Revenue of $370 million, down 7% sequentially
and up 11% year-over-year.
Net loss of $14 million, as compared to net
income of $9 million for the second quarter of 2023 and net loss of
$18 million for the third quarter of 2022.
Adjusted EBITDA1 of $50 million, down 31%
sequentially and up 4% year-over-year. Adjusted EBITDA margin1 of
14%, down sequentially from 18%.
Adjusted EBITDA, excluding $15 million of
demobilization and other unrecoverable operating costs within the
Company’s light well intervention, or LWI, business, of $66
million, down 15% sequentially and up 2% year-over-year. Adjusted
EBITDA margin, excluding LWI-related unrecoverable operating costs,
would have been 18%, down sequentially from 20%.
Expro Group Holdings N.V. (NYSE: XPRO) (the “Company” or
“Expro”) today reported financial and operational results for the
three and nine months ended September 30, 2023.
Third Quarter 2023 Highlights
•
Revenue was $370 million compared to
revenue of $397 million in the second quarter of 2023, a decrease
of $27 million, or 7%, driven by lower activity, primarily in the
North and Latin America (“NLA”) region.
•
Net loss for the third quarter of 2023 was
$14 million, or $0.10 per diluted share, compared to net income of
$9 million, or $0.08 per diluted share, for the second quarter of
2023. Adjusted net loss1 for the third quarter of 2023 was $3
million, or $0.03 per diluted share, compared to adjusted net
income for the second quarter of 2023 of $19 million, or $0.17 per
diluted share.
•
Adjusted EBITDA was $50 million, a
sequential decrease of $22 million, or 31%, primarily attributable
to lower revenue, a less favorable activity mix, and demobilization
and other unrecoverable operating costs within our light well
intervention (“LWI”) business. For the three months ended September
30, 2023, Adjusted EBITDA includes LWI-related unrecoverable
operating costs of $15 million. Adjusted EBITDA for the three
months ended June 30, 2023, includes LWI-related unrecoverable
operating costs of $6 million. Adjusted EBITDA margin for the third
quarter of 2023 and second quarter of 2023 was 14% and 18%,
respectively. Excluding LWI-related unrecoverable operating costs,
Adjusted EBITDA for the third and second quarter of 2023 would have
been $66 million and $78 million, and Adjusted EBITDA margin would
have been 18% and 20%, respectively.
•
Net cash provided by operating activities
for the third quarter of 2023 was $59 million compared to net cash
provided by operating activities of $25 million for the second
quarter of 2023, primarily driven by a favorable movement in net
working capital of $46 million and a decrease in cash paid for
exceptional costs of $7 million, partially offset by a decrease in
Adjusted EBITDA of $22 million. Adjusted cash flow from operations1
and cash conversion1 for the third quarter of 2023 were $64 million
and 127%, respectively, compared to $36 million and 50%,
respectively, for the second quarter of 2023.
Michael Jardon, Expro Chief Executive Officer, noted, “Despite
near-term volatility, the macro backdrop for energy services
remains quite constructive and the international and offshore
markets to which Expro is most leveraged are expected to be
resilient, with increased upstream spending supporting a multi-year
growth phase. Sequentially lower activity in the U.S. reflects a
combination of what we expect will be short-term softness in the
U.S. Gulf of Mexico and what we believe to be structural challenges
for our tubular running services, or TRS, business within the well
construction product line in several U.S. onshore markets. In
addition to a dynamic operating environment, third quarter results
were also negatively impacted by our suspension of vessel-deployed
LWI operations. In sum, while Expro’s results for the third quarter
fell short of expectations, we remain optimistic about the
multi-year outlook for the energy services industry and Expro.
1. A non-GAAP measure.
“As disclosed in our press release on September 27, 2023, we
suspended vessel-deployed LWI operations during the quarter
following a wire failure on the main crane of the third party-owned
vessel working with Expro while the crane was suspending the subsea
module (“SSM”) of Expro’s vessel-deployed LWI system. Results for
the third quarter include the recognition of $15 million of
unrecoverable operating costs. We are continuing to work with the
relevant stakeholders and independent experts to assess the
incident and plan the recovery operation, which we expect to be
completed during the fourth quarter of 2023 or in early 2024. Third
quarter results do not include an estimate for recovery and repair
costs; however, based on the information that is currently
available to us, we do not expect that such recovery and repair
costs, net of insurance, will be material to Expro’s financial
results. After we have recovered our equipment, we will be able to
determine a path forward for our vessel-deployed LWI business,
including when our LWI system will return to operational status,
what alternative service delivery options and service partner
options are available to the company, and the timing and cost
(including potential damage claims) of completing customer work
scopes for which our vessel-deployed LWI system was integral.
