Expro (XPRO) Q2 2025 Earnings Call Transcript

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Date

Tuesday, July 29, 2025, at 11 a.m. ET

Call participants

• Chief Executive Officer — Mike Jardon
• Chief Financial Officer — Sergio Myworm

For analyst commentary or quotes, please email pr@fool.com

Takeaways

• Revenue: $423 million in revenue for Q2 2025, up $32 million, or 8% sequentially from Q1 2025.
• EBITDA: EBITDA reached $94 million for Q2 2025, an increase of $18 million, or 24% quarter over quarter, exceeding the prior guidance range of $80 million–$90 million.
• EBITDA margin: 22%, representing a 200 basis point improvement sequentially and year over year. The rate set a quarterly company record for EBITDA margin.
• Free cash flow (adjusted): $36 million in adjusted free cash flow, equivalent to 9% of revenue on an adjusted basis. This figure excludes one-time items for comparability and refers to adjusted free cash flow (a non-GAAP measure) as defined and reconciled in the Q2 2025 earnings materials.
• Regional revenue breakdown: North and Latin America: $143 million (up $8 million sequentially). Europe and Sub-Saharan Africa: $132 million (up $20 million). Middle East and North Africa: $91 million in revenue (slightly down). Asia Pacific: $57 million in revenue (up $6 million sequentially).
• Segment margins: Middle East and North Africa EBITDA margin at 36% (down 70 basis points sequentially). Asia Pacific segment EBITDA margin was 26% of revenues (up 500 basis points).
• Share repurchases: $15 million in year-to-date share repurchases, $5 million in share repurchases, $61 million remaining under the $100 million authorization. There is a plan to repurchase approximately $40 million in stock for full year 2025.
• Full-year company outlook: Reaffirmed revenue guidance of approximately $1.7 billion for the full year 2025, and at least $350 million of EBITDA for the full year 2025. Full-year 2025 adjusted free cash flow is targeted at plus or minus $110 million.
• Liquidity: $343 million available at quarter-end ($207 million cash and equivalents; $136 million in revolver capacity), with subsequent credit agreement extension to July 2029. The total revolving credit facility was expanded to $400 million in July 2025, plus a new $100 million bridge facility.
• Operational innovation: Deployed three new technologies as industry firsts—Brute Armor Packer, Remote Clamp Insulation System (RCIS), and Generation X Remote Plug Launcher/Skyhook Cement Line Makeup Device—resulting in contract wins and efficiency gains.
• Cost savings initiatives: DRIVE 2025 program targeting $30 million in run-rate cost reductions, as announced on the Q1 2025 earnings conference call, with 50% expected to be realized in 2025.
• Major project awards: Five-year contract in Guyana with revenue in excess of $120 million. Contracts in North Africa (approximately $100 million and $60 million), and additional wins in Indonesia, Brazil, and the North Sea supporting contracted revenue visibility.

Summary

Expro's (NYSE:XPRO) quarter marked new records for EBITDA margin and a robust increase in adjusted free cash flow, benefiting from continued strength in international and offshore markets. Management announced a refined free cash flow reporting methodology, aligning metrics with industry peers and highlighting plans for continued transparency around adjustments. New and renewed contract awards diversified across regions and service lines, with $595 million of new orders supporting significant future revenue visibility. Amended and expanded credit facilities, entered into subsequent to June 30, 2025, materially increased liquidity, positioning the company for both operational resilience and possible M&A opportunities. Three recently commercialized technologies secured customer adoption and new work scopes, contributing to future margin expansion by enabling safer and more efficient operations.

• CFO Sergio Myworm introduced a new adjusted free cash flow definition, stating it will be reported CFFO minus CapEx beginning in Q2 2025, and it will exclude truly one-time items "to come up with an adjusted free cash flow that is more reflective of the steady-state business performance."
• CEO Mike Jardon said, "We still anticipate, and I would be very disappointed if we do not expand margins in 2025 versus 2024," reaffirming a company-wide focus on operational leverage and cost discipline.
• The company successfully executed a new credit agreement, extending debt maturities to July 2029. Revolving commitments were increased from $340 million to $400 million subsequent to Q2 2025. A $100 million 364-day bridge facility was added to support liquidity needs entered into subsequent to June 30, 2025.
• Management confirmed plans to repurchase approximately $40 million in shares in 2025, front-loaded toward the latter half of 2025 as adjusted free cash flow generation increases. This signals ongoing prioritization of shareholder returns.
• Market commentary by Jardon noted that recent order strength "really was just kind of the timing of it. You know, we continue to see a robust level of bidding and tendering activity," indicating a sustained pipeline as opposed to single-event concentration.

Industry glossary

• Brute Armor Packer: High-pressure, high-tensile well packer designed for deepwater applications, offering leading sealing integrity and retrievability.
• Remote Clamp Insulation System (RCIS): Automation technology to install control line clamps on tubing during completions, minimizing manual labor and safety risk.
• Generation X Remote Plug Launcher/Skyhook Cement Line Makeup Device: Technology suite enabling fully remote, hands-free cementing plug operations to enhance safety and control for offshore wells.
• DRIVE 2025: Company-wide operating efficiency and cost optimization initiative targeting permanent structural cost savings across business segments.

