Ladies and gentlemen, thank you for standing by, and welcome to the Weatherford International Second Quarter 2020 Earnings Call. As a reminder, today's call is being recorded.

Welcome everyone to the Weatherford International Second Quarter 2020 Conference Call. I'm joined today by Karl Blanchard, Interim CEO and COO; and Christian Garcia, Executive Vice President and CFO. First, Karl and Christian will share their prepared remarks, and then we will open it up for questions. I'd like to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Our comments today also include non-GAAP financial measures. And as noted in our press release, the company adopted fresh-start accounting in December 2019, and our comments today include a comparison of the results of our predecessor and successor companies. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our second quarter press release, which can be found on our website. With that, I'd like to turn the call over to Karl.

Thank you, Sebastian. Good morning and good afternoon, everyone. The second quarter has been unlike any other, even for a cyclical industry like ours that is used to regular change. The unprecedented reductions in customer spending due to supply-demand disruption of commodities and the resulting price decline, along with constraints associated with the COVID-19 pandemic, had a substantial impact on the industry, with significant declines in activity in both North America and international. But I am proud of how our One Weatherford team managed the many challenges faced during the quarter. Our team adapted quickly, executed well against our plans, and increased our cost reduction efforts. Unlevered free cash flow exceeded $100 million in the quarter, a significant increase in both sequential and year-on-year. We also won important new work from our customers and continued to leverage our product and service portfolio. Notably, I am pleased to announce a new $500 million financing agreement, which, subject to closing conditions, will strengthen the company's liquidity as it continues to support customers during this challenging environment. Christian will cover this in his remarks. Most importantly, however, we continue to meet the needs of our customers with little to no disruption to their operations, while also maintaining our commitment to the health and safety of our employees. This required a number of changes to how we work, whether from home or from remote locations in the field, and the Weatherford team's discipline, ingenuity, and determination were energizing. We were able to execute remote operations amidst global travel restrictions with relative ease as we have embedded digital capabilities throughout the organization and across our portfolio. Let me give you a few examples. In both Asia and Russia, our liner hanger team created remote installation protocols that trained, enabled, and guided the operator's representatives through the entire offshore liner installation process, delivering successful installations with zero nonproductive time, with no Weatherford personnel on the rig. In the Middle East, the reliability of our quick casing-exit system and the precision of the AccuView system enabled us to remotely install a whipstock with 100% success in a single trip, again, with no Weatherford personnel on location. In Europe, we supported the installation of an annular gas-lift system remotely from onshore, reducing personnel required onboard the rig. These are a few of many examples, and we will continue to leverage our capabilities for remote operations going forward. Now I want to cover three things with you today. I'll start by discussing our portfolio and how we continue to strengthen it; next, I'll turn to the market and our outlook for the remainder of the year; and finally, I'll close with the steps we're taking to preserve margin and maximize cash flow. We have a strong portfolio of technology, products, and services. We've made strategic investments in new technology and digital solutions to maintain our market-leading position in several product lines and services, including production automation, managed pressure drilling, segmentation products, and tubular running services. We are differentiating ourselves by offering solutions across our unique portfolio that not only provide value to our customers through their operating costs but also help them reach their objectives to increase production, all while maintaining safety and sustainability. With the breadth of our portfolio, we deliver value to our customers across the entire operation and well life cycle. But for this quarter, I want to focus on our tubular running services product line. We are the largest provider of tubular running services globally with a portfolio ranging from conventional equipment to advanced automated rig systems. We are also leaders from an innovation perspective. Our Vero automated connection integrity solution is the industry's only automated tubular running system. Rather than rely upon human judgment for connection, evaluation, and integrity, we apply the full breadth of automation and artificial intelligence to eliminate errors or oversights that can lead to safety incidents, higher operating costs, or costly remediation. Vero also delivers significant safety enhancements by taking personnel out of the red zone and reducing crew size. Since its launch in 2018, we've deployed the Vero system in 140 operations across 17 countries. In doing so, we've automated the makeup of nearly 40,000 connections and have saved more than 500 hours of rig time for our operators. In the second quarter alone, we delivered Vero on 15 jobs. Using the Vero system and the benefits of digital technology, we enabled live streaming of completions running data for four different operations across four continents. By providing a digitization solution, we allowed our customers to take part in the operation and review data remotely, thereby eliminating travel and exposure for the client's personnel while continuing to deliver our best-in-class tubular running services. In Egypt, Weatherford deployed the Vero system for a major international operator. In this case, the customer wanted to improve connection integrity while simultaneously enhancing safety by removing personnel from the red zone and increasing efficiency. The system helped to reduce our personnel on board by 33% and reduce rig up and rig down times by 10%. Our clients recognize the value that Vero provides. And we are running it around the world with top-tier customers, such as Chevron and Shell. And it's not just that we run tubulars with unmatched connection integrity and efficiency, we can provide what our customers need for everything that happens after reaching total depth. One way we're doing that is integrating our Vero system with complete post-TD optimization. Complete combines every phase of the well completion, including tubular running, liner hangers, wellbore cleanup, fishing, slickline, and well services. But unlike bundling services of discrete products, complete solutions drive real value and cost savings by providing a single-focused cross-functional team that bridges the gap between the operator and the contractor. Our thinking-like-an-operator approach improves efficiency and reduces interface costs by up to 40%. Our overarching strategy, therefore, is evolving the Weatherford organization from one that was aligned around individual technologies into one with market-focused teams that integrate our technologies and innovative ideas to provide value to our customers through market-leading wellbore and production solutions. Now I mentioned earlier, our portfolio is strong. A