On October 1, 2021, the merger between Legacy
Expro and Frank’s was completed; the combined company was re-named
Expro Group Holdings N.V. and began trading on the NYSE as “XPRO”
on October 4, 2021
Delivered strong results due to higher activity
and continued market growth across all regions
Provides fourth quarter revenue and Adjusted
EBITDA Margin outlook
Expro Group Holdings N.V. (NYSE: XPRO) (the “Company” or
“Expro”) today reported financial and operational results for Expro
Group Holdings International Limited, (“Legacy Expro”) and Frank’s
International N.V. (“Frank’s”) for the three and nine months ended
September 30, 2021.
Legacy Expro and Frank’s completed their merger on October 1,
2021 and consolidated combined company financial results under
Expro Group Holdings N.V. will be reported beginning with the
fiscal fourth quarter of 2021. However, the Company noted that
third quarter pro forma combined company revenue was $312.5
million, an increase of 10% sequentially, driven primarily by
higher activity and continued market growth across all regions.
Frank’s results are detailed in the Company’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2021 which will be
filed with the Securities and Exchange Commission.
References in this earnings release to “Frank’s” are to the
Company prior to the completion of the merger on October 1, 2021
and to “Legacy Expro” are to the Legacy Expro Group that combined
with Frank’s in the merger.
Frank’s Third Quarter 2021 Financial Highlights
- Frank’s delivered third quarter revenue of $114.9 million, an
improvement of 7% from the second quarter of 2021 and a significant
improvement from the third quarter of 2020.
- Third quarter net loss totaled $15.1 million, as compared to
the prior quarter net loss of $12.6 million driven by higher
foreign currency losses.
- As defined by Frank’s, Adjusted EBITDA for the third quarter of
2021 was $13.8 million, a sequential improvement of 11% with
improving revenue in the TRS and Tubulars product lines.
Legacy Expro Third Quarter 2021 Financial Highlights
- Legacy Expro’s third quarter revenue was $197.5 million,
compared to revenue of $176.3 million in the second quarter of
2021, an increase of 12% sequentially.
- Net loss for the third quarter of 2021 was $11.9 million
compared to a net loss of $8.4 million for the second quarter of
2021, primarily driven by incremental merger and integration
related costs of $4.9 million incurred during the third quarter of
2021 as compared to the second quarter of 2021.
- As defined by Legacy Expro, Adjusted EBITDA for the third
quarter of 2021 was $30.9 million, a sequential increase of 18%,
driven by higher revenue, a more favorable activity mix and lower
corporate costs.
- Legacy Expro achieved substantial growth in Production Services
and Subsea, Completion and Intervention Services, capitalizing on
improving industry fundamentals.
Michael Jardon, the Company’s Chief Executive Officer, noted,
“Expro is a full-cycle energy services leader with scale, a broad
offering of services and solutions, a global operating footprint,
through-cycle resiliency and a strong financial profile. Frank’s
and Legacy Expro ended the quarter in a strong position as we
continued to experience growth across all areas of our business,
supported by sustained customer demand and improving industry
fundamentals.
“Our results this quarter are also a testament to the continued
hard work, commitment and expertise of our talented employees from
both Frank’s and Legacy Expro. Together, we believe that we are
well positioned to accelerate growth, improve profitability and
enhance value for shareholders, employees, customers and partners.
The integration of Frank’s and Legacy Expro is on track, and we are
looking forward to what we can achieve as we begin this new journey
together.
“Looking ahead, we expect another quarter of solid financial
performance. The Company’s current outlook for the fourth quarter
of 2021 is for flat to mid-single digit revenue growth and an
Adjusted EBITDA Margin, consistent with the definition used by
Legacy Expro, of 15-17% of consolidated revenue, driven by improved
business mix and continued discipline in regard to costs. While the
fourth and first quarters are typically seasonally weaker quarters
due to reduced activity in the Northern Hemisphere, we continue to
see signals of a multi-year recovery, which is expected to gain
momentum as 2022 progresses.
“With a backdrop of global economic recovery and improving
industry fundamentals, Expro is also poised to benefit from
increased activity as well as cost and revenue synergies. During
the third quarter, we finalized many of our plans for the
integration, and we are confident in our ability to achieve
previously disclosed synergy targets. Our integration work has
confirmed our expectations that we can strengthen our operating
model, lower our cost structure and significantly expand margins.
We continue to expect approximately $55 million in annual run-rate
cost synergies within the first 12 months following the closing of
the merger, with the objective of delivering $70 million of total
cost savings in 24-36 months. We also expect that revenue synergies
will result in $10 million to $30 million of incremental Adjusted
EBITDA through complementary customer relationships and operating
footprints, increased time on rig and greater exposure to the full
life of field.
“We believe Expro has an exciting platform with the scale,
diversity and financial profile to accelerate growth and provide
through-cycle resiliency. Our strategy is already underway, and we
look forward to creating significant value on behalf of our
shareholders, employees, customers and partners.” concluded Mr.
Jardon.
Notable Awards and
Achievements
As a demonstration of the combined company’s commitment to
produce technologies that improve the integrity of the well and
decrease risk of injury to personnel, Frank’s was recognized as
2020 World Oil Award Finalist for two technologies and was the
recipient of the 2021 Hart’s E&P Meritorious Award Engineering
Innovation in the category of Health Safety and Environment. In the
category of Best Well Integrity Technology, the 22” BRUTE®
High-Pressure/High-Tensile Service Packer is the newest addition to
the BRUTE® System.
For the category of Health, Safety, Environmental/Sustainable
Development Offshore, Frank’s was also recognized for the Spring
ARK™ Anti-Rotation Key (“Spring ARK™”), which is designed to impede
vibration induced rotation (movement) of a fully made-up large OD
connection that can occur during drilling operations. The Spring
ARK™ functions completely hands free on the rig. It is
pre-installed prior to shipment to the well site and self-energizes
during makeup, thus eliminating the need for personnel on the rig
floor to enter into the red zone around well center.
