Executive Summary / Key Takeaways

• Expro (XPRO) is leveraging its differentiated technology portfolio and strategic acquisitions to drive margin expansion and cash flow generation, positioning itself for resilience in a dynamic energy services market and capitalizing on the multiyear upcycle in international and offshore activity.
• First quarter 2025 results demonstrated solid performance with $391 million in revenue and $76 million in Adjusted EBITDA (20% margin), representing the highest first quarter performance since the 2021 merger, despite typical seasonal slowdowns and project phasing.
• The company's focus on cost and capital discipline, highlighted by the Drive 25 efficiency initiative targeting over $30 million in run rate support cost savings, is expected to protect margins in a potentially softer near-term environment and enhance operating leverage with future growth.
• Management forecasts full year 2025 revenue to be generally flat relative to 2024, exceeding $1.7 billion, with Adjusted EBITDA expected to meet or exceed 2024 results and free cash flow margin projected around 7% ($120 million), reflecting cautious optimism amid macroeconomic uncertainty.
• Strategic acquisitions like Coretrax and PRT Offshore are expanding Expro's capabilities and geographic reach, particularly in higher-margin areas like well intervention/integrity and subsea well access, while proprietary technologies like CENTRI-FI, iTONG, and SeaCure offer quantifiable benefits in safety and efficiency, strengthening the company's competitive moat against larger rivals.

Setting the Stage: A Global Energy Services Leader Adapts and Innovates

Expro Group Holdings N.V., with roots tracing back to 1938, stands as a seasoned global provider of energy services. Operating across more than 50 countries, the company offers a comprehensive suite of solutions spanning the entire well lifecycle, from initial construction through abandonment. Its core capabilities in well construction, well flow management, subsea well access, and well intervention and integrity are designed to enhance production and improve recovery for operators worldwide. A pivotal moment in Expro's recent history was the October 2021 merger with Frank's International, a strategic combination that expanded its service offerings and operational footprint, contributing to a multiyear trend of margin improvement.

The company operates within a complex and often volatile industry landscape, heavily influenced by global commodity prices, geopolitical dynamics, and evolving energy policies. While near-term market conditions are marked by uncertainty stemming from trade policies and production decisions, the long-term outlook for the international and offshore markets, where Expro is primarily focused, remains positive. Industry forecasts anticipate continued growth in global liquids demand, expected to remain above 100 million barrels per day through at least 2030, with a significant portion met by barrels from undeveloped fields. Natural gas is also seen as a critical fuel for energy security and the energy transition, driving substantial investment in LNG infrastructure. This backdrop supports a multiyear upcycle for energy services companies with strong international and offshore exposure, particularly as U.S. shale shows signs of maturation, prompting operators to increasingly focus on deepwater activities which offer cost and carbon advantages.

Expro's strategy is centered on building a relevant and resilient business by leveraging its global presence, investing in high-return projects, and pursuing accretive acquisitions. The company aims to balance its portfolio, traditionally more levered to capital expenditure (CapEx) driven drilling and completions activity, with increased exposure to operational expenditure (OpEx) funded production optimization and intervention services. This strategic positioning, coupled with a focus on cost and capital discipline, is designed to enable consistent financial performance and create long-term value for stakeholders, even amidst market fluctuations.

In this competitive environment, Expro faces off against larger, diversified players such as Schlumberger (SLB), Halliburton (HAL), and Baker Hughes (BKR), as well as more specialized competitors like TechnipFMC (FTI) and Weatherford International (WFRD). While these rivals often possess greater scale and R&D budgets, Expro seeks to differentiate itself through specialized technology, operational efficiency, and strong customer relationships in its core geographic markets. Its competitive standing is bolstered by targeted investments and acquisitions that enhance its niche capabilities and expand its geographic reach, allowing it to compete effectively for complex international projects.

Technology as a Differentiator and Competitive Moat

A cornerstone of Expro's strategy and a key competitive advantage is its portfolio of differentiated technologies designed to improve safety, enhance efficiency, and optimize production across the well lifecycle. These technological solutions are not merely incremental improvements but offer tangible, often quantifiable, benefits to operators, helping to create a competitive moat against rivals.

