Financial Data and Key Metrics Changes - Expro reported quarterly revenue of $411 million and EBITDA of $94 million, representing a 22.8% margin, with adjusted free cash flow of $46 million, or 11% of revenue, marking the highest in the company's history [4][24][23] - EBITDA margin increased by approximately 50 basis points from the previous quarter and 270 basis points year-over-year [23] - The company raised its annual guidance for EBITDA and free cash flow for 2025, expecting adjusted EBITDA between $350 million and $360 million and adjusted free cash flow between $110 million and $120 million [25][24] Business Line Data and Key Metrics Changes - North and Latin America (NLA) revenue was $151 million, up $8 million quarter-over-quarter, driven by higher well construction and flow management revenue [27] - Europe and Sub-Saharan Africa (ESA) revenue decreased by $7 million to $126 million, primarily due to lower well flow management and subsea well access revenue [28] - Middle East and North Africa (MENA) revenue was $86 million, slightly lower than Q2, with an EBITDA margin of 35%, down 100 basis points from the prior quarter [28] - Asia-Pacific (APAC) revenue was $49 million, a decrease of $8 million, with an EBITDA margin of 21%, down 500 basis points from the prior quarter [29] Market Data and Key Metrics Changes - Expro's backlog stands at $2.3 billion, providing solid revenue visibility and reflecting a diverse portfolio across regions [6] - The company anticipates that upstream investments will remain largely flat globally in 2026, with pockets of growth in international markets, particularly in offshore projects in Latin America, the Middle East, and West Africa [8][10] Company Strategy and Development Direction - Expro's strategy focuses on maximizing free cash flow through operational efficiency, disciplined capital allocation, and targeted acquisitions [20][21] - The company aims to expand its wallet share with existing customers and enhance service offerings to drive profitability [12] - Expro is committed to technology leadership, investing in digitalization and artificial intelligence to deliver innovative solutions [13][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Expro's ability to deliver resilient performance despite a softer commodity market backdrop, with expectations for a strong fourth quarter [33][34] - The company anticipates continued growth in free cash flow generation in 2026, supported by ongoing cost efficiencies and the maturation of its production solutions business [35] Other Important Information - Expro repurchased around 2 million shares for approximately $25 million, achieving its annual target of $40 million ahead of schedule [5] - The company completed a $22 million voluntary prepayment of its revolving credit facility, reducing the outstanding balance [25] Q&A Session Summary Question: What are the drivers for margin expansion in 2026 despite flat to slightly lower revenue? - Management indicated that the full-year effect of the Drive25 initiative, internationalization of recent acquisitions, and rollout of new technologies will contribute to margin expansion [37][38] Question: What factors are contributing to expected softness in the first half of 2026? - Management noted cautious sentiment among customers due to commodity pricing and geopolitical factors, along with typical seasonal slowdowns in the northern hemisphere [51][52] Question: How will share repurchases be managed for the rest of the year? - Management stated that they will continue to evaluate opportunities for share repurchases in line with their capital allocation framework [42][43] Question: What types of services are included in the production solutions opportunity? - Management explained that production solutions involve optimizing existing infrastructure and providing modular enhancements, primarily in the Middle East, West Africa, and South America [60][61] Question: How will the geographic mix impact margins moving into 2026? - Management highlighted that growth in high-margin regions like the Middle East could significantly influence overall margin performance, depending on the mix of activities [71][72]