Further demonstrating our commitment to safety, VIGILANCE™ -
truly a step change in safety during well construction operations -
was the recipient of the 2021 Hart’s E&P Meritorious Award for
Engineering Innovation. VIGILIANCE™ is a novel surveillance
technology that tracks equipment as well as personnel movement
through a unified real-time system with a high degree of accuracy
and precision. An early deployment of the system in the Gulf of
Mexico proved itself with increased safety measures when the system
was able to stop the mechanized tong system twice during operations
when personnel entered the critical area in the red zone with
multiple moving equipment, thereby avoiding two potential
incidents.
Frank’s announced during the third quarter that it has received
the inaugural 2021 Most Valuable Partner (MVP) Award from a
supermajor operator in recognition of its work in Guyana. The
customer considered the outstanding performance of Frank's teams
across several categories, including Safety, Security, Health and
Environment (SSHE) Excellence, demonstrating "reliability;
adaptability and proactivity and truly working as a partner" to
provide the highest level of service and safety to lower the
overall cost of the operator’s well ownership.
Known as one of the industry leaders in the deployment of large
diameter tubulars utilized for conductor strings and surface casing
strings in deepwater and ultra-deepwater environments, a new
milestone was achieved with a first deployment of the 38” Xtreme3™
Super Duty (SD) & 22” XT4™ Gas Tight (GT) threaded connections
for an operator in the Gulf of Mexico onboard a drillship operating
in approximately 6,700 feet of water.
Highlighting the Company’s production optimization capabilities,
Legacy Expro successfully completed an integrated Plug and
Abandonment (P&A) contract in West Africa, utilizing its
integrated Open Water Intervention Riser System (OWIRS), which was
deployed from a drillship. This system performed over 250 functions
during the project with 100% operational uptime and no
non-productive time (NPT) incurred, leading to the successful
intervention and barrier placement on 15 wells.
In addition, Legacy Expro’s Octopoda™ annulus intervention
system achieved world record depth for annular intervention in the
Piedemonte region of Colombia. The system successfully reached 300
meters in the annulus and sealed the C annulus of the well. This
removed the risk of casing collapse and gas migration to enable the
well to produce and significantly extend its production lifespan.
Octopoda™ is the latest example of Expro’s commitment to investing
in innovation, developing new technologies and working towards
reducing its own and its clients’ carbon footprint.
Other Financial
Information
In connection with the merger, on October 1, 2021, the Company
and certain of its subsidiaries entered into a new credit facility
with DNB Bank ASA, London Branch, as agent, and other financial
institutions as lenders with an aggregate commitment of $200.0
million with up to $130.0 million available for drawdowns as loans
and up to $70.0 million for bonds and guarantees (the “New Credit
Facility”). Subject to the terms of the New Credit Facility, the
Company has the ability to increase the commitments to $250.0
million. The New Credit Facility is available for general corporate
purposes and replaces the credit facilities of Frank’s and Legacy
Expro which were terminated on October 1, 2021 in connection with
the merger.
Frank’s capital expenditures related to property, plant and
equipment totaled $3.1 million in the third quarter of 2021 and
year to date totaled $7.6 million. Frank’s currently plans for
capital expenditures during 2021 of approximately $15 million.
Legacy Expro’s capital expenditures related to property, plant
and equipment totaled $15.8 million in the third quarter of 2021
and year to date totaled $53.5 million. Legacy Expro continues to
plan for capital expenditures during 2021 in the range of $70 to
$75 million.
As of September 30, 2021, Frank’s consolidated cash and cash
equivalents, including restricted cash, totaled $204.7 million.
Frank’s had no outstanding debt as of September 30, 2021.
As of September 30, 2021, Legacy Expro’s consolidated cash and
cash equivalents, including restricted cash, totaled $65.9 million.
Legacy Expro had no outstanding debt as of September 30, 2021.
The combined company’s pro forma cash and cash equivalents,
including restricted cash, and total liquidity as of September 30,
2021 was $270.6 million and $400.6 million, respectively. Total
liquidity includes $130.0 million available for drawdowns as loans
under the New Credit Facility.
Frank’s provision for income taxes for the current quarter was
$4.0 million compared to $6.8 million in the prior quarter. The
change in income taxes was primarily driven by the geographical mix
of income.
Legacy Expro’s provision for income taxes for the current
quarter was $5.1 million compared to $0.7 million in the prior
quarter. The change in income taxes was primarily driven by changes
in taxable profits in certain jurisdictions, the reduction of
deferred tax liabilities due to amortization of intangible assets
and derecognition of deferred tax assets in certain jurisdictions
during the current quarter.
The financial measures provided that are not presented in
accordance with U.S. generally accepted accounting principles
(“GAAP”) are defined and reconciled to their most directly
comparable GAAP measures. Please see “Use of Non-GAAP Financial
Measures” and the reconciliations to the nearest comparable GAAP
measures.
Additionally, the downloadable financials are available on the
Investor section of www.expro.com. The downloadable financials
include historical results of Frank’s and Legacy Expro, and the
combined company, Expro, on a pro forma basis.
Conference Call
The Company will host a conference call to discuss third quarter
2021 results on Monday, November 8, 2021, at 10:00 a.m. Central
Time (11:00 a.m. Eastern Time).
Participants may also join the conference call by dialing:
US: +1 (844) 200-6205
International: +1 (929) 526-1599
Access ID: 648921
To listen via live webcast, please visit the Investor section of
www.expro.com.
The Q3 2021 Investor Presentation is available on the Investor
section of www.expro.com.
An audio replay of the webcast will be available on the Investor
section of the Company’s website approximately 3 hours after the
conclusion of the call and will remain available for a period of
approximately 12 months.
