Financial Performance - Revenue for Q1 2025 was $391 million, a decrease of $46 million, or 11%, compared to Q4 2024 revenue of $437 million[7] - Adjusted EBITDA for Q1 2025 was $76 million, a sequential decrease of $24 million, or 24%, with an Adjusted EBITDA margin of 20% compared to 23% in Q4 2024[7] - Net income for Q1 2025 was $14 million, or $0.13 per diluted share, down from $23 million, or $0.17 per diluted share in Q4 2024, resulting in a net income margin of 4%[7] - Total revenue for Q1 2025 was $390.872 million, a decrease of 10.5% compared to $436.843 million in Q4 2024 and an increase of 1.0% from $383.489 million in Q1 2024[44] - Operating income for Q1 2025 was $10.323 million, down 67.7% from $31.932 million in Q4 2024 and up 22.6% from $8.420 million in Q1 2024[44] - Net income for Q1 2025 was $13.948 million, compared to $23.034 million in Q4 2024 and a loss of $2.677 million in Q1 2024[44] - Adjusted EBITDA for the three months ended March 31, 2025, was $76,228, with an adjusted EBITDA margin of 20%, compared to $67,460 and 18% in the same period of 2024[58] - Gross profit for the three months ended March 31, 2025, was $40,070, with a gross margin of 10%, compared to a gross profit of $34,932 and a margin of 9% in the same period of 2024[55] Guidance and Future Outlook - The company provided Q2 2025 revenue guidance in the range of $400 to $410 million and Adjusted EBITDA guidance of $80 to $90 million[4] - The company is focused on achieving anticipated synergies from the Coretrax acquisition, which is expected to enhance growth prospects[35] - The company continues to invest in new technologies and products to maintain competitive advantage in the oil and gas industry[35] - The company is monitoring market conditions and adjusting its strategies in response to the volatility of oil and gas prices[35] Segment Performance - Revenue for the North and Latin America segment was $134 million, a decrease of $5 million, or 4%, compared to Q4 2024[14] - Revenue for the Europe and Sub-Saharan Africa segment was $112 million, a decrease of $30 million, or 21%, compared to Q4 2024[16] - Revenue for the Middle East and North Africa segment was $94 million, an increase of $1 million, or 1%, compared to Q4 2024[18] - Segment revenue from NLA was $134,278, accounting for 34% of total revenue, while ESSA generated $112,373, representing 29% of total revenue[50] Cash and Liquidity - As of March 31, 2025, the company had consolidated cash and cash equivalents of $180 million and total liquidity of $316 million[24] - The company reported a decrease in cash and cash equivalents to $180,174 at the end of the period, down from $184,663 at the beginning[48] Expenses and Adjustments - Capital expenditures for Q1 2025 totaled $33 million, with plans for $90 million to $100 million for the remaining nine months of 2025[23] - Total current assets decreased to $948.605 million as of March 31, 2025, from $964.046 million as of December 31, 2024[46] - Total liabilities decreased to $793.341 million as of March 31, 2025, from $842.057 million as of December 31, 2024[46] - Cash provided by operating activities for the three months ended March 31, 2025, was $41,509, an increase from $29,938 in the same period of 2024[53] - Capital expenditures for the three months ended March 31, 2025, were $33,112, compared to $30,739 in the same period of 2024[48] - Total support costs for the three months ended March 31, 2025, were $85,180, representing 22% of total revenue[56] - Cash paid for merger and integration expenses was $1,556 for the three months ended March 31, 2025, compared to $2,280 in the same period of 2024[53] Net Income and Earnings Per Share - The company reported a basic net income per share of $0.12 for Q1 2025, compared to $0.20 in Q4 2024 and a loss of $0.02 in Q1 2024[44] - Adjusted net income for Q1 2025 was $28.673 million, a decrease of 32.9% from $42.765 million in Q4 2024[60] - Net income per diluted share for Q1 2025 was $0.12, down from $0.19 in Q4 2024, reflecting a decline of 36.8%[61] - Adjusted net income per diluted share for Q1 2025 was $0.25, down from $0.36 in Q4 2024, a decline of 30.6%[61] Tax and Other Adjustments - Total adjustments before taxes for Q1 2025 amounted to $14.790 million, compared to $20.089 million in Q4 2024, a decrease of 26.3%[60] - The company incurred merger and integration expenses of $1.740 million in Q1 2025, down from $3.947 million in Q4 2024[60] - Severance and other expenses were $6.082 million in Q1 2025, a reduction from $9.041 million in Q4 2024, representing a decline of 32.5%[60] - Stock-based compensation expense remained stable at $6.968 million in Q1 2025, compared to $7.101 million in Q4 2024[60] - The total adjustments net of taxes for Q1 2025 were $14.725 million, down from $19.731 million in Q4 2024, a decrease of 25.4%[60] - The diluted weighted average common shares outstanding for Q1 2025 were 116,929,082, compared to 118,129,232 in Q4 2024[61] - The tax benefit for Q1 2025 was minimal at $(65), compared to $(358) in Q4 2024[60]

