, and 8% of the decrease, respectively, with the remaining decrease from lower activity in integrated services and projects.

Geographically, the year-over-year first quarter revenue decrease was led by a decline in the Latin America, Europe/Sub-Sahara Africa/Russia and North America regions, which impacted 78%, 15% and 10% of the decrease, respectively, partly offset by a revenue increase in Middle East/North Africa/Asia.

Year-over-year revenue decreases were primarily driven by a decline in activity across segments and geographies.

Operating income of $142 million in the three months ended March 31, 2025, decreased 39% compared to $233 million in the three months ended March 31, 2024, due to the decline in revenue, with a partial offset from lower cost of products and services and selling general, administrative and research and development costs.

Cost of products and services of $819 million in the three months ended March 31, 2025, decreased 7% compared to $884 million in the three months ended March 31, 2024.

Our cost of products and services as a percentage of revenues was 69% in the three months ended March 31, 2025 compared to 65% in the three months ended March 31, 2024.

Selling, general, administrative and research and development costs of $190 million in the three months ended March 31, 2025, decreased 20% compared to $236 million in the three months ended March 31, 2024.

The year-over-year decrease was primarily due to a decline in amortization expense and the cost of employee incentive programs.

Selling, general, administrative and research and development costs as a percentage of revenues was 16% in the three months ended March 31, 2025, and 17% in the three months ended March 31, 2024.

Restructuring charges were $29 million in the three months ended March 31, 2025 and $3 million in the three months ended March 31, 2024.

See “Note 4 – Restructuring Charges” for additional information.

Other Charges, Net in the three months ended March 31, 2025 were $13 million in net charges, and primarily include fees to third-party financial institutions related to collections of certain receivables from our largest customer in Mexico.

Other Charges, Net in the three months ended March 31, 2024 were $2 million in net charges.

Consolidated Statements of Operations - Non-Operating Summary

Interest Expense, Net

Interest expense, net was $24 million and $77 million in the three and nine months ended September 30, 2024, respectively, and $30 million and $92 million in the three and nine months ended September 30, 2023, respectively.

Interest Expense, Net was $26 million and $29 million in the three months ended March 31, 2025 and 2024, respectively.

Interest Expense, Net is interest expense net of interest income.

Interest expense of $37 million and $121 million in the three and nine months ended September 30, 2024, respectively, and $45 million and $139 million in the three and nine months ended September 30, 2023, respectively, decreased primarily due to the reduction in our outstanding long-term debt.

As of September 30, 2024, we have fully repaid our outstanding 2028 Senior Secured Notes.

See “Note 6 – Borrowings and Other Debt Obligations” to our Condensed Consolidated Financial Statements for additional details.

Interest income was $13 million and $44 million in the three and nine months ended September 30, 2024, respectively, and $15 million and $47 million in the three and nine months ended September 30, 2023.

Loss on Blue Chip Swap Securities

An indirect foreign exchange mechanism known as the Blue Chip Swap (“BCS”) allows entities to remit U.S.

dollars from operations in Argentina.

No BCS transactions were executed during the third quarter of 2024 or 2023.

During the second quarter of 2024 and 2023, we entered into a series of BCS securities transactions that resulted in a “Loss on Blue Chip Swap Securities” of $10 million in the nine months ended September 30, 2024 and $57 million in the nine months ended September 30, 2023, respectively.

See “Note 12 – Blue Chip Swap Securities - Argentina” to our Condensed Consolidated Financial Statements for additional details.

Interest expense was $37 million in the three months ended March 31, 2025 and $43 million in the three months ended March 31, 2024.

The decrease was primarily due to the reduction in our outstanding long-term debt.

Interest income was $11 million in the three months ended March 31, 2025 and $14 million in the three months ended March 31, 2024.

Other Expense, Net

Other expense, net was $41 million and $83 million in the three and nine months ended September 30, 2024, respectively, and $24 million and $98 million in the three and nine months ended September 30, 2023, respectively.

Other expense, net primarily represents foreign exchange losses in countries with no or limited markets to hedge, letter of credit fees and other financing charges, including when applicable, bond redemption premiums partially offset by certain investment gains and losses.

Other Expense, Net was $20 million in the three months ended March 31, 2025 and $22 million in the three months ended March 31, 2024.

Other Expense, Net primarily represents foreign exchange losses in countries with no or limited markets to hedge, letter of credit fees and other financing charges, including bond redemption premiums partially offset by certain investment gains and losses.

When economically advantageous, we enter into foreign currency forward contracts to mitigate the risk of future cash flows denominated in a foreign currency.

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Financial information by segment is summarized below.