To access the audio replay telephonically:
Dial-In: US +1 (866) 813- 9403 or +44 (204)
525-0658
Access ID: 183236
Start Date: November 8, 2021, 2:00 p.m.
CT
End Date: November 15, 2021, 11:00 p.m.
CT
A transcript of the conference call will be posted to the
Investor relations section of the Company’s website after the
conclusion of the call.
ABOUT EXPRO
Working for clients across the entire well life cycle, Expro is
a leading provider of energy services, offering cost-effective,
innovative solutions and best-in-class safety and service quality.
The Company’s extensive portfolio of capabilities spans well
construction, well flow management, subsea well access, and well
integrity and intervention.
Founded in 1938, Expro has more than 6,600 employees and
provides services and solutions to leading exploration and
production companies in both onshore and offshore environments in
approximately 60 countries with over 100 locations.
For more information, please visit: expro.com and connect with
Expro on Twitter @ExproGroup and LinkedIn @Expro.
Forward Looking
Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. All statements, other
than statements of historical facts, included in this release that
address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future
are forward-looking statements. Without limiting the generality of
the foregoing, forward-looking statements contained in this release
include statements, estimates and projections regarding the
Company’s future business strategy and prospects for growth, cash
flows and liquidity, financial strategy, budget, projections and
operating results. These statements are based on certain
assumptions made by the Company based on management’s experience,
expectations and perception of historical trends, current
conditions, anticipated future developments and other factors
believed to be appropriate. Forward-looking statements are not
guarantees of performance. Although the Company believes the
expectations reflected in its forward-looking statements are
reasonable and are based on reasonable assumptions, no assurance
can be given that these assumptions are accurate or that any of
these expectations will be achieved (in full or at all) or will
prove to have been correct. Moreover, such statements are subject
to a number of assumptions, risks and uncertainties, many of which
are beyond the control of the Company, which may cause actual
results to differ materially from those implied or expressed by the
forward-looking statements. Such assumptions, risks and
uncertainties include the outcome and results of the integration
process associated with the Company’s recent merger, the amount,
nature and timing of capital expenditures, the availability and
terms of capital, the level of activity in the oil and gas
industry, volatility of oil and gas prices, unique risks associated
with offshore operations, political, economic and regulatory
uncertainties in international operations, the ability to develop
new technologies and products, the ability to protect intellectual
property rights, the ability to employ and retain skilled and
qualified workers, the level of competition in the Company’s
industry, global or national health concerns, including health
epidemics, such as COVID-19 and any variants thereof, the
possibility of a swift and material decline in global crude oil
demand and crude oil prices for an uncertain period of time, the
length of time it will take for the United States and the rest of
the world to slow the spread of COVID-19 to the point where
applicable authorities are comfortable easing current restrictions
on various commercial and economic activities, future actions of
foreign oil producers such as Saudi Arabia and Russia, the timing,
pace and extent of an economic recovery in the United States and
elsewhere, the impact of current and future laws, rulings,
governmental regulations, accounting standards and statements, and
related interpretations, and other guidance.
Such assumptions, risks and uncertainties also include the
factors discussed or referenced in the “Risk Factors” section of
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2020 and the Company’s proxy statement/prospectus
dated August 5, 2021 filed with the Securities and Exchange
Commission and the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2021 that will be filed with the
Securities and Exchange Commission. Any forward-looking statement
speaks only as of the date on which such statement is made, and the
Company undertakes no obligation to correct or update any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by applicable law,
and we caution you not to rely on them unduly.
Use of Non-GAAP Financial
Measures
This press release and the accompanying schedules include the
non-GAAP financial measures of free cash flow, Adjusted EBITDA and
Adjusted EBITDA margin for Frank’s, and Adjusted EBITDA, Adjusted
EBITDA margin, contribution, contribution margin, support costs,
adjusted cash flow from operations and cash conversion for Legacy
Expro, which may be used periodically by management when discussing
financial results with investors and analysts. The accompanying
schedules of this press release provide a reconciliation of these
non-GAAP financial measures to their most directly comparable
financial measure calculated and presented in accordance with GAAP.
These non-GAAP financial measures are presented because management
believes these metrics provide additional information relative to
the performance of the referenced business. These metrics are
commonly employed by financial analysts and investors to evaluate
the operating and financial performance of Frank’s or Legacy Expro,
as applicable, from period to period and to compare such
performance with the performance of other publicly traded companies
within the industry. You should not consider free cash flow,
Adjusted EBITDA and Adjusted EBITDA margin for Frank’s, and
Adjusted EBITDA, Adjusted EBITDA margin, contribution, contribution
margin, support costs, adjusted cash flow from operations and cash
conversion for Legacy Expro in isolation or as a substitute for
analysis of Frank’s or Legacy Expro’s results as reported under
GAAP. Because free cash flow, Adjusted EBITDA and Adjusted EBITDA
margin for Frank’s, and Adjusted EBITDA, Adjusted EBITDA margin,
contribution, contribution margin, support costs, adjusted cash
flow from operations and cash conversion for Legacy Expro may be
defined differently by other companies in the industry, the
presentation of these non-GAAP financial measures may not be
comparable to similarly titled measures of other companies, thereby
diminishing their utility.
Frank’s historically defined free cash flow as net cash provided
by (used in) operating activities less purchases of property, plant
and equipment. Frank’s historically defined Adjusted EBITDA as net
income (loss) before interest income or expense, net, depreciation
and amortization, income tax benefit or expense, asset impairments,
gain or loss on disposal of assets, foreign currency gain or loss,
equity-based compensation, unrealized and realized gains or losses
and other non-cash adjustments and other charges or credits.
