UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
1934
For the quarterly period ended
OR
the Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission file number:
EXPRO GROUP HOLDINGS N.V.
(Exact name of registrant as specified in its charter)
| The | | |||
| (State or other jurisdiction of | (IRS Employer | |||
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | | Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 23, 2025, there were
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| Item 1. |
Financial Statements |
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| Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2025 and 2024 |
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| Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2025 and 2024 |
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| Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024 |
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| Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2025 and 2024 | ||
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2025 and 2024 |
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| Notes to the Unaudited Condensed Consolidated Financial Statements |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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| Item 4. |
Controls and Procedures |
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| PART II. OTHER INFORMATION |
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| Item 1. |
Legal Proceedings |
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| Item 1A. |
Risk Factors |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 43 |
| Item 5. | Other Information |
43 |
| Item 6. |
Exhibits |
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| Signatures |
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Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except share data)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Total revenue | $ | $ | ||||||
| Operating costs and expenses: | ||||||||
| Cost of revenue, excluding depreciation and amortization expense | ( | ) | ( | ) | ||||
| General and administrative expense, excluding depreciation and amortization expense | ( | ) | ( | ) | ||||
| Depreciation and amortization expense | ( | ) | ( | ) | ||||
| Merger and integration expense | ( | ) | ( | ) | ||||
| Severance and other expense | ( | ) | ( | ) | ||||
| Total operating cost and expenses | ( | ) | ( | ) | ||||
| Operating income | ||||||||
| Other income, net | ||||||||
| Interest and finance expense, net | ( | ) | ( | ) | ||||
| Income before taxes and equity in income of joint ventures | ||||||||
| Equity in income of joint ventures | ||||||||
| Income before income taxes | ||||||||
| Income tax benefit (expense) | ( | ) | ||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Earnings (loss) per common share: | ||||||||
| Basic | $ | $ | ( | ) | ||||
| Diluted | $ | $ | ( | ) | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in thousands)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Other comprehensive loss: | ||||||||
| Amortization of prior service credit | ( | ) | ( | ) | ||||
| Other comprehensive loss | ( | ) | ( | ) | ||||
| Comprehensive income (loss) | $ | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets: | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Income tax receivables | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Investments in joint ventures | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets | ||||||||
| Non-current accounts receivable, net | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity: | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Income tax liabilities | ||||||||
| Finance lease liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term borrowings | ||||||||
| Deferred tax liabilities, net | ||||||||
| Post-retirement benefits | ||||||||
| Non-current finance lease liabilities | ||||||||
| Non-current operating lease liabilities | ||||||||
| Uncertain tax positions | ||||||||
| Other non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 17) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, € nominal value, shares authorized, and shares issued | ||||||||
| Treasury stock (at cost) and shares | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Equity in income of joint ventures | ( | ) | ( | ) | ||||
| Stock-based compensation expense | ||||||||
| Elimination of unrealized loss on sales to joint ventures | ( | ) | ||||||
| Changes in fair value of contingent consideration | ||||||||
| Deferred taxes | ( | ) | ( | ) | ||||
| Unrealized foreign exchange (gain) loss | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Other liabilities | ||||||||
| Income taxes, net | ( | ) | ||||||
| Other | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| (Cash pledged for) release of collateral deposits, net | ( | ) | ||||||
| Proceeds from borrowings | ||||||||
| Repurchase of common stock | ( | ) | ||||||
| Payment of withholding taxes on stock-based compensation plans | ( | ) | ( | ) | ||||
| Repayment of financed insurance premium | ( | ) | ( | ) | ||||
| Repayments of finance leases | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net (decrease) increase to cash and cash equivalents and restricted cash | ( | ) | ||||||
| Cash and cash equivalents and restricted cash at beginning of period | ||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | ||||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
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Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands)
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | other | Total | ||||||||||||||||||||||||||
| Common | Treasury | paid-in | comprehensive | Accumulated | stockholders’ | |||||||||||||||||||||||
| stock | Stock | capital | income | deficit | equity | |||||||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||
| Common shares issued upon vesting of share-based awards | ( | ) | ||||||||||||||||||||||||||
| Treasury shares withheld | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Acquisition of common stock | ||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | other | Total | ||||||||||||||||||||||||||
| Common | Treasury | paid-in | comprehensive | Accumulated | stockholders’ | |||||||||||||||||||||||
| stock | Stock | capital | income | deficit | equity | |||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||
| Common stock issued upon vesting of share-based awards | ||||||||||||||||||||||||||||
| Treasury shares withheld | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Acquisition of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
| Business description |
With roots dating to 1938, Expro Group Holdings N.V. (the “Company,” “Expro,” “we,” “our” or “us”) is a global provider of energy services with operations in over
On December 12, 2024, the Company’s Board of Directors (the “Board”) approved an extension to its stock repurchase program, pursuant to which the Company is authorized to acquire up to $
| 2. | Basis of presentation and significant accounting policies |
Basis of presentation
The unaudited condensed consolidated financial statements reflect the accounts of the Company and its subsidiaries. All intercompany balances and transactions, including unrealized profits arising from them, have been eliminated for purposes of preparing these unaudited condensed consolidated financial statements. Investments in which we do not have a controlling interest, but over which we do exercise significant influence, are accounted for under the equity method of accounting.
The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim consolidated financial information. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for annual consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2024, included in our most recent Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2025 (the “Annual Report”).
In the opinion of management, these unaudited condensed consolidated financial statements, which are prepared in accordance with the rules of the SEC and U.S. GAAP for interim financial reporting, included herein contain all adjustments necessary to present fairly our financial position as of March 31, 2025, the results of our operations for the three months ended March 31, 2025 and 2024 and our cash flows for the three months ended March 31, 2025 and 2024. Such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other period.
The unaudited condensed consolidated financial statements have been prepared on an historical cost basis using the United States dollar (“$” or “U.S. dollar”) as the reporting currency.
Significant accounting policies
Refer to Note 2 “Basis of presentation and significant accounting policies” of our consolidated financial statements as of and for the year ended December 31, 2024, which are included in our most recent Annual Report for a discussion of our significant accounting policies. There have been no material changes in our significant accounting policies as compared to the significant accounting policies described in our consolidated financial statements as of and for the year ended December 31, 2024.
Recent accounting pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) generally in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is preparing to include the new disclosures in our 2025 annual financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expense” (“ASU 2024-03”), which is intended to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. This ASU requires public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in the notes to the financial statements. Public business entities are required to apply the guidance prospectively and may elect to apply it retrospectively. The amendments in ASU 2024-03 are effective for the Company for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on our disclosures.
All other recently issued ASUs were assessed and were either determined to be not applicable or are expected to have immaterial impact on our consolidated financial position, results of operations and cash flows.
| 3. | Business combinations and dispositions |
PRT Offshore
On October 2, 2023 (the “PRT Closing Date”), Professional Rental Tools, LLC (“PRT” or “PRT Offshore”), was acquired (the “PRT Acquisition”) from PRT Partners, LLC by our wholly owned subsidiary, EPSH. The acquisition will enable Expro to expand its portfolio of cost-effective, technology-enabled services and solutions within the subsea well access sector in the North and Latin America region and is expected to accelerate the growth of PRT Offshore’s surface equipment offering in the Europe and Sub-Saharan Africa and Asia Pacific regions. The fair value of consideration for the PRT Acquisition was $
The contingent consideration arrangement required the Company to pay the former owners of PRT additional consideration based on PRT’s financial performance during the four quarters following closing. The fair value of the contingent consideration arrangement of $
The PRT Acquisition is accounted for as a business combination and Expro has been identified as the acquirer for accounting purposes. As a result, the Company has in accordance with ASC 805, Business Combinations, applied the acquisition method of accounting to account for PRT’s assets acquired and liabilities assumed.
The following table sets forth the allocation of the PRT Acquisition consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed as of the PRT Closing Date, with the recording of goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed (in thousands):
| Initial allocation of the consideration | Measurement period adjustments | Final allocation of | ||||||||||
| Cash and cash equivalents | $ | $ | - | $ | ||||||||
| Accounts receivables, net | - | |||||||||||
| Other current assets | - | |||||||||||
| Property, plant and equipment | ( | ) | ||||||||||
| Goodwill | ||||||||||||
| Intangible assets | ( | ) | ||||||||||
| Operating lease right-of-use assets | - | |||||||||||
| Total assets | ||||||||||||
| Accounts payable and accrued liabilities | - | |||||||||||
| Operating lease liabilities | - | |||||||||||
| Other current liabilities | ||||||||||||
| Non-current operating lease liabilities | - | |||||||||||
| Long-term borrowings | - | |||||||||||
| Total liabilities | ||||||||||||
| Fair value of net assets acquired | $ | $ | ( | ) | $ | |||||||
The preliminary valuation of the assets acquired and liabilities assumed, including other liabilities, in the PRT Acquisition initially resulted in a goodwill of $
The fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either using the relief-from royalty method or the multi-period excess earnings method, which are discounted to approximate their current value. The estimated useful lives are based on management’s historical experience and expectations as to the duration of time that benefits from these assets are expected to be realized. The cost approach was used to determine the fair value of property, plant and equipment.