“In addition to LWI-related unrecoverable operating costs, third
quarter financial results reflect lower activity and revenue in NLA
within our well flow management and well construction product
lines. Lower well test activity following a series of dry wells
negatively impacted well flow management results and reduced
drilling activity in the U.S. Gulf of Mexico and in the Caribbean
negatively impacted offshore well construction results. We believe
sequentially lower activity and revenue resulting from dry wells
and rig schedules is transitory in nature and we are anticipating a
rebound in NLA offshore activity in the coming quarters. In
contrast, we believe the U.S. onshore market has structural
challenges which will require structural solutions. To that end, we
have begun to rationalize our U.S. onshore operating footprint and
are beginning to re-deploy well construction equipment to select
U.S. basins as well as international markets where we believe we
can achieve better asset utilization, better pricing, and better
returns.
“We also completed the previously announced acquisition of
Houston-based, PRT Offshore at the beginning of October. This
expansion to our portfolio will enable Expro to expand our offering
of cost-effective, technology-enabled services and solutions within
the subsea well access sector in NLA and accelerate the growth of
PRT Offshore’s surface equipment offering in the Europe and
Sub-Saharan Africa (“ESSA”) and Asia Pacific (“APAC”) regions.
“October 1, 2023, also marked the second anniversary of our
completion of the business combination of Expro and Frank’s
International through which we brought together two iconic brands
and created one company focused on best-in-class safety and service
delivery and sustainable value creation. While I am proud of our
team and all that they have accomplished in the past two years, we
still have work to do.”
Notable Awards and
Achievements
Expro won three out of the four awards presented at the Offshore
Technology Conference (“OTC”) Brasil Spotlight on New Technology
Awards for our CentriFi™, Distributed Fiber Optic Sensing (“DFOS”)
and QuikCure® technologies. The OTC Brazil Spotlight Awards program
is an annual event celebrating the latest and most advanced
technologies in offshore energy and showcases the company’s
commitment to technological innovation and excellence in the
offshore energy sector.
In addition, Expro has been shortlisted across four categories
at the annual Global OWI Awards. Our DFOS and CoilHose™
technologies have been shortlisted for Best Example of Digital
Innovation and Best Example of Platform Intervention, respectively.
Expro has also been shortlisted for Intervention Champion of the
Year and Energy Transition Pioneer of the Year.
Expro has also successfully delivered a well cementing project
for a large international oil operator in the US Gulf of Mexico
expanding our innovative Cure technology offering into the Western
Hemisphere. Expro’s solution helped save approximately 18 hours of
cement related drill-out, clean-out and waiting on cement (“WOC”)
time compared to offset wells. By using our Cure technologies, the
requirement for a shoetrack to be left in the casing string was
eliminated, which helped the customer avoid previously experienced
cement sheath-related challenges, while our QuickCure® solution
materially reduced WOC time. This latest project highlights Expro’s
commitment to provide cementing technology solutions that empower
our clients to overcome operational challenges and reduce drilling
time and cost.
In the Middle East and North Africa, one of our customers had a
failed electric submersible pump on a production well in Oman for
which Expro provided a non-explosive solution. Utilizing the Kinley
check valve with non-explosive technology, together with gas lift
stimulation, the non-producing well achieved 2,000 Bbls/Day of
total production.
Finally, in the Asia Pacific region, Expro’s Octopoda™ annulus
intervention technology is being utilized to assist with the
remediation of sustained casing pressure for a major liquified
natural gas (“LNG”) project. Following the success this project,
Octopoda™ will be used on a two well trial project. Octopoda™ is
the only certified annular intervention system in the world with a
reduced environmental footprint that enables direct intervention of
a live annulus without the expense of a heavy workover rig.
Segment Results
Unless otherwise noted, the following discussion compares the
quarterly results for the third quarter of 2023 to the results for
the second quarter of 2023.
North and Latin America (NLA)
Revenue for the NLA segment was $105 million for the three
months ended September 30, 2023, a decrease of $30 million, or 22%,
compared to $135 million for the three months ended June 30, 2023.
The decrease was due to generally lower U.S. onshore activity,
offshore rigs undergoing maintenance and undertaking non drilling
operations, and a number of dry wells in the region, resulting in
lower well construction revenue in the U.S., Canada and Guyana and
lower well flow management revenue in Mexico.