testament to this is the recently announced integrated project we signed with a customer in Iraq. This contract includes drilling and completing 20 wells in Southern Iraq, with the customer providing rigs, civil works, and drilling services while Weatherford provides all other services, including project management. This contract establishes a critical relationship as a trusted business partner and illustrates the confidence our customers place in the strength and breadth of our portfolio. This project is just one of many examples of major successes during the quarter when every aspect of winning work was challenged. Other highlights include: in South America, our Victus managed pressure drilling solution was combined with directional drilling offering. This enabled the operator to drill ahead without nonproductive time caused by influxes or losses in the formation, eliminating 7 days of rig time. In Mexico, the Magnus rotary steerable system exceeded the target rate of penetration by 23% to finish the drilling phase of a project ahead of schedule and under budget. In Angola, we won a tender to deliver a package of completions, cementation, and well suspension solutions in deepwater applications. And finally, our ForeSite production optimization ecosystem is now installed on more than 100,000 wells worldwide. It combines production optimization, next-generation automation, reservoir monitoring, and intelligent non-nuclear multiple flow measurement. Now let me turn to the market and our outlook for the remainder of the year. The outlook remains cautious. While some concerns we were facing as an industry early in the quarter have eased, the global economy remains weak. This, paired with concerns over rising COVID-19 cases and the potential for further outbreaks, as well as uncertainty around the effectiveness and timing of a potential vaccine, are resulting in highly uncertain economic environments. Second quarter drilling activity reductions in North America were largely in line with our expectations for the quarter. In the U.S., average rig counts declined nearly 50% quarter-on-quarter. Shut-ins and production cuts were deeper than anticipated and resulted in greater disruption to our production business than we anticipated. Across North America, activity appears to be stabilizing. We do not anticipate a meaningful recovery in the drilling activity during the second half of the year, given the current outlook for commodity pricing as well as customer spending plans. But on the production side, activity has stabilized in the U.S., and we expect to see a gradual recovery through the second half of the year as shut-ins are eased and workover activity increases. Activity declines in certain international markets were faster and deeper than initially anticipated, driven largely by COVID-related shutdowns. Average international rig counts declined by 22% quarter-on-quarter, with activity in Latin America and parts of Europe and Africa disproportionately impacted due to COVID shutdowns. We expect international activity to be flat to modestly down during the second half of the year, bottoming in Q3. While we are expecting COVID-related impacts to ease modestly over the second half of the year, these will be more than offset by reductions in activity in selected geographies as a result of reduced customer spending. We expect the path to recovery to be uneven and protracted over multiple quarters with a challenging environment continuing in the near term. During this time, we will be focused on the levers we can control. As outlined previously, going into the year, we were targeting cost savings of approximately $150 million to $200 million for 2020. In light of the material deterioration in the market environment, we have expanded our actions to mitigate margin degradation and maximize liquidity. We now anticipate realizing approximately $650 million of savings in 2020. And on an annualized basis, these actions are expected to yield over $800 million in cost savings. We are addressing costs across four categories: North America operations, international, manufacturing and supply chain, and corporate and other support functions. Our objectives on our cost actions are to not only adjust our activity but they're also focused on improving internal processes and procedures to enhance efficiency and service quality for our customers. In North America, we adjusted our structure and took significant action to reduce the size and cost of our footprint. We are optimizing our product and service offerings to best position the company as we enter this cycle. Our plans include personnel reductions of approximately 45% and a 35% reduction in facility count, with the majority of these actions already completed. As communicated previously, we are exiting a handful of international locations and are adjusting our go-to-market strategies in others. While we will not provide specifics on these for competitive reasons, we have and will continue to monitor current and expected activity levels and adjust as necessary. In addition to this, we have taken steps to flatten our international organization through the consolidation of certain geozones. We are reducing the size of our international organization by approximately 25%. In manufacturing and supply chain, our focus is on reducing the cost of the goods and services we procure externally as well as the products we manufacture internally. To de-layer and better serve internal and external clients, we have consolidated our manufacturing and supply chain groups into a single organization. In manufacturing, the footprint consolidations we undertook in 2018 and 2019 have enabled us to efficiently reduce our capacity and output alongside current market activity, and we are aggressively reducing our manufacturing overhead costs. In supply chain, we have worked with vendors to lower our third-party costs not only by negotiating more favorable rates and terms but also by consolidating our supply base and establishing and expanding partnerships with key vendors. Now our final area of focus is on corporate and other functions. This is an area that we were focused on entering the year and have further augmented our plans. We consolidated our product line structure going from four product line organizations down to two. We are standardizing processes and procedures so that we can move additional support activities into centralized support homes, and we are realigning our sales structure to more closely align with our customers' needs. Overall, our overhead and support costs are expected to be down 30% year-on-year. As I mentioned, we began taking action early in the year and have been focused on executing swiftly against our plans. To date, we have implemented actions to achieve approximately 85% of the total savings target. These changes have been very difficult for our organization, but I'm proud of how the team has pulled together to execute these actions to address the market environment and position Weatherford for the future. Before I pass it over to Christian, I'd like to speak briefly about our recent and pending leadership change. We are pleased to announce that Scott Weatherholt has joined the company as Executive Vice President, General Counsel, and Chief Compliance Officer. I'd like to welcome him aboard and look forward to his perspective and insights as we continue guiding the organization forward. The Board is actively working to recruit a Chief Executive Officer and a Chief Financial Officer, with both searches progressing well. While I can't provide specific timelines, the CFO search is further along, and we anticipate making an announcement in the near future.

