EXPRO GROUP HOLDINGS N.V. ANNOUNCES FIRST QUARTER 2024 RESULTS
Revenue of $383 million, down 6% sequentially and up 13% year-over-year.
Net loss of $3 million, as compared to net loss of $12 million for the fourth quarter of 2023 and a net loss of $6 million for the first quarter of 2023. Net loss margin was (1)% for the first quarter of 2024, compared to (3)% for the fourth quarter of 2023.
Adjusted EBITDA1 of $67 million, down 20% sequentially and up 61% year-over-year. Adjusted EBITDA margin1 of 18%, compared to 21% for the fourth quarter of 2023.
Reaffirming full-year 2024 guidance of $1.6 to $1.7 billion of revenue and $325 to $375 million of Adjusted EBITDA, supported by the strong first quarter performance, contract awards, the recently completed PRT Offshore acquisition, and
the pending Coretrax acquisition.
HOUSTON - April 25, 2024 – Expro Group Holdings N.V. (NYSE: XPRO) (the “Company” or “Expro”) today reported financial and operational results for the three months ended March 31, 2024.
First Quarter 2024 Highlights
• Revenue was $383 million compared to revenue of $407 million in the fourth quarter of 2023, a decrease of $24 million, or 6%, driven by lower activity primarily in the North and Latin America (“NLA”) and Europe and Sub-Saharan Africa (“ESSA”) segments, partially offset by higher revenue in the Middle East and North Africa (“MENA”). Consistent with historical patterns, revenue and profitability for the three months ended March 31, 2024, was negatively impacted by the winter season in the Northern Hemisphere and the budget cycles of our national oil company customers.
• Net loss for the first quarter of 2024 was $3 million, or $0.02 per diluted share, compared to net loss of $12 million, or $0.11 per diluted share, for the fourth quarter of 2023. Net loss margin (defined as Net income (loss) as a percentage of revenue) was (1)% for the three months ended March 31, 2024 compared to (3)% for the three months ended December 31, 2023. Adjusted net income1 for the first quarter of 2024 was $10 million, or $0.09 per diluted share, compared to adjusted net income for the fourth quarter of 2023 of $7 million, or $0.06 per diluted share.
• Adjusted EBITDA was $67 million, a sequential decrease of $18 million, or 20%, primarily attributable to lower revenue and a less favorable activity mix, primarily in NLA and ESSA segments, partially offset by increased activity on higher-margin projects in MENA. Adjusted EBITDA margin for the first quarter of 2024 and the fourth quarter of 2023 was 18% and 21%, respectively.
• Net cash provided by operating activities for the first quarter of 2024 was $30 million compared to net cash provided by operating activities of $33 million for the fourth quarter of 2023, primarily driven by a sequential decrease in Adjusted EBITDA of $18 million and non-repeat of dividends received from joint ventures in the fourth quarter of 2023 of $6 million, partially offset by a favorable movement in working capital of $21 million compared to the prior quarter.
Michael Jardon, Chief Executive Officer, noted “Expro has started 2024 in a strong position delivering solid financial results for the first quarter, with revenue surpassing expectations and Adjusted EBITDA consistent with the midpoint of guidance provided on our fourth quarter of 2023 earnings conference call. These results are encouraging for the full year 2024 outlook and a testament to our commitment to deliver excellence and innovation across all areas of operation.
“Our positive outlook is based on a constructive fundamental backdrop and increasing global demand for cost effective technology-enabled services and solutions. While we expect reduced activity in the US land market for the next several quarters, we believe international and offshore markets are in the early stages of a multi-year growth phase and that strong business momentum will be sustained across Expro’s geo-markets and product lines for at least the next several years. In the first quarter we captured more than $230 million of work globally and our backlog remained stable quarter-over -quarter at approximately $2 billion.