Three Months Ended (Unfavorable)

September 30, $ % or bps

(Dollars in millions) 2024 2023 Change

DRE Revenues $ 435 $ 388 $ 47 12 %

WCC Revenues 509 459 50 11 %

PRI Revenues 371 371 — — %

All Other 94 95 (1) (1) %

Total Revenues $ 1,409 $ 1,313 $ 96 7 %

Operating Income:

Three Months Ended March 31, 2025

Reportable Segments All

(Dollars in millions) DRE

Revenue $ 350 $ 441 $ 334 $ 68 $ 1,193

Direct Costs (a)

(226) (258) (230)

Other Expense (b)

(50) (55) (42)

DRE Segment Adjusted EBITDA 74 74

1 unchanged sentence

PRI Segment Adjusted EBITDA 62 62

All Other 23 7 16 229 %

Corporate (15)

1 unchanged sentence

Share-based Compensation

(10) (9) (1) (11) %

Other Credits (Charges) (13) 5 (18) (360) %

Operating Income $ 243 $ 218 $ 25 11 %

DRE Segment Adjusted EBITDA Margin 25.5 % 28.6 % n/m (309) bps

WCC Segment Adjusted EBITDA Margin 29.7 % 25.9 % n/m 374 bps

PRI Segment Adjusted EBITDA Margin 22.4 % 23.2 % n/m (81) bps

Nine Months Ended (Unfavorable)

September 30, $ % or bps

(Dollars in millions) 2024 2023 Change

DRE Revenues $ 1,284 $ 1,154 $ 130 11 %

WCC Revenues 1,471 1,320 151 11 %

PRI Revenues 1,088 1,086 2 — %

All Other 329 213 116 54 %

Total Revenues $ 4,172 $ 3,773 $ 399 11 %

Restructuring Charges

Other Charges, Net

Operating Income $ 142

(a) Segment cost of sales and direct operating costs.

(b) Segment selling, general and administrative and research and development costs .

Three Months Ended March 31, 2024

Reportable Segments All

(Dollars in millions) DRE

Revenue $ 422 $ 458 $ 348 $ 130 $ 1,358

Direct Costs (a)

(239) (276) (231)

Other Expense (b)

(53) (62) (44)

DRE Segment Adjusted EBITDA 130 130

1 unchanged sentence

PRI Segment Adjusted EBITDA 73 73

All Other 73 25 48 192 %

Corporate (14)

1 unchanged sentence

Share-based Compensation

(35) (26) (9) (35) %

Other Credits (Charges) (21) 9 (30) (333) %

Restructuring Charges

Other Charges, Net

Operating Income $ 233

DRE Segment Adjusted EBITDA Margin 28.9 % 28.2 % n/m 73 bps

WCC Segment Adjusted EBITDA Margin 28.3 % 24.5 % n/m 373 bps

PRI Segment Adjusted EBITDA Margin 22.2 % 21.6 % n/m 51 bps

DRE revenues of $435 million and $1,284 million in the three and nine months ended September 30, 2024, increased $47 million or 12%, and increased $130 million or 11%, compared to $388 million and $1,154 million in the three and nine months ended September 30, 2023, respectively.

Of the third quarter year-over-year revenue increase, approximately 50% was from wireline activity after business acquisitions in the first quarter of 2024 and approximately 35% from drilling-related services activity.

Geographically, the Middle East/North Africa/Asia and the North America regions contributed approximately 65% and 30%, respectively, partly offset by a revenue decline in the Latin America region.

Of the year-to-date year-over-year revenue increase, approximately 60% was from wireline activity and approximately 30% from drilling-related services.

Geographically, the Middle East/North Africa/Asia and Europe/Sub-Sahara Africa/Russia regions contributed approximately 65% and 35%, respectively, partly offset by a revenue decline in the Latin America region.

DRE segment adjusted EBITDA of $111 million and $371 million in the three and nine months ended September 30, 2024, was flat compared to $111 million in the three months ended September 30, 2023 and increased $46 million or 14%, compared to $325 million in the nine months ended September 30, 2023.

DRE segment adjusted EBITDA margin was 25.5% and 28.9% in the three and nine months ended September 30, 2024 compared to 28.6% and 28.2% in the three and nine months ended September 30, 2023.

The third quarter segment adjusted EBITDA remained flat with increased drilling-related services activity offset by lower margin fall through in wireline and managed pressure drilling.

The year-to-date year-over-year improvement in segment adjusted EBITDA was primarily due to higher margin international managed pressure drilling activity, including

certain sales of used rental equipment.

WCC revenues of $509 million and $1,471 million in the three and nine months ended September 30, 2024, increased $50 million or 11%, and increased $151 million or 11%, compared to $459 million and $1,320 million in the three and nine months ended September 30, 2023, respectively.