Full Conference Call Transcript

Mike Jardon, and Expro Group Holdings N.V.'s CFO, Sergio Myworm. First, Mike and Sergio will have some prepared remarks. Then we will open up for questions. We have an accompanying presentation on our second quarter results that is posted on the Expro Group Holdings N.V. website, exprogroup.com, under the investor section. Additionally, supplemental financial information for the second quarter results is downloadable on the Expro Group Holdings N.V. website, likewise, under the investors section. I would 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 in 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 SEC filings, which may be accessed on the SEC's website, sec.gov, or on our website again at exprogroup.com. 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 second quarter 2025 earnings release, which can also be found on our website.

With that, I would like to turn the call over to Mike.

Mike Jardon: Good morning, everyone. I am happy to welcome Sergio Myworm, Expro Group Holdings N.V.'s new Chief Financial Officer, to discuss our financial results today. Sergio has more than two decades of experience in financial roles in the energy industry and brings a proven track record of driving financial performance and operational excellence. I look forward to working closely with Sergio as we continue to advance our strategic initiatives and build on our strong financial foundation. Now, I would like to start off by reviewing the second quarter 2025 financial results as summarized in today's earnings press release. I am proud to announce very strong quarterly results.

This marks the third sequential record-setting quarterly EBITDA margin and robust free cash flow generation. I will then discuss the broader revolving macro environment, which we believe the underinvestment in traditional hydrocarbons in both the international and offshore markets supports a positive multiyear outlook for energy services companies like Expro Group Holdings N.V., who have technology-enabled services supporting the long-cycle development projects. We will move on to our operational highlights for the second quarter, discuss our outlook, and then turn the call over to Sergio to share additional financial information. For a recap of consolidated results and quarterly results by region, I will direct you to slides two through nine of the presentation that we posted to exprogroup.com.

On slide two, Expro Group Holdings N.V. reported an excellent quarter, reporting increased revenue to $423 million, EBITDA growth to $94 million, and expanded EBITDA margin representing 22% of revenue. Expro Group Holdings N.V. also generated a robust $36 million in free cash flow on an adjusted basis or 9% of revenue. This marks the third consecutive quarter of financial results above expectations. In fact, Expro Group Holdings N.V. has reported financial results above expectations in six of the last seven quarters, evidencing Expro Group Holdings N.V.'s continued focus on operational execution despite market headwinds. Our second-quarter financial results also represent a record-setting second-quarter EBITDA margin.

Our EBITDA margin ranks among the top in our peer group and is a continuation of a multiyear trend of margin improvement. Our results demonstrate we are on the right track to deliver robust free cash flow generation to our shareholders and the success of the organic and inorganic investments that we have made to drive growth and expand margins. It is also the result of permanent structural cost savings through our DRIVE 2025 initiatives, improved business activity mix, and operational leverage. Additionally, we are capitalizing and continue to see meaningful benefits on our diverse geographic footprint, which is mainly focused on the international and offshore markets.

As discussed in other calls, Expro Group Holdings N.V. has very limited exposure in regions such as US land, Mexico, and offshore Saudi. Markets that will continue to be soft in 2025. Commercial activity and tenders remain robust in our main markets with new order awards of $595 million in the second quarter, marking it the second-highest quarter of new order intakes in our company's history. These awards were spread across key markets and product lines, highlighting the diversity of our portfolio and setting a new benchmark for our core business performance. Our results and success in the marketplace reflect the confidence our customers have in us, and our focus on safety, service quality, and delivering cost-effective technology-driven solutions.

To highlight the more significant awards, we had contract wins in Guyana, covering well construction services, with revenues in excess of $120 million, and two contracts in North Africa for gas compression services and production solutions with revenues of approximately $100 million and $60 million, respectively. Our backlog has increased to approximately $2.3 billion at the end of the second quarter, remaining both healthy and in line with our expectations. All in all, this quarter presented a challenging market backdrop, yet we continued to deliver operationally and financially. From a continuous innovation point, we deployed three new industry-first technologies.

Those innovations at industry-first are a direct result of Expro Group Holdings N.V. understanding the challenges that our customers face in their operations day in and day out, and finding new creative solutions to address those challenges. This is what we refer to as innovation with a purpose. That is how we continue to provide differentiated services to our customers, and that is why we continue to get repeat business from our customer base. With that, we continue to drive efficient and safe operations to our customers in every single one of our global operations.

Turning to the market outlook, the second quarter of 2025 presented a dynamic operating environment marked by commodity price fluctuations driven by ongoing trade negotiations, OPEC Plus production increases, and geopolitical conflicts. As a result, Brent crude traded within a $20 per barrel range over this period, peaking at $80 per barrel in June. As geopolitical tensions recede in certain areas, the market's focus has returned to fundamentals, particularly on supply dynamics and seasonal demand. OPEC Plus has accelerated the phase-out of production cuts in a strategy pivot from output constraint to regain market share.

Although ongoing increases in production may exert downward pressure on commodity prices, the elimination of OPEC Plus voluntary cuts provides more clarity and is anticipated to support longer-term market stability. Barring any significant shifts in the current commodity price range, the industry is expected to demonstrate continued resilience. Though the market has experienced challenges in recent quarters, the oil and gas industry demonstrated fortitude and set operational expectations with limited impact on upstream spending in our key geomarkets year to date, which highlights the positive within the cycle for Expro Group Holdings N.V. Despite current customer caution, new project approvals are expected to return to growth in 2026, with offshore approvals accounting for 80% of all 2025-2026 sanctioning.

