Thank you for your patience, everyone. The Expro Group Holdings N.V. 2024Q4 earnings presentation will begin shortly. During the presentation, you will have the opportunity to ask questions by pressing star followed by one on your telephone keypad. Hello, and welcome to the Expro Group Holdings N.V. 2024Q4 earnings presentation. My name is Carla, and I will be coordinating your call today. During the presentation, you will have the opportunity to ask questions by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I would now like to hand you over to Chad Stephenson, director of investor relations to begin. Chad, please go ahead when you're ready.

Welcome to Expro Group Holdings N.V.'s fourth quarter 2024 conference call. I'm joined today by Expro Group Holdings N.V.'s CEO, Mike Jardon, and Expro Group Holdings N.V.'s CFO, Quinn Fanning. First, Mike and Quinn have some prepared remarks, then we will open it up for questions. We have an accompanying presentation on our fourth quarter results posted on the Expro Group Holdings N.V. website, expro.com, under the investor section. In addition, supplemental financial information for the fourth quarter results is downloadable on the Expro Group Holdings N.V. website, likewise under the investor section. 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 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's website, sec.gov, or our website again at expro.com. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable financial measure in our fourth quarter 2024 earnings release, which can also be found on our website. I'd like to turn the call over to Mike.

Good morning, everyone. I'd like to start off by reviewing the fourth quarter and full year 2024 financial results as was summarized in today's earnings press release. I will then discuss what I would characterize as a dynamic macro environment, which despite our expectation of a near-term moderating of upstream investment, we believe supports a positive multiyear outlook for energy services companies with exposure to international and offshore markets. Finally, Quinn will provide some additional commentary on the just completed quarter, the full year, and share some additional financial information. For a recap of consolidated results, quarterly results by region, I'll direct you to slides two through seven of the presentation we posted to expro.com. Turning to slide two, I am pleased to report a solid quarter for Expro Group Holdings N.V. with Q4 2024 revenue of $437 million and adjusted EBITDA of $100 million or 23% of revenue. Q4 adjusted cash flow from operations and free cash flow were $115 million and $75 million respectively. Of note, Q4 2024 results reflect our best financial performance in terms of adjusted EBITDA, adjusted EBITDA margin, adjusted cash flow from operations, and free cash flow since we closed the Expro Freight's merger in October of 2021. The sequential increase in revenue of $14 million in the fourth quarter was primarily due to increased activity in Angola within our Subsea Well Access business and higher well flow management services in Algeria, Iraq, and Saudi Arabia. Compared to Q4 2023, revenue was up $30 million or 7%, again reflecting a strong quarter for the Subsea Well Access business as well as results of the acquired CoreTrax business, partially offset by lower revenue from our Congo production solutions project. As highlighted in our press release, we recently resolved our outstanding variation orders related to the…

Thank you, Mike. Good morning and good afternoon to everyone on the call. As Mike noted, we reported revenue of $437 million for the quarter ended December 31st, as compared to the guidance range for Q4 2024, revenue of $440 to $470 million was provided on our Q3 earnings conference call. Revenue was up sequentially $14 million or 3% relative to the third quarter of 2024. Year over year, revenue was up $30 million or approximately 7% relative to the fourth quarter of 2023. North and Latin America came in a bit below Q4 revenue quotations, primarily reflecting lower than expected well construction activity and tubular sales in the Gulf of America. Lower CoreTrax revenue was largely driven by delivery delays within the expandables product line. Additionally, lower well flow management revenue in Apex, specifically in Malaysia and Australia, impacted Q4 results. At the full year, revenue at $1.71 billion was up $200 million or approximately 13% year over year. Activity and revenue across all of our regions increased during the year ended December 2024, most notably in NLA, Issa, and MENA. As Mike noted, MENA in particular was bolstered by the CoreTrax acquisition. Adjusted EBITDA for the fourth quarter of 2024 was $100 million as compared to Q4 guidance of $90 million to $105 million, representing a sequential increase of approximately $15 million or 18% relative to the third quarter of 2024. Adjusted EBITDA margin for the fourth quarter was 23%, up approximately 300 basis points quarter over quarter. On a full-year 2024 basis, adjusted EBITDA was $347 million, representing an increase of almost $100 million, approximately 40% relative to 2023. Adjusted EBITDA margin for the full year was approximately 20%, which represents an increase of approximately 400 basis points year over year. Turning to regional results for North…