Of the third quarter year-over-year revenue increase, approximately 55% was from completions activity and approximately 30% from liner hangers activity, partly offset by a revenue decline from lower cementation products activity.

Geographically, international regions drove revenue growth and the Middle East/North Africa/Asia region contributed approximately 70% of the international growth and the Latin America and Europe/Sub-Sahara Africa/Russia regions contributed equally to remaining international growth.

This was partly offset by a revenue decline in the North America region.

Of the year-to-date year-over-year revenue increase, approximately 45% was from completions activity and approximately 45% was from liner hangers and tubular running services activity.

Geographically, international regions drove the revenue growth and the Middle East/North Africa/Asia region contributed approximately 80% of the international growth.

This was partly offset by a revenue decline in the North America region.

WCC segment adjusted EBITDA of $151 million and $416 million in the three and nine months ended September 30, 2024, increased $32 million or 27%, and increased $92 million or 28%, compared to $119 million and $324 million in the three and nine months ended September 30, 2023, respectively.

WCC segment adjusted EBITDA margin was 29.7% and 28.3% in the three and nine months ended September 30, 2024, compared to 25.9% and 24.5% in the three and nine months ended September 30, 2023.

The increase in revenue and segment adjusted EBITDA was primarily from higher activity.

PRI revenues of $371 million and $1,088 million in the three and nine months ended September 30, 2024, was flat and increased $2 million, compared to $371 million and $1,086 million in the three and nine months ended September 30, 2023, respectively.

Revenue in the third quarter remained flat from prior year and consisted of intervention services and drilling tools activity, offset by a decline in pressure pumping activity.

Geographically, revenue growth in the Europe/Sub-Sahara Africa/Russia region was offset by a decline primarily in the North America region.

Of the year-to-date year-over-year revenue increase, revenue growth in intervention services and drilling tools was partly offset by a decline in primarily pressure pumping as well as a decline in artificial lift activity.

Geographically, revenue growth primarily in the Europe/Sub-Sahara Africa/Russia region as well as in the Middle East/North Africa/Asia region was offset by a decline in the North America region.

PRI segment adjusted EBITDA of $83 million and $241 million in the three and nine months ended September 30, 2024, decreased $3 million or 3% and increased $6 million or 3% compared to $86 million and $235 million in the three and nine months ended September 30, 2023, respectively.

PRI segment adjusted EBITDA margin was 22.4% and 22.2% in the three and nine months ended September 30, 2024, compared to 23.2% and 21.6% in the three and nine months ended September 30, 2023.

The third quarter year-over-year decrease in segment adjusted EBITDA was primarily due to a decline in pressure pumping activity.

The year-to-date year-over-year improvement in segment adjusted EBITDA was primarily from higher margin international artificial lift activity.

(a) Segment cost of sales and direct operating costs.

(b) Segment selling, general and administrative and research and development costs .

Three Months Ended Variance

($ in Millions) March 31, 2025 March 31, 2024 $

Revenue $ 350 $ 422 $ (72) (17) %

(226) (239) 13 5 %

Other Expense

(50) (53) 3 6 %

Segment Adjusted EBITDA $ 74 $ 130 $ (56) (43) %

Segment Adj EBITDA Margin 21.1 % 30.8 % n/m (966) bps

DRE revenues of $350 million in the three months ended March 31, 2025, decreased $72 million or 17%, compared to $422 million in the three months ended March 31, 2024.

Of the first quarter year-over-year revenue decrease, approximately 85% of the decrease was from lower activity in drilling-related services.

Geographically, approximately 90% of the revenue decrease was from the Latin America region.

DRE segment adjusted EBITDA of $74 million in the three months ended March 31, 2025, decreased $56 million or 43%, compared to $130 million in the three months ended March 31, 2024.

DRE segment adjusted EBITDA margin was 21.1% in the three months ended March 31, 2025 compared to 30.8% in the three months ended March 31, 2024.

The first quarter segment adjusted EBITDA decreased primarily due to a decline in drilling-related services activity.

Both direct costs and other expense generally decreased in line with the decrease in activity.

However, the rate of decrease in direct costs and other expense was lower than the rate of decrease in revenue, contributing to the decrease in margin.

Three Months Ended Variance

($ in Millions) March 31, 2025 March 31, 2024 $

Revenue $ 441 $ 458 $ (17) (4) %

Direct Costs (258) (276) 18 7 %

Other Expense (55) (62) 7 11 %

Segment Adjusted EBITDA $ 128 $ 120 $ 8 7 %

Segment Adj EBITDA Margin 29.0 % 26.2 % n/m 282 bps

WCC revenues of $441 million in the three months ended March 31, 2025, decreased $17 million or 4%, compared to $458 million in the three months ended March 31, 2024.