This provides plenty of opportunity for growth in Expro Group Holdings N.V.'s well construction, well flow management, and subsea product lines. With subdued greenfield activity and the current volatility, operators are focusing on optimizing production from existing assets to generate revenue, driving sustained OpEx spending and subsequent brownfield activity. The strategic focus aligns with Expro Group Holdings N.V.'s strength in well intervention. Overall, in the current market environments, we will continue to focus on controlling what we can control. With disciplined execution, a strong international and offshore presence, and a focus on operational efficiency, Expro Group Holdings N.V. remains well-positioned to navigate the current market.

We expect our differentiated service lines and resilient business model will allow us to continue to expand margins year over year. Stabilizing commodity prices at current levels, steady demand growth, and continued project sanctioning will drive demand for Expro Group Holdings N.V.'s services and solutions. We maintain a positive multiyear perspective on the overall opportunity set and Expro Group Holdings N.V.'s relative market position. Moving to our operational performance for the quarter, safety and innovation with a purpose are both central to who we are as a company. Just as safety is embedded in everything we do, so too is our drive to innovate with purpose.

In the second quarter, we achieved industry firsts through the deployment of our innovative technology, each designed to reduce operational risk and increase efficiencies for our customers, with artificial intelligence, machine learning, automation, and digitization playing key roles. First, we introduced the Brute Armor Packer, our most advanced high-pressure, high-tensile packer system. It is built for the extreme conditions of deepwater wells, with a leading differential rating and retrievability that ensures sealing integrity in harsh environments. This allows operators to work more efficiently and with more confidence in the extreme conditions of deepwater wells. We expect customers to rapidly deploy this technology, as two supermajors have already successfully deployed the system in the Gulf of America.

Second, we completed the first full deployment of Expro Group Holdings N.V.'s Remote Clamp Insulation System, or RCIS. This technology was developed with and partially sponsored by a supermajor that fully automates the installation of control line clamps on the tubing during the completion's operations. It eliminates manual steps, speeds up the process, and most importantly, removes people from the red zone. The RCIS technology was deployed in the North Sea, where Expro Group Holdings N.V. successfully ran a fully hands-free upper completion and reduced each clamp installation time by approximately two minutes or 50% per clamp. Based on the success of the operation, the customer has awarded additional work scopes for future deployments of the technology.

And finally, we delivered the world's first fully remote five-plug cementing operation using Expro Group Holdings N.V.'s Generation X Remote Plug Launcher and Skyhook Cement Line Makeup Device. It is designed for safety, control, and field adaptability, removing the need for anyone to enter the red zone while giving operators more operational control. The deployment marks a major step forward in the company's expansion of cementing services in the Middle East offshore and reflects the progress of the strategic initiatives for the region. These are not just technical wins; they are real-world examples of how we bring innovation, efficiency, and safety together to move the industry forward.

Further, these technologies give Expro Group Holdings N.V. competitive advantages in highly specialized service offerings and create future revenue opportunities by enabling scalable technology applications with improved margins. We are also demonstrating that innovation can be both effective and efficient, and that focus is evident in our regional activity this quarter. Beginning with the North and Latin America region, as we anticipated in the first quarter, activity in Brazil and Guyana has remained stable due to the development plans stemming from high volumes of FIDs in recent years. We capitalized on this improving environment as we secured a five-year multi-rig contract with revenue in excess of $120 million to provide completion and tubular running services in Guyana.

We similarly continue to drive activity in Brazil, securing contracts with revenue of more than $50 million across production optimization and well decommissioning-related activities, highlighting the breadth of capability across the lifecycle of the well. And as referenced in our July 14th press release, Expro Group Holdings N.V. secured a significant three-year contract award with Woodside Energy to support the Trion deepwater oil and gas development in offshore Mexico. This project marks Mexico's first deepwater field development and underscores our longstanding partnership with Woodside and the trust they have placed in Expro Group Holdings N.V. We will provide TRS and cementing services focused on optimizing well performance, driving cost efficiencies, and enhancing operational reliability throughout the project lifecycle.

Moving to Europe and Sub-Saharan Africa, we successfully completed a multi-well campaign for a major operator in Angola, conducting eleven cleanup and twelve well intervention operations over approximately five thousand man-hours with a 98% job performance rating. In the UK North Sea, our thirty-year partnership with a major operator remains strong as we recently secured a three-year contract extension with revenue of approximately $30 million for well intervention, well services, and well testing operations. This is a testament to our exceptional service delivery and strong client relationships. In North Africa, we have further expanded our production optimization business.

We secured a significant seven-year, approximately $100 million contract to deliver a gas compression system on low-pressure gas wells in order to maintain throughput at the processing facility. Additionally, as a result of the high service quality delivered to the customer, the team has secured a six-month contract extension with revenue of approximately $60 million for early production facilities and gas compression services. Shifting focus to Asia Pacific, particularly Indonesia, we won four contracts from a single customer with revenue totaling approximately $15 million. This covers well intervention and integrity services, brownfield production optimization, restoring well integrity, and maximizing hydrocarbon recovery. These new awards demonstrate the ongoing strategic focus on production optimization in these mature basins.