The intangible assets will be amortized on a straight-line basis over an estimated
The goodwill related to the PRT Acquisition consists largely of the synergies and economies of scale expected from the acquired customer relationships and contracts. The goodwill is not subject to amortization but will be evaluated at least annually for impairment or more frequently if impairment indicators are present.
Coretrax
On May 15, 2024 (“Coretrax Closing Date”), CTL UK Holdco Limited, a company incorporated and registered in England and Wales (“Coretrax”), was acquired (the “Coretrax Acquisition”), by our wholly owned subsidiary, Expro Holdings UK 3 Limited with an effective date of May 1, 2024. The acquisition will enable Expro to expand its portfolio of cost-effective, technology-enabled Well Construction and Well Intervention & Integrity solutions.
We estimated the fair value of consideration for the Coretrax Acquisition to be $
The contingent consideration arrangement required the Company to pay the former owners of Coretrax additional consideration based on Expro’s stock price and foreign exchange rate movement during a period of up to 150 days following the Coretrax Closing Date. The fair value of the contingent consideration arrangement of $
In July 2024, the Company entered into a Deed of Amendment to the Stock Purchase Agreement with the sellers party thereto (the “Sellers”), pursuant to which, among other things, (i) all obligations relating to the true up payments and completion statement under the Stock Purchase Agreement were released and (ii) the escrow agent was instructed to (A) sell a sufficient number of escrow shares on behalf of the Sellers to generate proceeds of $
The Coretrax Acquisition is accounted for as a business combination and Expro has been identified as the acquirer for accounting purposes. As a result, the Company has in accordance with ASC 805, Business Combinations, applied the acquisition method of accounting to account for Coretrax’s assets acquired and liabilities assumed.
The following table sets forth the allocation of the Coretrax Acquisition consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed as of the Coretrax Closing Date, with the recording of goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed (in thousands):
| Initial allocation of the consideration | Measurement period adjustments | Allocation of | ||||||||||
| Cash and cash equivalents | $ | $ | - | $ | ||||||||
| Accounts receivables, net | ( | ) | ||||||||||
| Inventories | - | |||||||||||
| Other current assets | ( | ) | ||||||||||
| Property, plant and equipment | - | |||||||||||
| Goodwill | ( | ) | ||||||||||
| Intangible assets | - | |||||||||||
| Operating lease right-of-use assets | - | |||||||||||
| Total assets | ( | ) | ||||||||||
| Accounts payable and accrued liabilities | - | |||||||||||
| Operating lease liabilities | - | |||||||||||
| Current tax liabilities | ( | ) | ||||||||||
| Other current liabilities | ||||||||||||
| Non-current tax liabilities | ||||||||||||
| Deferred tax liabilities | ( | ) | ||||||||||
| Non-current operating lease liabilities | - | |||||||||||
| Long-term borrowings | - | |||||||||||
| Total liabilities | ( | ) | ||||||||||
| Fair value of net assets acquired | $ | $ | ( | ) | $ | |||||||
Due to the recency of the Coretrax Acquisition, these amounts, including the estimated fair values, are based on preliminary calculations and subject to change as our fair value estimates and assumptions are finalized during the measurement period. The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation table above. The fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either using the relief-from royalty method or the multi-period excess earnings method, which are discounted to approximate their current value. The estimated useful lives are based on management’s historical experience and expectations as to the duration of time that benefits from these assets are expected to be realized. The cost approach was used to determine the fair value of property, plant and equipment.
The intangible assets will be amortized on a straight-line basis over an estimated
The goodwill related to the Coretrax Acquisition consists largely of the synergies and economies of scale expected from the acquired technology and customer relationships and contracts. The goodwill is not subject to amortization but will be evaluated at least annually for impairment or more frequently if impairment indicators are present.
Supplemental pro forma financial information
The Company has determined the estimated unaudited pro forma financial information to be immaterial for the three months ended March 31, 2024, assuming the Coretrax Acquisition had been completed as of January 1, 2024. This is not necessarily indicative of the results that would have occurred had the Coretrax Acquisition been completed on the respective dates indicated or of future operating results.
| 4. | Fair value measurements |
Recurring Basis
A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of March 31, 2025 and December 31, 2024, were as follows (in thousands):
| March 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Non-current accounts receivable, net | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Contingent consideration | ||||||||||||||||
| Long-term borrowings | ||||||||||||||||
| Finance lease liabilities | ||||||||||||||||
| December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Non-current accounts receivable, net | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Contingent consideration | ||||||||||||||||
| Long-term borrowings | ||||||||||||||||
| Finance lease liabilities | ||||||||||||||||
We have certain contingent consideration assets and liabilities related to acquisitions which are measured at fair value using Level 3 inputs. The amount of contingent consideration due from or due to the sellers is based on the achievement of agreed-upon financial performance metrics by the acquired company, as determined by the terms of the contingent consideration agreements with the sellers of each acquired company. We record a liability at the time of the acquisition based on the present value of management’s best estimates of the future results of the acquired companies compared to the agreed-upon metrics. After the date of acquisition, we update the original valuation to reflect the passage of time and current projections of future results of the acquired companies. Accretion of, and changes in the valuations of, contingent consideration are reported on the condensed consolidated statement of operations within “Severance and other expense.”
| 5. | Business segment reporting |
Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s Chief Operating Decision Maker (“CODM”), which is our chief executive officer (“CEO”), in deciding how to allocate resources and assess performance. Our operations are comprised of
| • | North and Latin America (“NLA”), |
| • | Europe and Sub-Saharan Africa (“ESSA”), |
| • | Middle East and North Africa (“MENA”), and |
| • | Asia-Pacific (“APAC”). |
Each reportable segment provides products and services in well construction, well flow management, subsea well access and well intervention and integrity to operators within their respective geographic regions. The reportable segments are separately managed business units consistent with the way our CODM manages the business. Activity in each region may vary and may not be responsive to changes in the broader global oil and gas market, and demand for our various offerings will generally benefit all product lines in that region. Assets used in support of our operations can in many instances be moved from country to country within a region, with relative ease as compared to moving between regions, in order to address demand.
The accounting policies of the segments are the same as those described in Note 2 “Basis of presentation and significant accounting policies.”
Our CODM regularly evaluates the performance of our operating segments using Segment EBITDA, which we define as income (loss) before income taxes adjusted for corporate costs, equity in income of joint ventures, depreciation and amortization expense, impairment expense, severance and other expense, gain (loss) on disposal of assets, foreign exchange (gains) losses, merger and integration expense, other income (expenses), net, interest and finance expense, net and stock-based compensation expense.
The CODM uses Segment EBITDA to allocate resources (including employees, property and capital resources) to each segment predominantly in the annual budget and forecasting process. Our CODM assesses the performance using Segment EBITDA to compare the results of each segment with one another and considers budget-to-actual variances on a monthly basis. Our CODM also uses segment EBITDA to evaluate product pricing and determine the compensation of certain employees.
The following tables presents our revenue, significant segment expenses and Segment EBITDA disaggregated by our operating segments and reconciliation to income before income taxes (in thousands):
| Three Months Ended March 31, 2025 | ||||||||||||||||||||
| NLA | ESSA | MENA | APAC | Consolidated | ||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Compensation and related cost | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Cost of product, materials, and supplies | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other (1) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Total Segment EBITDA | $ | $ | $ | $ | $ | |||||||||||||||
| Corporate costs (2) | ( | ) | ||||||||||||||||||
| Equity in income of joint ventures | ||||||||||||||||||||
| Depreciation and amortization expense | ( | ) | ||||||||||||||||||
| Merger and integration expense | ( | ) | ||||||||||||||||||
| Severance and other expense | ( | ) | ||||||||||||||||||
| Stock-based compensation expense | ( | ) | ||||||||||||||||||
| Foreign exchange losses | ( | ) | ||||||||||||||||||
| Other expenses, net | ||||||||||||||||||||
| Interest and finance expense, net | ( | ) | ||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||
| NLA | ESSA | MENA | APAC | Consolidated | ||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Compensation and related cost | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Cost of product, materials, and supplies | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other (1) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Total Segment EBITDA | $ | $ | $ | $ | $ | |||||||||||||||
| Corporate costs (2) | ( | ) | ||||||||||||||||||
| Equity in income of joint ventures | ||||||||||||||||||||
| Depreciation and amortization expense | ( | ) | ||||||||||||||||||
| Merger and integration expense | ( | ) | ||||||||||||||||||
| Severance and other expense | ( | ) | ||||||||||||||||||
| Stock-based compensation expense | ( | ) | ||||||||||||||||||
| Foreign exchange losses | ( | ) | ||||||||||||||||||
| Other expenses, net | ||||||||||||||||||||
| Interest and finance expense, net | ( | ) | ||||||||||||||||||
| Income before income taxes | $ | |||||||||||||||||||
| (1) | Other segment expenses consists primarily of facilities, sales and purchase tax, motor vehicles, insurance, professional and other costs. |
| (2) | Corporate costs include the costs of running our corporate head office and other central functions that support the operating segments but are not attributable to a particular operating segment, including central product line management, research, engineering and development, logistics, sales and marketing and health and safety. |
The following table presents total assets by geographic region and assets held centrally. Assets held centrally includes certain property plant and equipment, investments in joint ventures, collateral deposits, income tax related balances, corporate cash and cash equivalents, accounts receivable and other current and non-current assets, which are not included in the measure of segment assets reviewed by the CODM:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| NLA | $ | $ | ||||||
| ESSA | ||||||||
| MENA | ||||||||
| APAC | ||||||||
| Assets held centrally | ||||||||
| Total | $ | $ | ||||||
The following table presents our capital expenditures disaggregated by our operating segments (in thousands):
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| NLA | $ | $ | ||||||
| ESSA | ||||||||
| MENA | ||||||||
| APAC | ||||||||
| Assets held centrally | ||||||||
| Total | $ | $ | ||||||
| 6. | Revenue |
Disaggregation of revenue
We disaggregate our revenue from contracts with customers by geography, as disclosed in Note 5 “Business segment reporting,” as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Additionally, we disaggregate our revenue into main areas of capabilities.