The first quarter year-over-year revenue decrease was primarily due to a decline in activity for cementation products which impacted 65% of the decrease for product lines which decreased year-over-year.

This was partly offset by revenue increases from well services and completions activity.

Geographically, of the regions with revenue decreases, approximately 50% of the decrease was from North America and approximately 30% was from the Latin America region.

This was partly offset by a revenue increase in the Middle East/North Africa/Asia region.

WCC segment adjusted EBITDA of $128 million in the three months ended March 31, 2025, increased $8 million or 7%, compared to $120 million in the three months ended March 31, 2024.

WCC segment adjusted EBITDA margin was 29.0% in the three months ended March 31, 2025, compared to 26.2% in the three months ended March 31, 2024.

The increase in segment adjusted EBITDA was primarily due to higher margin activity in the Middle East/North Africa/Asia region and lower selling, general and administrative costs.

Both direct costs and other expense generally decreased in line with the decrease in activity.

However, the rate of decrease in direct costs and other expense was higher than the rate of decrease in revenue, contributing to increase in margin.

Three Months Ended Variance

($ in Millions) March 31, 2025 March 31, 2024 $

Revenue $ 334 $ 348 $ (14) (4) %

Direct Costs (230) (231) 1 — %

Other Expense (42) (44) 2 5 %

Segment Adjusted EBITDA $ 62 $ 73 $ (11) (15) %

Segment Adj EBITDA Margin 18.6 % 21.0 % n/m (241) bps

PRI revenues of $334 million in the three months ended March 31, 2025, decreased $14 million or 4% compared to $348 million in the three months ended March 31, 2024.

The first quarter year-over-year revenue decrease was primarily due to decline in activity for intervention services and drilling tools and artificial lift which impacted 60% and 30% of the decrease, respectively, for product lines which decreased year-over-year.

This was partly offset by revenue increase from pressure pumping activity.

Geographically, approximately 90% of the revenue decrease was from the Latin America region.

PRI segment adjusted EBITDA of $62 million in the three months ended March 31, 2025, decreased $11 million or 15% compared to $73 million in the three months ended March 31, 2024.

PRI segment adjusted EBITDA margin was 18.6% in the three months ended March 31, 2025, compared to 21.0% in the three months ended March 31, 2024.

The first quarter year-over-year decrease in segment adjusted EBITDA was primarily due to a decline in activity and cost inflation on products sold.

Direct costs slightly decreased year-over-year, while other expense decreased in line with decrease in activity.

However, the decrease in direct costs and other expense was lower than decrease in revenue, contributing to the decrease in margin.

All Other Results

All Other results were from non-core business activities that do not individually meet the criteria for segment reporting, including integrated services and projects, which includes pass through and project management services.

All Other revenues of $94 million and $329 million in the three and nine months ended September 30, 2024, compared to $95 million and $213 million in the three and nine months ended September 30, 2023.

The year-to-date year-over-year increase was primarily from of our integrated services and projects in the Middle East/North Africa/Asia and Latin America regions.

Corporate was a net expense of $13 million and $45 million in the three and nine months ended September 30, 2024 compared to $18 million and $44 million in the three and nine months ended September 30, 2023.

The third quarter year-over-year decrease was primarily due to a decrease in certain professional fees and employee incentive programs.

All Other revenues were $68 million in the three months ended March 31, 2025, compared to $130 million in the three months ended March 31, 2024.

The first quarter year-over-year decrease was due to a decline in international activity for integrated services and projects.

Corporate was a net expense of $15 million in the three months ended March 31, 2025 compared to $14 million in the three months ended March 31, 2024.

Depreciation and Amortization

Depreciation and amortization were $89 million and $260 million in the three and nine months ended September 30, 2024 compared to $83 million and $244 million in the three and nine months ended September 30, 2023.

The year-over-year increase was primarily due to a larger asset base.

Depreciation and amortization expense was $62 million in the three months ended March 31, 2025 compared to $85 million in the three months ended March 31, 2024.

The year-over-year decrease was primarily due to certain intangible assets reaching full amortization in the fourth quarter of 2024.

Share-based Compensation

We recognized $10 million and $35 million of share-based compensation in the three and nine months ended September 30, 2024 compared to $9 million and $26 million in the three and nine months ended September 30, 2023.

The year-over-year increase was primarily due to an increase in equity awards granted.

We recognized $7 million of share-based compensation in the three months ended March 31, 2025 compared to $13 million in the three months ended March 31, 2024.