Financial Data and Key Metrics Changes - Q4 2024 revenue was $437 million, with adjusted EBITDA of $100 million, representing 23% of revenue, marking the best financial performance since the merger in October 2021 [10][11] - Q4 adjusted cash flow from operations was $115 million, and free cash flow was $75 million, reflecting strong operational performance [11] - Full year 2024 revenue reached $1.71 billion, up 13% year over year, with adjusted EBITDA of $347 million, a 40% increase compared to 2023 [15][49] Business Line Data and Key Metrics Changes - Subsea Well Access business saw increased activity in Angola, contributing to revenue growth, while well flow management services improved in Algeria, Iraq, and Saudi Arabia [11] - North and Latin America (NLA) revenue was $139 million, flat quarter over quarter, with a segment EBITDA margin of 22%, down from 24% in Q3 2024 [50] - Europe and Sub-Saharan Africa (EASA) revenue was $143 million, up 9% sequentially, with an EBITDA margin of 37%, reflecting increased subsea activity [53] Market Data and Key Metrics Changes - MENA revenue for Q4 was $93 million, up 7% sequentially, with a stable EBITDA margin of 35% [58] - Asia Pacific (APAC) revenue decreased by 5% to $62 million, primarily due to reduced well management activity in Malaysia and Australia [60] - The backlog remained healthy at approximately $2.3 billion at the end of Q4 2024, consistent with the previous quarter [17] Company Strategy and Development Direction - The company aims to enhance operational efficiency through the "Drive 25" initiative, targeting a 7% to 8% reduction in support costs over the next 12 to 18 months [40][63] - Focus on strategic acquisitions to broaden the portfolio of technology-enabled services and solutions, with a clean balance sheet allowing for opportunistic M&A [108] - The company expects stable to modest growth in upstream investments in 2025, with a focus on international and offshore markets [26][28] Management's Comments on Operating Environment and Future Outlook - Management anticipates a transition year for the energy services industry in 2025, with cautious near-term outlook but bullish medium to long-term prospects [42][75] - The macro environment is expected to support a positive multiyear outlook for energy services companies, particularly in international and offshore markets [9][22] - Concerns about oil supply are expected to abate, leading to momentum building in international markets as the year progresses [75] Other Important Information - The company reported total available liquidity of $320 million at year-end, with cash and cash equivalents of approximately $185 million [66] - Full-year guidance for 2025 includes revenue expectations of $1.7 billion to $1.75 billion and adjusted EBITDA of $350 million to $370 million [67] Q&A Session Summary Question: About the full-year 2025 revenue guidance - Management indicated that the guidance reflects exposure to markets with minimal spend reductions and benefits from strategic M&A and engineering investments [81][84] Question: On the first quarter guidance and expected rebound - The sequential decline in Q1 is attributed to strong Q4 performance and seasonal impacts, with expectations for a typical recovery in Q2 based on project timing [87][90] Question: Free cash flow progression and capital allocation priorities - Management highlighted the Drive 25 initiative aimed at improving efficiency and reducing costs, with a focus on capital discipline and potential M&A opportunities [95][102][108] Question: Resolution of the Congo project - The company successfully resolved outstanding variation orders, with expectations for improved margins in the O&M phase and operational flexibility in production rates [115][116]

PART I [Business](index=4&type=section&id=Item%201.%20Business) Expro is a global energy services provider offering comprehensive well life cycle solutions across four geographic segments, with FY2024 revenue of $1.71 billion - Expro is a leading provider of energy services with approximately **8,500 employees**, providing solutions to exploration and production companies in over **50 countries**[16](index=16&type=chunk) Consolidated Revenue by Segment (2022-2024) | Segment | 2024 Revenue ($ thousands) | 2023 Revenue ($ thousands) | 2022 Revenue ($ thousands) | 2024 % of Total | 2023 % of Total | | :--- | :--- | :--- | :--- | :--- | :--- | | NLA | 566,048 | 511,800 | 499,813 | 33.0% | 33.8% | | ESSA | 564,440 | 520,951 | 389,342 | 33.0% | 34.4% | | MENA | 332,216 | 233,528 | 201,495 | 19.4% | 15.4% | | APAC | 250,098 | 246,485 | 188,768 | 14.6% | 16.3% | | **Total** | **1,712,802** | **1,512,764** | **1,279,418** | **100.0%** | **100.0%** | - The