The following table sets forth the total amount of revenue by main area of capabilities as follows (in thousands):
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Well construction | $ | $ | ||||||
| Well management | ||||||||
| Total | $ | $ | ||||||
Contract balances
We perform our obligations under contracts with our customers by transferring services and products in exchange for consideration. The timing of our performance often differs from the timing of our customer’s payment, which results in the recognition of unbilled receivables and deferred revenue.
Unbilled receivables are initially recognized for revenue earned on completion of the performance obligation which are not yet invoiced to the customer. The amounts recognized as unbilled receivables are reclassified to trade receivable upon billing. Deferred revenue represents the Company’s obligations to transfer goods or services to customers for which the Company has received consideration, in full or part, from the customer.
Contract balances consisted of the following as of March 31, 2025, and December 31, 2024 (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Trade receivable, net | $ | $ | ||||||
| Unbilled receivables (included within accounts receivable, net) | $ | $ | ||||||
| Contract assets (included within accounts receivable, net) | $ | $ | ||||||
| Deferred revenue (included within other liabilities) | $ | $ | ||||||
Contract assets include unbilled amounts resulting from sales under our long-term construction-type contracts when revenue recognized exceeds the amount billed to the customer and right to payment is conditional or subject to completing a milestone, such as a phase of the project. Contract assets are not considered a significant financing component, as they are intended to protect the customer in the event that we do not perform our obligations under the contract. Contract assets are generally classified as current, as it is very unusual for us to have contract assets with a term of greater than one year. Our contract assets are reported in a net position on a contract-by-contract basis at the end of each reporting period.
The Company recognized revenue of $
As of March 31, 2025, $
Transaction price allocated to remaining performance obligations
Remaining performance obligations represent firm contracts for which work has not been performed and future revenue recognition is expected. We have elected the practical expedient permitting the exclusion of disclosing remaining performance obligations for contracts that have an original expected duration of one year or less and for our long-term contracts we have a right to consideration from customers in an amount that corresponds directly with the value to the customer of the performance completed to date. With respect to our long-term construction contracts, revenue allocated to remaining performance obligations is immaterial as of March 31, 2025.
| 7. | Income taxes |
For interim financial reporting, the annual tax rate is based on pre-tax income (loss) before equity in income of joint ventures. We have historically calculated the income tax expense/(benefit) during interim reporting periods by applying a full year estimated Annual Effective Tax Rate (“AETR”) to income (loss) before income taxes, excluding infrequent or unusual discrete items, for the reporting period. For the three months ended March 31, 2025, we concluded, consistent with prior periods, that using an AETR would not provide a reliable estimate of income taxes due to the forecasting methodology used to project income (loss) before income taxes, resulting in significant changes in the estimated AETR. Thus, we concluded to use a discrete effective tax rate, which treats the year-to-date period as an annual period, to calculate income taxes for the three months ended March 31, 2025.
Our effective tax rates was (
Our effective tax rate was impacted primarily due to changes in the mix of taxable profits between jurisdictions with different tax regimes, in particular in Asia Pacific, North America and in our ESSA region and recognition of deferred taxes related to the Coretrax Acquisition.
| 8. | Investment in joint ventures |
We have investments in two joint venture companies, which together provide us access to certain Asian markets that otherwise would be challenging for us to penetrate or develop effectively on our own. COSL-Expro Testing Services (Tianjin) Co. Ltd (“CETS”), in which we have a
The carrying value of our investment in joint ventures as of March 31, 2025, and December 31, 2024, was as follows (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| CETS | $ | $ | ||||||
| PVD-Expro | ||||||||
| Total | $ | $ | ||||||
| 9. |
Accounts receivable, net |
Accounts receivable, net consisted of the following as of March 31, 2025, and December 31, 2024 (in thousands):
| March 31, |
December 31, |
|||||||
| 2025 |
2024 |
|||||||
| Accounts receivable |
$ | $ | ||||||
| Less: Expected credit losses |
( |
) | ( |
) | ||||
| Total |
$ | $ | ||||||
| Current |
||||||||
| Non – current |
||||||||
| Total |
$ | $ | ||||||
| 10. | Inventories |
Inventories consisted of the following as of March 31, 2025, and December 31, 2024 (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Finished goods | $ | $ | ||||||
| Raw materials, equipment spares and consumables | ||||||||
| Work-in-progress | ||||||||
| Total | $ | $ | ||||||
| 11. |
Other assets and liabilities |
Other assets consisted of the following as of March 31, 2025, and December 31, 2024 (in thousands):
| March 31, |
December 31, |
|||||||
| 2025 |
2024 |
|||||||
| Prepayments |
$ | |||||||
| Value-added tax receivables |
||||||||
| Collateral deposits |
||||||||
| Deposits |
||||||||
| Other |
||||||||
| Total |
$ | $ | ||||||
| Current |
||||||||
| Non – current |
||||||||
| Total |
$ | $ | ||||||
Other liabilities consisted of the following as of March 31, 2025, and December 31, 2024 (in thousands):
| March 31, |
December 31, |
|||||||
| 2025 |
2024 |
|||||||
| Deferred revenue |
$ | $ | ||||||
| Other tax and social security |
||||||||
| Provisions |
||||||||
| Contingent consideration |
||||||||
| Other |
||||||||
| Total |
$ | $ | ||||||
| Current |
||||||||
| Non – current |
||||||||
| Total |
$ | $ | ||||||
| 12. |
Accounts payable and accrued liabilities |
Accounts payable and accrued liabilities consisted of the following as of March 31, 2025, and December 31, 2024 (in thousands):
| March 31, |
December 31, |
|||||||
| 2025 |
2024 |
|||||||
| Accounts payable – trade |
$ | $ | ||||||
| Payroll, vacation and other employee benefits |
||||||||
| Accruals for goods received not invoiced |
||||||||
| Accrued liabilities |
||||||||
| Total |
$ | $ | ||||||
| 13. | Property, plant and equipment, net |
Property, plant and equipment, net consisted of the following as of March 31, 2025, and December 31, 2024 (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Cost: | ||||||||
| Land | $ | $ | ||||||
| Land improvements | ||||||||
| Buildings and lease hold improvements | ||||||||
| Plant and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The carrying amount of our property, plant and equipment recognized in respect of assets held under finance leases as of March 31, 2025 and December 31, 2024 and included in amounts above is as follows (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Cost: | ||||||||
| Buildings | $ | $ | ||||||
| Plant and equipment | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Depreciation expense relating to property, plant and equipment, including assets under finance leases, was $
| 14. | Intangible assets, net |
The following table summarizes our intangible assets comprising of Customer Relationships & Contracts (“CR&C”), Trademarks, Technology and Software as of March 31, 2025 and December 31, 2024 (in thousands):
| March 31, 2025 | December 31, 2024 | March 31, 2025 | ||||||||||||||||||||||||||
| Gross carrying amount | Accumulated impairment and amortization | Net book value | Gross carrying amount | Accumulated impairment and amortization | Net book value | Weighted average remaining life (years) | ||||||||||||||||||||||
| CR&C | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Trademarks | ( | ) | ( | ) | ||||||||||||||||||||||||
| Technology | ( | ) | ( | ) | ||||||||||||||||||||||||
| Software | ( | ) | ( | ) | ||||||||||||||||||||||||
| Total | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Amortization expense for intangible assets was $
The following table summarizes the intangible assets which were acquired pursuant to the Coretrax Acquisition (in thousands):
| Acquired Fair Value | Weighted average life (years) | |||||||
| Coretrax: | ||||||||
| CR&C | $ | |||||||
| Trademarks | ||||||||
| Software | ||||||||
| Technology | - | |||||||
| Total | $ | |||||||
| 15. | Goodwill |
Our reporting units are our operating segments which are NLA, ESSA, MENA and APAC.
