XPRO

General Market Outlook

• Offshore and international energy markets remain supportive, a trend that has held steady for the past six months. The ongoing Middle East conflict has heightened global focus on energy security, supply diversification, and resilient energy infrastructure, which is expected to add further near-term momentum to offshore activity.
• Customers increasingly prioritize technology-enabled efficiency improvements (automation, reliability, process optimization) to strengthen project economics, aligning with Expro's core service and growth strategy.

Strategic Updates

• Expro completed the acquisition of Enhanced Drilling, adding next-generation Controlled Mud Level Drilling (CML/MPD) technology to its portfolio. This technology reduces total well costs (e.g., 5-7 days of drilling time saved by eliminating one casing string) and lowers operational risk when drilling through depleted reservoirs to access new reserves. Expro will leverage its global footprint to expand deployment of the technology from its current core markets (Norway, U.S. Gulf of Mexico) to West Africa, South America (including Brazil), and Asia Pacific.
• Expro completed shareholder approval and legal redomiciliation from the Netherlands to the Cayman Islands, legally renaming the company from Expro Group Holdings to Expro Limited.
• All internal projects for the Drive 25 cost efficiency program are complete, with Expro expected to fully realize over $40 million in annual structural cost savings in 2026. Management is currently assessing additional targeted cost optimization actions across select geographies and product lines to improve returns and support margin and free cash flow growth.

Capital Allocation Framework

The company's four prioritized capital allocation goals, designed to maximize long-term value, are:

1. Invest in high-return organic capital expenditures, focused on specific projects with predefined return hurdles (no speculative investments)
2. Pursue selective, value-accretive M&A that adds scalable technology, clear industrial logic, synergies, and expanded access to attractive markets, with the goal of multiplicative rather than just additive growth
3. Return at least one-third of annual adjusted free cash flow to shareholders; Expro repurchased ~2.5 million shares for ~$40 million in H1 2026, and is on track to meet its annual target
4. Maintain a strong balance sheet and financial flexibility; at quarter-end, Expro had $492 million in total liquidity, $121 million in net cash, and less than 0.5x net leverage

Operational Highlights

• In the U.S. Gulf of Mexico, Expro successfully completed full field trials of its 1,250-ton extended-range drilling spider for a major operator, confirming commercial readiness. The technology reduces rig-up/rig-down time, minimizes manual equipment handling, cuts overall rig time, and improves rig floor safety.
• In the UK, Expro completed an abandonment campaign with 2,490 operating hours (104 days) and zero non-productive time, demonstrating its focus on productivity and efficiency.
• In Namibia, Expro delivered its first in-country reservoir fluid lab service (including fluid restoration, PVT analysis, and compositional analysis), expanding its local capability to support customer operations.

• Updated 2026 guidance takes a conservative approach to account for continued uncertainty from the ongoing Middle East conflict, including the cumulative impacts of disruptions through the first half of the year and projected ongoing disruption for the balance of 2026. The guidance also includes five months of operating contributions from the recently closed Enhanced Drilling acquisition.
• Management expects a sizable ramp-up in revenue, adjusted EBITDA, and margins in the second half of 2026, with the strongest growth coming in Q4 2026. Projected incremental growth sources include: subsea and well flow projects and tubular sales in the U.S. Gulf, well intervention work in Colombia, a large production solutions project and equipment sales in North Africa, higher well construction activity and subsea equipment sales in China (Asia Pacific), marginal growth in steady Europe/Sub-Saharan Africa, and the addition of Enhanced Drilling operations.
• Adjusted EBITDA margin is projected to exceed 24% for H2 2026, with Q4 2026 margins exceeding 26%, representing a substantial improvement over H1 2026 results.
• H1 2026 adjusted free cash flow totaled $60 million, and management still expects strong full-year 2026 adjusted free cash flow generation, supported by internal working capital and capital intensity improvements despite downward revisions to EBITDA expectations from Middle East disruptions.
• Incremental 2026 growth from the high-margin Core Trakcs business, particularly in the Middle East, will be lower than previously projected, with some activity delayed into 2027.

The transcript does not break down financial performance by individual product segments. It reports aggregate Q2 2026 results: total revenue of $393 million, adjusted EBITDA of $76 million (19% margin), and adjusted free cash flow of $56 million. Geographic regional results are referenced but not detailed in the call, with all granular regional and segment data directed to the earnings release and presentation appendix. The newly acquired Enhanced Drilling segment has a current margin above 30% and will contribute five months of 2026 operating results.

• The ongoing Middle East conflict has caused operational and financial disruptions to Expro's Middle East operations, particularly in Iraq and the United Arab Emirates, while North Africa operations remain undisrupted. The conflict creates high uncertainty for near-term activity levels in the region, and the full impact of potential infrastructure damage across Middle Eastern markets is not yet fully understood.
• Geopolitical volatility around the conflict has moderated the expected pace of 2026 growth for Expro's high-margin businesses in the region, with some activity delayed into 2027.
• Short-term market choppiness persists due to ongoing geopolitical uncertainty in the Middle East, particularly around trade flow through the Strait of Hormuz.
• The Asia Pacific market has seen ongoing softness, and activity is not expected to ramp up until mid-to-late 2027.
• All forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from projected outcomes, with additional risk factors detailed in Expro's SEC filings.

Q: How does the updated 2026 guidance account for the duration of the Middle East conflict, and what is the expected 2026 EBITDA contribution from the Enhanced Drilling acquisition? / A: Guidance assumes the conflict will continue for the rest of 2026. Management took a cautious approach due to high uncertainty, and notes that even if the conflict ends in Q3, activity would take months to ramp back up. Management declined to provide a specific five-month contribution figure, noting that results are not linear and will vary throughout the second half of the year.

Q: Why are you confident in free cash flow guidance despite a modest EBITDA cut, and what are your expected 2027 regional growth avenues? / A: Confidence in free cash flow comes from ongoing efforts to reduce the business's capital intensity and improve working capital efficiency, which are internally controllable. For 2027, management expects more robust well construction/drilling activity, with strength in Latin America, the U.S. Gulf of Mexico, and West Africa. Strong growth is expected in the Middle East once the conflict is resolved, while Asia Pacific activity is not expected to ramp until mid-to-late 2027. Global long-term growth will be supported by rising focus on energy security.

Q: What internal priorities is management focused on amid macro uncertainty, and what is the outlook for future M&A? / A: Expro is focused on internal controllable factors as part of its Drive 25 initiative, which is now projected to deliver over $40 million in annual sticky cost savings (up from the original $30 million target). This internal preparation positions the company for strong activity growth in 2027 and 2028. M&A remains a core capital allocation priority; Expro continues to evaluate selective opportunities that strengthen its full well lifecycle portfolio, increase customer relevancy, and meet strict financial return requirements, with a refined integration playbook for future transactions.

Q: What is your outlook for Middle East customer activity after the conflict ends, and can you explain the recent multi-product Canada offshore contract? / A: Medium and long-term growth in the Middle East will be very robust due to the region's low lifting costs and large reserves, but the speed of recovery after the conflict is uncertain. Normalization of trade through the Strait of Hormuz will be a key signal of recovery, and national oil company capital deployment is typically slower than other customer segments. The Canada 14-well contract reflects Expro's flexible business model; the company adapts its offering to meet customer demands, including bundled multi-service contracts that often come from customers requesting Expro's specific efficiency and safety-focused technology, even when working through third-party service providers.