And finally, in Australia, within TRS, Expro Group Holdings N.V. performed the first rigless conductor driving operation on a customer's platform in over a decade, underscoring our commitment to reintroducing and delivering solutions to the region. The team successfully completed a six-slot conductor installation safely and ahead of schedule. Before we move to our financial performance, I will comment on the guidance for the full year 2025 that was included in our press release. The macro environment has created challenges for the entire industry, and we also see that several pockets in the market are softening and will remain challenging for the next twelve to eighteen months.

We are still assessing what that means to Expro Group Holdings N.V. in 2026. However, we firmly believe the international and offshore segments of the market will generally perform better than other segments. Those are markets with longer-duration development plans and are primarily dominated by the supermajors, large IOCs, and the NOCs. Those customers tend to be less susceptible to short-term market volatility and tend to focus more on the longer-term fundamentals of their business. If we combine our presence weighted to the international offshore markets with our strong relationships with customers, leading market positions, and key services, we still see relative stability and a relatively constructive outlook for the business.

In the near term, for 2025, we are reaffirming our full-year outlook. And as stated during the Q1 earnings call, we continue to expect at least mid-single-digit revenue growth in the second half of 2025 compared to the first half of the year. This is supported by our line of sight and the customer-scheduled activities and delivery of products and services for the next two quarters. More specifically, we are not relying on binary outcomes of large individual projects to meet our guidance. Our anticipated annual revenue is circa $1.7 billion and EBITDA of at least $350 million. We continue to anticipate our free cash flow on an adjusted basis to be for the full year 2025.

Despite the definitional change we announced this morning in the earnings release, Sergio will go into more detail on that shortly. Consistent with historical trends, we expect free cash flow generation to be more weighted to the second half of the year. Overall, we have seen customers prioritize key projects, and it is expected that our customers' upstream investments will be largely unaffected by short-term commodity price movements through 2025, and several of our geomarkets are proving to be more resilient than the current market's perception. In our NLA region, activity should be stable in Brazil and Guyana as a result of a continuation of existing development plans.

In the Gulf of America, we anticipate steady to slightly increasing activity in the second half of 2025. Similarly, we see growth from LATAM countries such as Brazil and Colombia. Overall, for the second half of the year, we anticipate NLA revenue to demonstrate growth over the first half of the year. In ESA, the outlook is constructive for the North Sea and parts of Europe, with a stable outlook on revenue and improving margins based on activity mix in the region for the remainder of the year. In the Middle East and North Africa, we are anticipating stability between Saudi Arabia and Algeria, two of our largest markets in the region.

And as a reminder, in Saudi, our business is leveraged onshore and unconventional gas more so than offshore oil. In Algeria, our business is leveraged to production optimization activity, which provides more predictability. In Asia Pacific, for the remainder of 2025, we are expecting an increase in activity for Southeast Asia, specifically in Indonesia, Brunei, and Thailand, related to well construction and well intervention services. Additionally, in Australia, we see incremental activity in subsea well access related to project timing and the onshore core tracks expandables business. For these reasons, we believe the region will see revenue growth with improved margins in the second half of 2025 compared to the first half of the year.

With that, I will turn the call over to Sergio to review our financial results in detail.

Sergio Myworm: Thank you, Mike, and good morning to everyone on the call. First of all, it is a great pleasure to be here. I am very excited to have joined Expro Group Holdings N.V., and I wanted to take a brief moment to thank every Expro Group Holdings N.V. team member for the warm welcome that I have received from all parts of the organization and from every region and product line. Tomorrow marks my first thirty days with Expro Group Holdings N.V., and I wanted to share some initial observations. As Mike noted, we reported very strong financial results in the second quarter, and this was not an isolated occurrence. The team has been consistently delivering results above expectations.

That is due to the talent and dedication of our almost nine thousand coworkers in all parts of the globe. And that is my first observation: the quality and passion of the team to solve our customers' most complex challenges. My second observation is the depth of our conversations with our customers. That understanding of our customers' needs and our passion to provide solutions that lead to our innovation with a purpose DNA and that innovation mindset materializes in every way possible. From the new AI-driven tool to utilizing day-to-day creativity to improve our own processes.

These were my own initial observations, but they were somewhat confirmed by many of my former peers and colleagues in upstream companies that reached out to me to praise Expro Group Holdings N.V. and the team. Now moving on to the quarterly results. We reported revenue of $423 million for the second quarter as compared to a guidance range of $400 to $410 million. Revenue was up $32 million or about 8% relative to the first quarter of 2025, reflecting a seasonal recovery in the northern hemisphere and increased activity globally, more specifically in ESA. EBITDA for the second quarter was $94 million, where guidance was between $80 million and $90 million.

This quarter's EBITDA represents a sequential increase of approximately $18 million or 24% relative to the first quarter. The EBITDA margin for the second quarter was 22% and was up about 200 basis points quarter over quarter. Similarly, as compared to Q2 of last year, the EBITDA margin increased about 200 basis points as well. As Mike noted, Q2 2025 was the best EBITDA margin quarterly result in the company's history and builds on Expro Group Holdings N.V.'s established track record of margin expansion. We also generated over $36 million of free cash flow on an adjusted basis in the second quarter and repurchased $5 million in shares in the open markets.

We are extremely proud of the cash flow performance of the company for the quarter, and we will remain focused on improving the capital efficiency of the business. To expand on this morning's earnings release, I would like to take a moment to discuss free cash flow and share buybacks. Generating significant free cash flow and growing our free cash flow is of the utmost importance to us. Therefore, we have taken another look at our own free cash flow definition and decided to make it more aligned with industry peers. Beginning in the current period or second quarter of 2025, and going forward, free cash flow will be our reported CFFO minus CapEx.