company's portfolio spans **well construction, well flow management, subsea well access, and well intervention and integrity solutions**[16](index=16&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) - One major customer accounted for approximately **10.5% of revenue in 2024** and **12.5% in 2023**[43](index=43&type=chunk) Safety Performance Metrics (2022-2024) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | LTIF (Lost Time Injury Frequency) | 0.00 | 0.06 | 0.36 | | TRCF (Total Recordable Case Frequency) | 1.05 | 0.61 | 1.07 | [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse operational, financial, legal, regulatory, and stock-related risks, including oil and gas industry volatility, physical hazards, and compliance challenges - Business depends on the level of activity in the oil and gas industry, which is significantly affected by **volatile commodity prices, global economic conditions, and geopolitical events** like the war in Ukraine and conflicts in the Middle East[67](index=67&type=chunk) - Operations are subject to **physical dangers and hazards** inherent in the oil and gas industry, which can cause personal injury, loss of life, and significant financial losses not fully covered by insurance or indemnification[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - The company is exposed to **cybersecurity threats**, and a successful attack could lead to disclosure of confidential information, damage to reputation, and other financial costs[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - As a Dutch company, **shareholder rights may differ** from those in U.S. jurisdictions, and provisions in the articles of association and Dutch law may discourage takeover attempts[114](index=114&type=chunk)[118](index=118&type=chunk) - Compliance with complex laws like the U.S. Foreign Corrupt Practices Act (FCPA) and trade sanctions is required, and **violations can result in severe penalties**[107](index=107&type=chunk)[108](index=108&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=Item%201B.%20Unresolved%20Staf%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[128](index=128&type=chunk) [Cybersecurity](index=25&type=section&id=Item%201C.%20Cybersecurity) The company maintains a comprehensive cybersecurity risk management program overseen by the CIO and Board, with no material threats identified in the last fiscal year - The company has implemented processes to assess, identify, and manage cybersecurity risks, managed by a dedicated **Cybersecurity and Infrastructure team** led by the Chief Information Officer[129](index=129&type=chunk)[130](index=130&type=chunk) - The Board of Directors, through its Nominating and Governance Committee, **oversees cybersecurity risks** and receives periodic updates from the CIO[131](index=131&type=chunk) - In the last fiscal year, **no identified risks from cybersecurity threats have materially affected the company**, but ongoing threats are reasonably likely to pose a material risk in the future[131](index=131&type=chunk) [Properties](index=26&type=section&id=Item%202.%20Properties) Expro operates numerous global manufacturing and service facilities, including key corporate offices and major hubs in Houston, Reading, Aberdeen, and Lafayette - The company maintains several manufacturing and service facilities worldwide, with key corporate offices in **Houston, TX (leased)** and **Reading, UK (leased)**[133](index=133&type=chunk)[134](index=134&type=chunk) - The largest manufacturing facilities are located in **Aberdeen, Scotland (owned/leased)** and **Lafayette, Louisiana (owned)**, where a substantial portion of service equipment is designed and assembled[134](index=134&type=chunk) [Legal Proceedings](index=26&type=section&id=Item%203.%20Legal%20Proceedings) The company settled an $8.0 million SEC investigation for FCPA violations in April 2023 and had no material loss contingencies as of December 31, 2024 - Information on legal proceedings is included in **Note 18 to the consolidated financial statements**[135](index=135&type=chunk) - In April 2023, the company settled with the SEC regarding an investigation into possible FCPA violations in West Africa. The company paid **$8.0 million in disgorgement, interest, and penalties** in the second quarter of 2023[489](index=489&type=chunk) - As of December 31, 2024, the company had **no material accruals for loss contingencies**[490](index=490&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[136](index=136&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Expro's common stock trades on the NYSE, with 116.4 million shares outstanding and an active $100 million stock repurchase program - The company's common stock is traded on the **New York Stock Exchange (NYSE)** under the symbol '**XPRO**'[138](index=138&type=chunk) - The Board approved an extension to its