EXPRO GROUP HOLDINGS N.V. ANNOUNCES SECOND QUARTER 2023 RESULTS

EXPRO GROUP HOLDINGS N.V. ANNOUNCES SECOND QUARTER 2023 RESULTS

Revenue of $397 million, up 17% sequentially and up 27% year-over-year. 

Net income of $9 million, up sequentially from net loss of $6 million and up year-over-year from net loss of $4 million.

Adjusted EBITDA¹ of $72 million, up 71% sequentially and up 40% year-over-year. Adjusted EBITDA margin¹ of 18%, up sequentially from 12%.

Reaffirms positive business outlook and full-year guidance range for revenue of $1,450 million to $1,550 million, Adjusted EBITDA of $275 million to $325 million, and Adjusted EBITDA margin of 19% to 21%

HOUSTON - July 27, 2023 - Expro Group Holdings N.V. (NYSE: XPRO) (the “Company” or “Expro”) today reported financial and operational results for the three and six months ended June 30, 2023. 

Second Quarter 2023 Highlights

• Revenue was $397 million compared to revenue of $339 million in the second quarter of 2023, an increase of $58 million, or 17%, driven by higher activity across all of Expro’s segments, most notably in Europe and Sub-Saharan Africa (ESSA) and Asia-Pacific (APAC).
• Net income for the second quarter of 2023 was $9 million, or $0.08 per diluted share, compared to net loss of ($6) million, or ($0.06) per diluted share, for the first quarter of 2023. Adjusted net income1 for the second quarter of 2023 was $19 million, or $0.17 per diluted share, compared to adjusted net income for the first quarter of 2023 of $1 million, or $0.01 per diluted share. 
• Adjusted EBITDA was $72 million, a sequential increase of $30 million, or 71%, primarily attributable to higher revenue, better business mix and the light well intervention (“LWI”) project becoming operational towards the end of the first quarter of 2023. Adjusted EBITDA margin for the second quarter of 2023 and first quarter of 2023 was 18% and 12%, respectively. Adjusted EBITDA for the three months ended March 31, 2023 includes unrecoverable mobilization costs and start-up and commissioning costs on LWI-related projects in APAC of $11 million. Adjusted EBITDA for the three months ended June 30, 2023 includes LWI-related non-reimbursable costs for NPT (“non-productive time”) of $6 million (these costs were incurred after the system became operational and, therefore, are not considered start-up and commissioning costs).
• Net cash provided by operating activities for the second quarter of 2023 was $25 million compared to net cash provided by operating activities of $21 million for the first quarter of 2023, primarily driven by an increase in Adjusted EBITDA of $30 million, partially offset by an unfavorable movement in net working capital of $15 million, higher cash paid for income taxes, net of refunds, of $9 million, and an $8 million payment to the Securities and Exchange Commission to settle issues identified in the legacy Frank's FCPA-related internal investigation during the three months ended June 30, 2023. Adjusted cash flow from operations1 and cash conversion1 for the second quarter of 2023 were $36 million and 50%, respectively, compared to $27 million and 65%, respectively, for the first quarter of 2023.

Michael Jardon, Expro Chief Executive Officer, noted, “I am pleased to announce a strong quarter, with the Company delivering excellent operational performance and robust financial results. As activity continues to increase, the breadth of our portfolio and depth of our expertise brings value to clients across the life of their wells and enables us to compete and win on a global basis.

“Momentum has continued throughout our second quarter, securing $300 million of new work, leveraging global relationships, continuing to provide a portfolio of technology-enabled services and solutions with the ability to be flexible in adapting to our customers’ evolving needs, and by capitalizing on a strong resurgence of activity. Our increase in contract wins and backlogs compared to previous years is testament to the depth of our technical expertise, service quality performance, and breadth of capabilities. I remain optimistic on the outlook for 2023 as we see demand continue to grow this year and into 2024.

“New energy initiatives are ever increasing, and our geothermal business continues to develop globally. I am pleased to report that after construction, test rig up and deployment of geothermal specific well test evaluation spread for a customer in Germany they successfully achieved ‘first steam’. This demonstrates our enhanced offering and capabilities in the geothermal sector and our commitment to a more sustainable, lower carbon future.

“We are working to develop new strategic partnerships and have recently become members of the Solent Cluster and Carbon Capture and Storage Association, which is important as we enhance our business in the carbon capture, usage and storage sector. As a citizen of the world, we remain totally committed to our responsibilities to our planet and further strengthening our Sustainable Energy Solutions. We believe our industry is part of the solution to address a lower carbon future and as we advance our strategy through 2023 and beyond.