1. A non-GAAP measure.
“In the first quarter, we announced that Expro entered into a definitive agreement to acquire Coretrax, a technology leader in performance drilling tools and wellbore cleanup, well integrity and production optimization solutions. Coretrax has a complementary offering to Expro with little overlap and will broaden our services and solutions offered through our Well Construction and Well Intervention & Integrity product lines, adding significant value to our clients from innovative technologies that reduce risk and cost, improve drilling efficiency, extend the life of existing well stock, and optimize production. As we near completion of the acquisition of Coretrax, integration planning is underway, and we look forward to John Fraser and team joining the Expro family.
“We continue to gain momentum across carbon capture, utilization and storage (CCUS) with Expro participating in Japan’s first clean hydrogen production demonstration project. Expro's comprehensive scope of services will support the project's goal of reducing carbon emissions while advancing clean energy solutions as we play our part as a citizen of the world.
“As we look ahead, Expro is well positioned for additional margin expansions in our drilling and completions levered businesses, which will drive improved group profitability and shareholder returns. Based on recent performance, good dialog with customers and a positive market outlook, we are comfortable reiterating 2024 guidance for revenues of between $1,600 million and $1,700 million. Adjusted EBITDA in 2024 is expected to be between $325 million and $375 million, and Adjusted EBITDA margin is expected to be between 20% and 22%. Full-year guidance assumes our proposed acquisition of Coretrax will be completed at the beginning of the third quarter, with some upside tied to a possible closing of the transaction a month or two earlier than this assumption. Second quarter revenue is expected to reflect approximately 20% year-on-year growth and sequential growth of 8%, with Adjusted EBITDA Margin in an expected range of 20% to 21%, or up 200 to 300 basis points year-on-year and sequentially in both cases based on the mid-point of second quarter guidance.”
Notable Awards and Achievements
In the NLA region, we worked with a major operator to help optimize critical cementing operations, implementing our Rotating Plug Launcher to facilitate rotation during cementing and provide necessary cement competency and zonal isolation. This innovative solution not only enhanced safety but also standardized operations across a fleet of active drilling rigs, showcasing our ability to provide efficient and reliable services.
Expanding our presence in Eastern Europe and the Black Sea, the ESSA region secured three deepwater contracts in Romania, totaling more than$10 million. These contracts underscore our technical expertise and the trust clients place in our capabilities to deliver advanced technology solutions for their projects.
In the MENA region, Expro secured a significant contract for cementing accessories in Egypt’s deepwater market, featuring our wireless cement heads. This contract marks a pivotal step in promoting hands-free cementing operations globally, enhancing safety, efficiency, and operational speed.
Furthermore, Eni S.p.A.’s project to develop an onshore liquefied natural gas pre-treatment facility in Congo is progressing well, with the team achieving over one million manhours lost time injury free. This project exemplifies our commitment to safety and sustainable operations while contributing to the global energy transition.
Segment Results
Unless otherwise noted, the following discussion compares the quarterly results for the first quarter of 2024 to the results for the fourth quarter of 2023.
North and Latin America (NLA)
Revenue for the NLA segment was $130 million for the three months ended March 31, 2024, a decrease of $15 million, or 10%, compared to $145 million for the three months ended December 31, 2023. The decrease was primarily due to lower Well Construction revenue in the United States, Guyana and Mexico, partially offset by increased Well Intervention & Integrity revenue in the United States and Brazil and higher Well Flow Management revenue in Colombia.
Segment EBITDA for the NLA segment was $34 million, or 26% of revenues, during the three months ended March 31, 2024, a decrease of $10 million, or 22%, compared to $44 million or 30% of revenues during the three months ended December 31, 2023. The decrease in Segment EBITDA and Segment EBITDA margin was attributable to lower activity and activity mix during the three months ended March 31, 2024.
Europe and Sub-Saharan Africa (ESSA)
Revenue for the ESSA segment was $122 million for the three months ended March 31, 2024, a decrease of $12 million, or 9%, compared to $134 million for the three months ended December 31, 2023. The decrease in revenues was primarily driven by lower Well Flow Management revenue in Congo, lower Subsea Well Access revenue in the Western and Central Africa, and lower Well Construction revenue in the UK and Angola, partially offset by higher Well Intervention & Integrity revenue in the UK and higher Well Flow Management revenue in Norway and Denmark.