The year-over-year decrease in share-based compensation expense was primarily due to the vesting of equity awards, resulting in a lower number of non-vested awards.

Growth and spending in the energy services industry is highly dependent on many external factors.

These include but are not limited to;

geopolitical uncertainty;

supply chain disruptions;

energy policies at local and regional levels;

and the price of oil and natural gas.

We continue to expect overall 2024 revenue to outpace 2023, led by international activity and global offshore activity.

We expect there to be continued variability in economic conditions globally, driven primarily by geopolitical events.

While the global macroeconomic conditions support continued activity and investments by our customers, there exists a significant risk of activity reduction in certain areas if commodity prices drop significantly.

Alternately, there could be a curtailment of activity altogether if security infrastructure in certain regions is compromised due to the ongoing conflicts in multiple regions.

At the same time, there could also be a significant uptick in activity if there is a positive shift in hydrocarbon fuel demand or a curtailment of supply due to geopolitical events in certain regions.

We anticipate shifts in activity mix and evolution of demand for technology solutions and continue to align our business priorities with market demand trends.

We remain constructive on the mid-to-long-term outlook which provides a pathway to a multi-year energy demand expansion.

We continue to closely monitor macroeconomic and geopolitical conditions, potential supply chain disruptions, inflationary factors, and other labor and logistical constraints that could impact our operations and results.

the impact from geopolitical conflicts;

our customers’ capital expenditures;

environmental, social and governance and other sustainability policies and initiatives;

world economic, political, trade, and weather conditions;

the price of oil, natural gas, and alternatives;

member-country quota compliance within the Organization of Petroleum Exporting Countries and the expanded alliance (OPEC+);

and, non-OPEC+ investments and project timing.

Imbalance across geographies driven by geopolitical conflicts, investment variances and supply disruptions are driving a greater focus on energy security and resiliency, which in turn is creating a shift towards national oil companies and diversification across multiple energy sources (oil, gas, coal, renewables, etc.) to meet domestic and global demand.

The overall international market has softened over the past nine months, and the industry has witnessed substantial drops in Mexico along with continued reduction in certain portions of our North America business.

We expect a continued focus on capital discipline and efficiencies, particularly in our Latin American and North American regions, which we expect to negatively impact demand for our services and products in 2025, as our customers regulate activity timing and services spending, relative to macro-driven factors.

Particularly, in the near term we expect lower demand from our largest customer in Mexico.

Additionally, trade concerns such as recent U.S.

tariff actions and potential retaliatory responses has increased uncertainty in our industry and in relation to global economic outlook, which may contribute to an economic slowdown and negatively impact both domestic and international crude demand and increase cost pressure on the sector.

Over the mid to long-term, we expect demand for oil and natural gas exploration and production as well as new energy platforms to continue to require more advanced technology from the energy service industry.

While we remain cautious on our activity profile as we calibrate macroeconomic conditions with customer demand, we are confident that adoption of our differentiated technologies and market penetration will provide a pathway to long-cycle growth.

We continue to closely monitor and adapt to macroeconomic and trade conditions, potential supply chain disruptions, inflationary factors, and other labor and logistical constraints that could impact our operations and results.

Liquidity and Capital Resources

At September 30, 2024, we had cash and cash equivalents of $920 million and $58 million in restricted cash, compared to $958 million of cash and cash equivalents and $105 million in restricted cash at December 31, 2023.

At March 31, 2025, we had cash and cash equivalents of $873 million and $57 million in restricted cash, compared to $916 million of cash and cash equivalents and $59 million in restricted cash at December 31, 2024.

The following table summarizes cash flows provided by (used in) each type of business activity in the periods presented:

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in millions) 2025

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Operating Activities

Cash provided by operating activities was $543 million for the nine months ended September 30, 2024 compared to cash provided by operating activities of $457 million for the nine months ended September 30, 2023.

The primary operating sources of cash were from the timing of cash generated by our operations, offset by our operating spend, including payments to suppliers and employees.

The increase in cash provided by operating activities in 2024 over 2023 was partly from revenue growth and its conversion to cash as well as from higher than average collections from our largest customer in Mexico.

Cash provided by operating activities was $142 million for the three months ended March 31, 2025 compared to cash provided by operating activities of $131 million for the three months ended March 31, 2024.

The increase in cash provided by operating activities in 2025 over 2024 was primarily due to lower employee costs, partially offset by decreased collections as a result of decreased revenue.

During both the three months ended March 31, 2025 and March 31, 2024, we entered into arrangements with third-party financial institutions related to collections of certain receivables from our largest customer in Mexico.

Pursuant to such arrangements, we received $93 million and $142 million during the three months ended March 31, 2025 and March 31, 2024, respectively.