The allocation of goodwill by operating segment as of March 31, 2025 and December 31, 2024 is as follows (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| NLA | $ | $ | ||||||
| ESSA | ||||||||
| MENA | ||||||||
| APAC | ||||||||
| Total | $ | $ | ||||||
The following table summarizes the goodwill by operating segment which were acquired pursuant to the Coretrax Acquisition (in thousands):
| Coretrax | ||||
| NLA | $ | |||
| ESSA | ||||
| MENA | ||||
| APAC | ||||
| Total | $ | |||
| 16. | Interest bearing loans |
On October 6, 2023, we amended and restated the previous revolving credit facility agreement pursuant to an amendment and restatement agreement (the “Amended and Restated Facility Agreement”) with DNB Bank ASA, London Branch, as agent, in order to extend the maturity of the revolving credit facility agreement. The maturity date of the Amended and Restated Facility Agreement is October 6, 2026. The Amended and Restated Facility Agreement increased the total commitments to $
Borrowings under the Amended and Restated Facility Agreement bear interest at a rate per annum of Term SOFR (as defined in the Amended and Restated Facility Agreement), subject to a
The Amended and Restated Facility Agreement retains various undertakings and affirmative and negative covenants (with certain agreed amendments) which limit, subject to certain customary exceptions and thresholds, the Company and its subsidiaries’ ability to, among other things, (1) enter into asset sales; (2) incur additional indebtedness; (3) make investments, acquisitions, or loans and create or incur liens; (4) pay certain dividends or make other distributions and (5) engage in transactions with affiliates. The Amended and Restated Facility Agreement amends certain of the financial covenants such that the Company is required to maintain (i) a minimum interest cover ratio of
On May 15, 2024, the Company established an incremental facility under its Amended and Restated Facility Agreement, in order to increase its existing $
As of March 31, 2025, we had $
| 17. | Commitments and contingencies |
Commercial Commitments
During the normal course of business, we enter into commercial commitments in the form of letters of credit and bank guarantees to provide financial and performance assurance to third parties. We entered into contractual commitments for the acquisition of property, plant and equipment totaling $
Contingencies
Certain conditions may exist as of the date our unaudited condensed consolidated financial statements are issued that may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management, with input from legal counsel, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings pending against us or unasserted claims that may result in proceedings, our management, with input from legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates it is probable a material loss has been incurred and the amount of liability can be reasonably estimated, then the estimated liability would be accrued in our unaudited condensed consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. We are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of March 31, 2025 and December 31, 2024. We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows.
| 18. | Post-retirement benefits |
Amounts recognized in the unaudited condensed consolidated statements of operations in respect of the defined benefit schemes were as follows (in thousands):
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Amortization of prior service credit | $ | $ | ||||||
| Interest cost | ( | ) | ( | ) | ||||
| Expected return on plan assets | ||||||||
| Total | $ | $ | ||||||
The Company contributed $
Amortization of prior service credit, interest cost and expected return on plan assets have been recognized in “Other income, net” in the unaudited condensed consolidated statements of operations.
| 19. | Earnings (loss) per share |
Basic earnings (loss) per share attributable to Company stockholders is calculated by dividing net income attributable to the Company by the weighted-average number of common shares outstanding for the period. Diluted earnings per share attributable to Company stockholders is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding, assuming all potentially dilutive shares were issued. We apply the treasury stock method to determine the dilutive weighted average common shares represented by unvested restricted stock units, stock options and Employee Stock Purchase Program (“ESPP”) shares.
The calculation of basic and diluted earnings (loss) per share attributable to Company stockholders for the three months ended March 31, 2025 and 2024, respectively, are as follows (in thousands):
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Basic weighted average number of shares outstanding | ||||||||
| Effect of dilutive securities: | ||||||||
| Unvested restricted stock units | ||||||||
| ESPP shares | ||||||||
| Diluted weighted average number of shares outstanding | ||||||||
| Total basic earnings (loss) per share | $ | $ | ( | ) | ||||
| Total diluted earnings (loss) per share | $ | $ | ( | ) | ||||
For the three months ended March 31, 2025, approximately
| 20. | Related party disclosures |
Our related parties consist primarily of CETS and PVD-Expro, the two companies in which we exert significant influence. During the three months ended March 31, 2025, we provided goods and services to related parties totaling $
Additionally, we entered into various operating lease agreements to lease facilities with affiliated companies. Rent expense associated with our related party leases was immaterial for the three months ended March 31, 2025, and $
As of March 31, 2025 and December 31, 2024 amounts receivable from related parties were $
| 21. | Stock-based compensation |
Stock-based compensation expense relating to the Long-Term Incentive Plan (“LTIP”), including restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”) for the three months ended March 31, 2025 was $
During the three months ended March 31, 2025,
During the three months ended March 31, 2025 we recognized $
| 22. | Supplemental cash flow |
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes, net of refunds | $ | $ | ||||||
| Cash paid for interest, net | $ | $ | ||||||
| Change in accounts payable and accrued expenses related to capital expenditures | $ | $ | ||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Form 10-Q and the audited consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report.
This section contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations, and involve risks and uncertainties. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements because of various factors, including those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” of this Form 10-Q and our Annual Report.
Overview of Business
Working for clients across the entire well life cycle, we are a leading provider of energy services, offering cost-effective, innovative solutions and what we consider to be best-in-class safety and service quality. With roots dating to 1938, we have approximately 8,500 employees and provide services and solutions to leading exploration and production companies in both onshore and offshore environments in over 50 countries. Our extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity solutions.
| Well Construction |
| • |
Our well construction products and services support customers’ new wellbore drilling, wellbore completion and recompletion, and wellbore plug and abandonment requirements. We offer advanced technology solutions in tubular running services, tubular products, cementing, drilling and wellbore cleanup. With a focus on innovation, we are continuing to advance the way wells are constructed by optimizing process efficiency on the rig floor, developing new methods to handle and install tubulars, and mitigating well integrity risks. We believe we are a market leader in deepwater tubular running services and solutions. In recent years, we have added a range of lower-risk, open water cementing solutions, including the proprietary SeaCure® and QuikCure® solutions. We also offer a range of performance drilling tools designed to mitigate risk and optimize drilling efficiency, including proprietary downhole circulation tools and hydraulic pipe recovery systems. |
| Well Management |
|
| Our well management offerings consist of well flow management, subsea well access and well intervention and integrity services: |
| • |
Well flow management: We gather valuable well and reservoir data, with a particular focus on well-site safety and environmental impact. We provide global, comprehensive well flow management systems for the safe production, measurement and sampling of hydrocarbons from a well, including well testing during the exploration and appraisal phase of a new field; flowback and clean-up of a new well prior to production; and in-line testing of a well during its production life. We also provide early production facilities to accelerate production; production enhancement packages to enhance reservoir recovery rates through the realization of production that was previously locked within the reservoir; flare reduction and other emissions management solutions; and metering and other well surveillance technologies to monitor and measure flow and other characteristics of wells. |
| • |
Subsea well access: With nearly 50 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to provide safe well access and optimized production throughout the lifecycle of the well. We provide what we believe to be the most reliable, efficient and cost-effective subsea well access systems for exploration and appraisal, development, intervention and abandonment, including an extensive portfolio of standard and bespoke Subsea Test Tree Assemblies (“SSTA”) and a range motion-compensating and other surface handling equipment. We also provide services and solutions utilizing a rig-deployed Intervention Riser System (“IRS”) owned by a third party and have capabilities for vessel-deployed light well intervention services. In addition, we provide systems integration and project management services. |
| • |
Well intervention and integrity: We provide well intervention solutions to acquire and interpret well data, maintain and restore well bore integrity and improve production. In addition to our extensive fleet of mechanical and cased hole wireline units, we have recently introduced and acquired a number of cost-effective, innovative well intervention services, including CoilHose™, a lightweight, small-footprint solution for wellbore lifting, cleaning and chemical treatments; Octopoda™, for fluid treatments in wellbore annuli; Galea™, an autonomous well intervention solution; and expandable casing patches designed to repair damaged production casing or isolate existing perforations prior to refracturing a well (a so called “patch and perf”). We also possess several other distinct technical capabilities, including fiber optic-enabled data acquisition and interpretation services, non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring. |
We operate a global business and have a diverse and relatively stable customer base that is comprised of national oil companies (“NOC”), international oil companies (“IOC”), independent exploration and production companies (“Independents”) and service partners. We have strong relationships with a number of the world’s largest NOCs and IOCs, some of which have been our customers for decades. We are dedicated to safely and sustainably delivering maximum value to our customers.
We organize and manage our operations on a geographical basis. Our reporting structure and the key financial information used by our management team is organized around our four operating segments: (i) North and Latin America (“NLA”), (ii) Europe and Sub-Saharan Africa (“ESSA”), (iii) Middle East and North Africa (“MENA”) and (iv) Asia-Pacific (“APAC”).