Segment EBITDA for the NLA segment was $20 million, or 19% of
revenues, during the three months ended September 30, 2023, a
decrease of $17 million, or 46%, compared to $37 million or 27% of
revenues during the three months ended June 30, 2023. The decrease
in Segment EBITDA and Segment EBITDA margin was attributable to
lower activity and less favorable activity mix during the three
months ended September 30, 2023.
Europe and Sub-Saharan Africa (ESSA)
Revenue for the ESSA segment was $135 million for the three
months ended September 30, 2023, a decrease of $3 million, or 2%,
compared to $138 million for the three months ended June 30, 2023.
The decrease in revenues was primarily driven by lower well
construction revenue in Cyprus, Mozambique and Senegal and lower
well flow management revenue due to a decrease in customer
activity. The decrease in revenue was offset by increased subsea
well access revenue, particularly in Congo and Angola.
Segment EBITDA for the ESSA segment was $39 million, or 29% of
revenues, for the three months ended September 30, 2023, an
increase of $4 million, or 12%, compared to $35 million, or 25% of
revenues, for the three months ended June 30, 2023. The increase in
Segment EBITDA and Segment EBITDA margin was attributable to a
combination of a more favorable activity mix and increased
activities on higher margin services during the three months ended
September 30, 2023.
Middle East and North Africa (MENA)
Revenue for the MENA segment was $58 million for the three
months ended September 30, 2023, a decrease of $1 million, or 2%,
compared to $59 million for the three months ended June 30, 2023.
The decrease in revenue was driven by lower well flow management
activity primarily in Saudi Arabia, partially offset by higher
activity in Algeria.
Segment EBITDA for the MENA segment was $17 million, or 29% of
revenues, for the three months ended September 30, 2023, a decrease
of $2 million, or 9%, compared to $18 million, or 31% of revenues,
for the three months ended June 30, 2023. The decrease in Segment
EBITDA and Segment EBITDA margin was primarily due to lower
activity and less favorable activity mix during the three months
ended September 30, 2023.
Asia Pacific (APAC)
Revenue for the APAC segment was $71 million for the three
months ended September 30, 2023, an increase of $6 million, or 10%,
compared to $65 million for the three months ended June 30, 2023.
The increase in revenue was primarily due to higher activity across
all product lines, in particular, higher subsea well access revenue
in China (product sales) and Australia (LWI activity).
Segment EBITDA for the APAC segment was ($4) million, or (6)% of
revenues, for the three months ended September 30, 2023, a decrease
of $8 million compared to $4 million, or 5% of revenues, for the
three months ended June 30, 2023. The decrease in Segment EBITDA is
attributable primarily to demobilization and other unrecoverable
operating costs within our LWI business. For the three months ended
September 30, 2023, Segment EBITDA includes LWI-related
unrecoverable operating costs of $15 million. Segment EBITDA for
the three months ended June 30, 2023 include LWI-related
unrecoverable operating costs of $6 million. Excluding LWI-related
unrecoverable operating costs, Segment EBITDA for the third and
second quarter of 2023 would have been $11 million or 15% of
revenue and $9 million or 14% of revenue, respectively.
Stock Repurchase Plan
On October 25, 2023, the Company’s Board of Directors (the
“Board”) approved an extension to the stock repurchase program,
which was set to expire on November 24, 2023. Pursuant to the
extended stock repurchase program, the Company is now authorized to
acquire up to $100 million of its outstanding common stock through
November 24, 2024 (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 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.
Other Financial
Information
The Company’s capital expenditures totaled $27 million in the
third quarter of 2023, of which approximately 90% were used for the
purchase and manufacture of equipment to directly support
customer-related activities and approximately 10% for other
property, plant and equipment, inclusive of software costs. Expro
plans for capital expenditures in the range of approximately $30
million to $40 million for the remainder of 2023.
As of September 30, 2023, Expro’s consolidated cash and cash
equivalents, including restricted cash, totaled $257 million. The
Company had outstanding long-term borrowings of $50 million as of
September 30, 2023. The Company’s total liquidity as of September
30, 2023 was $337 million. Total liquidity includes $80 million
available for drawdowns as loans under the Company’s revolving
credit facility.
Expro’s provision for income taxes for both the third quarter of
2023 and the second quarter of 2023 was approximately $13 million.
The Company’s effective tax rate on a U.S. generally accepted
accounting principles (“GAAP”) basis for the three and nine months
ended September 30, 2023, also reflects liability for taxes in
certain jurisdictions that tax on an other than pre-tax profits
basis, including so-called “deemed profits” regimes.