stock repurchase program, authorizing up to **$100.0 million in repurchases** through November 24, 2025. During 2024, the company repurchased **1.2 million shares for a total cost of $14.2 million**[141](index=141&type=chunk) - As of December 31, 2024, approximately **$75.8 million remained authorized** for repurchases under the program[143](index=143&type=chunk) Share Repurchases for Q4 2024 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Dollar Value that may yet be Purchased | | :--- | :--- | :--- | :--- | | Oct 1 - Oct 31 | -- | $ -- | $ 89,987,162 | | Nov 1 - Nov 30 | -- | $ -- | $ 89,987,162 | | Dec 1 - Dec 31 | 1,200,000 | $ 11.80 | $ 75,831,912 | [Reserved](index=28&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2024, Expro's revenue grew 13.2% to $1.71 billion, achieving $51.9 million net income and $347.4 million Adjusted EBITDA, with a stable 2025 market outlook Financial Highlights (FY 2024 vs. FY 2023) | Metric | FY 2024 | FY 2023 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,712.8 M | $1,512.8 M | +$200.0 M | +13.2% | | Net Income (Loss) | $51.9 M | ($23.4 M) | +$75.3 M | N/A | | Adjusted EBITDA | $347.4 M | $248.9 M | +$98.5 M | +39.6% | | Adjusted EBITDA Margin | 20.3% | 16.5% | +3.8 p.p. | N/A | | Net Cash from Operations | $169.5 M | $138.3 M | +$31.2 M | +22.6% | - The market outlook for 2025 remains stable, with commodity prices and energy security requirements supporting continued upstream investments. Declining onshore investment is expected to be offset by **healthy growth in deepwater and offshore segments**[173](index=173&type=chunk) - Total available liquidity as of December 31, 2024, was **$320.3 million**, including **$184.7 million in cash** and **$135.6 million available under the revolving credit facility**[224](index=224&type=chunk) - Capital expenditures for 2025 are estimated to be between **$120.0 million and $130.0 million**, compared to **$143.6 million in 2024**[225](index=225&type=chunk) Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Net income (loss)** | **$ 51,918** | **$ (23,360)** | **$ (20,145)** | | Income tax expense | $ 46,048 | $ 44,307 | $ 41,247 | | Depreciation and amortization expense | 163,468 | 172,260 | 139,767 | | Severance and other expense | 17,048 | 14,388 | 7,825 | | Merger and integration expense | 16,334 | 9,764 | 13,620 | | Other expenses (income), net | 105 | (1,234) | (3,149) | | Stock-based compensation expense | 26,352 | 19,574 | 18,486 | | Foreign exchange losses | 13,613 | 9,238 | 8,341 | | Interest and finance expense, net | 12,517 | 3,943 | 241 | | **Adjusted EBITDA** | **$ 347,403** | **$ 248,880** | **$ 206,233** | [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces foreign currency, interest rate, and credit risks, with potential impacts of $0.9 million from USD fluctuations and $6.1 million from interest rate changes - The company's primary foreign currency cash flow exposures are to the British pound and Norwegian kroner. A hypothetical **5% appreciation/depreciation in the USD** would result in a change in net income of approximately **$0.9 million**[257](index=257&type=chunk)[258](index=258&type=chunk) - Borrowings under the credit facility bear variable interest rates based on SOFR. A **5% change in interest rates** would have an approximate impact of **$6.1 million** on results of operations and cash flows[259](index=259&type=chunk) - Credit risk is concentrated in the oil and gas industry. As of December 31, 2024, accounts receivable in Algeria and the KSA each represented approximately **12.8% of the net accounts receivable balance**[261](index=261&type=chunk) [Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022-2024, including notes on accounting policies, acquisitions, and an unqualified audit opinion Consolidated Statement of Operations Highlights (in thousands) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total revenue | $ 1,712,802 | $ 1,512,764 | $ 1,279,418 | | Operating income | $ 94,166 | $ 10,803 | $ 2,463 | | Net income (loss) | $ 51,918 | $ (23,360) | $ (20,145) | | Diluted earnings (loss) per share | $ 0.45 | $ (0.21) | $ (0.18) | Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $ 964,046 | $ 851,600 | | Total Assets | $ 2,333,541 | $ 2,013,007 | | Total Current Liabilities | $ 484,430 | $ 488,851 | | Total Liabilities | $ 842,057 | $ 717,134 | | Total Stockholders' Equity | $ 1,491,484 | $ 1,295,873 | - On May 15, 2024, the company acquired Coretrax for an estimated consideration of **$186.7 million**, consisting of cash, equity, and contingent consideration. The acquisition expands the company's **Well Construction and Well Intervention & Integrity solutions**[384](index=384&type=chunk)[385](index=385&type=chunk) - The company increased its revolving credit facility to a total of **$340.0 million** in May 2024 to partially finance the Coretrax acquisition. As of Dec 