Thank you, Karl, and good morning, everyone. This is my last earnings call with Weatherford. In my short tenure, I saw the company's potential for value creation. I want to thank the Board, Karl, and our employees for the support that they provided me during my time here. Before I begin with a summary of the second quarter results, let me provide some details on the agreement that was recently signed. The proposed $500 million financing in the form of senior secured notes will carry a coupon rate of 8.75% and a maturity date of September 2024. Upon closing, the proceeds of these new notes are intended to replace the ABL credit agreement, which would eliminate the risk of noncompliance with associated financial covenants. This transaction is subject to documentation and certain closing conditions. A summary of the principal terms and conditions are more fully outlined in the Form 8-K filed this morning. As discussions are ongoing, we will not address any questions regarding this potential transaction on this call. Now let me discuss the summary of the results of the second quarter of 2020, then provide comments on the progression of the company in the second half of 2020 and beyond. Revenues in the second quarter of 2020 were $821 million or 32% below the first quarter of 2020 and 37% below the same period in 2019. The sequential decline primarily resulted from the significant activity reductions in the United States and Latin America. In the second quarter of 2020, the average rig count in the United States fell approximately by 50% sequentially, and oil production declined as operators shut their wells in response to lower commodity prices. Activity in Argentina, which had been the company's largest country exposure in Latin America, dropped by 94%. Colombia fell sharply as well by 87% due to lockdowns resulting from the pandemic. Second quarter 2020 adjusted EBITDA was $79 million with adjusted EBITDA margins of 10%. Margins were flat against the same period last year despite the steep reduction due to the cost actions that Karl mentioned in his remarks. As many of you know, the oilfield services industry is a high fixed cost business. And typically, incrementals or decrementals defined as change in adjusted EBITDA over the change in revenue run between 40% to 50%. However, due to the magnitude of the changes the company has and continues to make to its cost structure, the company's year-over-year decrementals for the second quarter were approximately 10%. Now let me provide a regional breakdown, starting with the Western Hemisphere. Western Hemisphere combined revenues of $310 million in the second quarter declined 47% sequentially and 57% versus last year. As mentioned, North America was down by 50% sequentially, which was better than the corresponding 57% decline in the average North American rig count. We saw revenue declines across most product lines, but particularly in artificial lift as producers shut in their wells due to low commodity prices. Notably, we saw lower declines in our production automation and software product lines as we continued to see a good level of take-up for our ForeSite production optimization platform. We also experienced sequential growth in wireline in the United States due to the change in our business model for this product line with improved profitability. Latin America second quarter revenues of $138 million declined 44% sequentially and 54% versus last year. The sequential decline was the result of the lockdowns in Argentina and Colombia, where activity essentially halted in April through May and by lower activity in Mexico. Our work in Argentina has a high fixed cost content as we support our customers in their conventional Vaca Muerta region. As such, we experienced sizable decrementals on the revenue loss. While we are hopeful that activity will recover in the medium term, we expect continued challenges in the coming year and are actively rightsizing our operations in the country. Segment adjusted EBITDA for the Western Hemisphere was $6 million in the second quarter, which is a significant drop sequentially and versus last year due to a significant decline in revenues in both regions. Year-over-year decrementals for the hemisphere were 12% due to the amount of cost actions implemented. Now let's move to the Eastern Hemisphere. Eastern Hemisphere revenues of $511 million in the second quarter reduced by 19% sequentially and were down 13% versus last year. Revenues in Europe, Sub-Saharan Africa, and Russia declined 24% sequentially due to the nonrecurrence of completion tool sales in the first quarter, COVID-19 related lockdowns in Central Europe, project delays with certain customers, and the impact of unfavorable foreign exchange in Russia. Middle East, North Africa, and Asia revenues of $341 million were down 15% sequentially due to lower activity across the region, with the exception of Saudi Arabia. Saudi Arabia revenues increased by single digits sequentially due to recognition of a deferred completion product sale and higher drilling services revenue. Segment EBITDA for the Eastern Hemisphere was $100 million in the second quarter and was