On October 6, 2023, the Company amended and restated its
revolving credit facility (the “Amended and Restated Facility
Agreement”) pursuant to an amendment and restatement agreement with
DNB Bank ASA, London Branch, as agent, in order to extend the
maturity of the facility for a further 36 months and increase the
total commitments to $250 million, of which $167 million is
available for drawdowns as loans and $83 million is available for
letters of credit. The Company has the ability to increase the
commitments to $350 million.
The financial measures provided that are not presented in
accordance with GAAP are defined and reconciled to their most
directly comparable GAAP measures. Please see “Use of Non-GAAP
Financial Measures” and the reconciliations to the nearest
comparable GAAP measures.
Additionally, downloadable financials are available on the
Investor section of www.expro.com.
Conference Call
The Company will host a conference call to discuss third quarter
2023 results on Thursday, October 26, 2023, at 12:00 p.m. Central
Time (1:00 p.m. Eastern Time).
Participants may also join the conference call by dialing:
U.S.: +1 (833) 470-1428 International: +1
(929) 526-1599 Access ID: 385159
To listen via live webcast, please visit the Investor section of
www.expro.com.
The third quarter 2023 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 three 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: U.S. +1 (866) 813-9403 or +44 (204)
525-0658 Access ID: 585102 Start Date: October 26, 2023, 3:00 p.m.
CT End Date: November 2, 2023, 11:59 p.m. CT
A transcript of the conference call will be posted to the
Investor relations section of the Company’s website as soon as
practicable 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 what the Company considers to be
best-in-class safety and service quality. The Company’s extensive
portfolio of capabilities spans well construction, well flow
management, subsea well access, and well intervention and integrity
solutions.
With roots dating to 1938, Expro has approximately 7,800
employees and provides services and solutions to leading
exploration and production companies in both onshore and offshore
environments in approximately 60 countries.
For more information, please visit: www.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,
guidance, operating results and environmental, social and
governance goals, targets and initiatives. 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 2021 merger of Frank’s International
and Expro Group Holdings International Limited, 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 (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 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, 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, inflationary pressures, volatility in the
banking sector, 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, 2022 filed with the SEC, as well as other risks and
uncertainties set forth from time to time in the reports the
Company files with the SEC. 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, historical practice 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 Adjusted EBITDA, Adjusted EBITDA
margin, contribution, contribution margin, support costs, adjusted
cash flow from operations, cash conversion, adjusted net income
(loss), and adjusted net income (loss) per diluted share, 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 business. These metrics are commonly
employed by financial analysts and investors to evaluate the
operating and financial performance of Expro from period to period
and to compare such performance with the performance of other
publicly traded companies within the industry. You should not
consider Adjusted EBITDA, Adjusted EBITDA margin, contribution,
contribution margin, support costs, adjusted cash flow from
operations, cash conversion, adjusted net income (loss) and
adjusted net income (loss) per diluted share in isolation or as a
substitute for analysis of Expro’s results as reported under GAAP.
Because Adjusted EBITDA, Adjusted EBITDA margin, contribution,
contribution margin, support costs, adjusted cash flow from
operations, cash conversion, adjusted net income (loss) and
adjusted net income (loss) per diluted share 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.
Expro defines Adjusted EBITDA as net income (loss) adjusted for
(a) income tax expense, (b) depreciation and amortization expense,
(c) severance and other expense, (d) merger and integration
expense, (e) gain on disposal of assets, (f) other (income)
expense, net, (g) stock-based compensation expense, (h) foreign
exchange (gains) losses and (i) interest and finance (income)
expense, net. Adjusted EBITDA margin reflects Adjusted EBITDA
expressed as a percentage of total revenue.
Contribution is defined as total revenue less cost of revenue
excluding depreciation and amortization expense, adjusted for
indirect support costs and stock-based compensation expense
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
supporting the activities of the operating segments, research and
engineering expenses and product line management costs included in
cost of revenue, excluding depreciation and amortization expense,
and general and administrative expense, excluding depreciation and
amortization expense, which represent 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 and other non-routine
expenses. Adjusted cash flow from operations is defined as net cash
(used in) provided by operating activities adjusted for cash paid
during the period for interest, net, severance and other expense
and merger and integration expense. Cash conversion is defined as
Adjusted cash flow from operations divided by Adjusted EBITDA,
expressed as a percentage.
