Expro Group Holdings N.V. (NYSE: XPRO), a leading provider of energy services, reported its financial results for the second quarter of 2024, showcasing strong revenue growth and margin expansion. The company's performance highlights its strategic positioning in the international and offshore markets, which continue to drive robust demand for its cost-effective, technology-enabled solutions.

Financials

Revenue for the second quarter of 2024 reached $469.6 million, up 22.5% sequentially and 18% year-over-year. This outperformance was driven by increased activity across all operating segments, with the largest contributions from the North and Latin America (NLA) and Europe and Sub-Saharan Africa (ESSA) regions. The company's recent acquisition of Coretrax, a technology leader in performance drilling tools and well integrity solutions, also contributed $21.1 million to the top line during the quarter.

Net income for the second quarter of 2024 was $15.3 million, a significant improvement from the net loss of $2.7 million reported in the previous quarter. The company's net income margin was 3.3% in the second quarter, compared to (0.7)% in the first quarter. This increase was primarily driven by higher Adjusted EBITDA, which rose 40.2% sequentially to $94.6 million, with the Adjusted EBITDA margin expanding to 20.1% from 17.6% in the prior quarter.

The strong financial performance was underpinned by increased activity and a more favorable business mix, with the company's well construction, well flow management, and subsea well access businesses exhibiting robust momentum. Expro's strategic focus on technology-enabled, high-value-adding services has allowed it to capture greater pricing power and operational leverage, further enhancing its profitability.

Segment Performance

In the NLA segment, revenue increased 20% sequentially to $157.0 million, driven by higher well construction activity in the U.S., Guyana, and Trinidad, as well as increased well flow management activity in the U.S. and Argentina. Segment EBITDA margin expanded to 28.3% from 26.4% in the previous quarter, reflecting the improved activity mix.

The ESSA segment reported a 38.3% sequential increase in revenue to $168.4 million, primarily due to higher subsea well access activity in Angola and increased well flow management revenue in Congo. Segment EBITDA margin remained stable at 20.8%, as the company navigated the transition of the Congo project from the construction phase to the operations and maintenance phase.

In the Middle East and North Africa (MENA) region, revenue grew 13.9% to $81.4 million, with the Coretrax acquisition contributing $10.4 million. Segment EBITDA margin improved to 35.1% from 34.3% in the previous quarter, driven by increased activity on higher-margin projects and a more favorable activity mix.

The Asia-Pacific (APAC) segment reported a 4.9% sequential increase in revenue to $62.8 million, supported by higher well construction activity in Malaysia and Australia, as well as improved well flow management activity in Thailand. Segment EBITDA margin expanded significantly to 24.3% from 18.0% in the prior quarter, reflecting the non-recurrence of unrecoverable light well intervention (LWI) costs that had weighed on the region's profitability in the past.

Liquidity

Expro's liquidity position remains strong, with total available liquidity of $271.1 million as of June 30, 2024, including $135.5 million in cash and cash equivalents and $135.6 million in available borrowing capacity under its revolving credit facility. The company's net cash used in operating activities for the second quarter was $13.2 million, a decrease compared to the $29.9 million in net cash provided in the previous quarter, primarily due to an increase in net working capital and higher cash outflows for merger and integration expenses, as well as severance and other costs.

Outlook

Looking ahead, Expro has refined its full-year 2024 guidance, now expecting revenues to be between $1.7 billion and $1.75 billion, up from the previous range of $1.6 billion to $1.7 billion. The company has also narrowed its Adjusted EBITDA guidance to a range of $350 million to $375 million, compared to the prior range of $325 million to $375 million. This revised guidance reflects the strong first-half performance, the positive market outlook, and the successful early closing of the Coretrax acquisition.

For the third quarter of 2024, Expro expects revenue to be in the range of $410 million to $430 million, implying a sequential decline of approximately 10% but a 14% year-over-year increase. Adjusted EBITDA margin is expected to be between 21% and 22% for the third quarter.

Management Commentary

Expro's CEO, Mike Jardon, commented, "The company reported another quarter of strong financial performance, with revenue and Adjusted EBITDA exceeding guidance, including the impact of the early closing of the Coretrax acquisition. The results reflect Expro's commitment to deliver excellence and innovation across its operations, and positions the company for sustained, through-cycle growth."

Jardon further noted, "Expro's strategic position in the international and offshore markets continues to anchor the business, with increased activity in mission-critical, high-value-adding services. The company continues to maintain a positive outlook based on the fundamental backdrop and increased global demand for services and solutions that support lower-cost, carbon-advantaged incremental production."

Conclusion

Expro's strong performance in the second quarter and its positive outlook for the remainder of 2024 and beyond underscore the company's ability to capitalize on the favorable trends in the international and offshore energy markets. With its focus on technology-driven solutions, strategic acquisitions, and operational excellence, Expro appears well-positioned to deliver enhanced value to its customers and shareholders in the years to come.