Both numbers are straight from our statement of cash flows. We also intend to further adjust it for truly one-time items, either positive or negative, to come up with an adjusted free cash flow that is more reflective of the steady-state business performance and therefore better aligned with corporate finance principles. Those adjustments will also be very transparent and sourced straight from the income statement on a quarterly and year-to-date basis. We intend to report both free cash flow and adjusted free cash flow with their respective reconciliations. With that said, we will mainly refer to the adjusted number as we believe it better represents the operational performance of the company. On share buybacks, we remain committed to repurchase guidance.

The previous guidance was framed in the form of percentages, but given the changes in the definition of free cash flow, we concluded that it will be clearer to guide the dollar amount. But nothing has changed in that regard. Year to date, Expro Group Holdings N.V. has repurchased $15 million in stock, with $5 million of that in the second quarter. We still have approximately $61 million available under our current $100 million authorization and expect to catch up on our annual repurchases in the second half of the year. As Mike mentioned before, we are reaffirming our annual financial guidance with revenues of circa $1.7 billion and EBITDA of at least $350 million.

Our general expectation of the revenue progression is that the third quarter will be flattish relative to the second quarter, with expected revenue growth in the fourth quarter. We expect free cash flow as adjusted to be plus or minus $110 million for the full year. We acknowledge there is an element of market uncertainty, but based on the team's ongoing dialogue with customers, we expect the demand for Expro Group Holdings N.V.'s services to continue as guided with line of sight on projects in 2025, particularly in international and offshore markets. In other words, our guided numbers represent our best view of the business performance today, but to be sure, the numbers have both downside risks and upside opportunities.

In relation to the second half of the year, we expect our results to reflect a moderate increase in activity across NLA and APAC, while the MENA and ESA regions are expected to be relatively stable. As we have highlighted, we continue to optimize costs and streamline processes through our DRIVE 2025 operating efficiency campaign. With that, if operators' plans change, we expect to adjust costs and CapEx accordingly to preserve our ability to generate and maximize free cash flow and maintain our commitments to share buybacks. My general philosophy around guidance is that no one benefits from aggressive targets. It often leads to future disappointments. But I am not a sandbagger either.

Neither one of those two extremes creates credibility, in my opinion. My belief is that credibility is built around having an honest view of the business, the associated downsides and upsides, and ultimately, working tirelessly to execute on the operational front to meet or exceed those expectations. And do that consistently. I believe our guidance this year reflects that philosophy. Turning to our regional results. For North and Latin America or NLA, second quarter revenue was $143 million, up $8 million quarter over quarter, reflecting higher activity in well construction while well flow management activity was down in Mexico and Brazil.

Note that revenue generated from U.S. land and Mexico markets was about 4% and 2% of consolidated 2024 annual revenue, respectively, and continues to be a very small part of the global Expro Group Holdings N.V. business. For Europe and Sub-Saharan Africa or ESA, second quarter revenue increased $20 million to $132 million sequentially, reflecting higher activity and a favorable product mix. The MENA segment delivered another solid quarter, but slightly lower as compared to Q1, with revenue at $91 million, driven by lower well construction revenue in Saudi Arabia and the UAE, partially offset by well flow management revenue in North Africa.

The MENA segment EBITDA margin was 36% of revenues, a decrease of 70 basis points from the prior quarter, reflecting the lower well construction activity. Finally, in Asia Pacific or APAC, second quarter revenue was $57 million, an increase of $6 million relative to the first quarter, primarily reflecting the higher well flow management activity in Malaysia, Indonesia, and Brunei. The Asia Pacific segment EBITDA margin was 26% of revenues, increased about 500 basis points from the prior quarter, reflecting increased activity and mix. To provide an update on the DRIVE 2025 initiative, Expro Group Holdings N.V. is well into the implementation phase of this cost optimization program.

On the first quarter earnings conference call, Expro Group Holdings N.V. announced an updated target of $30 million in run-rate cost savings. We continue to anticipate capturing at least 50% of that run-rate target during the current year. Turning to liquidity, Expro Group Holdings N.V. has a total available liquidity at the end of Q2 of approximately $343 million, with available cash and cash equivalents of approximately $207 million and availability under our revolving credit facility of $136 million. Subsequent to the June 30 quarter end, Expro Group Holdings N.V. entered into an amended credit facility to, among other things, extend the maturity and increase the bank commitments.

The new facility has a four-year maturity and matures in July of 2029. Additionally, it increases the total RCF commitment from $340 million to $400 million. Concurrently, we entered into a $100 million 364-day bridge facility. In aggregate, these facilities provide up to $500 million in available liquidity, further strengthening our balance sheet and providing plenty of flexibility to execute on future M&A opportunities while continuing to return capital to shareholders. With that, I will turn the call back to Mike for a few closing comments.

Mike Jardon: Thank you, Sergio. We believe Expro Group Holdings N.V. is well-positioned with our market-leading core product lines and good exposure to international and offshore markets that will support the ongoing activity not only for the remainder of 2025 but for a multiyear growth cycle expected to start in the back half of 2026. We will continue to focus on free cash flow generation by continuing to expand our EBITDA margins and looking for ways of reducing the capital intensity of our business. We work hard every day to continue to earn our customers' trust, create value for our shareholders, and deliver solid financial results every quarter.