down $27 million sequentially but flat against last year, despite the lower revenues, translating to improved adjusted EBITDA margins on a year-over-year basis. Favorable product mix and savings from cost actions drove the margin improvement. Now the company had breakeven free cash flow in the quarter, which is a significant improvement from last year's levels of negative $265 million. The second quarter's free cash flow was impacted by cash interest of $110 million and $58 million of severance and restructuring payments. Unlevered free cash flow, or free cash flow excluding cash interest, was $108 million compared to approximately negative $200 million for the second quarter of 2019 as the company benefited from the unwinding of accounts receivable. Due to the strength of the company's free cash flow, Weatherford ended the second quarter with total cash of $756 million. Our results in the second quarter of 2020 included several charges, totaling $463 million that were not included in our adjusted EBITDA, and I'd like to touch on the main ones. For the quarter, we had charges for impairment of long-lived assets, including property, plant, and equipment and intangibles of $178 million, goodwill impairment of $72 million, inventory write-down of $134 million, and $79 million for severance and restructuring, and other charges. Now let me discuss our thoughts on the second half of 2020 and beyond. The industry was challenged in the second quarter with the impact of the pandemic and the significant decline in activity. The decline in global production in the quarter was not matched by the disruption in hydrocarbon consumption, leading to an oversupply situation. Even though storage capacity fears have dissipated, we believe that the oil prices will be range-bound in the short to medium term until such time that there is a sustained balance between hydrocarbon supply and demand. We do not foresee any meaningful recovery in activity before the second half of 2021. There is still significant economic and industry-specific uncertainty that precludes us from providing any numerical guidance. I would like to provide some qualitative comments on how we expect the business to progress for the second half of 2020 and beyond. These comments do not take into account the extraneous risks of another round of pandemic-related lockdowns that may curtail oil and gas activity or disrupt the expected recovery of hydrocarbon consumption that is underway. Further, these comments do not consider a reoccurrence of sustained production increases by certain producers that may lead to commodity price weakness. Let me start my comments with our revenue progression. In North America, we project that Q3 and Q4 will be flattish as drilling-related products continue to decline, while production and completion-related products recover slightly from Q2 levels. For 2021, we are projecting that North America revenues will decline by low double-digit percentage, consistent with the industry spend reduction in 2021. For Latin America, we expect revenues for the region to continue to decline in the second half as certain countries like Argentina and Colombia start to recover from pandemic shutdowns, while revenue in other countries decreases from second quarter levels, in line with reductions in customer spending. Eastern Hemisphere is anticipated to be slightly down due to a decrease in Middle East activity and the nonrecurrence of high-margin completion sales and drilling services that occurred in the second quarter. Overall, we expect Q3 and Q4 total company revenues to be lower by single-digit percentage from Q2 levels. Q4 typically benefits from year-end sales, but we expect this to be more muted this year than in the past. Beyond 2020, international revenues are expected to decline by low double-digit percentage in 2021 as markets begin a recovery from Q3 and Q4 activity levels. We continue to believe that next year, the Middle East and Russia will be relatively more resilient than other regions, and Latin America will continue to be the weakest among the international regions. For adjusted EBITDA, as I mentioned, Q2 benefited significantly from cost action to achieve year-over-year decrementals of approximately 10%. Given the actions that have been implemented as well as those planned for the remainder of the year, year-over-year decrementals for the total year 2020 and 2021 are expected to be in the 10% to 15% range. For guidance on unlevered free cash flow, Q2 was strong despite lower profitability due to the unwinding of working capital driven by strong receivable collections. As revenue starts flattening in Q3 and Q4 versus Q2 levels, the company does not project significant contribution from lower receivables. We are seeing a lengthening of payment terms with some NOC customers, such that any further benefit of the unwinding of working capital will be associated with modest reductions in inventory. For 2021, our view is that unlevered free cash flow is going to be about half of 2020 levels, as we do not expect the benefit from the unwinding of receivables in 2021 to be as significant as what we are projecting for 2020.

