Expro(XPRO) - 2024 Q4 - Earnings Call Transcript

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]