How We Generate Our Revenue
Our revenue is derived primarily from providing services in well construction, well flow management, subsea well access and well intervention and integrity to operators globally. Our revenue includes equipment service charges, personnel charges, run charges and consumables. Some of our contracts allow us to charge for additional deliverables, such as the costs of mobilization of people and equipment and customer specific engineering costs associated with a project. We also procure products and services on behalf of our customers that are provided by third parties for which we are reimbursed with a mark-up or in connection with an integrated services contract. We also design, manufacture and sell equipment, which is typically done in connection with a related operations and maintenance arrangement with a particular customer. In addition, we also generate revenue from the sale of certain well construction products.
Commodity Prices and Market Conditions
Commodity Prices
Market Conditions
Despite a relatively balanced first quarter, the market is experiencing increasing near-term uncertainty and volatility resulting from recently announced tariffs and expected production increases, particularly by OPEC+ members. These developments have led to a decline in commodity prices due to concerns over a global recession and a potential deceleration in demand growth. Nonetheless, demand has thus far remained relatively resilient, which should continue to support commodity prices at a profitable level for operators in the long-term, driving upstream investment and activity.
There are a number of market factors that have had, and may continue to have, an effect on our business, including:
| • |
The market for energy services and our business are substantially dependent on the price of oil and, to a lesser extent, the regional price of gas, which are both driven by market supply and demand. Changes in oil and gas prices impact customer willingness to spend on exploration and appraisal, development, production, and abandonment activities. The extent of the impact of a change in oil and gas prices on these activities varies extensively between geographic regions, types of customers, types of activities and the financial returns of individual projects. |
| • |
Activity related to gas and liquified natural gas (“LNG”) production (and associated asset development) continues to grow within our ESSA and MENA regions in support of Europe’s ongoing drive to diversify away from its reliance on Russian pipeline gas supplies over the long term. More broadly, the energy security and energy transition imperatives of policymakers in the U.S. and Europe continue to result in increased investment in global gas development. |
| • |
International, offshore and deepwater activity continued to strengthen throughout 2024 and into 2025. We also experienced an increased demand for services related to brownfield and production enhancement and infield development programs as operators strived to maximize their previous investments and increase production with a lower carbon footprint. In addition, we have seen an increase in demand for production optimization technologies, especially in support of gas and LNG developments. |
| • |
The clean energy transition continues to gain momentum, though with a reduced focus as energy security remains a key priority of policymakers. As such, we believe that hydrocarbons, and natural gas in particular, will continue to play a vital role in the transition towards more sustainable energy resources and that existing expertise and future innovation within the energy services sector, both to reduce emissions and enhance efficiency, will be critical. We are already active in the early-stage carbon capture and storage segment and have expertise and established operations within the geothermal and flare reduction segments. We continue to develop technologies to enhance the sustainability of our customers’ operations which, along with our digital transformation initiatives, are expected to enable us to continue to support our customers’ commercial and environmental initiatives. As the industry changes, we continue to evolve our approach to assist and enable our customers to develop more sustainable energy solutions. |
Outlook
Global liquids demand increased in the first quarter of 2025 compared to the previous quarter and average year-on-year consumption is expected to continue to grow in 2025, though at a reduced rate. Overall, the market remained largely unchanged over the first quarter. Early in the quarter, prices were supported by the announcement of additional sanctions on Russia, Iran and Venezuela, before the announcement of a temporary ceasefire in the Middle East, concerns relating to tariffs, and a weakening demand outlook caused prices to retreat.
Following the conclusion of the first quarter, the announcement by the U.S. administration of sweeping new tariffs on its global trade partners drove a decline in crude oil prices. This was further compounded by China announcing retaliatory tariffs and an unexpected announcement from the Organization of the Petroleum Exporting Countries and certain other oil exporting nations (“OPEC+”) indicating the group will be accelerating its timeline for increasing production. These factors have added significant uncertainty to the market and commodity price forecasts for the near-term.
The U.S. Energy Information Administration (“EIA”) predicts that global liquids fuels demand will average 103.6 million b/d in 2025, increasing by 0.9 million b/d over 2024. Consumption is then expected to grow by a further 1.1 million b/d in 2026 to an average of 104.7 million b/d. Growth in oil consumption continues to be below its pre-pandemic trend. Recently announced trade policies suggest that the uncertainty around global oil demand growth has risen significantly. The EIA has revised downward its demand growth forecast due to the potential impact of the tariffs on the global economy. The reduction in demand forecast is concentrated in Asia. Despite the uncertainty, non-OECD Asia continues to be the primary driver of global oil demand growth, led by India and its rising demand for transportation fuels. China’s economic stimulus efforts may also drive higher demand growth; however, this may now be limited by the impact of higher tariffs. Despite the near-term downside risk and slowing of growth, demand for global liquid fuels is expected to remain resilient in the long-term, supporting a multi-year energy sector upcycle.
The EIA forecasts that global liquid fuels production will grow by 1.3 million b/d in 2025 to an average of 104.1 million b/d. Global liquid fuels supply is then predicted to grow a further 1.2 million b/d in 2026 to average 105.3 million b/d. Production growth in 2025 and 2026 is anticipated from the scheduled increase in OPEC+ production and further growth from countries outside of OPEC+. Although OPEC+ announced they will increase production at an accelerated rate compared to previous market expectations, the EIA anticipates the group will likely produce below their current target path to limit increases in inventories and thereby support prices. This leads to the assumption that OPEC+ will keep overall crude oil production largely unchanged in 2025. As a result, we believe that liquid fuels production growth in 2025 will be led by countries outside of OPEC+, driven mainly by the U.S. Canada, Brazil and Guyana.
Overall, oil prices remained largely unchanged during the first quarter of 2025 as geopolitical sentiments drove intra-quarter variations. Prices found support early in the quarter as further sanctions were imposed on Russian entities. The price then started to decline through February and March amid a Middle East ceasefire, tariff announcements and a weakening demand outlook. In April, the Trump administrations’ new tariffs, China’s retaliatory tariffs and the OPEC+ acceleration in the timing of production increases have weighed on the market, driving a decline in Brent crude prices. Given this recent geopolitical instability, oil prices are expected to remain volatile in the near-term, with the EIA currently forecasting an average Brent price of $68/bbl for 2025 and $61/bbl for 2026. Significant uncertainty lies in these estimations however, as market participants assess the effects that new or additional tariffs will have on global economic activity and associated oil demand. Further uncertainty stems from the implementation of energy-sector sanctions on Russia and Iran, and Venezuelan exports. Despite the market uncertainty and decline in commodity prices, Wall Street analysts generally expect oil prices of $60-$65/bbl over the medium-term, a level supportive of continued upstream investment by operators, driving a stable to positive outlook for our business.
Turning to the natural gas outlook, international prices continue to support investment and activity, resulting in a fundamentally tight market through 2025.
The EIA expects Henry Hub prices to average $4.30 per million British thermal units (“MMBtu”) in 2025, an increase from an average of $2.20/MMBtu in 2024. The Henry Hub price is then expected to increase further to an average of $4.60/MMBtu in 2026. The main driver of the price increase is a growth in demand for U.S. natural gas, led by pipeline and LNG exports. Rystad Energy forecasts prices at the European Title Transfer Facility (“TTF”) will average $13.8/MMBtu in 2025, driven by increased demand due to Europe’s colder-than-typical winter and severely depleted storage. Europe is expected to absorb roughly 10 million tons of incremental LNG production to replenish storage, pushing up prices. This in turn is expected to trigger modest price increases for Asia, where the Northeast Asian spot LNG price is expected to average $14.3/MMBtu in 2025, largely tracking the TTF prices over the near-term.
Despite the near-term market volatility driven by geopolitical sentiment, at least modest annual demand growth is expected to be sustained. Commodity prices remain profitable for operators and demand for hydrocarbons, driven by energy security requirements, supports continued investment and activity. International and offshore capital expenditures, which is a key driver of opportunity for Expro, is expected to remain relatively stable, with the sanctioning of large developments anticipated in NLA including in Argentina, Brazil and Guyana, and ESSA including in Norway, the UK and West Africa. In addition, additional onshore activity that is focused on unconventional gas is expected to support growth opportunities for Expro in the Middle East.
Overall, the current market outlook for energy service companies is challenging given the ongoing volatility. However, we still anticipate modest growth, assuming commodity prices remain above $60 to $65/bbl (a level that should be profitable for operators). Energy security requirements should also support sustained demand for hydrocarbons. These key factors continue to support investment and activity, driving at least modest medium-term growth for Expro.
How We Evaluate Our Operations
We use a number of financial and operational measures to routinely analyze and evaluate the performance of our business, including Revenue and Adjusted EBITDA.
Revenue: We analyze our performance by comparing actual monthly revenue by operating segments and areas of capabilities to our internal projections for each month. Our revenue is primarily derived from well construction, well flow management, subsea well access and well intervention and integrity solutions.
Adjusted EBITDA: We regularly evaluate our financial performance using Adjusted EBITDA. Our management believes Adjusted EBITDA is a useful financial performance measure as it excludes non-cash charges and other transactions not related to our core operating activities and allows more meaningful analysis of the trends and performance of our core operations.
Adjusted EBITDA is a non-GAAP financial measure. Please refer to the section titled “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial performance measure calculated and presented in accordance with GAAP.