Thank you, Quinn. Expro Group Holdings N.V. accomplished a lot in 2024. Solid financial performance including year-over-year growth in revenue of 13% and year-over-year growth in adjusted EBITDA of 40%. Some key operational highlights include the acquisition of CoreTrax, which enhances our depth of talent and the capabilities of our product offerings, the successful integration of the PRT Offshore team, and the completion of the construction and commissioning phase of the large Congo production solutions project. While we believe the macro backdrop sets up 2025 to be a transition year for the energy services industry, Expro Group Holdings N.V.'s outlook is for steady revenue, if not modest growth, relative to 2024. Activity mix and operating efficiency gains should translate into adjusted EBITDA dollars and margins at or above 2024 levels. Absent further geopolitical disruptions, we expect momentum to build in the international and offshore markets as the year progresses and concerns about oil supply abate. Beyond 2025, we remain very bullish on the outlook for long-cycle development driven by economic growth, security of supply considerations, and market policymakers accepting that hydrocarbons and particularly natural gas will remain a key element of the global energy slate for the foreseeable future. With that, we can open up the call for questions.

Star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We will make a quick pause here for the questions to be registered. Our first question comes from the line of Eddie Kim with Barclays.

Hi. Good morning. Wanted to ask about the full-year 2025 revenue guide of stable to modestly up year over year, which is a little bit higher than what others have indicated. At more kind of in the maybe flat or maybe even flat to down kind of level. Is that more a function of maybe Expro Group Holdings N.V. gaining share or just a better than expected outlook than what others are saying, or is it maybe a function of kind of Expro Group Holdings N.V. specific differences? I know there are a lot of moving parts with your CoreTrax acquisition last year and the Congo project moving into the O&M phase of the contract. So just more details around your full-year revenue guidance, that would be great.

Sure. No. Eddie, good morning, and thanks for the question. I guess that I would frame it up like this. Part of it has to do with the markets that we have a lot of exposure to. You know, whether it's US land, which I think is gonna have some choppiness this year or you know, the announced reduction in spend by Pemex in Mexico, we have very minimal spend. We're about, you know, four and two percent respectively revenue from those. It also has to do with our exposure to the Saudi market. As we try to highlight in a discussion, most of our exposure in Saudi is really unconventional land, gas, so the jackup reduction and the offshore reduction is not gonna have as much of an impact on us. And then the other one is really kinda what's gonna happen in the offshore Australia market. So it's really kind of us. It's a combination of the markets we're exposed to. It also frankly is we very intentionally and strategically have done so accretive M&A in the last few years. We're gonna see the benefit of those as we internationalize those businesses. And frankly, we're also gonna see the benefit of some of the investments we've made in our own engineering efforts. You know, whether it's, you know, introduction of technology around segmentation, or introducing a technology to reduce personnel in the red zone. We're really starting to see the benefit of it. So some of it's related to our business, the markets we're in, and really continue to see some of the internationalization of our overall business.

Understood. Understood. My follow-up is just on the first quarter guidance. The 15% kind of sequential decline in revenue is a bit more steep than historically. If I look at past years, I think the sequential decline has been kind of in the mid-single digits range. So just any more color on why this first quarter is the decline is a little bit more steep than historically. And then I guess, just your confidence level in the rebounds, in 2Q and the rest of the year, is that more your expectation for the market the overall market to kinda rebound, or is it based on kinda projects you're working on currently?

Hey. Yeah. It's Quinn. I'll take that. So number one on the sequential decline in the first quarter, I think a couple of things that I would highlight would be number one, we had a very strong quarter in terms of subsea project deliveries in Q4 2024. So we won't repeat that in the first quarter. And beyond that, it's really the, you know, kind of, you know, as expected and as this happened the last number of years, the winter season in the northern hemisphere, which most significantly impacts the North Sea activity. And I guess if you look at it from a year-over-year perspective, we did have Congo project-related revenue last year, which, you know, somewhat insulated the step down. That was also true in 2023. So, essentially, when you remove the Congo benefit in the last two years, it's actually pretty consistent with, you know, the seasonality that we've experienced in the past. So, again, the Q4 2024 subsea projects probably magnify it a bit. Regarding the rebound, you know, our internal forecasting and budgeting processes are very much bottoms up. A lot of it relates to expected project timing. In part, you know, benefiting from the season, northern hemisphere kinda, you know, passing. You know, so that is, you know, expected, you know, uptick. But beyond that, you know, we had some relative weakness in terms of NLA, you know, in the tubulars, deliveries, and the expandables product line. And at least based on the visibility that we have today, that will somewhat reverse. So it's really, you know, kind of as the team sees projects lining up, in 2024, hopefully, the macro, you know, situation improves a bit, but have relatively good visibility on our key two activity. And based on what we know today, we should see, you know, the typical recovery.