Frank’s used Adjusted EBITDA to assess its financial performance
because it allowed Frank’s to compare its operating performance on
a consistent basis across periods by removing the effects of its
capital structure (such as varying levels of interest expense),
asset base (such as depreciation and amortization), income tax,
foreign currency exchange rates and other charges and credits.
Frank’s historically defined Adjusted EBITDA margin as Adjusted
EBITDA divided by total revenue.
Legacy Expro historically defined Adjusted EBITDA as net (loss)
income adjusted for (a) income tax (benefit) expense, (b)
depreciation and amortization, (c) impairment charges, (d)
severance and other charges, net, (e) merger and integration costs,
(f) equity-based compensation expense, (g) other (income) expenses,
net, and (h) interest and finance charges (income), net. Adjusted
EBITDA margin reflects Legacy Expro’s Adjusted EBITDA as a
percentage of revenues.
Contribution is defined as total revenue less cost of revenue
excluding depreciation and amortization and indirect support costs
included in cost of revenue. Contribution margin is defined as
contribution divided by total revenue, expressed as a percentage.
Support costs is defined as indirect costs attributable to support
the activities of the operating segments, research and engineering
expenses and product line management costs included in cost of
revenue, and general and administrative expenses representing costs
of running the corporate head office and other central functions
including, logistics, sales and marketing and health and safety and
does not include foreign exchange gains or losses, depreciation and
amortization and other non-routine expenses. Adjusted cash flow
from operations is defined as net cash provided by operating
activities adjusted for cash paid during the period for interest,
net, severance and other charges and merger and integration costs.
Cash conversion is defined as adjusted cash flow from operations
divided by Adjusted EBITDA.
Please see the accompanying financial tables for a
reconciliation of these non-GAAP measures to their most directly
comparable GAAP measures.
EXPRO GROUP HOLDINGS N.V. (formerly named Frank's International
N.V.)
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Revenue:
Services
$
95,821
$
90,520
$
66,418
$
267,864
$
246,084
Products
19,120
17,321
17,999
49,729
47,926
Total revenue
114,941
107,841
84,417
317,593
294,010
Operating expenses:
Cost of revenue, exclusive of depreciation
and amortization
Services
70,627
68,619
56,574
203,181
197,005
Products
15,489
14,408
13,733
40,811
36,007
General and administrative expenses
18,591
16,427
18,665
51,465
67,634
Depreciation and amortization
14,092
15,332
15,950
45,531
52,920
Goodwill impairment
—
—
—
—
57,146
Severance and other charges, net
2,958
3,399
3,549
13,733
29,436
Gain on disposal of assets
(72
)
(1,479
)
(308
)
(1,733
)
(898
)
Operating loss
(6,744
)
(8,865
)
(23,746
)
(35,395
)
(145,240
)
Other income (expense):
Other income, net
347
404
109
877
2,291
Interest income (expense), net
(167
)
(101
)
(93
)
(555
)
618
Foreign currency gain (loss)
(4,548
)
2,718
2,334
(4,698
)
(5,865
)
Total other income (expense)
(4,368
)
3,021
2,350
(4,376
)
(2,956
)
Loss before income taxes
(11,112
)
(5,844
)
(21,396
)
(39,771
)
(148,196
)
Income tax expense (benefit)
3,969
6,773
6,395
11,812
(182
)
Net loss
$
(15,081
)
$
(12,617
)
$
(27,791
)
$
(51,583
)
$
(148,014
)
Loss per common share:
Basic and diluted (1)
$
(0.40
)
$
(0.33
)
$
(0.74
)
$
(1.36
)
$
(3.93
)
Weighted average common shares
outstanding:
Basic and diluted (1)
38,066
38,002
37,691
37,957
37,659
(1)
On September 30, 2021, Frank’s board of
directors unanimously approved a 1-for-6 reverse stock split of
Frank’s common stock, which was effected on October 1, 2021. All of
the outstanding Company Common Stock share numbers, nominal value,
share prices and per share amounts in these condensed consolidated
financial statements have been retroactively adjusted to reflect a
1-for-6 reverse stock split for all periods presented.
EXPRO GROUP HOLDINGS N.V.
(formerly named Frank's International N.V.)
SELECTED OPERATING SEGMENT
DATA
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Revenue
Tubular Running Services
$
77,625
$
71,895
$
52,926
$
215,805
$
204,750
Tubulars
18,784
16,566
16,483
47,019
37,766
Cementing Equipment
18,532
19,380
15,008
54,769
51,494
Total
$
114,941
$
107,841
$
84,417
$
317,593
$
294,010
Segment Adjusted EBITDA:
Tubular Running Services
$
11,912
$
9,750
$
982
$
29,790
$
18,336
Tubulars
2,735
4,108
1,806
7,481
3,883
Cementing Equipment
6,389
4,851
3,376
16,036
6,806
Corporate
(7,258
)
(6,297
)
(7,151
)
(20,464
)
(24,645
)
Total
$
13,778
$
12,412
$
(987
)
$
32,843
$
4,380
EXPRO GROUP HOLDINGS N.V. (formerly named Frank's International
N.V.)
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
September 30,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
202,997
$
209,575
Restricted cash
1,742
1,672
Short-term investments
1,882
2,252
Accounts receivables, net
130,585
110,607
Inventories, net
91,776
81,718
Assets held for sale
7,998
2,939
Other current assets
6,554
7,744
Total current assets
443,534
416,507
Property, plant and equipment, net
228,994
272,707
Goodwill
42,785
42,785
Intangible assets, net
8,756
7,897
Deferred tax assets, net
15,008
18,030
Operating lease right-of-use assets
26,646
28,116
Other assets
21,409
30,859
Total assets
$
787,132
$
816,901
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
114,962
$
99,986
Current portion of operating lease
liabilities
8,215
7,832
Deferred revenue
89
586
Other current liabilities
—
1,674
Total current liabilities
123,266
110,078
Deferred tax liabilities
—
1,548
Non-current operating lease
liabilities
19,303
21,208
Other non-current liabilities
23,123
22,818
Total liabilities
165,692
155,652
Stockholders’ equity:
Common stock
2,900
2,866
Additional paid-in capital
1,098,236
1,087,733
Accumulated deficit
(428,930
)
(377,346
)
Accumulated other comprehensive loss
(28,798
)
(31,966
)
Treasury stock
(21,968
)
(20,038
)
Total stockholders’ equity
621,440
661,249
Total liabilities and equity
$
787,132
$
816,901
EXPRO GROUP HOLDINGS N.V. (formerly named Frank's International
N.V.)