Despite the uncertain market backdrop, we continue to focus on what we can control while being ready for every scenario. That being said, we remain confident that our main international and offshore markets will perform better than other sectors. With our strong balance sheet and liquidity positions, Expro Group Holdings N.V. is equipped to manage anticipated market fluctuations and deliver sustained free cash flow. With that, we can open up the call for questions.

Operator: Thank you. The first question comes from David Smith with Pickering Energy Partners. Your line is open. Please go ahead.

David Smith: Hey, good morning. Thanks for taking my question, and congratulations on a very strong quarter.

Mike Jardon: Good morning, David. Thank you for joining us. Appreciate it.

David Smith: I wanted to say also just really impressive Q2 orders and wanted to ask if that was mostly timing, you know, just large multiyear projects coincidentally booking in the quarter, or, you know, good commercial discussions suggest 2025 orders that, you know, could be up 20% or more versus 2024.

Mike Jardon: Yeah. I mean, David, it really is kind of all of the above. I mean, a number of those were, you know, contract awards we had in places like Guyana or in North Africa, you know, that were more contract renewals, contract extensions, those types of things. It really was just kind of the timing of it. You know, we continue to see a robust level of bidding and tendering activity, and that just kind of translates into a strong quarter of order intakes.

David Smith: Great. Appreciate that. And I know it is early to talk about 2026, but conceptually and just following on from Sergio's prepared remarks, you know, if activity grew at a rate to flatten or first all, do you talk about opportunities you are seeing maybe for improved free cash flow conversion, you know, compared to historical, you know, the last few years? Maybe if there is, you know, flexibility for the CapEx spend, you know, potential thoughts on working capital improvement, maybe fewer, you know, merging integration and severance charges.

Mike Jardon: Yeah. No. It is a really good question. I guess how I would kind of decouple that is, you know, number one, I think we have continued to demonstrate, as we have been saying all year, even if 2025 is in a, you know, flattish kind of year-on-year top line, we are still going to expand margins here in 2025. You know, that is a combination of, you know, our own internal engineering efforts. We have launched a number of new technologies that we are starting to get good market penetration. We have continued to realize the synergies both from a cost standpoint as well as from the revenue standpoint of some of the recent acquisitions we have made.

And then fundamentally, we kicked off a cost efficiency exercise, you know, last summer, summer of 2024. That has really, it really was timely. I wish I could say that we anticipated we were going to see things like Liberation Day in April of this year and those types of things, but obviously, we did not. But it really was, you know, kind of our focus on continuous improvement and really focusing on taking cost out and driving efficiency. So we are seeing some benefits from that. You know, we have said here that we will exit this year with $30 million of run-rate cost savings. About half of that we will see in the 2025 numbers.

So it is really kind of all of the above those types of things. You know, we can and will flex CapEx spend, you know, to some degree. We, as a reminder, we do not spend CapEx dollars speculatively. We spend CapEx dollars based upon projects. So all those things will kind of help flex us into that. But fundamentally, our continued focus on margin expansion is paramount to us, and at the same time, expanding our free cash flow generation. So these things kind of all, you know, they all line up together, and they are all being choreographed very intentionally and very purposefully. So Sergio, you want to comment on anything that I missed? Feel free.

Sergio Myworm: No, Mike. That is it. I think, Dave, as you mentioned, the focus is generating an increase in the free cash flow generation of the business. I think there are many levers, and Mike already touched on all of them, but expanding the margins further and perhaps flexing on the capital intensity of the business, those are the main drivers that we see at this point.

David Smith: I really appreciate all the color. I will turn it back.

Mike Jardon: Sounds good. Thank you, David.

Operator: We now turn to Adi Modak with Goldman Sachs. Your line is open. Please go ahead.

Adi Modak: Hey, guys. Good morning. Thanks for taking the question. I guess, Sergio and Mike, I have been on the quarterly EBITDA margin cadence. Is there anything that you can provide us in terms of how to think about the segments for the remainder of the year?

Mike Jardon: Yeah. So, Adi, actually, thanks for joining us. I mean, it is, you know, we always kind of start off, you know, Q1 of the year is always, that is always going to be our lightest quarter. We are particularly affected by the northern hemisphere, kind of winter season, that is always especially the North Sea, that is always going to be a little bit of a challenge. But we have seen a good recovery here in the second quarter, and we are able to translate that through to a really good follow-through. We still anticipate, and I would be very disappointed if we do not expand margins in 2025 versus 2024.

And we do not see anything right now that would give us particular pause for that. So, you know, Q2 was just a solid execution quarter. It was not like we had some particular one-offs or those kinds of things that help prop up margins. It was just a really solid execution quarter, and, you know, based on a tremendous amount of customer dialogue that we have had here, you know, we still see the second half of the year playing out as we have anticipated. That is why we try to give a, you know, roughly $1.7 billion, you know, outlook for the second half of or for the total year. Naturally, based on that customer feedback.

So right now, I would not anticipate, you know, anything changing from a margin standpoint beyond that.

Adi Modak: And that is very helpful, Mike. And then it seems like M&A in the market is heating up. I know we have spoken about this a few times before, but I am just curious if you are seeing anything that would suggest increased opportunities or any thoughts you can provide there.