The Company defines adjusted net income (loss) as net income
(loss) before merger and integration expense, severance and other
expense, stock-based compensation expense, and gain on disposal of
assets, adjusted for corresponding tax benefits of these items. The
Company defines adjusted net income (loss) per diluted share as net
income (loss) per diluted share before merger and integration
expense, severance and other expense, stock-based compensation
expense, and gain on disposal of assets, adjusted for corresponding
tax benefits of these items, divided by diluted weighted average
common shares
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.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except share
data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2023
2023
2022
2023
2022
Total revenue
$
369,818
$
396,917
$
334,351
$
1,106,014
$
928,452
Operating costs and expenses:
Cost of revenue, excluding depreciation
and amortization expense
(315,825
)
(318,948
)
(283,695
)
(924,420
)
(779,808
)
General and administrative expense,
excluding depreciation and amortization expense
(15,437
)
(16,186
)
(18,593
)
(44,908
)
(47,943
)
Depreciation and amortization expense
(37,414
)
(37,235
)
(34,825
)
(109,386
)
(105,229
)
Merger and integration expense
(817
)
(1,377
)
(1,629
)
(4,332
)
(8,624
)
Severance and other expense
(1,897
)
(2,663
)
(3,242
)
(5,487
)
(5,414
)
Total operating cost and expenses
(371,390
)
(376,409
)
(341,984
)
(1,088,533
)
(947,018
)
Operating income (loss)
(1,572
)
20,508
(7,633
)
17,481
(18,566
)
Other (expense) income, net
(1,129
)
(1,462
)
432
(3,540
)
1,672
Interest and finance (expense) income,
net
(373
)
(17
)
1,502
(1,688
)
3,227
(Loss) income before taxes and equity
in income of joint ventures
(3,074
)
19,029
(5,699
)
12,253
(13,667
)
Equity in income of joint ventures
2,495
2,805
3,510
7,736
10,141
(Loss) income before income
taxes
(579
)
21,834
(2,189
)
19,989
(3,526
)
Income tax expense
(13,307
)
(12,539
)
(15,405
)
(30,931
)
(29,550
)
Net (loss) income
$
(13,886
)
$
9,295
$
(17,594
)
$(10,942
)
$(33,076
)
Net (loss) income per common
share:
Basic
$
(0.13
)
$
0.09
$
(0.16
)
$(0.10
)
$(0.30
)
Diluted
$
(0.13
)
$
0.08
$
(0.16
)
$(0.10
)
$(0.30
)
Weighted average common shares
outstanding:
Basic
108,777,429
108,662,509
108,708,651
108,764,599
109,183,863
Diluted
108,777,429
109,381,977
108,708,651
108,764,599
109,183,863
EXPRO GROUP HOLDINGS
N.V.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
September 30,
December 31,
2023
2022
Assets
Current assets
Cash and cash equivalents
$
255,323
$
214,788
Restricted cash
1,688
3,672
Accounts receivable, net
412,642
419,237
Inventories
154,488
153,718
Assets held for sale
-
2,179
Income tax receivables
26,585
26,938
Other current assets
59,873
44,975
Total current assets
910,599
865,507
Property, plant and equipment, net
466,894
462,316
Investments in joint ventures
67,500
66,038
Intangible assets, net
213,447
229,504
Goodwill
229,131
220,980
Operating lease right-of-use assets
70,937
74,856
Non-current accounts receivable, net
10,350
9,688
Other non-current assets
8,047
8,263
Total assets
$
1,976,905
$
1,937,152
Liabilities and stockholders’
equity
Current liabilities
Accounts payable and accrued
liabilities
$
297,456
$
272,704
Income tax liabilities
42,663
37,151
Finance lease liabilities
1,055
1,047
Operating lease liabilities
17,375
19,057
Other current liabilities
88,597
107,750
Total current liabilities
447,146
437,709
Long-term borrowings
50,000
-
Deferred tax liabilities, net
25,119
30,419
Post-retirement benefits
9,163
11,344
Non-current finance lease liabilities
12,563
13,773
Non-current operating lease
liabilities
53,846
60,847
Other non-current liabilities
102,072
97,165
Total liabilities
699,909
651,257
Total stockholders’ equity
1,276,996
1,285,895
Total liabilities and stockholders’
equity
$
1,976,905
$
1,937,152
EXPRO GROUP HOLDINGS
N.V.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(10,942
)
$
(33,076