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2021
2020
Cash flows from operating
activities
Net loss
$
(51,583
)
$
(148,014
)
Adjustments to reconcile net loss to cash
from operating activities
Depreciation and amortization
45,531
52,920
Equity-based compensation expense
9,604
8,434
Goodwill impairment
—
57,146
Loss on asset impairments and
retirements
307
20,532
Amortization of deferred financing
costs
291
291
Deferred tax provision (benefit)
1,474
(1,783
)
Provision for bad debts
852
980
Gain on disposal of assets
(1,733
)
(898
)
Changes in fair value of investments
(863
)
218
Other
—
(380
)
Changes in operating assets and
liabilities
Accounts receivable
(23,149
)
63,307
Inventories
(7,969
)
(3,625
)
Other current assets
1,137
2,567
Other assets
756
667
Accounts payable and accrued
liabilities
15,910
(22,486
)
Deferred revenue
(498
)
(513
)
Other non-current liabilities
(2,263
)
(4,048
)
Net cash provided by (used in)
operating activities
(12,196
)
25,315
Cash flows from investing
activities
Purchases of property, plant and
equipment
(7,613
)
(25,722
)
Proceeds from sale of assets
4,300
7,037
Proceeds from sale of investments
11,603
2,832
Purchase of investments
(1,294
)
—
Investment in intellectual property
(1,608
)
—
Other
(799
)
(356
)
Net cash provided by (used in)
investing activities
4,589
(16,209
)
Cash flows from financing
activities
Repayments of borrowings
(1,674
)
—
Treasury shares withheld for taxes
(1,930
)
(1,125
)
Treasury share repurchase
—
(1,498
)
Proceeds from the issuance of ESPP
shares
933
934
Net cash used in financing
activities
(2,671
)
(1,689
)
Effect of exchange rate changes on
cash
3,770
3,267
Net increase (decrease) in cash, cash
equivalents and restricted cash
(6,508
)
10,684
Cash, cash equivalents and restricted cash
at beginning of period
211,247
196,740
Cash, cash equivalents and restricted cash
at end of period
$
204,739
$
207,424
EXPRO GROUP HOLDINGS N.V.
(formerly named Frank's International N.V.)
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATION
(In thousands)
(Unaudited)
ADJUSTED EBITDA AND ADJUSTED
EBITDA MARGIN RECONCILIATION
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Revenue
$
114,941
$
107,841
$
84,417
$
317,593
$
294,010
Net loss
$
(15,081
)
$
(12,617
)
$
(27,791
)
$
(51,583
)
$
(148,014
)
Goodwill impairment
—
—
—
—
57,146
Severance and other charges, net
2,958
3,399
3,549
13,733
29,436
Interest (income) expense, net
167
101
93
555
(618
)
Depreciation and amortization
14,092
15,332
15,950
45,531
52,920
Income tax expense (benefit)
3,969
6,773
6,395
11,812
(182
)
Gain on disposal of assets
(72
)
(1,479
)
(308
)
(1,733
)
(898
)
Foreign currency (gain) loss
4,548
(2,718
)
(2,334
)
4,698
5,865
Charges and credits (1)
3,197
3,621
3,459
9,830
8,725
Adjusted EBITDA
$
13,778
$
12,412
$
(987
)
$
32,843
$
4,380
Adjusted EBITDA margin
12.0
%
11.5
%
(1.2
)%
10.3
%
1.5
%
(1)
Comprised of Equity-based compensation
expense (for the three months ended September 30, 2021, June 30,
2021 and September 30, 2020: $3,307, $3,399 and $2,773,
respectively, and for the nine months ended September 30, 2021 and
2020: $9,604 and $8,434, respectively), Unrealized and realized
(gains) losses (for the three months ended September 30, 2021, June
30, 2021 and September 30, 2020: $(199), $108 and $113,
respectively, and for the nine months ended September 30, 2021 and
2020: $7 and $(1,480), respectively) and Investigation-related
matters (for the three months ended September 30, 2021, June 30,
2021 and September 30, 2020: $89, $88 and $573, respectively, and
for the nine months ended September 30, 2021 and 2020: $219 and
$1,771, respectively).
EXPRO GROUP HOLDINGS N.V. (formerly named Frank's International
N.V.)