Executive Overview
Three months ended March 31, 2025, compared to three months ended December 31, 2024
Certain highlights of our financial results and other key developments include:
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Revenue for the three months ended March 31, 2025, decreased by $46.0 million, or 10.5%, to $390.9 million, compared to $436.8 million for the three months ended December 31, 2024. The decrease in revenue was a result of lower activity in the NLA, ESSA and APAC segments, offset by modestly higher activity in MENA. Consistent with historical patterns, revenue and profitability for the three months ended March 31, 2025, was negatively impacted by the winter season in the Northern Hemisphere, the budget cycles of our national oil company customers and the non-repeat of subsea well access activity in the first quarter of 2025 compared to the fourth quarter of 2024. Revenue for our segments is discussed separately below under the heading “Operating Segment Results.” |
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We reported net income for the three months ended March 31, 2025, of $13.9 million, a decrease of $9.1 million, or 39.4%, as compared to net income of $23.0 million for the three months ended December 31, 2024. Net income margin was 4% for the three months ended March 31, 2025 compared to 5% for the three months ended December 31, 2024. The decrease primarily reflected lower Adjusted EBITDA of $24.1 million, and higher depreciation and amortization expense of $3.1 million, partially offset by lower income tax expense of $11.1 million, lower severance and other expense of $3.0 million and lower merger and integration expense of $2.2 million. |
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Adjusted EBITDA for the three months ended March 31, 2025, decreased by $24.1 million, or 24.0%, to $76.2 million from $100.4 million for the three months ended December 31, 2024. Adjusted EBITDA margin was 20% for the three months ended March 31, 2025 compared to 23% for the three months ended December 31, 2024. The decrease in Adjusted EBITDA and Adjusted EBITDA margin is primarily attributable to lower revenue and less favorable activity mix. |
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| • | Net cash provided by operating activities for the three months ended March 31, 2025, was $41.5 million, as compared to net cash provided by operating activities of $97.4 million for the three months ended December 31, 2024, primarily driven by a decrease in Adjusted EBITDA and movements in working capital. | |
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Net cash used in financing activities for the three months ended March 31, 2025 was $15.1 million, including $10.1 million of cash used to repurchase common stock, as compared to $32.4 million of cash used in financing activities for the three months ended December 31, 2024, including $14.2 million used to repurchase common stock. |
Non-GAAP Financial Measures
We include in this Form 10-Q the non-GAAP financial measures Adjusted EBITDA and Adjusted EBITDA margin. We provide reconciliations of net income (loss), the most directly comparable financial performance measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.
Adjusted EBITDA and Adjusted EBITDA margin are used as supplemental financial measures by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others. These non-GAAP financial measures allow our management and others to assess our financial and operating performance as compared to those of other companies in our industry, without regard to the effects of our capital structure, asset base, items outside the control of management and other charges outside the normal course of business.
We define Adjusted EBITDA as net income (loss) adjusted for (a) income tax expense (benefit), (b) depreciation and amortization expense, (c) impairment expense, (d) severance and other expense, net, (e) stock-based compensation expense, (f) merger and integration expense, (g) gain on disposal of assets, (h) other income (expense), net, (i) interest and finance (income) expense, net and (j) foreign exchange (gain) loss. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. As Adjusted EBITDA may be defined differently by other companies in our industry, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the three months presented (in thousands):
| Three Months Ended |
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| March 31, 2025 |
December 31, 2024 |
March 31, 2024 |
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| Net income (loss) |
$ | 13,948 | $ | 23,034 | $ | (2,677 | ) | |||||
| Income tax (benefit) expense |
$ | (1,716 | ) | $ | 9,375 | $ | 12,288 | |||||
| Depreciation and amortization expense |
45,421 | 42,284 | 40,146 | |||||||||
| Severance and other expense |
6,082 | 9,041 | 5,062 | |||||||||
| Merger and integration expense |
1,740 | 3,947 | 2,161 | |||||||||
| Other (income) expense, net (1) |
(1,654 | ) | 1,186 | (485 | ) | |||||||
| Stock-based compensation expense |
6,968 | 7,101 | 5,070 | |||||||||
| Foreign exchange loss |
1,988 | 2,585 | 2,743 | |||||||||
| Interest and finance expense, net |
3,451 | 1,804 | 3,152 | |||||||||
| Adjusted EBITDA |
$ | 76,228 | $ | 100,357 | $ | 67,460 | ||||||
| Net income (loss) margin |
4 | % | 5 | % | (1 | )% | ||||||
| Adjusted EBITDA margin |
20 | % | 23 | % | 18 | % | ||||||
| (1) |
Other income (expense), net, is comprised of immaterial, unusual or infrequently occurring transactions which, in management’s view, do not provide useful measures of the underlying operating performance of the business. |
Results of Operations
Operating Segment Results
We evaluate our business segment operating performance using segment revenue and Segment EBITDA, as described in Note 5 “Business segment reporting” in our consolidated financial statements. We believe Segment EBITDA is a useful operating performance measure as it excludes non-cash charges and other transactions not related to our core operating activities and corporate costs, and Segment EBITDA allows management to more meaningfully analyze the trends and performance of our core operations by segment as well as to make decisions regarding the allocation of resources to our segments.
The following table shows revenue by segment and revenue as a percentage of total revenue by segment for the periods presented (in thousands):
| Three Months Ended |
Percentage |
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| March 31, 2025 |
December 31, 2024 |
March 31, 2024 |
March 31, 2025 |
December 31, 2024 |
March 31, 2024 |
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| NLA |
$ | 134,278 | $ | 139,272 | $ | 130,389 | 34.4 | % | 31.9 | % | 34.0 | % | ||||||||||||
| ESSA |
112,373 | 142,788 | 121,746 | 28.7 | % | 32.7 | % | 31.7 | % | |||||||||||||||
| MENA |
93,554 | 92,557 | 71,494 | 23.9 | % | 21.2 | % | 18.6 | % | |||||||||||||||
| APAC |
50,667 | 62,226 | 59,860 | 13.0 | % | 14.2 | % | 15.6 | % | |||||||||||||||
| Total Revenue |
$ | 390,872 | $ | 436,843 | $ | 383,489 | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
The following table shows Segment EBITDA and Segment EBITDA margin by segment and a reconciliation to income before income taxes for the periods presented (in thousands):
| Three Months Ended |
Segment EBITDA Margin |
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| March 31, 2025 |
December 31, 2024 |
March 31, 2024 |
March 31, 2025 |
December 31, 2024 |
March 31, 2024 |
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| NLA |
$ | 30,386 | $ | 30,062 | $ | 34,377 | 22.6 | % | 21.6 | % | 26.4 | % | ||||||||||||
| ESSA |
29,188 | 53,002 | 25,201 | 26.0 | % | 37.1 | % | 20.7 | % | |||||||||||||||
| MENA |
34,168 | 32,591 | 24,538 | 36.5 | % | 35.2 | % | 34.3 | % | |||||||||||||||
| APAC |
10,862 | 15,453 | 10,786 | 21.4 | % | 24.8 | % | 18.0 | % | |||||||||||||||
| Total Segment EBITDA |
104,604 | 131,108 | 94,902 | |||||||||||||||||||||
| Corporate costs (1) |
(32,082 | ) | (34,218 | ) | (31,300 | ) | ||||||||||||||||||
| Equity in income of joint ventures |
3,706 | 3,467 | 3,858 | |||||||||||||||||||||
| Depreciation and amortization expense |
(45,421 | ) | (42,284 | ) | (40,146 | ) | ||||||||||||||||||
| Merger and integration expense |
(1,740 | ) | (3,947 | ) | (2,161 | ) | ||||||||||||||||||
| Severance and other expense |
(6,082 | ) | (9,041 | ) | (5,062 | ) | ||||||||||||||||||
| Stock-based compensation expense |
(6,968 | ) | (7,101 | ) | (5,070 | ) | ||||||||||||||||||
| Foreign exchange loss |
(1,988 | ) | (2,585 | ) | (2,743 | ) | ||||||||||||||||||
| Other income (expense), net |
1,654 | (1,186 | ) | 485 | ||||||||||||||||||||
| Interest and finance expense, net |
(3,451 | ) | (1,804 | ) | (3,152 | ) | ||||||||||||||||||
| Income before income taxes |
$ | 12,232 | $ | 32,409 | $ | 9,611 | ||||||||||||||||||
| (1) | Corporate costs include the costs of running our corporate head office and other central functions that support the operating segments, including research, engineering and development, logistics, sales and marketing and health and safety and are not attributable to a particular operating segment. |
Three months ended March 31, 2025 compared to three months ended December 31, 2024
NLA
Revenue for the NLA segment was $134.3 million for the three months ended March 31, 2025, a decrease of $5.0 million, or 3.6%, compared to $139.3 million for the three months ended December 31, 2024. The decrease was primarily due to lower well construction revenue in the US, Mexico and Guyana and lower well flow management revenue in Argentina and Mexico, partially offset by higher subsea well access revenue in the U.S. and higher well intervention and integrity revenue in Argentina.