Factoring arrangements related to certain receivables during both the three months ended March 31, 2025 and March 31, 2024 resulted in cash proceeds at the time of factoring of $55 million and $8 million, respectively.

Investing Activities

Cash used in investing activities was $207 million for the nine months ended September 30, 2024 compared to cash used in investing activities of $158 million for the nine months ended September 30, 2023.

The primary investing uses of cash were for capital expenditures of $199 million and $142 million for the nine months ended September 30, 2024 and the nine months ended September 30, 2023, respectively.

Cash used in investing activities also includes the use of the Blue Chip Swap mechanism in Argentina, of which the purchases more than offset the proceeds, resulting in a loss of $10 million and $57 million during the nine months ended September 30, 2024 and September 30, 2023 (see “Note 12 – Blue Chip Swap Securities - Argentina”), respectively.

The increase in business acquisitions, net of cash acquired in the current period was primarily from our acquisitions completed in the first quarter of 2024 (see “Note 13 – Acquisitions”).

Other investing activities include proceeds from the sale of investments from our marketable securities in Argentina and proceeds from the disposition of assets, offset by investing spend around other intangibles.

Cash used in investing activities was $79 million for the three months ended March 31, 2025.

The primary investing use of cash was for capital expenditures of $77 million.

Cash used in investing activities was $54 million for the three months ended March 31, 2024.

The primary investing activities were from cash used for capital expenditures of $59 million and cash used for acquisitions net of cash acquired, of $36 million.

The uses of cash were primarily offset by proceeds from sale of investments of $41 million from our marketable securities in Argentina and other outflows of $10 million.

Financing Activities

Cash used in financing activities was $378 million for the nine months ended September 30, 2024 compared to cash used in financing activities of $388 million for the nine months ended September 30, 2023.

The primary financing uses of cash were for repayments and repurchases of long-term debt of $264 million and $306 million for the nine months ended September 30, 2024 and nine months ended September 30, 2023, respectively (see “Note 6 – Borrowings and Other Debt Obligations”), cash dividends and share repurchases.

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.

In the third quarter of 2024, dividends paid were $18 million.

Also on July 23, 2024, we announced a $500 million share repurchase program.

In the third quarter of 2024, share repurchases were $50 million.

Cash used in financing activities also includes tax remittances on equity awards vested, which were lower this period compared to the same period in the prior year due to a decrease in the quantity of shares vested and the increase in share price of those awards upon vesting.

Other financing uses of cash primarily include distributions to noncontrolling interests and bond redemption premiums paid.

Cash used in financing activities was $133 million for the three months ended March 31, 2025.

The primary financing uses of cash were for share repurchases of $53 million (see “Note 9 – Shareholders’ Equity”), repayments and repurchases of long-term debt of $39 million (including $34 million in repurchases of our 2030 Senior Notes, see “Note 7 – Borrowings and Other Debt Obligations”), tax remittances on equity awards vested of $20 million and cash dividends of $18 million.

Cash used in financing activities was $187 million for the three months ended March 31, 2024.

The primary financing uses of cash were for repayments and repurchases of long-term debt of $172 million.

Sources of Liquidity

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Our cash requirements will continue to include payments for principal and interest on our long-term debt, capital expenditures, payments on our finance and operating leases, payments for short-term working capital needs, operating costs and restructuring payments.

As business activity continues to rise, we expect to utilize cash on capital assets and working capital growth.

We expect to utilize cash in our capital allocation framework, which includes investments in technology and infrastructure upgrades, and in strategic mergers and acquisitions.

Our cash requirements also include personnel costs, including awards under our employee incentive programs and other amounts to settle litigation related matters.

In addition, we have derivative financial instruments where we have notional amounts that do not generally represent cash amounts exchanged by the parties and are calculated based on the terms of the derivative instrument, however, in the event of a related default, we could potentially be required to pay.

See further discussion in our Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”).

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

See further discussion in our Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”) and “Note 12 – Credit Default Swap”.

Our cash requirements also include payments for our shareholder returns programs described in “Note 9 – Shareholders’ Equity.”

As of September 30, 2024, the aggregate principal amount of our primary debt outstanding was $1.6 billion of our 2030 Senior Notes.

We expect to pay $138 million in interest payments in 2024 specific to this note, of which we have paid $69 million during the nine months ended September 30, 2024.

As of March 31, 2025, the aggregate principal amount of our primary debt outstanding was $1.56 billion of our 2030 Senior Notes.

We expect to pay $135 million in interest payments in 2025 specific to these notes.

See “Note 7 – Borrowings and Other Debt Obligations” for additional information.