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATION
(In thousands)
(Unaudited)
SEGMENT ADJUSTED EBITDA
RECONCILIATION
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Segment Adjusted EBITDA:
Tubular Running Services
$
11,912
$
9,750
$
982
$
29,790
$
18,336
Tubulars
2,735
4,108
1,806
7,481
3,883
Cementing Equipment
6,389
4,851
3,376
16,036
6,806
Corporate
(7,258
)
(6,297
)
(7,151
)
(20,464
)
(24,645
)
13,778
12,412
(987
)
32,843
4,380
Goodwill impairment
—
—
—
—
(57,146
)
Severance and other charges, net
(2,958
)
(3,399
)
(3,549
)
(13,733
)
(29,436
)
Interest income (expense), net
(167
)
(101
)
(93
)
(555
)
618
Depreciation and amortization
(14,092
)
(15,332
)
(15,950
)
(45,531
)
(52,920
)
Income tax (expense) benefit
(3,969
)
(6,773
)
(6,395
)
(11,812
)
182
Gain on disposal of assets
72
1,479
308
1,733
898
Foreign currency gain (loss)
(4,548
)
2,718
2,334
(4,698
)
(5,865
)
Charges and credits (1)
(3,197
)
(3,621
)
(3,459
)
(9,830
)
(8,725
)
Net loss
$
(15,081
)
$
(12,617
)
$
(27,791
)
$
(51,583
)
$
(148,014
)
(1)
Comprised of Equity-based compensation
expense (for the three months ended September 30, 2021, June 30,
2021 and September 30, 2020: $3,307, $3,399 and $2,773,
respectively, and for the nine months ended September 30, 2021 and
2020: $9,604 and $8,434, respectively), Unrealized and realized
gains (losses) (for the three months ended September 30, 2021, June
30, 2021 and September 30, 2020: $199, $(108) and $(113),
respectively, and for the nine months ended September 30, 2021 and
2020: $(7) and $1,480, respectively) and Investigation-related
matters (for the three months ended September 30, 2021, June 30,
2021 and September 30, 2020: $89, $88 and $573, respectively, and
for the nine months ended September 30, 2021 and 2020: $219 and
$1,771, respectively).
EXPRO GROUP HOLDINGS N.V.
(formerly named Frank's International N.V.)
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATION
(In thousands)
(Unaudited)
FREE CASH FLOW
RECONCILIATION
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Net cash provided by (used in)
operating activities
$
3,864
$
(579
)
$
21,169
$
(12,196
)
$
25,315
Less: purchases of property, plant and
equipment
3,096
2,171
5,463
7,613
25,722
Free cash flow
$
768
$
(2,750
)
$
15,706
$
(19,809
)
$
(407
)
EXPRO GROUP HOLDINGS INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Total revenue
$
197,547
$
176,251
$
149,006
$
530,093
$
520,836
Operating costs and expenses:
Cost of revenue(1)
(189,510
)
(174,008
)
(148,812
)
(528,248
)
(519,448
)
General and administrative(1)
(6,199
)
(6,297
)
(7,507
)
(19,234
)
(18,685
)
Impairment charges
-
-
(259
)
-
(275,853
)
Merger and integration costs
(9,617
)
(4,703
)
-
(19,143
)
-
Severance and other charges
(3,905
)
(1,637
)
(5,272
)
(6,097
)
(11,135
)
Total operating cost and expenses
(209,231
)
(186,645
)
(161,850
)
(572,722
)
(825,121
)
Operating loss(1)
(11,684
)
(10,394
)
(12,844
)
(42,629
)
(304,285
)
Other income, net
685
387
2,261
1,311
982
Interest and finance (charges) income,
net
678
(1,604
)
(4,573
)
(2,553
)
(1,329
)
Loss before taxes and equity in income
of joint ventures
(10,321
)
(11,611
)
(15,156
)
(43,871
)
(304,632
)
Equity in income of joint ventures
3,459
3,957
2,562
11,508
9,169
Loss before income taxes
(6,862
)
(7,654
)
(12,594
)
(32,363
)
(295,463
)
Income tax (expenses) benefit
(5,051
)
(727
)
(225
)
(8,323
)
4,135
Net loss
$
(11,913
)
$
(8,381
)
$
(12,819
)
$
(40,686
)
$
(291,328
)
Loss per common share:
Basic and diluted
$
(0.20
)
$
(0.14
)
$
(0.22
)
$
(0.70
)
$
(4.98
)
Weighted average common shares
outstanding:
Basic and diluted
58,489,895
58,489,895
58,489,895
58,489,895
58,489,895
(1)
Depreciation and amortization included in
cost of revenue for the three months ended September 30, 2021, June
30, 2021, September 30, 2020 and the nine months ended September
30, 2021 and September 30, 2020 was $25.5 million, $26.3 million,
$27.0 million, $79.5 million, $84.1 million. Depreciation and
amortization included in General and administrative expense for the
three months ended September 30, 2021, June 30, 2021, September 30,
2020 and the nine months ended September 30, 2021 and September 30,
2020 was $0.1 million, $0.1 million, $0.5 million, $0.3 million,
$0.7 million.
