Weatherford (WFT) Q4 Loss Wider Than Expected, Revenues Lag

Weatherford International plc (NYSE:WFT) posted fourth-quarter 2018 adjusted loss of 14 cents per share, wider than the Zacks Consensus Estimate of a loss of 12 cents. The figure was narrower than year-ago quarter’s loss of 33 cents.

In 2018, Weatherford reported adjusted loss of 59 cents per share compared with adjusted loss of $1.16 in the year-ago quarter.

Total revenues of $1,429.0 million missed the Zacks Consensus Estimate of $1,435.0 million. Also, the figure declined from $1,490.0 million in the year-ago quarter.

In 2018, total revenues inched up 0.8% year over year to $5,744 million.

Results were affected by lower activity in the United States and the Middle East. This was partially offset by higher activity in Latin America and higher revenues associated with integrated service projects.

Operational Performance

The leading oilfield services company realigned its organization into two operating segments — Western Hemisphere and Eastern Hemisphere — during the fourth quarter. The Western Hemisphere segment will include the previous North America and Latin America segments as well as land drilling rig operations in Colombia and Mexico.

The Eastern Hemisphere segment will comprise the previous Middle East/North Africa/Asia Pacific segment and Europe/SSA/Russia segment as well as land drilling rig operations in the Eastern Hemisphere. Research and development expenses will be incorporated in the Western and Eastern Hemisphere segment results.

In the fourth quarter, revenues in the Western Hemisphere were $776 million, up 1.8% sequentially and 2.2% year over year. Increases in integrated service project revenues and higher product sales in Latin America were offset by lower revenues associated with the divestment of the international land rigs.

Revenues in the Eastern Hemisphere were $653 million, down 4.3% sequentially and 10.7% year over year. The fall can be attributed to lower revenues associated with the divestment of the land drilling rigs in the Middle East as well as lower year-end product sales.

Liquidity

As of Dec 31, 2018, Weatherford had $602 million in cash and cash equivalents. The company’s long-term debt was $7,605 million. Weatherford spent approximately $76 million in capital expenditures during the reported quarter. The company generated positive free cash flow of $65 million during the quarter, after several years.

Q4 Price Performance

In the past three months, Weatherford’s shares underperformed the industry. During the aforesaid period, the stock plunged 80.1% compared with the industry’s 47.4% decline.

Zacks Rank & Key Picks

Weatherford carries a Zacks Rank #4 (Sell).

A few better-ranked players in the energy space are Evergy, Inc (NYSE:EVRG) , Sunoco L.P (NYSE:SUN) and Contura Energy (NYSE:CTRA) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Evergy, through its operating subsidiaries Kansas City Power & Light Company (KCP&L) and Westar Energy, Inc, provides clean, safe and reliable energy in Kansas and Missouri. The company delivered average negative earnings surprise of 11.1% in the last four quarters.

Headquartered in Houston, TX, Sunoco operates as a wholesale fuel distributor. The company is expected to witness year-over-year earnings decline of 38.9% in 2018.

Bristol, U.S-based Contura Energy is a mining company. The company generated average negative surprise of 17.9% in the trailing four quarters.

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