Key technologies include the CENTRI-FI consolidated control solution and iTONG AI-enabled autonomous tubular makeup system. These systems are critical for well construction, particularly in offshore environments. They significantly reduce the time personnel are exposed to hazardous "red zones" on the rig floor, improving safety outcomes. Quantitatively, technologies like the DeltaTek SeaCure cementing solution, acquired in 2023, can save operators typically between 12 and 24 hours of rig time per job in deepwater cementation operations. With elevated day rates for modern rigs often exceeding $500,000 per day, these time savings translate directly into substantial economic benefits for customers, providing a strong incentive for adoption. The iTONG system, recently deployed in Africa for deepwater operations, is seen as the industry's most advanced tubular makeup solution, enhancing repeatability and efficiency through machine learning and automation. Expro aims for a high uptake of such systems on floating rigs in the coming years.

In well intervention and integrity, technologies like expandable casing patches, including the Coretrax Relign MNS solution (acquired with Coretrax in 2024), offer a full suite of remediation solutions for casing corrosion and integrity issues. These are conveyance agnostic, deployable via coiled tubing, wireline, or drill pipe, providing flexibility and efficiency. The distributed fiber optic sensing (DFOS) capability, deployed in Algeria and Brunei, delivers unique, real-time data insights that traditional methods cannot match, enabling operators to optimize injection profiles and refine well completions.

For well flow management, the QPulse non-intrusive metering technology, piloted in Saudi Arabia, can eliminate the need for conventional separators in production testing, offering rapid and cost-efficient data. A new non-intrusive flow meter developed with Petrobras (PBR) further exemplifies the focus on innovative, data-driven solutions for production optimization.

These technologies contribute to Expro's financial performance by enabling it to command better pricing for the value delivered, improve operational efficiency to lower its own costs, and enhance its market position by offering solutions that directly address critical customer needs around safety, efficiency, and production optimization. While larger competitors like SLB and BKR invest heavily in R&D and digital solutions, Expro's targeted technological development and strategic acquisitions allow it to offer specialized, high-impact tools that provide a distinct edge in specific workflows and markets. The company continues to invest in its own engineering development and leverages M&A to supplement its technological roadmap, ensuring its offerings remain relevant and competitive.

Segment Performance and Operational Highlights

Expro manages its global operations through four geographic segments: North and Latin America (NLA), Europe and Sub-Saharan Africa (ESSA), Middle East and North Africa (MENA), and Asia-Pacific (APAC). Each segment delivers the company's full suite of services, adapting to regional market dynamics.

In the first quarter of 2025, the company reported total revenue of $391 million, a sequential decrease of 11% from the strong fourth quarter of 2024 ($437 million). This decline was consistent with historical seasonal patterns, reflecting lower activity in NLA, ESSA, and APAC due to the Northern Hemisphere winter and customer budget cycles, partially offset by a modest sequential increase in MENA. Year-over-year, Q1 2025 revenue was up 2% compared to Q1 2024 ($383 million).

Segment performance in Q1 2025 showed varied trends. NLA revenue decreased sequentially by 3.6% to $134.3 million, primarily due to lower well construction and well flow management activity, though higher-margin projects led to a sequential improvement in Segment EBITDA margin to 22.6%. Year-over-year, NLA revenue increased 3.0%, driven by higher well flow management, subsea well access, and well intervention/integrity activity, including contributions from Coretrax, despite a less favorable activity mix resulting in a year-over-year Segment EBITDA margin decrease to 22.6%.

ESSA revenue saw the most significant sequential decrease, falling 21.3% to $112.4 million, mainly due to lower high-margin subsea well access activity in Angola, despite increased production solutions revenue in Congo. This resulted in a sequential Segment EBITDA margin decrease to 26.0%. Year-over-year, ESSA revenue decreased 7.7%, primarily from lower well flow management in Congo, but higher-margin subsea activity in Angola, West Africa, and the UK drove a year-over-year Segment EBITDA margin increase to 26.0%. The successful system integration of the open water intervention riser system in the UK North Sea highlights ongoing operational advancements in this region.

MENA continued its strong performance, with revenue increasing sequentially by 1.1% to $93.6 million, driven by higher well intervention/integrity in Qatar, production solutions in Algeria, and Coretrax activity, leading to a Segment EBITDA margin of 36.5%. Year-over-year, MENA revenue surged 30.9%, largely attributable to the Coretrax acquisition and increased well flow management activity across the region, resulting in a Segment EBITDA margin increase to 36.5%. The successful pilot of QPulse technology in Saudi Arabia's unconventional gas fields underscores the region's strategic importance and technological adoption.