EXPRO GROUP HOLDINGS INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
September 30,
December 31,
2021
2020
Assets
Current assets
Cash and cash equivalents
$
64,849
$
116,924
Restricted cash
1,023
3,785
Accounts receivable, net
230,603
193,600
Inventories, net
53,857
53,359
Income tax receivables
18,288
20,327
Other current assets
35,719
39,957
Total current assets
404,339
427,952
Property, plant and equipment, net
280,172
294,723
Investments in joint ventures
55,555
45,088
Intangible assets, net
155,725
173,168
Goodwill
25,504
25,504
Operating lease right-of-use assets
59,430
57,247
Non-current accounts receivable, net
10,109
11,321
Other non-current assets
5,605
4,748
Total assets
$
996,439
$
1,039,751
Liabilities and stockholders’
equity
Current liabilities
Accounts payable and accrued
liabilities
$
154,570
$
136,242
Income tax liabilities
9,648
13,657
Finance lease liabilities
1,120
1,220
Operating lease liabilities
12,734
14,057
Other current liabilities
50,267
59,043
Total current liabilities
228,339
224,219
Deferred tax liabilities, net
27,095
26,817
Post-retirement benefits
53,418
57,946
Non-current finance lease liabilities
16,056
16,974
Non-current operating lease
liabilities
57,415
58,585
Other non-current liabilities
43,001
43,226
Total liabilities
425,324
427,767
Stockholders’ equity:
Common stock
585
585
Warrants
10,530
10,530
Additional paid-in capital
1,006,100
1,006,100
Accumulated other comprehensive loss
(1,677
)
(1,494
)
Accumulated deficit
(444,423
)
(403,737
)
Total stockholders’
equity
571,115
611,984
Total liabilities and stockholders’
equity
$
996,439
$
1,039,751
EXPRO GROUP HOLDINGS INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September
30,
Cash flows from operating
activities:
2021
2020
Net loss
$
(40,686
)
$
(291,328
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Impairment charges
-
275,853
Depreciation and amortization
79,754
84,753
Equity in income of joint ventures
(11,508
)
(9,169
)
Elimination of unrealized profit on sales
to joint ventures
118
1,512
Deferred tax credit
278
(17,416
)
Unrealized foreign exchange loss
1,331
139
Changes in assets and liabilities:
Accounts receivable, net
(38,138
)
45,565
Inventories, net
(498
)
(1,603
)
Other assets
3,260
(1,094
)
Accounts payable and accrued
liabilities
24,793
(20,833
)
Other liabilities
(7,084
)
7,809
Income taxes, net
(3,888
)
(4,655
)
Other, net
(8,202
)
(8,500
)
Dividends received from joint ventures
924
1,354
Net cash provided by operating
activities
454
62,387
Cash flows from investing
activities:
Capital expenditures
(53,463
)
(86,965
)
Proceeds from disposal of property, plant
and equipment
-
107
Net cash used in investing
activities
(53,463
)
(86,858
)
Cash flows from financing
activities:
Release of collateral deposits
122
1,787
Payment of debt issuance and other
transaction costs
(452
)
(787
)
Repayment of finance leases
(871
)
(1,205
)
Net cash used in financing
activities
(1,201
)
(205
)
Effect of exchange rate changes on cash
and cash equivalents
(627
)
(1,517
)
Net decrease to cash and cash
equivalents and restricted cash
(54,837
)
(26,193
)
Cash and cash equivalents and restricted
cash at beginning of year
120,709
147,085
Cash and cash equivalents and
restricted cash at end of period
$
65,872
$
120,892
Supplemental disclosure of cash flow
information:
Cash paid for income taxes, net of
refunds
$
(11,933
)
$
(17,932
)
Cash paid for interest, net
$
(3,016
)
$
(3,000
)
Change in accounts payable and accrued
expenses related to capital expenditures
$
(5,699
)
$
(3,999
EXPRO GROUP HOLDINGS INTERNATIONAL LIMITED
SELECTED OPERATING SEGMENT
DATA
(In thousands)
(Unaudited)
Legacy Expro manages its business and
reports financial results using four operating segments based on
its geographical regions: Europe and Sub-Saharan Africa (“ESSA”);
Asia (“ASIA”); Middle East and North Africa (“MENA”) and North and
Latin America (“NLA”).
Segment Revenue and Segment Revenue as
Percentage of Total Revenue:
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
ESSA
$
87,428
44
%
$
65,177
37
%
$
45,100
30
%
$
206,235
39
%
$
170,569
33
%
ASIA
40,318
20
%
37,959
22
%
38,354
26
%
109,424
21
%
109,888
21
%
MENA
38,032
19
%
42,485
24
%
44,534
30
%
121,672
23
%
148,231
28
%
NLA
31,769
16
%
30,630
17
%
21,018
14
%
92,762
17
%
92,148
18
%
Total
$
197,547
100
%
$
176,251
100
%
$
149,006
100
%
$
530,093
100
%
$
520,836
100
%
Segment Adjusted EBITDA(1), Segment Adjusted EBITDA Margin(2),
Adjusted EBITDA and Adjusted EBITDA Margin(3):
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
ESSA
$
17,796
20
%
$
10,315
16
%
$
9,552
21
%
$
33,477
16
%
$
28,971
17
%
ASIA
7,755
19
%
8,317
22
%
10,888
28
%
21,238
19
%
26,463
24
%
MENA
11,099
29
%
14,079
33
%
16,686
37
%
40,236
33
%
59,812
40
%
NLA
5,309
17
%
3,355
11
%
(1,504
)
(7
%)
11,092
12
%
1,286
1
%
Corporate costs(4)
(14,516
)
-
(13,730
)
-
(15,468
)
-
(43,678
)
-
(49,076
)
-
Equity in income of joint ventures
3,459
-
3,957
-
2,562
-
11,508
-
9,169
-
Adjusted EBITDA
$
30,902
16
%
$
26,293
15
%
$
22,716
15
%
$
73,873
14
%
$
76,625
15
%
(1)
Expro evaluates its business segment
operating performance using Segment Revenue, Segment Adjusted
EBITDA and Segment Adjusted EBITDA Margin. Expro’s management
believes Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin
are useful operating performance measures as they exclude
transactions not related to its core cash operating activities and
corporate costs and allows Expro to meaningfully analyze the trends
and performance of its core cash operations by segment as well as
to make decisions regarding the allocation of resources to
segments.
(2)
Expro defines Segment Adjusted EBITDA
Margin as Segment EBITDA divided by Segment Revenue, expressed as a
percentage.
(3)
Expro defines Adjusted EBITDA Margin as
Adjusted EBITDA divided by total revenue, expressed as a
percentage.
(4)
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.