Okay. Great. All very clear. Thank you. I'll turn it back.

Thanks, Eddie.

Thank you. And our next question comes from Adi Modak with Goldman Sachs.

Hi. Good morning, team. I guess on the thanks for all the color on the Drive 25. I was just wondering if you can give us more color on the free cash flow progression as well from the 7% of revenue this year into the 10% target over time.

Yeah. I'll Adi, thanks for the question. I'll comment on the Drive 25 initiative. This was something that we actually highlighted in our Q3 call that we kicked off kind of at the middle of summer last year. Really felt like we had an opportunity to, you know, start to go through and look at opportunities and look at how we can drive more throughput through the organization. And as much as anything that, you know, as we get out into, you know, 2026 and beyond, as we see revenue step up, how do we drive more efficiency with, you know, with the business from a support cost standpoint? We've spent a lot of time over the course of and we had some external help, you know, kinda in the late fall timeframe to really go through and look at how are the regions and how are the product lines and how the support functions operating today, how can we become more efficient, how can we drive additional cost out? And part of that has been to continue to expand service center operations. We stood up a support center in Bogota in Colombia last year to support largely the Americas activity. But also how do we drive more of that more of the transactional kind of things. How do we drive more, you know, more operating efficiency, more operating leverage there? So the good thing was, you know, we started that off back in the summertime not because we necessarily anticipated any market softness in 2025, but more around a, you know, we have a lot of focus on continuous improvement. That's really what that was around. So to some extent, we were kind of ahead of the curve, so to speak, so we could move into an implementation mode. You know, as we moved into 2025, we're able to embed many of those expectations on our 2025 budget process. So I think kinda as we try to highlight in the prepared remarks, it's about $25 million of cost improvements, about half of which we think we'll see, you know, pop out the bottom of the P&L, so to speak, here in 2025. But it's very much part of our, you know, we really focus a lot on continuous improvement around our performance and our service delivery performance. And it's really applying that same kind of approach and efficiency expectation to our own kind of internal support efforts as well.

Yeah. And I'll just pick up on the free cash flow margin progression. And what are the key drivers. You know, so activity mix is one. You know, so the movement into the, you know, operations maintenance phase of the Congo is one example where we know we've got a change in mix that's expected that should be beneficial. But more broadly, I think it's about cost and capital discipline. Mike's talked about the Drive 25 program. We've provided guidance for CapEx, which is down year over year. In a more, you know, flattish type environment, you know, where, as Mike said, we'll be designing the cost structure and capital investments around revenue realities as opposed to revenue aspirations. So you'll see us restrained in terms of CapEx until we have a better sense of where the market's headed. And then finally, you know, Expro Group Holdings N.V. and, quite frankly, the entire energy services industry has been challenged with working capital issues over the last, you know, year plus. You know, and, you know, at least our expectations that will at least moderate in a more flat revenue environment and hopefully reverse at some point. But I think we're all sitting on, you know, higher AI or higher AR and a higher inventory, you know, than we prefer as an industry and hopefully, that will start to, again, moderate or reverse. But those are the key drivers.

That's very helpful. Thank you, Quinn. And maybe sticking with you, if you can give us any color on capital allocation priorities throughout the year. Your CoreTrax obviously has been very additive to MENA. Thoughts around similar kind of M&A given where the market is, are beta spreads becoming more interesting, what's the appetite for M&A there, and then overall capital allocation if you can.

Well, the appetite is there for M&A. We've got a clean balance sheet that would allow us to execute on it without issuing shares within a certain size parameter. You know, but we don't believe in big for big sake. You know, as Mike says, you know, we focus on three things, industrial logic, industrial logic, and industrial logic. And now broader capital allocation, we've highlighted the 7% that we're intending to invest in CapEx. M&A will be compared against, you know, where effectively Expro Group Holdings N.V. trades. We've tried to be balanced in our approach targeting 1% to 2% of TSO in terms of buybacks per annum. I think that will continue to be our plan or expectation. We did buy some stock in the fourth quarter late in the fourth quarter. And I would expect we'll continue to look hard at that on a go-forward basis. So, again, I think our approach is balanced. You know, the name of the game is to create long-term shareholder value. And if we can convince ourselves that we can do that through M&A, we'll do so. But it's gotta be, you know, relative to, you know, where Expro Group Holdings N.V. trades and, you know, ultimately, what's in the message for shareholders. Is that responsive?