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization expense
109,386
105,229
Equity in income of joint ventures
(7,736
)
(10,141
)
Stock-based compensation expense
14,682
14,932
Change in fair value of investments
-
1,199
Elimination of unrealized profit on sales
to joint ventures
3,520
-
Deferred taxes
(8,066
)
(3,171
)
Unrealized foreign exchange loss
1,725
6,544
Changes in assets and liabilities:
Accounts receivable, net
3,193
(105,814
)
Inventories
(587
)
(8,044
)
Other assets
(15,279
)
(1,289
)
Accounts payable and accrued
liabilities
29,269
18,792
Other liabilities
(15,422
)
(2,154
)
Income taxes, net
4,481
11,884
Dividends from joint ventures
2,754
2,985
Other
(5,450
)
(10,650
)
Net cash provided by (used in)
operating activities
105,528
(12,774
)
Cash flows from investing
activities:
Capital expenditures
(84,623
)
(50,606
)
Payment for acquisition of business, net
of cash acquired
(8,477
)
-
Acquisition of technology
-
(7,967
)
Proceeds from disposal of assets
2,013
6,579
Proceeds from sale / maturity of
investments
288
11,386
Net cash used in investing
activities
(90,799
)
(40,608
)
Cash flows from financing
activities:
Release of (cash pledged for) collateral
deposits, net
350
(131
)
Payments of loan issuance and other
transaction costs
-
(132
)
Proceeds from long-term borrowings
50,000
-
Acquisition of common stock
(10,011
)
(12,996
)
Payment of withholding taxes on
stock-based compensation plans
(2,436
)
(4,145
)
Repayment of financed insurance
premium
(6,733
)
(5,074
)
Repayment of finance leases
(1,296
)
(855
)
Net cash provided by (used in)
financing activities
29,874
(23,333
)
Effect of exchange rate changes on cash
and cash equivalents
(6,052
)
(6,418
)
Net increase (decrease) to cash and
cash equivalents and restricted cash
38,551
(83,133
)
Cash and cash equivalents and restricted
cash at beginning of period
218,460
239,847
Cash and cash equivalents and
restricted cash at end of period
$
257,011
$
156,714
Supplemental disclosure of cash flow
information:
Cash paid for income taxes, net of
refunds
$
34,722
$
20,529
Cash paid for interest, net
1,456
2,890
Change in accounts payable and accrued
expenses related to capital expenditures
1,432
2,508
EXPRO GROUP HOLDINGS
N.V.
SELECTED OPERATING SEGMENT
DATA
(In thousands)
(Unaudited)
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,
2023
2023
2022
2023
2022
NLA
$
105,252
28
%
$
134,830
34
%
$
134,574
40
%
$
366,310
33
%
$
368,129
40
%
ESSA
135,395
37
%
138,062
35
%
99,809
30
%
387,105
35
%
271,998
29
%
MENA
58,057
16
%
59,163
15
%
50,030
15
%
168,165
15
%
146,108
16
%
APAC
71,114
19
%
64,862
16
%
49,938
15
%
184,434
17
%
142,217
15
%
Total
$
369,818
100
%
$
396,917
100
%
$
334,351
100
%
$
1,106,014
100
%
$
928,452
100
%
Segment EBITDA(1), Segment 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,
2023
2023
2022
2023
2022
NLA
$
19,967
19
%
$
36,703
27
%
$
39,743
30
%
$
88,544
24
%
$
100,083
27
%
ESSA
39,268
29
%
34,964
25
%
17,760
18
%
95,017
25
%
44,502
16
%
MENA
16,871
29
%
18,491
31
%
14,667
29
%
49,930
30
%
43,882
30
%
APAC (5)(6)
(4,286
)
(6
)%
3,452
5
%
(8,617
)
(17
)%
(3,532
)
(2
)%
1,177
1
%
71,820
93,610
63,553
229,959
189,644
Corporate costs(4)
(24,070
)
(24,810
)
(18,849
)
(73,961
)
(63,626
)
Equity in income of joint ventures
2,495
2,805
3,510
7,736
10,141
Adjusted EBITDA (5)(7)
$
50,245
14
%
$
71,605
18
%
$
48,214
14
%
$
163,734
15
%
$
136,159
15
%
(1)
Expro evaluates its business segment
operating performance using Segment Revenue, Segment EBITDA and
Segment EBITDA margin. Expro’s management believes Segment EBITDA
and Segment EBITDA margin are useful operating performance measures
as they exclude transactions not related to its core operating
activities, corporate costs and certain non-cash items and allows
Expro to meaningfully analyze the trends and performance of its
core operations by segment as well as to make decisions regarding
the allocation of resources to segments.
(2)
Expro defines Segment 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.