31, 2024, **$121.1 million was outstanding**[473](index=473&type=chunk)[474](index=474&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=106&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None[555](index=555&type=chunk) [Controls and Procedures](index=106&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal controls over financial reporting were effective as of December 31, 2024, excluding the Coretrax acquisition - The CEO and CFO concluded that **disclosure controls and procedures were effective** as of December 31, 2024[556](index=556&type=chunk) - Management concluded that **internal control over financial reporting was effective** as of December 31, 2024. The assessment excluded the internal controls of Coretrax, acquired on May 15, 2024[558](index=558&type=chunk)[559](index=559&type=chunk) - No changes in internal control over financial reporting occurred during the fourth quarter of 2024 that have materially affected, or are reasonably likely to materially affect, these controls[561](index=561&type=chunk) [Other Information](index=107&type=section&id=Item%209B.%20Other%20Information) No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q4 2024 - No director or officer adopted or terminated a **Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** during the three months ended December 31, 2024[563](index=563&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=107&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - None[564](index=564&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=107&type=section&id=Item%2010.%20Directors%2C%20Executive%20Of%20icers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 proxy statement - Information required by this item is **incorporated by reference** from the company's definitive proxy statement to be filed within 120 days after December 31, 2024[566](index=566&type=chunk) [Executive Compensation](index=107&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the company's definitive proxy statement - Information required by this item is **incorporated by reference** from the company's definitive proxy statement to be filed within 120 days after December 31, 2024[567](index=567&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=107&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Beneficial ownership and equity compensation plan information is incorporated by reference from the company's definitive proxy statement - Information required by this item is **incorporated by reference** from the company's definitive proxy statement to be filed within 120 days after December 31, 2024[568](index=568&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=107&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the company's definitive proxy statement - Information required by this item is **incorporated by reference** from the company's definitive proxy statement to be filed within 120 days after December 31, 2024[569](index=569&type=chunk) [Principal Accounting Fees and Services](index=107&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Details on principal accounting fees and services are incorporated by reference from the company's definitive proxy statement - Information required by this item is **incorporated by reference** from the company's definitive proxy statement to be filed within 120 days after December 31, 2024[570](index=570&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=108&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including various agreements and certifications - This section provides an index of all exhibits filed or furnished with the report, including agreements related to **acquisitions, debt facilities, and executive compensation plans**[573](index=573&type=chunk)[574](index=574&type=chunk) - Certifications by the CEO and CFO pursuant to the Securities Exchange Act of 1934 and Sarbanes-Oxley Act are filed as exhibits[579](index=579&type=chunk) [Form 10–K Summary](index=110&type=section&id=Item%2016.%20Form%2010%E2%80%93K%20Summary) The company has not provided a summary for this item in the Form 10-K - None[580](index=580&type=chunk)

Expro Group Holdings (XPRO) Q4 2024 Earnings Call February 25, 2025 11:00 AM ET Company Participants Chad Stephenson - Director of Investor RelationsMichael Jardon - CEOQuinn Fanning - Chief Financial OfficerEddie Kim - Vice President - Equity ResearchNeil Mehta - Head of Americas Natural Resources Equity ResearchGrant Hynes - Equity Research AssociateJosh Jayne - Managing Director Conference Call Participants Steve Ferazani - Senior Equity Analyst - Diversified Industrials & Energy Operator Hello, and welc ...

Q4 & FY | 2024 Highlights Expro Group Holdings N.V. NYSE: XPRO Disclaimer This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Expro Group Holdings N.V. (the "Company") expects, believes or anticipates will or may occur in the future are forward- lo ...

