The past couple of years have been difficult for Weatherford International (NYSE:WFT) as it has struggled to generate cash and has a bloated balance sheet. But it's looking to change all that under new leadership. Now that the oil market is starting to pick back up again, hitting the reset button couldn't come at a better time.

Here's a quick look at Weatherford's results for the most recent quarter and what investors can expect in the coming quarters under new management. 

Subsea equipment

Image source: Getty Images.

By the numbers

Results*Q4 2016Q3 2016Q4 2015


$1,406 $1,356 $2,012
Operational income ($76) ($111) ($270)
Net income ($549) ($1,780) ($1,208)
Earnings per share ($0.59) ($1.98) ($1.54)

Data source: Weatherford international earnings release. *in millions, except per-share data. 

Weatherford's results for the quarter were typical for oil services companies so far: Increased activity in places like North America and the Middle East were mostly offset by still-declining activity in the rest of the world. As the company pointed out, its North American results were stronger than what the numbers reflect. In the past quarter, management elected to idle its pressure pumping equipment business, which resulted in a $28 million charge to the income statement. 

This move to idle equipment like pressure pumping isn't unique to Weatherford. Just this past quarter, Baker Hughes (NYSE:BHI) spun off its pressure pumping and well cementing business into its own privately held business. These particular types of well services are asset intensive -- which means capital intensive -- and low margin. So companies with higher-technology options like Weatherford and Baker Hughes are looking to shed these assets to focus on higher-return businesses. 

Chart of Weatherford International's operating income by geographic segments for Q4 2015, Q3 2016, and Q4 2016.

Data source: Weatherford International earnings release. Author's chart.

Weatherford continues to have several charges and impairments to the income statement. This past quarter, there were $246 million of them. Some of that was the aforementioned pressure pumping business, but it also involved several severance and restructuring charges. For several quarters, management has been saying that these charges would become negligible, yet they continue to happen. 

One thing that can't be overlooked is the company's debt reduction efforts. Through some debt restructuring efforts and an equity raise, it was able to reduce its total debt load by another $507 million in the quarter to an outstanding balance of $6.5 billion. It also helps that it generated $171 million in free cash flow this past quarter. Granted, most of it was from working capital reductions, but free cash flow generation has eluded the company many times over the past several years. Any signs that it is making progress on that end is a good sign.

What management had to say

During this past quarter, former CEO Bernard Duroc-Danner stepped down and CFO Krishna Shivram was elected to the top spot. Here's what he had to say in his first quarterly press release:

As supply and demand fundamentals continue to steadily improve, we stand at the beginning of a multi-year cycle of increased spending by our customers, almost entirely focused on developing mature reservoirs, principally on land.  We are perfectly aligned to benefit from the attributes of this kind of cycle as it plays to our strengths on land in Well Construction, Completions and Artificial Lift.

We are now emerging from the downturn as a much stronger organization. With a transformed cost structure, and a much-improved balance sheet, we are committed to delivering the difference for our clients through innovation, collaboration and fit-for-purpose solutions. Our focus is centered on service quality, safety, customer engagement, talent management and further strengthening a culture of accountability. As we execute on this 'Back to the Basics' strategy, we expect stronger financial results will naturally follow.

10-second takeaway

Most of the cost-cutting and restructuring efforts over the past couple of years has been driven by Shivram when he came over from Schlumberger. Many of those efforts seem to be paying off as the company begins to show improving operating margins and positive cash flow numbers. By no means is Weatherford out of the woods yet, but there are signs that things are getting better.

Over the next couple of quarters, anyone invested in or watching Weatherford should see if the company can capture some of the higher spending levels from producers as well as continue to trim its debt load. Until these things happen, it's probably best to sit on the sidelines.