Hello, everybody, and a warm welcome to today's Expro Q1 2022 Conference Call. My name is Melissa, and I'll be your operator. [Operator Instructions] I now have the pleasure of handing over to Karen David-Green, to begin. Karen, over to you.

Welcome, everyone, to Expro's First Quarter 2022 Conference Call. I'm joined today by Mike Jardon, CEO; and Quinn Fanning, CFO. First, Mike and Quinn will share their prepared remarks, and then we will open it up for questions. We have an accompanying presentation on our first quarter results that is posted on the Expro website, expro.com, under the Investors section. In addition, the first quarter financials are downloadable on the Expro website under the Investors section. The downloadable financials include historical Frank's and legacy Expro financials along with the combined company pro forma historical results. I'd like to remind everyone that some of today's comments may refer to or contain forward-looking statements. Such remarks are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such statements speak only as of today's date, and the Company assumes no responsibility to update any forward-looking statements as of any future date. The Company has included in its SEC filings cautionary language identifying important factors that could cause actual results to be materially different from those set forth in any forward-looking statements. A more complete discussion of these risks is included in the Company's SEC filings, which may be accessed on the SEC website or on our website at expro.com. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable GAAP financial measure in our first quarter 2022 earnings release, which can be found on our website. With that, I'd like to turn the call over to Mike.

Thank you, Karen. Good morning and good afternoon, everyone. The first quarter was a solid start to 2022 as we saw improving fundamentals across our business and the industry. Prior to the merger, which was completed last October, Expro and Frank's were market leaders, each with strong reputations for safety, service quality and innovation. The combined company now has the scale, scope and financial profile required to compete and win in what is probably the most attractive and most dynamic energy services market that I have observed in the thirty years that I've been in the business. Our results in the first quarter and our outlook for 2022 and beyond underscore the benefit of Expro's balanced portfolio of services and solutions that spans the entire well life cycle. As we have previously shared, we believe through-cycle resilience is a significant advantage and competitive differentiator for Expro. We have also never been better positioned to capture cyclical recovery upside, and that recovery is beginning to happen now. In addition to our current portfolio of services and solutions, Expro has a global operating footprint with established positions in key growth markets. As a result, we are poised to capitalize on increased spending and activity. We also continue to have a best-in-class innovation platform and technology portfolio that enable us to support our customers' efficiency and emissions-related goals, capture market share, capitalize on industry trends and lead the next chapter of our industry. Finally, our strong balance sheet and merger-related synergies also provide us with a significant financial, operational and strategic flexibility that will allow us to accelerate growth and create long-term stakeholder value. On today's call, I'm going to touch on three main topics. I'll walk you through our first quarter performance. I'll give you an update on our integration process. And…

Thank you, Mike, and good morning and good afternoon to everyone on the call. As Mike noted, I will cover the results for the quarter ended March 31, 2022, and will primarily highlight our sequential performance compared to the quarter ended December 31, 2021. To recap, we reported revenue of $280 million for the March quarter, which was up $29 million or approximately 12% relative to the combined revenue of Expro and Frank's in Q1 2021 and was down $16 million or approximately 5% relative to the December quarter. The sequential decrease in revenues was driven by lower activity across our Europe and Sub-Saharan Africa or ESSA and Asia Pacific or APAC segments, partially offset by higher activity in North and Latin America or NLA, and Middle East and North Africa or MENA segments. Adjusted EBITDA for Q1 2022 was approximately $37 million, representing a $13 million or 54% increase year-over-year relative to the combined adjusted EBITDA of Expro and Frank's in Q1 2021 and a sequential decrease of approximately $14 million or 27% relative to the December quarter. Adjusted EBITDA margin in Q1 was 13% as compared to 17% in Q4 2021. The sequential decrease in revenue and adjusted EBITDA was driven by a combination of seasonally lower activity, particularly in Europe. And as Mike noted, some projects that we expected to begin in Q1 slipping to the right. Our activity mix was less favorable in Q1, and we also recognized a couple of million dollars in mobilization and other start-up costs on projects that are scheduled to begin in Q2. Partially offsetting these items was lower support costs. As highlighted in our press release, adjusted net income for the first quarter of 2022 was $0.01 per diluted share, compared to an adjusted net loss for the fourth quarter…

