Expro(US:XPRO)2025-10-23 20:12Demand and Supply Forecast - Average daily global liquids demand in Q3 2025 exceeded previous quarter levels and is expected to remain steady through 2025, with a forecast of 104.0 million b/d in 2025, up 1.1 million b/d from 2024 [119]. - Global liquid fuels production is expected to grow by 2.7 million b/d in 2025, reaching an average of 105.9 million b/d, driven mainly by non-OECD markets [120]. - The EIA forecasts Henry Hub prices to average $3.40/MMBtu in 2025, up from $2.20/MMBtu in 2024, indicating a recovery in natural gas prices [124]. - The company anticipates that global crude oil demand and prices may lead to significant reductions in domestic oil and gas activity, affecting demand for its products and services [181]. Financial Performance - Revenue for Q3 2025 decreased by $11.4 million, or 2.7%, to $411.4 million compared to Q2 2025 revenue of $422.7 million, attributed to lower activity in the ESSA, MENA, and APAC segments [134]. - Net income for Q3 2025 was $14.0 million, a decrease of $4.0 million, or 22.4%, from $18.0 million in Q2 2025, resulting in a net income margin of 3.4% [134]. - Adjusted EBITDA for Q3 2025 decreased by $0.5 million, or 0.5%, to $94.0 million, with an adjusted EBITDA margin of 22.8%, up from 22.3% in Q2 2025 [134]. - Revenue for the nine months ended September 30, 2025, decreased by $51.0 million, or 4.0%, to $1,225.0 million compared to $1,276.0 million for the same period in 2024 [135]. - Net income for the nine months ended September 30, 2025, increased by $17.0 million, or 59.0%, to $45.9 million compared to $28.9 million for the same period in 2024, resulting in a net income margin of 3.7% [135]. - Adjusted EBITDA for the nine months ended September 30, 2025, increased by $17.6 million, or 7.1%, to $264.7 million, with an adjusted EBITDA margin of 21.6%, up from 19.4% in the same period of 2024 [135]. Segment Performance - Segment revenue for NLA in Q3 2025 was $150.9 million, representing 36.7% of total revenue, while ESSA revenue was $125.8 million, accounting for 30.6% [142]. - Segment EBITDA for NLA in Q3 2025 was $36.8 million with a margin of 24.4%, while ESSA segment EBITDA was $40.5 million with a margin of 32.2% [144]. - NLA segment revenue increased to $150.9 million for Q3 2025, up 5.8% from $142.6 million in Q2 2025, driven by higher well construction and flow management revenue in the Gulf of America [145]. - ESSA segment revenue decreased to $125.8 million in Q3 2025, down 4.9% from $132.4 million in Q2 2025, primarily due to lower well flow management revenue in the U.K. and Norway [147]. - MENA segment revenue fell to $86.1 million in Q3 2025, a decrease of 5.4% from $91.0 million in Q2 2025, attributed to lower well construction revenue in KSA, UAE, and Qatar [149]. - APAC segment revenue decreased to $48.6 million in Q3 2025, down 14.4% from $56.8 million in Q2 2025, driven by lower well construction revenue in Australia and Malaysia [151]. Cash Flow and Liquidity - Net cash provided by operating activities for Q3 2025 was $63.2 million, compared to $48.4 million in Q2 2025, driven by favorable working capital movements [134]. - Total available liquidity as of September 30, 2025, was $532.0 million, including $198.6 million in cash and cash equivalents, and $333.4 million available for borrowings [167]. - Net cash provided by operating activities was $153.1 million for the nine months ended September 30, 2025, compared to $72.1 million for the same period in 2024, reflecting an increase of $81.0 million [174]. - Net cash used in investing activities decreased by $47.2 million to $73.5 million for the nine months ended September 30, 2025, compared to $120.7 million for the same period in 2024, primarily due to a $20.6 million reduction in capital expenditures and non-repeating transactions from 2024 [175]. - Net cash used in financing activities was $72.1 million for the nine months ended September 30, 2025, a change of $134.1 million from net cash provided of $62.0 million in the same period of 2024, driven by $40.1 million for stock repurchases and $22.0 million for repayment of borrowings [176]. Strategic Focus and Risks - The company remains selective in pursuing low-carbon opportunities, including carbon capture and flare reduction solutions [122]. - The market for energy services is substantially dependent on oil prices, impacting customer spending on exploration and production activities [117]. - The company faces uncertainties regarding the timing and extent of economic recovery or recession, which could impact demand for crude oil and related services [181]. - The company is subject to risks associated with offshore operations, including the ability to recover and service equipment located on the seabed [181]. - The company must navigate political, economic, and regulatory uncertainties in international operations, particularly regarding OPEC+ production levels [181]. - The company acknowledges the impact of severe weather conditions and natural disasters on its operations, including potential interruptions [181]. - The company is aware of the ongoing transition in the global energy sector from fossil fuels to renewable energy sources, which may affect its business strategy [181]. - The company emphasizes the importance of developing new technologies and products while protecting its intellectual property rights [181]. - The company is focused on attracting, training, and retaining key employees and qualified personnel to support its operations [181].