Segment EBITDA for the NLA segment was $30.4 million, or 22.6% of revenues, during the three months ended March 31, 2025, an increase of $0.3 million, or 1.1%, compared to $30.1 million, or 21.6%, of revenues during the three months ended December 31, 2024. The increase in Segment EBITDA and Segment EBITDA margin, despite a decrease in revenue, was primarily attributable to increased activity on higher margin projects.
ESSA
Revenue for the ESSA segment was $112.4 million for the three months ended March 31, 2025, a decrease of $30.4 million, or 21.3%, compared to $142.8 million for the three months ended December 31, 2024. The decrease in revenues was primarily driven by lower subsea well access revenue in Angola offset by increased production solutions (well flow management) revenue in Congo.
Segment EBITDA for the ESSA segment was $29.2 million, or 26.0% of revenues, for the three months ended March 31, 2025, a decrease of $23.8 million, or 44.9%, compared to $53.0 million, or 37.1% of revenues, for the three months ended December 31, 2024. The decrease in Segment EBITDA and Segment EBITDA margin was primarily attributable to the above referenced decrease in subsea well access activity in Angola during the three months ended March 31, 2025 as compared to the three months ended December 31, 2024.
MENA
Revenue for the MENA segment was $93.6 million for the three months ended March 31, 2025, an increase of $1.0 million, or 1.1%, compared to $92.6 million for the three months ended December 31, 2024. The increase in revenue was driven by higher well intervention and integrity revenue in Qatar, higher production solutions revenue in Algeria, and higher Coretrax activity (well construction), partially offset by lower well construction revenue in Egypt.
Segment EBITDA for the MENA segment was $34.2 million, or 36.5% of revenues, for the three months ended March 31, 2025, an increase of $1.6 million, or 4.8%, compared to $32.6 million, or 35.2% of revenues, for the three months ended December 31, 2024. The increase in Segment EBITDA and Segment EBITDA margin was due to modestly higher revenue and activity mix
APAC
Revenue for the APAC segment was $50.7 million for the three months ended March 31, 2025, a decrease of $11.6 million, or 18.6%, compared to $62.2 million for the three months ended December 31, 2024. The decrease in revenue was primarily due to lower subsea well access, lower well flow management and lower well construction activity in Australia following completion of a large project in the fourth quarter of 2024, and lower well intervention and integrity activity in Brunei and Malaysia, partially offset by increased Coretrax (well intervention and integrity) activity in Australia.
Segment EBITDA for the APAC segment was $10.9 million, or 21.4% of revenues, for the three months ended March 31, 2025, a decrease of $4.6 million compared to $15.5 million, or 24.8% of revenues, for the three months ended December 31, 2024. The increase in Segment EBITDA is attributable primarily due to lower activity and a less favorable activity mix.
Merger and integration expense
Merger and integration expense for the three months ended March 31, 2025, decreased by $2.2 million, to $1.7 million as compared to $3.9 million for the three months ended December 31, 2024. The decrease was primarily attributable to professional costs incurred in connection with the Coretrax Acquisition during the three months ended December 31, 2024 that did not repeat in the first quarter of 2025.
Severance and other expense
Severance and other expense was $6.1 million for the three months ended March 31, 2025 as compared to severance and other expense of $9.0 million for the three months ended December 31, 2024. The decrease in severance and other expense was primarily attributable less restructuring activity across all segments.
Interest and finance expense, net
Interest and finance expense, net for the three months ended March 31, 2025 increased by $1.7 million to $3.5 million as compared to $1.8 million for the three months ended December 31, 2024. The increase was primarily attributable to unfavorable foreign exchange movement for interest and financing charges related to leases and a pension.
Three months ended March 31, 2025 compared to three months ended March 31, 2024
NLA
Revenue for the NLA segment was $134.3 million for the three months ended March 31, 2025, an increase of $3.9 million, or 3.0%, compared to $130.4 million for the three months ended March 31, 2024. The increase was primarily due to increases higher well flow management activity in the U.S. and Brazil, higher subsea well access revenue in the U.S., higher well intervention and integrity activity in Argentina and increased Coretrax activity in the U.S., partially offset by lower well flow management revenue in Mexico, and lower well construction revenue in the U.S. and Mexico.
Segment EBITDA for the NLA segment was $30.4 million, or 22.6% of revenues, during the three months ended March 31, 2025, a decrease of $4.0 million, or 11.6%, compared to $34.4 million, or 26.4%, of revenues during the three months ended March 31, 2024. The decrease in Segment EBITDA and Segment EBITDA margin was primarily attributable to a less favorable activity mix.
ESSA
Revenue for the ESSA segment was $112.4 million for the three months ended March 31, 2025, a decrease of $9.4 million, or 7.7%, compared to $121.7 million for the three months ended March 31, 2024. The decrease in revenues was primarily driven by lower well flow management revenue in Congo, partially offset by higher subsea well access activity in Angola, West Africa, and the United Kingdom.
Segment EBITDA for the ESSA segment was $29.2 million, or 26.0% of revenues, for the three months ended March 31, 2025, an increase of $4.0 million, or 15.8%, compared to $25.2 million, or 20.7% of revenues, for the three months ended March 31, 2024. The increase in Segment EBITDA and Segment EBITDA margin, despite the decrease in revenue, was primarily attributable to an increase in activities on higher margin services during the three months ended March 31, 2025.
MENA
Revenue for the MENA segment was $93.6 million for the three months ended March 31, 2025, an increase of $22.1 million, or 30.9%, compared to $71.5 million for the three months ended March 31, 2024. The increase in revenue was primarily attributable to the Coretrax Acquisition and increased well flow management revenue in Algeria, the UAE, and Iraq.
Segment EBITDA for the MENA segment was $34.2 million, or 36.5% of revenues, for the three months ended March 31, 2025, an increase of $9.6 million, or 39.2%, compared to $24.5 million, or 34.3% of revenues, for the three months ended March 31, 2024. The increase in Segment EBITDA and Segment EBITDA margin was primarily due higher revenue and a more favorable activity mix.
APAC
Revenue for the APAC segment was $50.7 million for the three months ended March 31, 2025, a decrease of $9.2 million, or 15.4%, compared to $59.9 million for the three months ended March 31, 2024. The decrease in revenue was primarily due to lower subsea well access activity in China and Australia, and lower well flow management activity in Australia.
Segment EBITDA for the APAC segment was $10.9 million, or 21.4% of revenues, for the three months ended March 31, 2025, an increase of $0.1 million compared to a loss of $10.8 million, or 18.0% of revenues, for the three months ended March 31, 2024. The increase in Segment EBITDA and Segment EBITDA margin is largely attributable to a decrease in activity on lower margin services.
Depreciation and amortization expense
Depreciation and amortization expense for the three months ended March 31, 2025 increased by $5.3 million, or 13.1%, to $45.4 million as compared to $40.1 million for the three months ended March 31, 2024. The increase was generally proportional to the increase in property plant and equipment year over year, including impacts of the Coretrax Acquisition.
Stock-based compensation expense
Stock-based compensation expense for the three months ended March 31, 2025 increased by $1.9 million, or 37.4%, to $7.0 million as compared to $5.1 million for the three months ended March 31, 2024. The increase is primarily due to an increase in equity awards during the first quarter of 2025 compared to the first quarter of 2024, primarily related to employees added through acquisitions.
Liquidity and Capital Resources
Liquidity
Our financial objectives include the maintenance of sufficient liquidity, adequate financial resources and financial flexibility to fund our business. As of March 31, 2025, total available liquidity was $315.8 million, including cash and cash equivalents and restricted cash of $180.2 million and $135.6 million available for borrowings under our Amended and Restated Facility Agreement. Expro believes these amounts, along with cash generated by ongoing operations, will be sufficient to meet future business requirements for the next 12 months and beyond. Our primary sources of liquidity have been cash flows from operations. Our primary uses of capital have been for capital expenditures, acquisitions and repurchase of company stock. We monitor potential capital sources, including equity and debt financing, in order to meet our investment and liquidity requirements.
Our total capital expenditures are estimated to range between $90.0 million and $100.0 million for the remaining nine months of 2025. Our total capital expenditures were $33.1 million for the three months ended March 31, 2025, 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. We continue to focus on preserving and protecting our strong balance sheet, optimizing utilization of our existing assets and, where practical, limiting new capital expenditures.
On December 12, 2024, the Company’s Board of Directors (the “Board”) approved an extension to its stock repurchase program, pursuant to which the Company is authorized to acquire up to $100.0 million of its outstanding common stock from October 25, 2023 through November 24, 2025 (the “Stock Repurchase Program”). Under the Stock Repurchase Program, the Company may repurchase shares of the Company’s common stock in open market purchases, in privately negotiated transactions or otherwise. The Stock Repurchase Program will continue to be utilized at management’s discretion and in accordance with federal securities laws. The timing and actual numbers of shares repurchased will depend on a variety of factors including price, corporate requirements, the constraints specified in the Stock Repurchase Program along with general business and market conditions. The Stock Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. During the three months ended March 31, 2025, the Company repurchased approximately 1.0 million shares at an average price of $10.08 per share, for a total cost of approximately $10.0 million. The Company made no repurchases during the three months ended March 31, 2024.