Mike Jardon: Yeah. I mean, you know, we continue to be very, very active. We are obviously, we have had good success in looking at things that are accretive and looking at things that help us improve our relevancy and help us expand our portfolio. You know, we have got a really, really good playbook of, you know, how to conduct, you know, diligence and how to execute on an M&A and how to bring them in. And more importantly, how to do proper integration. And, you know, it is really key to be able to drive synergies and those types of things. So yes, there are things that we continue to look at out there that make sense.

And quite frankly, you know, there is a lot of, you know, what I refer to as, you know, dislocated assets, so to speak, that do not have a really good home. And I think we have been able to demonstrate a good track record of being able to bring those in-house and really leverage it from a synergy standpoint, leverage from a customer relationship standpoint. So it is something we continue to be able to focus on and hope to continue to be able to execute on some of those.

Adi Modak: Thanks, Mike. Appreciate that.

Mike Jardon: Great. Thanks, Adi. Appreciate it.

Operator: Our next question comes from Eddie Kim with Barclays. Your line is open. Please go ahead.

Eddie Kim: Hi. Good morning. I apologize in advance, but I have to ask the offshore rig white space question. It has been a theme, as you well know, for over a year now, but the reason I ask is that more recently, we started to hear more mentions of it from the larger service companies and actually another offshore company recently lowered their ROVs utilization expectations for the full year. So it seems like we are starting to see some expected impact to this in the second half of the year from companies that are not offshore drillers.

So all that to ask, is there any part of your business where you expect to see some impact from offshore rig white space in the second half, just any thoughts around that would be great.

Mike Jardon: No. And it is a good question. I think it is something we continue to monitor, and as I alluded to when I was responding to an earlier question, you know, we have had a tremendous amount of customer engagement to really look at how the rest of the year is going to shape up and literally down to the point where we are sitting down with customers, we are looking at, you know, what are their drilling programs, what are their completion programs, and, you know, we are going to drill at well X, and then when are we going to complete it. Kind of translate that into the next activity set for us.

So yes, there are some puts and takes of rigs going on maintenance or, you know, those types of things. We have really tried to layer that into what our forecast looks like in the second half of the year. And that is why we have been able to, you know, stand up and say with the best information we have today is we still think we are going to be in that billion seven ZIP code and $350 million plus EBITDA range.

The area that I am seeing more, it is a bit of an interesting phenomenon that we are seeing right now, is really around the, you know, more of the short cycle activity, more of the intervention activity, more of the related activity. That is one that, in my thirty-plus years, that normally is the one that gets flexed up. And right now, we are seeing customers be, I think, particularly cautious around that. So that is one that, you know, we are kind of continuing to monitor that and trying to better understand kind of what the customer plans are there.

But, you know, fundamentally, Eddie, our forecasting and our outlook for it has really been based upon a very detailed customer engagement, almost a bottoms-up, you know, rig by rig, completion by completion type, you know, of analysis.

Eddie Kim: Got it. That is very helpful. If there was one blemish in the quarter, and obviously, you guys posted very strong results, if there was one blemish, it was in the subsea well access segment where your revenue declined 16% sequentially after kind of a similar double-digit decline in the first quarter. In your release, you mentioned lower subsea well access revenue in Malaysia. But could you provide some more color on the recent softness in this segment? And is that likely to sort of remain stable at these levels in the back half of the year, or should we expect a rebound from second-quarter levels?

Mike Jardon: Yeah. I mean, it is, I would not say it is a one-off, but it is not something we anticipate, you know, to be sustained. We think that the fourth quarter will be particularly strong in that aspect. You know, we did have in 2024, we did have some subsea projects that delivered more from an equipment standpoint. And you saw we referred to some of the activity in Angola. We had a lot of operational execution that was, you know, strong revenue generation at this point in time. So that is not something that gives me particular pause. It was just really kind of project timing and those types of things right now, Eddie.

Eddie Kim: Understood. Thank you very much. I will turn it back.

Mike Jardon: Okay. Thanks, Eddie.

Operator: We now turn to Derek Podhouser with Piper Sandler. Your line is open. Please go ahead.

Derek Podhouser: Hey. Good morning. Just maybe I want to ask a question on the Middle East segment. Obviously, revenues came down a little bit. You know, margins down a touch, just meaning, you know, margins are still up historically on a nice level here. But maybe just help me understand some of the puts and takes within the region, maybe some of the soft spots versus the strong spots, you know, why we see a 60% decremental here. Just maybe further help in color around what are the moving pieces within the Middle East or MENA region.

Mike Jardon: Yeah. I mean, it was, you know, let us remind ourselves that, you know, MENA is the most profitable geographic region we have. It has got very strong levels of activity. So really strong, you know, good, very strong margin delivery there. Up just slightly because of project timing in there. We are really driven by Saudi and by Algeria. And just to reiterate what I said in my prepared remarks, it is, you know, Saudi for us really is unconventional gas, you know, on land. And that continues to be robust.

I think especially in Saudi, a couple of months ago, if you go back to, you know, the administration's visit into the Middle East, an awful lot of discussion around, you know, data centers and AI and those types of things. And natural gas is going to be the feedstock for power generation in the Middle East and in Saudi in particular. That is why there is such a strong focus from Aramco on continuing to expand their gas production capabilities, and we are really well-positioned to be able to, you know, to capitalize on that.