“Looking ahead, Expro is well positioned for growth as we capitalize on market opportunities delivering maximum value to our customers, shareholders and other stakeholders. I am confident of our delivery as we progress into the second half of the year and look forward to the opportunities ahead for our business.”

Notable Awards and Achievements

Expro has commenced a five-year, $30 million, Well Intervention and Integrity contract with TotalEnergies EP Uganda for the multi-well Tilenga project. A key component in Expro securing the contract was its ability to provide an innovative environmental solution in support of the client’s carbon reduction objectives, as well as Expro’s commitment to national recruitment in line with a local development plan, working in collaboration with TotalEnergies and the Petroleum Authority of Uganda. 

Our Subsea Well Access product line has safely and efficiently completed a four well de-suspension and manifold de-isolation using our subsea Riserless Well Intervention (“RWI”) solution off Western Australia. 

As operations continue to ramp up in Brazil, our team has achieved another record-breaking operation to install a 14” casing string – one of the fastest and most efficient 14” jobs in the NLA region to date. During this operation, our Well Construction team utilized Expro's proprietary command and control solution, Centri-Fi™, to rack back 67 stands of pipe offline, all the while reducing the risk of injuries on the rig floor, by reducing the number of personnel required and eliminating the need for personnel in the redzone.

Expro also recently announced a new $20 million contract with Harbour Energy for a well abandonment campaign as part of the decommissioning project for the Balmoral area in the UK Continental Shelf. Reinforcing our position as a key enabler within the plug and abandonment market, this multi-year contract will utilize Expro’s Subsea Well Access technology with a combination of open-water and in-riser applications. 

The Company continues to see customers looking to secure subsea landing string capacity as the backlog of offshore deepwater and ultradeep water projects continue to build. In Ghana, we have received a contract extension worth more than $50 million to provide subsea packages. We have held this contract since 2012 and securing the extension is testament to the excellent service quality of our subsea landing strings and our team delivery. 

We have also deployed an electric powered slickline unit for a customer in Qatar. This is the first deployment of this unit type within Expro, where the electric powerpack replaces the diesel with no additional deck space required and ultimately supporting our customer on their journey to reducing their greenhouse gas emissions. This is another great example of Expro working together with our customers to develop and deploy the right solutions to help contribute to a lower-carbon world.

Segment Results

Unless otherwise noted, the following discussion compares the quarterly results for the second quarter of 2023 to the results for the first quarter of 2023.

North and Latin America (NLA)

Revenue for the NLA segment was $135 million for the three months ended June 30, 2023, an increase of $9 million, or 7%, compared to $126 million for the three months ended March 31, 2023. The increase was primarily due to higher Well Construction revenue in the U.S. offshore, Canada and Brazil, higher Well Flow Management revenue in U.S., as well as higher Well Intervention and Integrity activity in Argentina, offset by lower Well Construction activity in Guyana and U.S. land and lower Well Flow Management activity in Brazil and Mexico. 

Segment EBITDA for the NLA segment was $37 million, or 27% of revenues, during the three months ended June 30, 2023, an increase of $5 million, or 16%, compared to $32 million, or 25% of revenues, during the three months ended March 31, 2023. The increase in Segment EBITDA and Segment EBITDA margin was attributable to higher activity and more favorable product mix during the three months ended June 30, 2023.

Europe and Sub-Saharan Africa (ESSA)

Revenue for the ESSA segment was $138 million for the three months ended June 30, 2023, an increase of $24 million, or 21%, compared to $114 million for the three months ended March 31, 2023. The increase in revenues was primarily driven by higher Well Flow Management revenue, particularly in Congo, higher
Well Construction revenue in UK and western Europe and higher Subsea Well Access activity resulting from increased customer activities. 

Segment EBITDA for the ESSA segment was $35 million, or 25% of revenues, for the three months ended June 30, 2023, an increase of $14 million, or 67%, compared to $21 million, or 18% of revenues for the three months ended March 31, 2023. The increase in segment EBITDA was attributable to higher revenue and activity levels. The increase in Segment EBITDA margin was attributable to a combination of a more favorable activity mix and increased activities on higher margin jobs during the three months ended June 30, 2023.