Group 1: Earnings Performance - Expro Group Holdings reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.30 per share, and significantly up from $0.06 per share a year ago, representing an earnings surprise of 20% [1] - The company posted revenues of $436.84 million for the quarter ended December 2024, which was 2.80% below the Zacks Consensus Estimate, but an increase from $406.75 million year-over-year [2] - Over the last four quarters, Expro Group Holdings has surpassed consensus EPS estimates only once, while topping revenue estimates three times [2] Group 2: Stock Performance and Outlook - Expro Group Holdings shares have increased approximately 4.4% since the beginning of the year, outperforming the S&P 500's gain of 1.7% [3] - The future stock performance will largely depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.11 on revenues of $391.39 million, and for the current fiscal year, it is $1.03 on revenues of $1.76 billion [7] Group 3: Industry Context - The Oil and Gas - Production and Pipelines industry, to which Expro Group Holdings belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Expro's stock performance [5][6]

Revenue Performance - Fourth quarter revenue was $437 million, up 3% sequentially and up 7% year-over-year; full-year 2024 revenue reached $1,713 million, a 13% increase compared to 2023[1][8] - Total revenue for Q4 2024 was $436.8 million, an increase from $406.8 million in Q4 2023, representing a growth of 7.4% year-over-year[53] - The year ended December 31, 2024, saw total revenue of $1,712,802,000, an increase from $1,512,764,000 in the previous year[65] Profitability Metrics - Fourth quarter Adjusted EBITDA was $100 million, an 18% sequential increase, with an Adjusted EBITDA margin of 23%, up from 20% in the previous quarter[2][8] - Full-year Adjusted EBITDA increased by 40% to $347 million, with a margin of 20%, up from 16% in 2023[2][8] - Adjusted EBITDA for 2024 was $347,403 thousand, a 39.4% increase from $248,880 thousand in 2023[62] - Adjusted EBITDA for the three months ended December 31, 2024, was $100,357,000, representing an adjusted EBITDA margin of 23%[69] Net Income - Net income for the fourth quarter was $23 million, compared to $16 million in the third quarter of 2024 and a net loss of $12 million in the fourth quarter of 2023[2][8] - Full-year net income was $52 million, a turnaround from a net loss of $23 million in 2023; adjusted net income for 2024 was $111 million[3][12] - Net income for Q4 2024 was $23.0 million, compared to a net loss of $12.4 million in Q4 2023[53] - Net income for the three months ended December 31, 2024, was $23,034,000, compared to $16,275,000 in the previous quarter and a loss of $12,418,000 in the same quarter last year[69] Shareholder Returns - The company repurchased 1.2 million shares for a total cost of $14 million in the fourth quarter, as part of a $100 million stock repurchase program[3][12] - The Company approved a stock repurchase program allowing for the acquisition of up to $100 million of its common stock from October 25, 2023, through November 24, 2025[33] - Approximately 1.2 million shares were repurchased in both 2024 and 2023, costing approximately $14.2 million and $20.0 million respectively[33] Capital Expenditures - Capital expenditures for the fourth quarter totaled $44 million, with full-year expenditures at approximately $144 million; planned capital expenditures for 2025 are estimated between $120 million to $130 million[31][12] - Capital expenditures for 2024 were $143,576 thousand, up from $122,110 thousand in 2023, indicating a 17.6% increase[57] Financial Position - As of December 31, 2024, the company had consolidated cash and cash equivalents of $185 million and outstanding debt of $121 million, resulting in total liquidity of $320 million[32][12] - Total assets increased to $2,333,541 thousand in 2024, up from $2,013,007 thousand in 2023, representing a growth of 15.9%[55] - Total liabilities rose to $842,057 thousand in 2024, up from $717,134 thousand in 2023, reflecting a 17.4% increase[55] - The company reported a total stockholders' equity of $1,491,484 thousand in 2024, an increase from $1,295,873 thousand in 2023, representing a growth of 15.1%[55] Employee and Operational Insights - The Company has approximately 8,500 employees and operates in around 60 countries, providing energy services across the entire well life cycle[40] - Fourth quarter contract wins totaled $314 million, with significant contracts in well construction and intervention across various regions[12][12] Future Outlook - The company anticipates stable to modestly increased revenues for 2025, with an expected improvement of over 100 basis points in Adjusted EBITDA margin year-over-year[14][12] - Forward-looking statements indicate expectations for growth and strategic initiatives, including the anticipated benefits from the Coretrax acquisition[43]

Core Insights - The article discusses the author's extensive experience in stock analysis, particularly in the energy sector, focusing on oilfield equipment services and industrial supply industries [1]. Group 1 - The author has over 14 years of experience in stock analysis, with a specific focus on both long and short positions [1]. - The primary focus of the author's analysis has been on the energy sector for the past 7 years, particularly the oilfield equipment services sector [1]. - The author also covers the industrial supply industry and occasionally collaborates with another contributor [1].