That's very helpful. Thank you.

Thank you. And our next question comes from Grant Heinz with JPMorgan.

Hey. Good morning, Greg, Quinn, and team. Just had one quick one here. Could you provide us a little bit more color kind of on the resolution of the Congo project? I think previously, it might have represented about a $7 million head or so kind of in 3Q. Was it essentially reversed in 4Q? And then additionally, it sounds like you have an opportunity to maybe earn some better rates on the execution side within the O&M contract. Any more color there as well? Thank you.

So, Grant, thank you, Grant. Appreciate the question. I guess, you know, first off, you know, what I really want to highlight is that I am very pleased that we delivered a world-class facility in a very quick manner. All of this while maintaining a very high level of HSE performance. You know, on top of that, the design that we had for the plants has allowed for some short-term production rates to be above the nameplate capacity, which I think gives us and the operator some operational flexibility. So, you know, fundamentally, you know, subsequent to the close of the third quarter, we've been able to successfully resolve the outstanding variation orders. And this really is a mix of kind of lump sum in the construction and commissioning phase, lump sum that's gonna be in the O&M phase, and some increase in the O&M rates. Fundamentally, as we can, as I alluded to, as we can increase the production throughput, as well as provide some additional services and some additional support to them specifically around power generation capacity. You know, the original ten-year project economics will ultimately be delivered and, you know, fundamentally, despite the choppiness that we had during the percent of completion part of the project in 2024, these are the type of production solutions projects we really wanna have. You know, we now move into, you know, the operate and maintain phase. And fundamentally for us, that's when margins will be accretive to our overall business. You know, the lump sum impact in Q4 was not significant. It was a couple million bucks. You know, I am really pleased with how we've concluded the conversations with the operator. And it's really gonna be, you know, a combination of, you know, small incremental revenues in the commission and construct phase, increased in the lump sum in some O&M rates, and then increased in the overall daily rate. So good conclusion and fundamentally overall we still maintain the original project economics that we had based on the project when we sanctioned it a number of years ago, albeit a little bit more choppiness during the percentage of completion, you know, constructed commissioning phase, but overall very successful.

Appreciate the color. I'll hand it back. Thank you.

Sounds good. Thanks, Brad. Our next question comes from Steve Ferazani with Sidoti Company.

I did wanna follow-up on the answer to the previous question, Mike and Quinn. Obviously, you generated a really significant EASA margin in 4Q. If it was only a couple million bucks from the Congo repayment, what else was driving that really significant margin? Besides, obviously, you had the drag in the previous two quarters? It's still well above what we might have expected, and I'm assuming that's not the type of margin you want us to assume even as you go into the O&M phase with Congo next year. Is all of that kinda right?

Yeah. That's why I tried to walk through the regions in terms of our expectation in terms of year-over-year progression. You know, but as Mike highlighted, the closeout of the construction commissioning phase on Congo, I mean, it was a driver in terms of the sequential improvement because we essentially didn't repeat the losses that were recognized in Q3. That was obviously a positive. And then we had, as Mike mentioned, a couple million dollar benefit on those recognized in Q4. I would say the primary driver, you know, beyond that is, you know, Subsea is one of our higher margin product lines. We had significant subsea deliveries in terms of projects in Q2, which was also a good margin quarter, though somewhat offset by the Congo project. And then 4Q, we had, you know, another, you know, large project delivery again, in Angola within the Subsea Well Access product line. So Subsea can be a bit lumpy at times. You know, but it is, you know, a high value-added, you know, mission-critical service and customers value that, and we tend to generate better margins from it.

Okay. That's helpful. And when we think about your margin assumptions for 2025 guidance, you're talking about ten basis points. But when you put together all the pieces you walked through, the cost cuts related to Drive 25, the phasing into O&M, and you won't have to drag from the cost overruns last year in Congo. We think about a full year of CoreTrax, which is higher margin, a lot of this would bias towards higher margin. What's offsetting it? Less subsea well access projects this year? Or what limits margin improvement as we just go through those three pieces, which clearly drive better margins next year even in a flat market?