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Cash and cash equivalents and restricted cash are held by subsidiaries outside of Ireland.

At September 30, 2024 and December 31, 2023, we had approximately $118 million and $92 million, respectively, of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations.

At March 31, 2025 and December 31, 2024, we had approximately $140 million and $127 million, respectively, of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations.

As we continue to conduct business in certain countries with cash that cannot be immediately repatriated, we may consider infrequent transactions to safeguard our cash from exposure to the effects of inflation and currency devaluation.

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Ratings Services’ Credit Ratings

Our credit ratings at December 31, 2023 have been maintained and upgraded through our current filing date as follows:

• Standard and Poor (“S&P) and Fitch Ratings (“Fitch”) upgraded our issuer credit ratings from ‘B+’ to ‘BB-;’ there have been no updates to the S&P and Fitch outlook since December 31, 2023

• There have been no updates to the Moody's Investors Service rating since December 31, 2023

Our credit ratings at December 31, 2024 have been maintained as follows:

• Standard and Poor (“S&P) and Fitch Ratings (“Fitch”) maintain issuer credit ratings of ‘BB-;’ S&P maintained a positive outlook and Fitch maintained a stable outlook

• Moody's Investors Service (Moody's) maintained a Corporate Family Rating of Ba3 and a positive outlook

Customer Receivables

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In addition, our customers are primarily in fossil fuel-related industries and broad declines in demand for or pricing of oil or natural gas might impact the collections of our customer receivables.

As of September 30, 2024 and December 31, 2023, our net accounts receivables in the U.S.

was 11% of total net accounts receivables for both periods.

Our net accounts receivables in Mexico were 26% and 27% of our total net accounts receivables, as of September 30, 2024 and December 31, 2023, respectively, of which our largest customer in the country accounted for 21% and 22% of our total net outstanding accounts receivables, respectively.

We have experienced delays in payments from our largest customer in Mexico.

The balances due are not in dispute, however, additional or continued delays in customer payments in the future could differ from historical practice and management’s current expectations, and failures to pay or defaults, if any, could negatively impact the future results of the Company.

During the three and nine months ended September 30, 2024 we paid an immaterial amount of fees to third-party financial institutions to facilitate loans between those financial institutions and our largest customer in Mexico, who in turn paid certain of our outstanding receivables.

Pursuant to such arrangements, we received $317 million and $459 million during the three and nine months ended September 30, 2024, respectively.

As of September 30, 2024 we had no obligations under those loans.

Our net accounts receivables in Mexico were 28% and 31% of our total net accounts receivables, as of March 31, 2025 and December 31, 2024, respectively, of which our largest customer in the country accounted for 25% and 26% of our total net outstanding accounts receivables, respectively.

Mexico continues to account for a large percentage of our receivables despite dropping below 10% of total revenues for the three months ended March 31, 2025.

Our largest customer in Mexico has a history of making late payments and, in more recent periods, has utilized third-party financial institutions to pay certain of our receivables.

The balances due are not in dispute, however, additional or continued delays in customer payments in the future could differ from historical practice and management’s current expectations;

and delays or failures to pay or defaults, if any, could negatively impact the future results of the Company.

During the three months ended March 31, 2025 we paid an immaterial amount of fees to third-party financial institutions related to collections of certain receivables from our largest customer in Mexico.

Pursuant to such arrangements, we received $93 million during the three months ended March 31, 2025.

Except for the above, no other country accounted for more than 10% of our net accounts receivables balance.

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From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions for cash proceeds net of discounts and hold-back.

During the three and nine months ended September 30, 2024, we sold accounts receivable balances of $4 million and $55 million, and received cash proceeds of $4 million and $54 million, respectively, at the time of factoring.

During the three and nine months ended September 30, 2023, we sold accounts receivable balances of $12 million and $121 million, and received cash proceeds of $11 million and $114 million, respectively, at the time of factoring.

During the three months ended March 31, 2025 and March 31, 2024, we sold accounts receivable balances of $55 million and $8 million, and received cash proceeds of $55 million and $8 million, respectively, at the time of factoring.

The above factoring proceeds were included in Net Cash Provided by Operating Activities in the Condensed Consolidated Statements of Cash Flows.

Our 2028 Senior Secured Notes were issued by Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and guaranteed by the Company and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”) and other subsidiary guarantors party thereto.

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

Our 2030 Senior Notes were issued by Weatherford Bermuda and guaranteed by the Company and other subsidiary guarantors party thereto.

On December 1, 2022, the indenture related to our 2030 Senior Notes was amended and supplemented to add Weatherford Delaware as co-issuer and co-obligor, and concurrently released the guarantee of Weatherford Delaware.