(5)
APAC Segment EBITDA and Adjusted EBITDA
for the three months ended September 30, 2023 includes LWI-related
demobilization and other unrecoverable operating costs of $15
million. Excluding LWI-related unrecoverable operating costs, for
the three months ended September 30, 2023 APAC Segment EBITDA would
have been $11 million and Adjusted EBITDA would have been $66
million. APAC Segment EBITDA margin would have been 15% and
Adjusted EBITDA margin would have been 18%. APAC Segment EBITDA and
Adjusted EBITDA for the three months ended June 30, 2023 includes
LWI-related unrecoverable operating costs of $6 million. Excluding
LWI-related unrecoverable operating costs, for the three months
ended June 30, 2023 APAC Segment EBITDA would have been $9 million
and Adjusted EBITDA would have been $78 million. APAC Segment
EBITDA margin would have been 14% and Adjusted EBITDA margin would
have been 20%.
(6)
Excluding $17 million of mobilization,
start-up and commissioning costs during the three months ended
September 30, 2022, Segment EBITDA would have been $8 million and
Segment EBITDA margin would have been 16%.
(7)
Excluding $17 million of mobilization,
start-up and commissioning costs during the three months ended
September 30, 2022, Adjusted EBITDA would have been $66 million and
Adjusted EBITDA margin would have been 19%.
EXPRO GROUP HOLDINGS
N.V.
REVENUE BY AREAS OF
CAPABILITIES
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2023
2023
2022
2023
2022
Well construction
$
116,293
31
%
$
143,719
36
%
$
129,455
39
%
$
388,277
35
%
$
362,684
39
%
Well management(1)
253,525
69
%
253,198
64
%
204,896
61
%
717,737
65
%
565,768
61
%
Total
$
369,818
100
%
$
396,917
100
%
$
334,351
100
%
$
1,106,014
100
%
$
928,452
100
%
(1)
Well management consists of well flow
management, subsea well access, and well intervention and
integrity.
EXPRO GROUP HOLDINGS
N.V.
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,
2023
2023
2022
2023
2022
Total revenue
$
369,818
$
396,917
$
334,351
$
1,106,014
$
928,452
Cost of revenue, excluding depreciation
and amortization expense
(315,825
)
(318,948
)
(283,695
)
(924,420
)
(779,808
)
Indirect costs (included in cost of
revenue)
62,772
56,605
58,097
184,198
178,522
Stock-based compensation expense
1,789
2,049
2,383
5,212
6,192
Direct costs (excluding depreciation and
amortization expense) (3)
(251,264
)
(260,294
)
(223,215
)
(735,010
)
(595,094
)
Contribution (5)(6)
$
118,554
$
136,623
$
111,136
$
371,004
$
333,358
Contribution margin (6)
32
%
34
%
33
%
34
%
36
%
Support Costs(4):
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2023
2023
2022
2023
2022
Cost of revenue, excluding depreciation
and amortization expense
$
315,825
$
318,948
$
283,695
$
924,420
$
779,808
Direct costs (excluding depreciation and
amortization expense)
(251,264
)
(260,294
)
(223,215
)
(735,010
)
(595,094
)
Stock-based compensation expense
(1,789
)
(2,049
)
(2,383
)
(5,212
)
(6,192
)
Indirect costs (included in cost of
revenue)
62,772
56,605
58,097
184,198
178,522
General and administrative expense
(excluding depreciation and amortization expense, foreign exchange,
and other non-routine costs)
7,961
11,288
8,321
30,749
28,697
Total support costs
$
70,733
$
67,893
$
66,418
$
214,947
$
207,219
Total support costs as a percentage of
revenue
19
%
17
%
20
%
19
%
22
%
(1)
Expro defines Contribution as Total
Revenue less Cost of Revenue, excluding depreciation and
amortization expense, adjusted for indirect support costs and
stock-based compensation expense 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, excluding depreciation and
amortization expense, 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 and other non-routine expenses.
(5)
Contribution for the three months ended
September 30, 2023 includes LWI-related demobilization and other
unrecoverable operating costs of $15 million. Excluding LWI-related
unrecoverable operating costs, Contribution and Contribution Margin
for the third quarter of 2023 would have been $135 million and 36%,
respectively. Contribution for the three months ended June 30, 2023
include LWI-related unrecoverable operating costs of $6 million.
Excluding LWI-related unrecoverable operating costs, Contribution
and Contribution Margin for the second quarter of 2023 would have
been $143 million and 36%, respectively.