I think you might have misspoke, you know, so the, you know, margin benefit that we should get from, you know, operating efficiency campaign, you know, on a run rate basis should close in on a hundred basis points itself. Obviously, we won't get the full benefit of that in 2025. It's a phased program. But, again, the biggest drivers are gonna be activity mix and as Mike mentioned, we've built in the pricing that's embedded in our backlog, but we're not assuming given the current market tone that we'll get incremental net pricing gains. Those certainly within well construction subsea, we have, you know, high value-added mission-critical services that have limited, you know, sideline capacity, so as the market tightens up, we should see benefits from that, but we're not embedding it in our guidance today. So, again, I think, you know, what we're focused on is can we expand margins within the things that we can hundred percent control, and that's really cost. So I would say that, you know, primarily cost maybe a little bit of activity that's embedded in backlog is what drives the guidance. And hopefully, as the year progresses and the market tightens up a little bit, we can improve upon that. But, you know, I think we and others are going into 2025 cautious, both in terms of expectations and the guidance that we're providing the market.

Okay. Fair. If I could get one more in just in terms of progress with CoreTrax and Delta Tech, you just lapped two years on that acquisition. When you made it, you talked about potentially doubling the cementing business. How far are you towards that target? In CoreTrax, you won that Australia contract in terms of winning awards outside of the core markets where you are with that progress?

No. Steve, it's a great question. I can tell you we continue to make good progress on the expansion of our cementation product line. This helps us drive a lot of rig efficiency. When you start dramatically reducing the, you know, waiting on cement cure time, for, you know, offshore deepwater rigs that's, you know, eighteen to twenty-four hours. It starts to become meaningful. So we continue to make really good progress on that. At the same time, I can also tell you that we're gonna be patient on our introduction because we have value creation and revenue generation expectation for those new services. And we're not gonna give them away. I can say I was in Europe a week ago with one of our international customers and they pressed me really hard on, you know, why we don't have iTong on every one of their rigs globally. And my answer was, you know, as soon as you guys agree to the rates that we have expectations around, we'll continue deployment. So we're gonna be patient. We're gonna get those things out there, but we're making good progress with that. You know, CoreTrax is another one that we're gonna have an ability to expand our footprint in US land, you know, land Australia and some of the coal bed methane, you know, fields where they have a lot of corrosion issues and a lot of casing integrity issues. Brazil land. We tried to highlight, you know, Argentina and Colombia. There's a lot of places that, you know, expandable tubulars, whether it's short section patches or it's, you know, full production string realigning, we think we're going to have some great opportunities there. So it's as much as anything making sure we focus on the right markets. We can't try to go to sixty countries tomorrow to operate CoreTrax, and we wanna make sure we go to the top five and then the next five and then the next five. So it's really a matter of us trying to be, you know, methodical and patient to get the maximum benefit out of these things.

That's great. Thanks, Mike. Thanks, Quinn.

Thanks, Steve. Appreciate it.

Our next question comes from Josh Jayne with Daniel Energy Partners.

Good morning. Mike, in your last good morning. Thanks. Good morning. Mike, in your last question that you just responded to, you talked about Itong a little bit and you also highlighted it in the presentation first deployment in West Africa. Maybe you could just speak to the sense of urgency among customers to pay for this type of technology, especially when we think about rig safety and also the ability to take fifteen rig hours out a month. How many of these systems are in the market today, and what do you think the growth runway is for this over the next couple of years?

No. Josh, it's a great question. I can tell you it's, you know, some of our customers, some of our IOC customers are much more focused on the agency importance of this and the reducing number of personnel in the red zone and those type of things. I think we'll continue to gain momentum. I mean, quite frankly, you know, I was in Europe with an executive level meeting with a customer and I'll be honest, I was quite surprised that of the key topics they wanna talk about was iTong and introduction of it, how much value, you know, they see it bringing to them. It was a kind of specific technology importance that I would have thought would have kinda bubbled up to that level. But we've got good momentum behind it. You know, we're gonna put those into the marketplace at an appropriate rate. Because frankly, we have an expectation around what we're gonna charge for that and we could probably double the market uptakes if we would reduce the pricing on it. And we're not going to because it brings such tremendous value. And so we're gonna push it out there at the right rate. You know, ideally, you know, we today probably operate on somewhere north of seventy of the total floating assets and well construction. You know, I would like to think that at some point in time down the road in the next couple of years, that we would have, you know, seventy-five percent plus, you know, Itong, so uptime uptake on those rigs. Because it does drive efficiency and more importantly, it really reduces the exposure for personnel in the red zone. So I think we'll continue with that kind of uptake.

Okay. Thanks very much. I'll turn it back.

Great. Thanks, Josh.

That was our final question. So this does conclude today's call. Thank you everyone, for joining, and thank you for your participation. Have a great day, and you may now disconnect.