Credit Facility
Revolving Credit Facility
On October 6, 2023, we amended and restated our previous revolving credit facility agreement pursuant to an amendment and restatement agreement (the “Amended and Restated Facility Agreement”) with DNB Bank ASA, London Branch, as agent in order to extend the maturity of the Amended and Restated Facility Agreement for a further 36 months and increase the total commitments to $250.0 million, of which $166.7 million was available for drawdowns as loans and $83.3 million was available for letters of credit. The Company has the ability to increase the commitments to $350.0 million.
On May 15, 2024, the Company established an incremental facility under its Amended and Restated Facility Agreement, in order to increase its existing $250.0 million revolving credit facility by an additional $90.0 million in commitments, to a total of $340.0 million. The establishment of the incremental facility was accomplished by a notice entered into with DNB Bank ASA as Agent, together with a consortium of banks as lenders. The incremental facility has the same terms and conditions as the existing facility provided under the Amended and Restated Facility Agreement. The incremental facility is available for the same general corporate purposes as the existing facility provided under the Amended and Restated Facility Agreement, including acquisitions. On May 15, 2024, the Company drew down on the new facility in the amount of approximately $76.1 million to partially finance the acquisition of Coretrax.
Please see Note 16 “Interest bearing loans” in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.
Cash flow from operating, investing and financing activities
Cash flows from our operations, investing and financing activities are summarized below (in thousands):
| Three Months Ended |
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| March 31, 2025 |
March 31, 2024 |
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| Net cash provided by operating activities |
$ | 41,509 | $ | 29,938 | ||||
| Net cash used in investing activities |
(33,112 | ) | (30,739 | ) | ||||
| Net cash (used in) provided by financing activities |
(15,104 | ) | 14,891 | |||||
| Effect of exchange rate changes on cash activities |
2,218 | (2,722 | ) | |||||
| Net (decrease) increase to cash and cash equivalents and restricted cash |
$ | (4,489 | ) | $ | 11,368 | |||
Analysis of cash flow changes between the three months ended March 31, 2025 and March 31, 2024
Net cash provided by operating activities
Net cash provided by operating activities was $41.5 million during the three months ended March 31, 2025 as compared to $29.9 million during the three months ended March 31, 2024. The increase in net cash provided by operating activities of $11.6 million for the three months ended March 31, 2025, was primarily driven an increase in Adjusted EBITDA and favorable movement in working capital, partially offset by increase in cash paid for severance and other expenses and increase cash payments for income taxes.
Net cash used in investing activities
Net cash used in investing activities was $33.1 million during the three months ended March 31, 2025, as compared to $30.7 million during the three months ended March 31, 2024, an increase of $2.4 million. The increase in net cash used in investing activities was primarily due to an increase in capital expenditures.
Net cash (used in) provided by financing activities
Net cash used in financing activities was $15.1 million during the three months ended March 31, 2025, as compared to net cash provided by financing activities of $14.9 million during the three months ended March 31, 2024. The change of $30.0 million in net cash used in financing activities is primarily due to repurchase of common stock during the first quarter of 2025 and proceeds from borrowings during the first quarter of 2024 that did not repeat in 2025.
New accounting pronouncements
See Note 2 “Basis of presentation and significant accounting policies” in our unaudited condensed consolidated financial statements under the heading “Recent accounting pronouncements.”
Critical accounting policies and estimates
There were no changes to our critical accounting policies and estimates from those disclosed in our Annual Report.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include those that express a belief, expectation or intention, as well as those that are not statements of historical fact. Forward-looking statements include information regarding our future plans and goals and our current expectations with respect to, among other things:
| • | our business strategy and prospects for growth; |
| • | our cash flows and liquidity; |
| • | our financial strategy, budget, projections and operating results; |
| • | the amount and timing of any future share repurchases; |
| • | the amount, nature and timing of capital expenditures; |
| • | the availability and terms of capital; |
| • | the exploration, development and production activities of our customers; |
| • | the market for our existing and future products and services; |
| • | competition and government regulations; and |
| • | general economic and political conditions, including political tensions, conflicts and war (such as the ongoing Russian war in Ukraine and heightened tensions resulting from the ongoing conflicts in the Middle East). |
These forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “goal,” “plan,” “intend,” “potential,” “predict,” “project,” “may,” “outlook,” or other terms that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. The forward-looking statements in this Form 10-Q speak only as of the date of this report; we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following:
| • | continuing uncertainty relating to global crude oil demand and crude oil prices that correspondingly may lead to further significant reductions in domestic oil and gas activity, which in turn could result in further significant declines in demand for our products and services; |
| • | uncertainty regarding the timing, pace and extent of an economic recovery, or economic slowdown or recession, in the U.S. and other countries, which in turn will likely affect demand for crude oil and therefore the demand for the products and services we provide and the commercial opportunities available to us; | |
| • | the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations; |
| • | unique risks associated with our offshore operations (including the ability to recover, and to the extent necessary, service and/or economically repair any equipment located on the seabed); |
| • | political, economic and regulatory uncertainties in our international operations, including the impact of actions taken by the OPEC+ and non-OPEC+ nations with respect to production levels and the effects thereof; | |
| • | our ability to develop new technologies and products and protect our intellectual property rights; |
| • | our ability to attract, train and retain key employees and other qualified personnel; |
| • | operational safety laws and regulations; |
| • | international trade laws, tariffs and sanctions; |
| • | severe weather conditions and natural disasters, and other operating interruptions (including explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); |
| • | policy or regulatory changes; | |
| • | the overall timing and level of transition of the global energy sector from fossil-based systems of energy production and consumption to more renewable energy sources; and |
| • | perception related to our environmental, social and governance (“ESG”) performance as well as current and future ESG reporting requirements. |
These and other important factors that could affect our operating results and performance are described in (1) “Risk Factors” in Part II, Item 1A of this Form 10-Q, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Form 10-Q, and elsewhere within this Form 10-Q, (2) our Annual Report, (3) our other reports and filings we make with the SEC from time to time and (4) other announcements we make from time to time. Should one or more of the risks or uncertainties described in the documents above or in this Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statements. All such forward-looking statements in this Form 10-Q are expressly qualified in their entirety by the cautionary statements in this section.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the Annual Report. Our exposure to market risk has not changed materially since December 31, 2024.
Item 4. Controls and Procedures
| a) |
Evaluation of Disclosure Controls and Procedures |
As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the three months covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure, and such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon our evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of March 31, 2025 at the reasonable assurance level.
| b) |
Change in Internal Control Over Financial Reporting |
As of March 31, 2025, management has concluded that there have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Please see Note 17 “Commitments and contingencies” in the Notes to the Unaudited Condensed Consolidated Financial Statements.
In addition to the other information set forth in this report, you should carefully consider the risks discussed under the heading “Risk Factors” in our Annual Report, which risks could materially affect our business, financial condition or future results. These risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Following is a summary of repurchases of Company common stock during the three months ended March 31, 2025.
| Period |
Total Number of Shares Purchased (1) |
Average Price Paid per Share |
Shares Purchased as Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |
Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Program (2) |
||||||||||||
| January 1 - January 31 |
- | $ | - | - | $ | 75,831,912 | ||||||||||
| February 1 - February 28 |
- | $ | - | - | $ | 75,831,912 | ||||||||||
| March 1 - March 31 |
993,761 | $ | 10.08 | 993,761 | $ | 65,812,045 | ||||||||||
| Total |
993,761 | $ | 10.08 | 993,761 | ||||||||||||
| 1) |
This table excludes shares withheld from employees to satisfy tax withholding requirements on equity-based transactions. We administer cashless settlements and generally do not repurchase stock in connection with cashless settlements. |
| 2) |
Our Board authorized a program to repurchase our common stock from time to time. Approximately $65.8 million remained authorized for repurchases as of March 31, 2025, subject to the limitation set in our shareholder authorization for repurchases of our common stock. |
Securities Trading Arrangements with Officers and Directors
During the three months ended March 31, 2025, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
The exhibits required to be filed by Item 6 are set forth in the Exhibit Index included below.
EXHIBIT INDEX
| Exhibit Number |
Description |
| 3.1 | Deed of Amendment to Articles of Association of Expro Group Holdings N.V., dated October 1, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-36053), filed on October 1, 2021). |
| Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |
|
| Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
|
| *101.1 |
The following materials from Expro Group Holdings N.V.’s Quarterly Report on Form 10-Q for the period ended March 31, 2025 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Stockholders’ Equity; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements. |
| *104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| † | Represents management contract or compensatory plan or arrangement. |
| * | Filed herewith. |
| ** | Furnished herewith. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| EXPRO GROUP HOLDINGS N.V. |
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| Date: |
April 30, 2025 | By: |
/s/ Quinn P. Fanning |
| Quinn P. Fanning |
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| Chief Financial Officer |
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| (Principal Financial Officer) |