Thank you, Christian. As we bring the call to a close today, I want to leave you with these takeaways. We are executing on our plan to preserve margin and maximize liquidity, and we will take additional actions as necessary. We have a strong, diverse portfolio that's well positioned to leverage our solutions-based approach to meet our customers' objectives. Weatherford is well positioned to meet the challenges the industry is facing. Thank you again. Stay safe and be well. Operator, let's go ahead and open up for questions.

Today first question comes from Marc Bianchi with Cowen.

I guess, first question has to do with the outlook here for the market. It looks like your revenue progression that you're talking about is pretty similar to what most are saying in terms of how the market is trending. But Weatherford has this big cost reduction program and you're closing facilities around the world, which I would think would result in a loss of market share. Can you kind of talk through how you are able to perform kind of in line with what the market is doing yet closing facilities?

Yes, this is Karl. Christian may want to add his thoughts as well. We are very optimistic about our standing with our clients and the business we have. I want to clarify that even though historically the company has been seen as losing share after the declines in 2014 and 2015, we feel confident in our current position and our operational footprint. We are closing facilities in areas where there is no work. Looking ahead, we are confident that we have maintained our market share and, in some instances, have gained share in certain product lines over the last few quarters. We are not worried about losing market share; instead, we are making strategic decisions to close locations that are not aligned with expected future activity, which we believe will not negatively affect our market share.

Yes. I would like to add that when comparing our total revenues to those of our peers in this quarter, we are in line with them and even perform better than one particular peer. Additionally, regionally, we experienced strong results in North America and the Eastern Hemisphere, with Latin America being the exception due to our significant exposure in Argentina, which is our largest market. Aside from that, we are generally aligned with our peers. Furthermore, as mentioned by Karl, there are product lines where we are gaining market share, particularly in tubular running services. Following the reporting from one of our competitors, it’s clear that we are not only leading in this area but also extending our lead. Therefore, we have no concerns about losing market share at this time.

Yes. Okay. In terms of the outlook for cash generation, so $108 million of unlevered free cash in the second quarter. It looks like there was $130 million working capital release and the outlook doesn't really contemplate a lot of working capital benefit. So if I exclude that working capital release, it would appear you were consuming some cash in the second quarter. Revenue trending lower, albeit with tempered decrementals because of the cost-saving program. But if I just sort of put all that together, it would seem like you'd have negative unlevered free cash in the back half of the year. Am I right about that? And are there other levers that you've got where you can get that back into positive territory here?

We expect to generate positive unlevered free cash flow in the second half of the year. I’d like to explain how we view the impact of the unwinding of working capital. In the second quarter, we experienced a $130 million benefit from this unwinding. Of that total, around $275 million came from receivables, with only a minimal contribution from inventory, and the remainder was a negative outflow from payables. Looking ahead to the second half, as revenues stabilize and there may be delays in customer payments, we anticipate that any gains from receivables will be balanced out by reduced payables, leaving net working capital growth to come from inventory. We are currently estimating that our opportunity in inventory for the second half could be around $100 million, with most of that expected in the fourth quarter. We still believe there are advantages from working capital in the second half. I hope this clarifies things.