EXPRO GROUP HOLDINGS INTERNATIONAL LIMITED
REVENUE BY MAIN AREA OF
CAPABILITIES
(In thousands)
(Unaudited)
Historical Presentation of Legacy Expro
Supplemental Data:
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Well testing and appraisal services
$
83,449
42
%
$
89,821
51
%
$
72,932
48
%
$
249,200
47
%
$
267,220
51
%
Subsea, completion and intervention
services
74,317
38
%
66,286
38
%
59,385
40
%
203,942
38
%
203,945
39
%
Production services
39,781
20
%
20,144
10
%
16,689
11
%
76,951
15
%
49,671
10
%
Total
$
197,547
100
%
$
176,251
100
%
$
149,006
100
%
$
530,093
100
%
$
520,836
100
%
Presentation of Supplemental Data Subsequent to the Completion
of Business Combination with Frank’
s:
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Well flow management
$
123,146
62
%
$
110,534
63
%
$
90,051
60
%
$
327,172
62
%
$
311,541
60
%
Subsea well access
29,762
15
%
24,550
14
%
29,593
20
%
83,786
16
%
108,493
21
%
Well intervention and integrity
44,639
23
%
41,167
23
%
29,362
20
%
119,135
22
%
100,802
19
%
Well construction
-
0
%
-
0
%
-
0
%
-
0
%
-
0
%
Total
$
197,547
100
%
$
176,251
100
%
$
149,006
100
%
$
530,093
100
%
$
520,836
100
%
EXPRO GROUP HOLDINGS INTERNATIONAL LIMITED
CONTRIBUTION, CONTRIBUTION
MARGIN AND SUPPORT COSTS
(In thousands)
(Unaudited)
Contribution(1) and Contribution
Margin(2):
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Total revenue
$
197,547
$
176,251
$
149,006
$
530,093
$
520,836
Cost of revenue
(189,510
)
(174,008
)
(148,812
)
(528,248
)
(519,448
)
Depreciation and amortization
25,506
26,290
26,972
79,455
84,076
Indirect costs (included in cost of
revenue)
35,466
35,658
34,016
107,133
119,388
Direct costs (excluding depreciation and
amortization) (3)
(128,538
)
(112,060
)
(87,824
)
(341,660
)
(315,984
)
Contribution
$
69,009
$
64,191
$
61,182
$
188,433
$
204,852
Contribution margin
35
%
36
%
41
%
36
%
39
%
Support Costs(4):
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Cost of revenue
$
189,510
$
174,008
$
148,812
$
528,248
$
519,448
Depreciation and amortization
(25,506
)
(26,290
)
(26,972
)
(79,455
)
(84,076
)
Direct costs (excluding depreciation and
amortization)
(128,538
)
(112,060
)
(87,824
)
(341,660
)
(315,984
)
Indirect costs (included in cost of
revenue)
35,466
35,658
34,016
107,133
119,388
General and administrative (excluding
foreign exchange, central depreciation and other non-routine
costs)
5,818
5,891
4,447
17,552
17,211
Total support costs
$
41,284
$
41,549
$
38,463
$
124,685
$
136,599
Total support costs as a percentage of
revenue
21
%
24
%
26
%
24
%
26
%
(1)
Expro defines Contribution as Total
Revenue less Cost of Revenue excluding depreciation and
amortization and indirect support costs included in Cost of
Revenue.
(2)
Contribution margin is defined as
Contribution as a percentage of Revenue.
(3)
Direct Costs include personnel costs,
sub-contractor costs, equipment costs, repairs and maintenance,
facilities, and other costs directly incurred to generate
revenue.
(4)
Support costs includes indirect costs
attributable to support the activities of the operating segments,
research and engineering expenses and product line management costs
included in Cost of revenue, and General and administrative
expenses representing costs of running our corporate head office
and other central functions including, logistics, sales and
marketing and health and safety and does not include foreign
exchange gains or losses, depreciation and other non-routine
expenses.
EXPRO GROUP HOLDINGS INTERNATIONAL LIMITED
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATION
(In thousands)
(Unaudited)
Adjusted EBITDA Reconciliation and
Adjusted EBITDA Margin:
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Total revenue
$
197,547
$
176,251
$
149,006
$
530,093
$
520,836
Net loss
$
(11,913
)
$
(8,381
)
$
(12,819
)
$
(40,686
)
$
(291,328
)
Interest and finance (income) charges,
net
(678
)
1,604
4,573
2,553
1,329
Income tax expense (benefits)
5,051
727
225
8,323
(4,135
)
Depreciation and amortization
25,605
26,390
27,467
79,754
84,753
Impairment charges
-
-
259
-
275,853
Severance and other charges
3,905
1,637
5,272
6,097
11,135
Merger and integration costs
9,617
4,703
-
19,143
-
Other (income) expenses, net
(685
)
(387
)
(2,261
)
(1,311
)
(982
)
Adjusted EBITDA
$
30,902
$
26,293
$
22,716
$
73,873
$
76,625
Adjusted EBITDA margin
16
%
15
%
15
%
14
%
15
%
EXPRO GROUP HOLDINGS INTERNATIONAL LIMITED
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATION
(In thousands)
(Unaudited)
Adjusted Cash Flow from Operations
Reconciliation:
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2021
2021
2020
2021
2020
Net cash (used in) provided by operating
activities
$
(1,941
)
$
(7,246
)
$
38,988
$
454
$
62,387
Cash paid during the period for interest,
net
1,019
1,016
1,700
3,016
3,000
Cash paid during the period for severance
and other charges
4,022
1,702
5,377
6,216
12,243
Cash paid during the period for merger and
integration costs
8,353
1,654
-
14,531
-
Adjusted Cash Flow from
Operations
$
11,453
$
(2,875
)
$
46,065
$
24,217
$
77,630
Adjusted EBITDA
$
30,902
$
26,293
$
22,716
$
73,873
$
76,625
Cash conversion (1)
37
%
(11
)%
203
%
33
%
101
%
(1)
Expro defines Cash Conversion as Adjusted
Cash Flow from Operations divided by Adjusted EBITDA, expressed as
a percentage.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211108005403/en/
Investors contact: Karen David-Green - Chief
Communications, Stakeholder & Sustainability Officer
InvestorRelations@expro.com +1 281 994 1056
Media contact: Hannah Rumbles - Global Marketing
and Communications Manager MediaRelations@expro.com +44 1224
796729
Expro Group Holdings NV (NYSE:XPRO)
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