Segment EBITDA for the ESSA segment was $25 million, or 21% of revenues, for the three months ended March 31, 2024, a decrease of $16 million, or 39%, compared to $41 million, or 31% of revenues, for the three months ended December 31, 2023. The decrease in Segment EBITDA and Segment EBITDA margin was attributable to a combination of lower activity, activity mix and reduced margin recognized on our pre-treatment facility project in Congo during the three months ended March 31, 2024.
Middle East and North Africa (MENA)
Revenue for the MENA segment was $71 million for the three months ended March 31, 2024, an increase of $6 million, or 9%, compared to $65 million for the three months ended December 31, 2023. The increase in revenue was driven higher Well Flow Management revenue in Algeria and Saudi Arabia, partially offset by lower Well Construction revenue in Morocco.
Segment EBITDA for the MENA segment was $25 million, or 34% of revenues, for the three months ended March 31, 2024, an increase of $3 million, or 15%, compared to $21 million, or 32% of revenues, for the three months ended December 31, 2023. The increase in Segment EBITDA and Segment EBITDA margin was primarily due to increased activity on higher-margin projects and a more favorable activity mix during the three months ended March 31, 2024.
Asia Pacific (APAC)
Revenue for the APAC segment was $60 million for the three months ended March 31, 2024, a decrease of $2 million, or 4%, compared to $62 million for the three months ended December 31, 2023. The decrease in revenue was primarily due to lower Well Flow Management, Well Intervention & Integrity and Subsea Well Access revenue in Malaysia, offset by higher Subsea Well Access revenue in China and Australia, and higher Well Flow Management revenue in Australia and Thailand.
Segment EBITDA for the APAC segment was $11 million, or 18% of revenues, for the three months ended March 31, 2024, an increase of $6 million, compared to $5 million, or 9% of revenues, for the three months ended December 31, 2023. The increase in Segment EBITDA is attributable primarily to higher activity.
Other Financial Information
The Company’s capital expenditures totaled $31 million in the first quarter of 2024, 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 $100 million to $110 million for the remainder of 2024.
As of March 31, 2024, Expro’s consolidated cash and cash equivalents, including restricted cash, totaled $165 million. The Company had outstanding long-term borrowings of $40 million as of March 31, 2024. The Company’s total liquidity as of March 31, 2024 was $291 million. Total liquidity includes $127 million available for drawdowns as loans under the Company’s revolving credit facility.
Expro’s provision for income taxes for both the first quarter of 2024 and the fourth quarter of 2023 was approximately $12 million and $13 million. The Company’s effective tax rate on a U.S. generally accepted accounting principles (“GAAP”) basis for the three months ended March 31, 2024, also reflects liability for taxes in certain jurisdictions that tax on an other than pre-tax profits basis, including so-called “deemed profits” regimes.
On October 6, 2023, the Company amended and restated its revolving credit facility pursuant to an amendment and restatement agreement with DNB Bank ASA, London Branch, as agent, in order to extend the maturity of the facility for a further 36 months and increase the total commitments to $250 million, of which $167 million is available for drawdowns as loans and $83 million is available for letters of credit. The Company has the ability to increase the commitments to $350 million.
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.
Conference Call
The Company will host a conference call to discuss the results for the quarter ended March 31, 2024. The conference call is scheduled to begin at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).
Participants may also join the conference call by dialing:
US: +1 833 470 1428
International: +1 929 526 1599
Access code: 673250
To listen via live webcast, please visit the investor section of www.expro.com.
An audio replay of the webcast will be available in the Investor section of the Company’s website approximately 3 hours after the conclusion of the call and remain available for a period of two weeks.
To access the audio replay telephonically:
Dial-In: US 1 866 813 9403 or 1 929 458 6194
Access ID: 436305
Start Date: April 25, 2024, 12:00 p.m. CT
End Date: May 9, 2024, 10:59 p.m. CT
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 more than 8,000 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 connect with Expro on X (formerly Twitter): @ExproGroup and LinkedIn: @Expro.
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