Thank you, Quinn. We started 2022 with solid first quarter operating performance that drove significant growth on the top and bottom lines and demonstrated the potential of our resilient, flexible business model. Our broad portfolio of services and solutions continue to create opportunities in the growth markets that will be key to Expro's long-term sustained success. Our innovative platform, next-generation technology and solutions and ESG focus our differentiators that continue to rapidly advance our reputation and outstanding track record with customers as a leading well expert. We are incredibly excited about the strength and position of Expro and our ability to capitalize on the favorable outlook for our business. Our great momentum can only be achieved through the focus of our team, which has maintained through the merger and our ongoing integration process. Our talented group of global team members are supportive of each other and that translates to high levels of service and support for our customers. Their work drives our success day in and day out as we accelerate growth, improve profitability and enhance value for shareholders, employees, customers and partners. Thank you again. Operator, let's go ahead and open up for a few questions.

[Operator Instructions] We'll take our first question today from Taylor Zurcher of Tudor, Pickering, Holt & Co.

My first one is just on pricing. So you operate in a number of different sort of end markets, but a lot of them have really good industry structure that results in a more stable pricing through the cycle. But at this point, I mean you talked a little bit about capacity constraints impacting the Q1 numbers. You've also got inflationary pressures blowing pretty strong in the background. So curious if you could just give us an update on any sort of pricing indicators you're seeing across the portfolio? And if you're having any success or think you might have success pushing pricing over the back half of 2022?

Okay. Well, thanks, Taylor. It's a good question. I guess what I would say is that, ultimately, the conditions are really becoming favorable for us to get pricing traction, both across product lines as well as geographies. And yes, we are starting to see some net pricing improvements. Geographically, overall net pricing momentum is most prevalent today in the U.S. That's where we're really starting to see that. And our expectation is that we'll continue to see those net pricing gains, they'll kind of move eastward. They'll move internationally over the next couple of quarters. And ultimately, for us, we're much better positioned internationally. So I do think we'll start to see some pricing levers, some pricing traction in the back half of the year. But ultimately, for us, we are seeing some pricing improvements today. We are seeking price increases, in particular, around personnel rates. And then also, for some of our assets that we're really loading up, we're getting good utilization of, things like subsea well access, particularly with some of our higher-end landing strings, but also around well construction especially in deep water and some of the complex activities, we're starting to see the ability to get some pricing traction there. So good signs, good indicators that we're going to see more of this as we move forward. And I think we'll really start to see the most amount of leverage and pricing traction in the second half of this year, which fundamentally, I think, really sets us up well for continued activity growth, but also better pricing as we go into 2023.

Yes. Good to hear. Follow-up just on kind of the demand outlook. Mike, I think you said in the prepared remarks that you're seeing some acceleration in deepwater and offshore activity. Those are pretty similar comments to what a lot of your offshore-oriented peers have talked about in prior weeks, and it feels like Latin America is a strong market. West Africa, increasingly a strong market into the back half of the year. And I guess I'm just curious if you could flesh out those comments a little bit more. Where are you seeing the most improved demand? And is it a function of this Russia-Ukraine situation forcing operators to think long and hard about accelerating investments or just a mix of everything?

Sure. No, I think it's a really good question. I guess what I would say is, ultimately, internationally, the short cycle OpEx-type investments, that's what we're really starting to see strength, and I think that will be very much be the case in the second half of the year. So production optimization, production enhancement, intervention, those type of activities, I think we'll continue to see that. And that really allows that kind of short-cycle OpEx-type activity. That's the international operators' version of going out and completing more wells in U.S. land. But I think ultimately, offshore activity, I think it's well positioned to grow both in shallow and deepwater, I think particularly as operators starting to increase their infill drilling as well as their tieback type activity. So I think that's going to be strong. You touched on those areas. Latin America, I think, is going to be quite a strong area. Brazil in particular. And we're starting to see more technical inquiries and more discussions around some of the deepwater plays in West Africa. And I think as operators continue to kind of firm up their plans. And yes, I think the ongoing challenges in the Ukraine are starting to drive some of those decisions. So fundamentally, I said to begin with, that this is probably the most constructive environment we've seen in my 30 years in the industry. And everything we see, and I think it's why you hear some comment, consistent comments from all of the service providers, our peers as well as ourselves. Everybody is kind of seeing the same indicators from customer momentum and customer inquiries and order backlog building and those type of things.

[Operator Instructions] We don't have any further questions registered at this time. So I'd now like to thank you all for joining. You may now disconnect. Have a lovely rest of your day. Thank you.

Thank you, Melissa.

Thank you, Melissa.