Outperforming expectations in 2021
We came out of 2020 with forward momentum, having shifted our focus to leveraging our portfolio, expanding margins, and enhancing liquidity, which continued to build throughout the year, resulting in strong operational performance.
2nd consecutive year of positive free cash flow
16% Adjusted EBITDA
With a strategy in place and a foundation to build on, 2021 was a year of significant achievement as we executed on our strategic priorities, including listing on the Nasdaq Stock Exchange, refinancing our debt, exceeding our goal of 15% adjusted EBITDA margins (at 16%), realigning our reporting structure, and achieving our second consecutive year of positive free cash flow, a milestone that has not been achieved at Weatherford in more than 30 years. Our results demonstrate the increasing traction of our strategy, as we saw revenue growth across all our reportable segments and geographies on a year-over-year basis.
With our customers at the center of our focus, we harnessed growth opportunities through commercial adoption of new technologies, expanding into new markets by leveraging adjacent product lines in targeted geographies, and driving synergies from cross-product-line solutions. Our contract awards in 2021 demonstrate our ability to win in the marketplace and represent a pivot from the profile of a shrinking company over the past several years to one with a directed growth trajectory that continues to deliver increasing returns.
With the strong finish of 2021, we are very excited about our strategic direction, as the Company is poised to perform competitively in the anticipated multi-year upcycle for the energy industry. We are entering 2022 with a growth and execution mindset, focused on further improving the Company's fulfillment strategy, achieving profitable growth in the marketplace led by the strength of our portfolio, and building upon the incredible cost and cash successes of the last two years.
Reportable Segment Change
Effective the fourth quarter of 2021, we realigned our reporting structure to three product line segments: (1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention. The updated structure further refines the Company's organizational focus and business strategy around the well lifecycle and is intended to drive improved customer collaboration and growth opportunities through cross-product-line solutions. All segments provide services to core oil and gas as well as new energy markets. The reportable segment change creates an alignment of our management strategy and reporting structure and allows us to further drive organizational priorities into our operating processes.
Our market-leading product lines in each segment are a testament to the technology innovation and differentiation we provide and will serve as a foundation to drive growth and pull-through across our portfolio. Additionally, the seamless integration of our digital offerings and ability to provide integrated solutions across our segments will be key to growth in our core operations and in the energy transition.
Our Realigned Reporting Structure
At the onset of 2021, we laid out focus areas of North America Performance, Variable Cost Management, Organizational Simplification, and Inventory Rationalization. Throughout the year, we were methodical and deliberate in our actions, driving outperformance across the board on every one of our focus areas.
In North America Performance, we reorganized our operating structure to align with the realities of today's market. In doing so, we doubled our margins and grew revenues as we undertook measures to address our footprint, business mix, and service delivery model under a new leadership team focused on returns. These actions resulted in our exiting nonprofitable offerings in the United States, such as Drilling Services and Wellheads, and switching to a new model in Wireline Services.
In our Variable Cost Management program, we appointed an enterprise-wide team to establish new cultural and operational frameworks for tracking costs and driving cost reduction initiatives across the organization. Our work on our cost savings initiatives enabled us to increase gross margins by over 160-basis points from 2020 to 2021 despite inflationary headwinds. This was an incredible feat in a very challenging market, but we cannot rest there. The actions we are taking now are critical enablers for us to manage our business and advance toward the goal of sustainable profitability.
In Organization Simplification, we took critical steps to de-layer our company, which created greater operational efficiency and accountability resulting in support cost savings. We also focused on ensuring robust mechanisms for efficient international assignments and a thriving career progression pipeline for our next generation of talent.
In the area of Inventory Rationalization, we made incredible progress on our 2021 goal of improving Days Sales of Inventory (DSI) by over 10 days. We enhanced collaboration throughout our Company's entire supply chain and better integrated manufacturing, operations, and sales for improved inventory management and delivery. As a result of these efforts, we have seen a 14-day improvement in our DSI sequentially.
In 2021, we also introduced our three strategic vectors, and the actions on these are yielding positive outcomes that are positioning us well for the future.
Digital Transformation is a powerful growth vector for us, as it delivers value to our customers in their ongoing digital transformation journeys and also yields significant improvements in streamlining our internal operational efficiencies. We have seen renewed interest from customers in our digital offerings, which feature remote operating capabilities, visualization, edge automation, and artificial intelligence. During the year, we made headway in expanding our digital platforms into new geographies.
ESG and the Energy Transition is an extremely important strategic vector with tremendous traction from our customers. We have affirmed our commitment to being net zero by 2050 and have signed on to the UN Global Compact. Our offerings in Geothermal, Plug and Abandonment, and Carbon Capture, Utilization, and Storage (CCUS), are securing wins across multiple geographies.
In our Product and Service Portfolio vector, we identified market-leading offerings, including Managed Pressure Drilling (MPD), Tubular Running Services (TRS), Cementation Products, and Fishing & Re-Entry Solutions that serve as the foundation to drive growth and pull-through across our portfolio. These offerings reflect the strength and differentiation of our technology and innovation. Additionally, the seamless integration of our digital offerings and the ability to provide integrated solutions across our segments enable continued growth in our core operations and the Energy Transition.