Financial Data and Key Metrics Changes - Expro reported Q3 2024 revenue of $423 million and adjusted EBITDA of $85 million, both within guidance ranges [5][25] - Sequential revenue declined by $47 million or 10%, primarily due to the Congo project ramp-up and strong Q2 results in subsea well access [5][6] - Year-over-year revenue increased by $53 million or 14%, driven by PRT Offshore and Coretrax, despite lower Congo project revenue [6][25] - Adjusted EBITDA decreased by $10 million or 10% sequentially but increased by $35 million or 69% compared to Q3 2023 [6][25] Business Line Data and Key Metrics Changes - North and Latin America (NLA) revenue was $139 million, down 11% quarter-over-quarter due to decreased activity in well construction and subsea well access [10] - Europe and Sub-Saharan Africa (ESSA) revenue was $131 million, a sequential decrease of 22%, impacted by a large subsea project in Q2 and Congo project losses [11] - Middle East and North Africa (MENA) revenue increased by 7% to $87 million, driven by Coretrax contributions [14] - Asia Pacific revenue was $65 million, up 4% due to increased activity in Thailand and Australia [14] Market Data and Key Metrics Changes - Commodity prices have been under pressure, leading to cautious customer spending and moderated growth in certain regions, particularly NLA [7][17] - Brent crude prices declined from $80 per barrel in January 2024 to an average of $74 per barrel in September [17][19] - Despite anticipated modest price declines in 2025, Brent is expected to average $78 per barrel, supporting continued upstream investment [19][20] Company Strategy and Development Direction - Expro aims to leverage long-cycle development opportunities in international and offshore markets, anticipating a multiyear up cycle for energy services [6][8] - The company is focusing on cost rationalization initiatives to improve operating leverage and margins [9][31] - Expro has been recognized for innovation in engineering and sustainability, enhancing its market position [9] Management's Comments on Operating Environment and Future Outlook - Management noted that while near-term headwinds exist, the long-term outlook for energy services remains solid, particularly in international and offshore markets [4][8] - The company expects a slow start to 2025 due to potential project delays but remains confident in sustained business momentum [8][31] - Management highlighted ongoing dialogues with customers regarding project timing and scope across all markets [7][8] Other Important Information - Expro's backlog remains healthy at approximately $2.3 billion, including Coretrax and PRT backlog [15] - The company is integrating Coretrax and focusing on maximizing revenue synergies from the acquisition [16][62] Q&A Session All Questions and Answers Question: Can you talk about the revision to the 2024 outlook in detail? - Management explained that the revision was primarily due to performance expectations in NLA and weaker well construction activity in the Gulf of Mexico, with a temporary hiatus in DST activity impacting results [34][35] Question: What are the building blocks to achieve the $2 billion revenue and 25% EBITDA margin? - Management identified activity set, operating leverage, and pricing as key components, noting that a slower ramp-up in drilling completions could shift timelines [42][43] Question: What is the current status of the Congo project and its impact on profitability? - Management confirmed that the Congo project is moving into the O&M phase, with outstanding variation orders being resolved, which could impact Q4 results [45][46] Question: What are the trends in Mexico and Expro's exposure to Pemex? - Management noted governmental transitions in Mexico affecting activity but indicated a return to more historic patterns in exploration [49][50] Question: How do you view the outlook for next year and the impact of offshore drillers' concerns? - Management acknowledged early budgeting processes for 2025 and indicated that sentiment and customer feedback are being closely monitored [52][53]

Revenue Performance - Revenue for the three months ended September 30, 2024, decreased by $46.8 million, or 10.0%, to $422.8 million, compared to $469.6 million for the three months ended June 30, 2024[127]. - Revenue for the nine months ended September 30, 2024, increased by $169.9 million, or 15.4%, to $1,276.0 million compared to $1,106.0 million for the same period in 2023[132]. - Revenue from the NLA segment for the three months ended September 30, 2024, was $139.4 million, accounting for 33.0% of total revenue[141]. - Revenue from the MENA segment for the nine months ended September 30, 2024, was $239.7 million, representing an increase from $168.2 million for the same period in 2023[142]. - NLA segment revenue for Q3 2024 was $139.4 million, a decrease of $17.6 million or 11.2% from Q2 2024[147]. - ESSA segment revenue for Q3 2024 was $131.5 million, a decrease of $37.0 million or 21.9% from Q2 2024[149]. - MENA segment revenue for Q3 2024 was $86.7 million, an increase of $5.3 million or 6.5% from Q2 2024[151]. - APAC segment revenue for Q3 2024 was $65.2 million, an increase of $2.4 million or 3.9% from Q2 2024[153]. - NLA segment revenue for the nine months ended September 30, 2024, was $426.8 million, an