EXPRO GROUP HOLDINGS N.V. Q4 FY2024 earnings call

• Completed the construction and commissioning phase of the Congo production solutions project, with outstanding variation orders related to the Congo project resolved, and an adjustment to the contract rate for the multiyear operation and maintenance phase. • Acquired CoreTrax in May 2024, which bolstered the performance in the MENA region. • Introduced technologies such as the AI-enabled iTong and the cement head system with Skyhook, which create operational efficiencies and improve safety. • Launched the Drive 25 operating efficiency campaign, aiming to reduce run rate support costs by 7%-8% over the next 12-18 months. • Continued to invest in high-return projects and strategically pursued acquisitions to expand the portfolio of cost-effective technology-enabled services and solutions.

Expro Group Holdings N.V. reported Q4 2024 revenue of $437 million, with adjusted EBITDA of $100 million, which is 23% of revenue. The sequential revenue increase of $14 million was mainly due to increased activity in Angola's Subsea Well Access business and higher well flow management services in Algeria, Iraq, and Saudi Arabia. Year over year, revenue was up $30 million or 7%. For the full year 2024, revenue was $1.71 billion, a year-over-year increase of 13%, and adjusted EBITDA was $347 million, a year-over-year increase of 40% and 20% of revenue. Regionally, North and Latin America (NLA) had Q4 revenue of $139 million, flat quarter over quarter; Europe and Sub-Saharan Africa (EASA) had Q4 revenue of $143 million, up 9% sequentially; Middle East and North Africa (MENA) had Q4 revenue of $93 million, up 7% sequentially; Asia Pacific (APAC) had Q4 revenue of $62 million, down 5% sequentially.

• 2025 full-year revenue is expected to be stable to modestly up, within the range of $1.7 billion to $1.75 billion. • Adjusted EBITDA margin is expected to be up more than 100 basis points, with adjusted EBITDA within the range of $350 million to $370 million. • 2025 capital expenditures are planned to be $120 million to $130 million, approximately 7% of revenue at the midpoint of the guidance. • Q1 2025 revenue is expected to be in the range of $370 million to $380 million, down approximately 15% sequentially.

• Geopolitical uncertainties, such as new sanctions on Iranian exports or the impact of a peace deal between Russia and Ukraine on Russian exports, which could materially affect results. • Oil and gas market supply and demand fluctuations, which may impact upstream investments and the company's financial performance. • Seasonal and regional market variations, including the winter season in the northern hemisphere affecting North Sea activity and budget cycles of national oil company customers, which can influence quarterly revenue and margins.

Q: Eddie Kim asked about the 2025 full-year revenue guide being stable to modestly up, which is higher than some others' outlooks.

A: Mike Jardon said it's due to the markets the company is exposed to, including relatively minimal exposure to certain markets like US land and Mexico, exposure to Saudi's unconventional land gas market which is less affected by offshore reductions, and the benefit of accretive M&A and internal technology investments.

Q: Eddie Kim followed up on the first quarter guidance with a steeper sequential decline in revenue than historically.

A: Quinn Fanning explained that the strong Q4 2024 subsea projects won't be repeated in Q1, along with winter season impact in the northern hemisphere and removal of Congo project-related revenue benefit, but expected rebound as projects line up and visibility on key activities.

Q: Adi Modak inquired about free cash flow progression and capital allocation.

A: Mike Jardon discussed the Drive 25 initiative for cost efficiency, and Quinn Fanning mentioned capital allocation focused on cost and capital discipline, restrained CapEx based on revenue realities, and moderation of working capital issues.

Q: Grant Heinz asked about the resolution of the Congo project.

A: Mike Jardon said the Congo project was successfully closed with resolved variation orders, and there are opportunities for better rates in the O&M phase while maintaining original project economics overall.

Q: Steve Ferazani followed up on EASA margin and CoreTrax progress.

A: Quinn Fanning explained EASA margin drivers including Subsea project deliveries, and Mike Jardon said CoreTrax is making progress in expanding the cementation product line with patient introduction for value creation and potential in various markets.