(6)
Excluding $17 million of mobilization,
start-up and commissioning costs during the three months ended
September 30, 2022, Contribution would have been $128 million and
Contribution margin would have been 38%.
EXPRO GROUP HOLDINGS
N.V.
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,
2023
2023
2022
2023
2022
Total revenue
$
369,818
$
396,917
$
334,351
$
1,106,014
$
928,452
Net (loss) income
$
(13,886
)
$
9,295
$
(17,594
)
$
(10,942
)
$
(33,076
)
Income tax expense
13,307
12,539
15,405
30,931
29,550
Depreciation and amortization expense
37,414
37,235
34,825
109,386
105,229
Merger and integration expense
817
1,377
1,629
4,332
8,624
Severance and other expense
1,897
2,663
3,242
5,487
5,414
Other expense (income), net
1,129
1,462
(432
)
3,540
(1,672
)
Stock-based compensation expense
4,934
5,577
4,684
14,682
14,932
Foreign exchange loss
4,260
1,440
7,957
4,630
10,385
Interest and finance expense (income),
net
373
17
(1,502
)
1,688
(3,227
)
Adjusted EBITDA (1)(2)
$
50,245
$
71,605
$
48,214
$
163,734
$
136,159
Adjusted EBITDA margin (2)
14
%
18
%
14
%
15
%
15
%
(1)
Adjusted EBITDA for the three months ended
September 30, 2023 includes LWI-related demobilization and other
unrecoverable operating costs of $15 million. Excluding LWI-related
unrecoverable operating costs, for the three months ended September
30, 2023 Adjusted EBITDA would have been $66 million and Adjusted
EBITDA margin would have been 18%. Adjusted EBITDA for the three
months ended June 30, 2023 includes LWI-related unrecoverable
operating costs of $6 million. Excluding LWI-related unrecoverable
operating costs, for the three months ended June 30, 2023 Adjusted
EBITDA would have been $78 million and Adjusted EBITDA margin would
have been 20%.
(2)
Excluding $17 million of mobilization,
start-up and commissioning costs during the three months ended
September 30, 2022, Adjusted EBITDA would have been $66 million and
Adjusted EBITDA margin would have been 19%.
EXPRO GROUP HOLDINGS
N.V.
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,
2023
2023
2022
2023
2022
Net cash provided by (used in) operating
activities
$
58,841
$
25,358
$
(667
)
$
105,528
$
(12,774
)
Cash (received) paid for interest, net
910
(420
)
891
1,456
2,890
Cash paid for merger and integration
expense
1,614
9,076
5,525
13,014
22,994
Cash paid for severance and other
expense
2,208
1,999
2,501
6,779
3,273
Adjusted Cash Flow from
Operations
$
63,573
$
36,013
$
8,250
$
126,777
$
16,383
Adjusted EBITDA
$
50,245
$
71,605
$
48,214
$
163,734
$
136,159
Cash conversion (1)
127
%
50
%
17
%
77
%
12
%
(1)
Expro defines Cash Conversion as Adjusted
Cash Flow from Operations divided by Adjusted EBITDA, expressed as
a percentage.
EXPRO GROUP HOLDINGS
N.V.
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATION
(In thousands, except per
share amounts)
(Unaudited)
Reconciliation of Adjusted Net Income
(Loss) and Adjusted Net Income (Loss) per Diluted Share:
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2023
2023
2022
2023
2022
Net (loss) income
$
(13,886
)
$
9,295
$
(17,594
)
$
(10,942
)
$
(33,076
)
Adjustments:
Merger and integration expense
817
1,377
1,629
4,332
8,624
Severance and other expense
1,897
2,663
3,242
5,487
5,414
Stock-based compensation expense
4,934
5,577
4,684
14,682
14,932
Total adjustments, before taxes
7,648
9,617
9,555
24,501
28,970
Tax benefit
-
(32
)
(21
)
(43
)
(454
)
Total adjustments, net of taxes
7,648
9,585
9,534
24,458
28,516
Adjusted net (loss) income
$
(6,238
)
$
18,880
$
(8,060
)
$
13,516
$
(4,560
)
As reported diluted weighted average
common shares outstanding
108,777,429
109,381,977
108,708,651
108,764,599
109,183,863
As reported net (loss) income per diluted
share
$
(0.13
)
$
0.08
$
(0.16
)
$
(0.10
)
$
(0.30
)
Adjusted net (loss) income per diluted
share
$
(0.06
)
$
0.17
$
(0.07
)
$
0.12
$
(0.04
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026734177/en/
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Expro Group Holdings NV (NYSE:XPRO)
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