Middle East and North Africa (MENA)

Revenue for the MENA segment was $59 million for the three months ended June 30, 2023, an increase of $8 million, or 16%, compared to $51 million for the three months ended March 31, 2023. The increase in revenue was driven by higher Well Flow Management activity primarily in Saudi Arabia, offset by lower activity in United Arab Emirates and Egypt.

Segment EBITDA for the MENA segment was $19 million, or 31% of revenues, for the three months ended June 30, 2023, an increase of $4 million, or 27%, compared to $15 million, or 29% of revenues, for the three months ended March 31, 2023. The increase in Segment EBITDA and Segment EBITDA margin was primarily due to higher activity during the three months ended June 30, 2023.

Asia Pacific (APAC)

Revenue for the APAC segment was $65 million for the three months ended June 30, 2023, an increase of $16 million, or 33%, compared to $49 million for the three months ended March 31, 2023. The increase in revenue was primarily due to higher activity across all product lines, in particular, higher Subsea Well Access revenue in Australia and China.

Segment EBITDA for the APAC segment was $3 million, or 5% of revenues, for the three months ended June 30, 2023, an increase of $6 million compared to $(3) million, or (6%) of revenues, for the three months ended March 31, 2023. The increase in Segment EBITDA is attributable primarily to the LWI project becoming operational at the end of the first quarter, as well as increased activity on other projects. 

Other Financial Information

The Company’s capital expenditures totaled $29 million in the second quarter of 2023, of which approximately 90% were used for the purchase and manufacture of equipment to directly support customer-related activities and approximately 10% for other property, plant and equipment, inclusive of software costs. Expro plans for capital expenditures in the range of approximately $60 million to $70 million for the remaining two quarters of 2023.

As of June 30, 2023, Expro’s consolidated cash and cash equivalents, including restricted cash, totaled $181 million. The Company had no outstanding debt as of June 30, 2023 and has no outstanding debt today. The Company’s total liquidity as of June 30, 2023 was $311 million. Total liquidity includes $130 million available for drawdowns as loans under the Company’s revolving credit facility.

Expro’s provision for income taxes for the second quarter of 2023 was $13 million compared to $5 million in the first quarter of 2023. The sequential change in income taxes was primarily due to changes in the mix of taxable profits between jurisdictions, and non-recurring discrete items in the three months ended March 31, 2023, including the recognition of a deferred tax liability related to the acquisition of DeltaTek. The Company’s effective tax rate on a U.S. generally accepted accounting principles (“GAAP”) basis for the three and six months ended June 30, 2023, also reflects liability for taxes in certain jurisdictions that tax on an other than pre-tax profits basis, including so-called “deemed profits” regimes.

The financial measures provided that are not presented in accordance with GAAP are defined and reconciled to their most directly comparable GAAP measures. Please see “Use of Non-GAAP Financial Measures” and the reconciliations to the nearest comparable GAAP measures.

Additionally, downloadable financials are available on the Investor section of www.expro.com.

1.     A non-GAAP measure.

Conference Call

The Company will host a conference call to discuss second quarter 2023 results on Thursday, July 27, 2023, at 12:00 p.m. Central Time (1:00 p.m. Eastern Time).

Participants may also join the conference call by dialing:

U.S.: +1 (833) 470-1428

International: +1 (929) 526-1599

Access ID: 375034

To listen via live webcast, please visit the Investor section of www.expro.com.

The second quarter 2023 Investor Presentation is available on the Investor section of www.expro.com.

An audio replay of the webcast will be available on the Investor section of the Company’s website approximately three hours after the conclusion of the call and will remain available for a period of approximately 12 months.

To access the audio replay telephonically:

Dial-In: U.S. +1 (866) 813-9403 or +44 (204) 525-0658

Access ID: 596531

Start Date: July 27, 2023, 3:00 p.m. CT

End Date: August 3, 2023, 11:59 p.m. CT

A transcript of the conference call will be posted to the Investor relations section of the Company’s website as soon as practicable after the conclusion of the call.

ABOUT EXPRO

Working for clients across the entire well life cycle, Expro is a leading provider of energy services, offering cost-effective, innovative solutions and what the Company considers to be best-in-class safety and service quality. The Company’s extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity solutions.

With roots dating to 1938, Expro has approximately 7,600 employees and provides services and solutions to leading exploration and production companies in both onshore and offshore environments in approximately 60 countries.

For more information, please visit: www.expro.com and connect with Expro on Twitter @ExproGroup and LinkedIn @Expro.

Contact:

[email protected]