increase of $60.5 million or 16.5% from the same period in 2023[158]. - MENA segment revenue for the nine months ended September 30, 2024, was $239.7 million, an increase of $71.5 million or 42.5% from the same period in 2023[162]. - APAC segment revenue increased by $3.4 million, or 1.9%, to $187.9 million for the nine months ended September 30, 2024, compared to $184.4 million for the same period in 2023[163]. Income and EBITDA - Net income for the three months ended September 30, 2024, was $16.3 million, a 6.4% increase from $15.3 million for the three months ended June 30, 2024, with a net income margin of 3.8%[128]. - Adjusted EBITDA for the three months ended September 30, 2024, decreased by $9.5 million, or 10.1%, to $85.0 million from $94.6 million for the three months ended June 30, 2024, maintaining an Adjusted EBITDA margin of 20.1%[129]. - Net income for the nine months ended September 30, 2024, was $28.9 million, compared to a net loss of $10.9 million for the same period in 2023, resulting in a net income margin of 2.3%[132]. - Adjusted EBITDA for the nine months ended September 30, 2024, increased by $83.3 million, or 50.9%, to $247.0 million from $163.7 million for the same period in 2023, with an Adjusted EBITDA margin of 19.4%[133]. - Total Segment EBITDA for Q3 2024 was $111.5 million, a decrease from $123.3 million in Q2 2024[148]. - NLA segment EBITDA margin for Q3 2024 was 23.7%, down from 28.3% in Q2 2024[148]. - ESSA segment EBITDA margin for Q3 2024 was 24.5%, up from 20.8% in Q2 2024[150]. - MENA segment EBITDA for Q3 2024 was $30.0 million, an increase of $1.4 million or 5.0% from Q2 2024[152]. - Segment EBITDA for the APAC segment was $42.2 million, or 22.5% of revenues, for the nine months ended September 30, 2024, a significant increase from a loss of ($3.5) million, or (1.9)% of revenues, for the same period in 2023[163]. Cash Flow and Liquidity - Net cash provided by operating activities for the three months ended September 30, 2024, was $55.3 million, significantly higher than $13.2 million for the three months ended June 30, 2024[130]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $72.1 million, down from $105.5 million for the same period in 2023, primarily due to increased working capital[135]. - Total available liquidity as of September 30, 2024, was $302.6 million, including cash and cash equivalents of $167.0 million and $135.6 million available for borrowings[170]. - Net cash provided by operating activities decreased by $33.5 million to $72.1 million for the nine months ended September 30, 2024, compared to $105.5 million for the same period in 2023[176]. - Net cash used in investing activities increased by $29.9 million to $120.7 million for the nine months ended September 30, 2024, compared to $90.8 million for the same period in 2023[177]. Market and Industry Trends - Average daily oil demand in the third quarter of 2024 exceeded the average daily demand levels in the third quarter of 2023, with liquid demand expected to grow by 0.9 million b/d in 2024 over 2023[115]. - Brent crude oil prices declined from an average of $85/bbl in July to an average of $74/bbl in September 2024, primarily due to concerns over global oil demand growth[115]. - The EIA forecasts global liquid fuels consumption will average 103.1 million b/d in 2024, increasing by 0.9 million b/d over 2023[118]. - The EIA predicts that global liquids production will average 102.5 million b/d in 2024, up by 0.5 million b/d from 2023[119]. - Henry Hub natural gas prices averaged $2.11/MMBtu in the third quarter, with forecasts suggesting an increase to nearly $2.81/MMBtu in the fourth quarter[122]. - The market outlook for the remainder of 2024 and into 2025 shows commodity prices driving continued expenditures on exploration and production, with near 2015 levels of upstream investment expected[123]. Corporate Developments - The company has seen increased demand for services related to brownfield and production enhancement as operators strive to maximize previous investments[116]. - The clean energy transition continues to gain momentum, with the company actively developing technologies to enhance the sustainability of its customers' operations[116]. - The company’s revenue is primarily derived from well construction, well flow management, subsea well access, and well intervention and integrity solutions[124]. - Corporate costs rose by $21.6 million, or 29.3%, to $95.6 million for the nine months ended September 30, 2024, compared to $74.0 million for the same period in 2023[164]. - Depreciation and amortization expense increased by $11.8 million, or 10.8%, to $121.2 million for the nine months ended September 30, 2024, compared to $109.4 million for the same period in 2023[165]. - Merger and integration expenses surged by $8.1 million, or 185.9%, to $12.4 million for the nine months ended September 30, 2024, compared to $4.3 million for the same period in 2023[166]. - Interest and finance expense, net increased by $9.0 million, or 534.7%, to $10.7 million for the nine months ended September 30, 2024, compared to $1.7 million for the same period in 2023[168]. - The company suspended vessel-deployed light well intervention operations in Q3 2023 due to a wire failure, and is currently assessing the incident and pursuing an insurance claim[134].