That's helpful. I just have one more as it relates to kind of the new capital structure here. And unlevered free cash flow does exclude interest expense, but it is a cash cost. So when we do think about that interest expense, you will be consuming quite a bit of cash here. What level of revenue do you think the company needs to be at, given the capital structure going forward, assuming the deal is closed, to be comfortably generating free cash flow, including all obligations that you have?

Yes. So let me clarify that we are not ready to provide a specific projection. However, this capital raise serves two main purposes. First, it replaces the ABL credit facility and mitigates the risk of noncompliance, which is a significant concern for the company. Second, it offers a liquidity runway for us to fulfill our obligations and continue tackling the challenges in this market. Therefore, we believe this transaction is beneficial for the company.

And our next question comes from James West with Evercore.

Karl, you have experienced significant changes in parts of the management team and the Board in recent months. Has there been any change to the strategic goals of the company?

James, that's a great question. We have been very clear with our clients and employees that our strategic direction remains unchanged. We believe we have established the company on the right strategic path regarding how we market our products and services to create value for our customers. This was confirmed by the Board after some changes that happened during the quarter; our strategy is not changing. We are simply intensifying our focus and our cost management as we navigate this market environment.

Do you have a baseline we could discuss regarding the percentage of sales that is digital now, and what the future goals are for digital? This quarter, you’ve had some remarkable digital successes, and I’m interested in understanding a starting point to see how this could evolve moving forward.

Yes, James, I'm not sure how to quantify that easily. However, I can share some data points. When we finished 2019, our production automation ForeSite architecture was in use at roughly 50,000 wells, primarily supported by our CygNet SCADA system, which was deployed at several hundred thousand wells. Since the end of 2019, we've more than doubled the number of wells using that system. In terms of digital capability within some of our drilling services, like tubular running services, we're focused on designing and implementing that capability into our existing offerings. Vero is a prime example; it was non-existent two years ago, and now it represents a significant part of our capabilities, especially offshore where the value is greatest. While I can't provide a precise benchmark, this concept applies across all our product lines. Much of the remote capability we've mentioned is delivered through AccuView, which enables remote operations for tasks like liner hangers and whipstocks.

Operator Instructions. Today's next question comes from Connor Lynagh with Morgan Stanley.

I appreciate you want to be a little guarded in some of this information for competitive reasons. But I was wondering if you could just couch for us the countries that you've exited? I mean how significant if we were looking at, say, your 2017, 2018, 2019 revenues, were those regions relative to your overall revenue or EBITDA? Basically, how should we think about how much you've scaled down relative to the prior cycle?

I can address that. Christian might want to add something as well. To be honest, many of the locations we've exited likely weren't very significant in terms of revenue. The main issue was the residual infrastructure resulting from changes in market activity in those countries, which led to negative costs that affected our margins. I see this more as a cost cleanup rather than a retraction of our top-line revenue. It's primarily about effective business management and making decisions based on the fundamental shifts in those markets. We've chosen to exit and address the cost side.

I want to highlight that the decline in revenue is partly related to activity levels, but also due to the divestitures the company has made. As you are aware, we exited the labs and rigs, which did lessen our top line, but it didn't significantly affect our bottom line. Additionally, as Karl mentioned, we are not necessarily exiting certain markets, but we are adapting our go-to-market strategy in those regions. Instead of offering a comprehensive package with both products and services, we are focusing on ensuring we achieve returns on the investments we are making there. These adjustments, coupled with the divestitures and changes in market activity, are the main factors contributing to the reduction in revenue.

Understood. That's helpful. Maybe sort of the same question but on the product line side of things. I mean it seems a lot of your competitors are looking pretty closely at their portfolios and deciding what they want to be in for this coming cycle and what they don't. Are there any major areas that you think need strengthening or need you to scale back further? How do you feel about the portfolio now that we have at least some concept of what the bottom of the cycle looks like?

Yes, Connor, we are generally comfortable with the portfolio. As Christian mentioned, we conducted a strategic review in 2017, which led us to several divestitures before this year. What I can say is that we are focusing more intently on our existing product lines, ensuring that the business we engage in is profitable. This may involve refining our services and the types of business we accept to enhance profitability. However, we are not looking at significant changes to our portfolio by product or service line.

Right. Additionally, I would point out that when examining it regionally, our EBITDA margins internationally are very strong. The question we constantly face, and that everyone is asking, is how we can develop a United States offering that yields good returns on our investments in the country. This isn't just a Weatherford concern; it's an industry-wide issue. Like our peers, we're working on how to tackle this market.

And ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect your lines.