Our 2030 Senior Notes were issued by Weatherford International Ltd.

(“Weatherford Bermuda”) and guaranteed by the Company and other subsidiary guarantors party thereto.

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 released the guarantee of Weatherford Delaware.

Credit Agreement, Letters of Credit and Surety Bonds

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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.

At March 31, 2025 and December 31, 2024, the Credit Agreement allowed for a total commitment amount of $720 million, maturing on October 24, 2028.

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 September 30, 2024, we had zero borrowings outstanding under the Credit Agreement and $386 million of letters of credit outstanding.

As of March 31, 2025, we had zero borrowings outstanding under the Credit Agreement and $397 million of letters of credit outstanding.

The letters of credit consisted of $277 million for performance letters of credit, $6 million for financial letters of credit under the Credit Agreement and $114 million letters of credit under various uncommitted bi-lateral facilities ($48 million of which was cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

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We utilize surety bonds as part of our customary business practice in certain regions, primarily Latin America.

As of September 30, 2024 and December 31, 2023, we had surety bonds outstanding of $546 million and $594 million, respectively.

As of March 31, 2025 and December 31, 2024, we had surety bonds outstanding of $501 million and $520 million, respectively.

Any of our outstanding letters of credit or surety bonds could be called by the beneficiaries should we breach certain contractual or performance obligations and could reduce our available liquidity if we are unable to mitigate the issue.

Forward-Looking Statements

This report contains various statements relating to future financial performance and results, business strategy, plans, goals and objectives, including certain projections, business trends, a shareholder returns program, and other statements that are not historical facts.

This report contains various statements relating to future financial performance and results, business strategy, plans, goals and objectives, including certain projections, business trends, our shareholder returns program, and other statements that are not historical facts.

These statements constitute forward-looking statements.

These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “budget,” “strategy,” “plan,” “guidance,” “outlook,” “may,” “should,” “could,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, although not all forward-looking statements contain these identifying words.

These forward-looking statements generally are

identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “budget,” “strategy,” “plan,” “guidance,” “outlook,” “may,” “should,” “could,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, although not all forward-looking statements contain these identifying words.

Forward-looking statements reflect our beliefs and expectations based on current estimates and projections.

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The forward-looking statements included herein are only made as of the date of this report, or if earlier, as of the date they were made, and we undertake no obligation to correct, update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws.

The following, together with disclosures under “Part II – Other Information – Item 1A.

Risk Factors”, sets forth certain risks and uncertainties relating to our forward-looking statements that may cause actual results to be materially different from our present expectations or projections:

• global political, economic and market conditions, political disturbances, war, terrorist attacks, changes in global trade policies, weak local economic conditions and international currency fluctuations (including the Russia Ukraine Conflict and conflicts in the Middle East);

The following, together with disclosures under the heading “Item 1A.

Risk Factors” in our 2024 Form 10-K, Part I, and “Part II – Other Information – Item 1A.

Risk Factors” of this Form 10-Q, sets forth certain risks and uncertainties relating to our forward-looking statements that may cause actual results to be materially different from our present expectations or projections:

• global political, economic and market conditions, political disturbances, war or other global conflicts, terrorist attacks, changes in global trade policies, tariffs and sanctions, weak local economic conditions and international currency fluctuations (including the Russia Ukraine Conflict and conflicts in the Middle East);

• general global economic repercussions related to U.S.

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• our ability to generate cash flow from operations to fund our operations;

• our ability to effectively and timely adapt our technology portfolio, products and services to address and participate in changes to the market demands for the transition to alternate sources of energy such as geothermal, carbon capture and responsible abandonment, including our digitalization efforts;

• increases in the prices, lead times and lack of availability of our procured products and services;

• our ability to effectively and timely adapt our technology portfolio, products and services to remain competitive and to address and participate in changes to the market demands, including for the transition to alternate sources of energy such as geothermal, carbon capture and responsible abandonment, including our digitalization efforts;

• increases in the prices and lead times;

and the lack of availability of our procured products and services;

• our ability to timely collect from customers;

• our ability to realize cost savings and business enhancements from our revenue and cost improvement efforts;

• our ability to effectively execute our capital allocation framework;

• our ability to attract, motivate and retain employees, including key personnel;

• our ability to access to capital markets on terms that are commercially acceptable to the Company;

• our ability to access the capital markets on terms that are commercially acceptable to the Company;

• our ability to manage our workforce, supply chain challenges and disruptions, business processes, information technology systems and technological innovation and commercialization, including the impact of our organization restructure, business enhancements, improvement efforts and the cost and support reduction plans;

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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 2. Management’s Discussion and Analysis