And then, of course, activity in Algeria, which is very robust for us, is much more around, you know, production optimization, compression, those types of things, and just really, really solid projects. So MENA is one that just continues to deliver to a really, really high level, you know, off very slightly on a quarter-on-quarter margin standpoint. It is not something that we are particularly concerned about at all.

Derek Podhouser: Yep. And I just was just curious. Then just my second question, it is nice to see three quarters of shareholder returns here on the buyback. Maybe just your latest thoughts on how we should think about cadence or, you know, percentage of free cash flow or even potentially a dividend coming into the picture.

Sergio Myworm: Derek, this is Sergio. Yeah. So I think we communicated that through our press release and in our prepared remarks. We expect to repurchase roughly $40 million in stock this year. We have done already $15 million in the first half of the year. Mike alluded to some of this in his prepared remarks and saying that free cash flow generation tends to be kind of weighted towards the back half of the year. And as that being the case, we expect to accelerate those repurchases in the second half here.

So I think to us, strong free cash flow generation and returning capital to shareholders, these are things that are very important to us, and we are going to continue to do that. So five and beyond.

Derek Podhouser: Outside of dividend?

Sergio Myworm: I mean, as of now, we still think that share repurchases are the best avenue to return capital to shareholders, but we are continuously evaluating what that means. And if things change in the future, we will pivot as well. But as of now, share repurchase spends, we still think it is the best avenue for us to return capital to shareholders.

Mike Jardon: And I think it is really, Derek, it is an ongoing discussion we have with the board. You know, it is, that is clearly a board-level type decision. What I will say is that I think this is, you know, as a company, I think anybody generally needs to get to the point where they are not roughly a third of free cash flow return. They are getting into that 40, 50, 60% range. I think when you can get to that, you have visibility for an extended period of time, that is when it starts to make good sense strategically to look at dividends.

So very much is, I think it is why we have so much focus on free cash flow generation is for us to get to that point where we can start to expand that percentage. We are going to return and then start to change what the mix of that is, whether it continues to be share repurchases or it is a balance between that and dividends. That is very much what we are focused on. And that is why free cash flow generation becomes such a key driver for that.

Derek Podhouser: Thank you.

Mike Jardon: Thanks. Appreciate it.

Operator: As a reminder, if you would like to ask a question, please press star one on your telephone keypad. We now turn to Josh Jain with Daniel Energy Partners. Your line is open. Please go ahead.

Josh Jain: Thanks. Good morning. First question, Mike, in your remarks, you highlighted a lot of the volatility that we have seen in crude over the course of Q2. Could you just speak to how would you characterize the overall sense of urgency of your customer base today? Obviously, some nice contract wins and backlog adds this quarter. But maybe just given the volatility that we have seen, you know, conversations today versus where we were ninety days ago, do customers have, I guess, more comfort with where we sit today just from a macro standpoint?

Mike Jardon: No. It is a Josh, and thanks for joining. It is a great question. I can tell you that my view today is I think especially for the, you know, the deepwater and the ultra-deepwater projects, and frankly, that is, you know, we are very heavily tied to that type of activity. Our customers are very much, you know, they are in execution, you know, implementation phase. They are focused on those types of things. So that sentiment has not changed. You know, we are going to have to start, you know, kind of translating that into what it is going to look like from an activity set for 2026.

You know, we have all observed that the pace of new FID approval for deepwater and ultra-deepwater has moderated a little bit here. But I think we will continue to start to see how that plays out. And it is more, I alluded to it earlier, it is more that I am just seeing more caution from customers. They are not going out and, you know, pursuing some of those incremental oil production, you know, opportunities today that we normally would observe. I think part of it is because, you know, what is the continued behavior going to be from OPEC Plus?

But, you know, kind of a conviction on continuing to execute on things that are more existing is how I would frame it.

Josh Jain: Okay. Thanks. And then one for Sergio. First conference call in to see, maybe you could maybe just give you the opportunity to expand on how you see the world from a financing perspective. I mean, you guys just closed a new credit agreement and also just broadly how you see Expro Group Holdings N.V.'s opportunity set to maximize shareholder value over the next couple of years? I know you answered questions about the buyback and the dividend, but maybe just talk through your, just how you view the importance of free cash flow conversion and to use going forward. Thanks.

Sergio Myworm: Yeah. Josh, I appreciate that, and thanks for that. So no, you are absolutely right. I think the focus of the organization is to continue to increase that free cash flow conversion. There are obviously several avenues to get there, and we intend to attack all of them. And that, as Mike said before, that has continued to expand on our EBITDA margins, that has continued to look for opportunities to be more effective on our capital deployment. There are ways of actually collecting from our customer a little faster. So there are a lot of ways, and I am going to be heavily focused on doing all of those things. Look, Expro Group Holdings N.V. is a fantastic organization.

Right? So in the spirit of great companies wanting to be even better, kind of that is part of what I am going to try to do to help the organization, kind of turning under every rock, looking for things with a fresh perspective, looking for ways for us to continue to fine-tune our strategic objectives, looking for accretive acquisitions, and so on. So I think the company is in great shape. The execution, the operational execution of the business is fantastic. So I am just going to be looking to help the company get even better than what it is already today.

Josh Jain: And so I will turn it back.

Mike Jardon: Thanks, Josh.

Sergio Myworm: Thank you, Josh.

Operator: Ladies and gentlemen, we have no further questions. So this concludes our Q&A and today's conference call. We would like to thank you for your participation. You may now disconnect your lines.

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