Weatherford International (WFT) Tops Q1 EPS by 2c

Weatherford International (NYSE: WFT) reported Q1 EPS of $0.13, $0.02 better than the analyst estimate of $0.11. Revenue for the quarter came in at $3.6 million versus the consensus estimate of $3.7 billion.

Outlook

In 2014, we remain focused on achieving a step change in profitability by:

• Focusing the organization on growing our core businesses;
• Making our cost base more efficient; and
• Divesting our non-core businesses and reducing our net debt.

We have completed the initial phase of our cost reduction initiatives, and have identified over 6,600 positions for our reduction in workforce, with expected annualized pre-tax cost savings of approximately $450 million. This reduction remains on track to be substantially completed during the first half of 2014. Our strategic business reviews of operations that do not have critical mass, are currently unprofitable and are a drain on our cash flow are well underway. We have already started eliminating select operating locations identified during these reviews and will continue to do so during the next two quarters. We expect these actions will bring additional costs savings, both in the form of headcount reductions and other savings. These additional headcount reductions will enable us to fully deliver on the 7,000 reduction target and achieve our $500 million targeted annualized pre-tax cost savings.

In 2014, we expect revenue growth in North America, Europe/Sub-Sahara Africa/Russia and Middle East/North Africa/Asia Pacific regions, while Latin America is expected to decline year-over-year. Overall margins will improve with lower costs and the growth in our more profitable core businesses. Based on our current and projected activity profile, and inclusive of the already identified and expected benefits from the cost reduction actions outlined above, we re-affirm our most recent guidance, and expect 2014 earnings per share (non-GAAP) to range between $1.10 and $1.20. Our effective tax rate is forecasted to be between 25% and 30% and will depend on the geographical mix of earnings going forward. Capital expenditures are estimated at $1.3 billion for 2014 and include core and non-core product lines until the divestitures are complete. The continued focus on reducing working capital coupled with improved earnings is expected to generate positive free cash flow from operations of approximately $500 million for the year. Given these targets and the divestiture program, we expect net debt to reduce to $7 billion by the end of the year.

For earnings history and earnings-related data on Weatherford International (WFT) click here.

You May Also Be Interested In

• Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
• Sinda raises $331M in IPO, reports Q2 net loss of $16.6M
• UBS Reiterates Buy Rating on NVIDIA (NVDA), Expects Q2 Revenue Beat