APAC revenue decreased sequentially by 18.6% to $50.7 million, primarily due to lower subsea well access, well flow management, and well construction activity in Australia following a large project completion in Q4 2024, and lower well intervention/integrity in Brunei and Malaysia. This led to a sequential Segment EBITDA margin decrease to 21.4%. Year-over-year, APAC revenue decreased 15.4%, mainly from lower subsea well access and well flow management in Australia and China. However, a decrease in lower-margin services contributed to a year-over-year Segment EBITDA margin increase to 21.4%. New activity commencing in Indonesia and Vietnam, including the maiden international deployment of the CENTRI-FI console and a three-year well intervention contract across 315 wells, signals future potential.

Consolidated Adjusted EBITDA for Q1 2025 was $76 million, down 24% sequentially from $100 million in Q4 2024, primarily due to lower revenue and a less favorable activity mix. However, this represented a 13% increase year-over-year from $67 million in Q1 2024, reflecting improved activity mix and operating efficiency gains.

The Adjusted EBITDA margin for Q1 2025 was 20%, down sequentially from 23% but up year-over-year from 18%. This marked the highest first quarter Adjusted EBITDA and margin since the 2021 merger, demonstrating a continued trend of margin improvement.

Financial Health and Strategic Initiatives

Expro maintains a strong financial profile, prioritizing liquidity and cash generation. As of March 31, 2025, the company reported total available liquidity of $315.8 million, comprising $180.2 million in cash and restricted cash and $135.6 million available under its $340 million revolving credit facility. Management believes this liquidity, combined with operating cash flows, is sufficient to meet business requirements for the foreseeable future.

Cash flows from operations remain a primary source of liquidity. Net cash provided by operating activities in Q1 2025 was $41.5 million, influenced by changes in Adjusted EBITDA and working capital movements. Capital expenditures totaled $33.1 million in Q1 2025, primarily directed towards equipment supporting customer activities. The company's capital allocation strategy balances investments in the business (CapEx), strategic acquisitions, and returning value to shareholders through share repurchases. Under its stock repurchase program, Expro repurchased approximately 1 million shares for $10 million in Q1 2025, with $66 million remaining authorized. The company intends to use about one-third of its annual free cash flow for share buybacks.

Strategic initiatives like the Drive 25 efficiency campaign are central to Expro's financial strategy. Launched in 2024, this program focuses on standardizing practices and improving operating leverage across the organization. The initial target of $25 million in run rate support cost savings by Q4 2025 has been increased to over $30 million, with approximately half expected to be realized in 2025. This initiative is designed to protect margins in a volatile market and enhance profitability as activity grows.

Recent acquisitions, particularly PRT Offshore and Coretrax, are integral to Expro's growth and margin expansion strategy. The PRT acquisition in October 2023 expanded subsea well access capabilities, while the Coretrax acquisition in May 2024 significantly broadened the portfolio in well construction and well intervention/integrity. These deals were structured to be accretive, adding high-quality talent, technology, and customer relationships. Integration efforts are focused on leveraging Expro's global footprint to drive pull-through revenue synergies and streamline functional support, contributing to improved margins. The goodwill recognized from these acquisitions reflects the expected synergies and economies of scale.

Expro's competitive positioning is enhanced by its disciplined approach to M&A, targeting opportunities that offer industrial logic, enhance relevance to customers, and are accretive to margins and cash flow. While larger competitors like SLB and HAL have broader portfolios, Expro's focus on specialized, technology-enabled solutions in its core international and offshore markets allows it to compete effectively. Its balance sheet strength provides flexibility to pursue bolt-on acquisitions and share repurchases simultaneously, a notable advantage in the current environment.

Outlook and Risks

Expro's outlook for 2025 reflects a cautious yet optimistic perspective on the energy services market. Management anticipates 2025 will be a "transition year" influenced by macroeconomic uncertainty and geopolitical factors, rather than a fundamental downturn in energy fundamentals.

For the second quarter of 2025, Expro expects revenue between $400 million and $410 million, representing low to mid-single-digit sequential growth, with Adjusted EBITDA between $80 million and $90 million, implying modest sequential and year-over-year margin expansion. This guidance assumes no significant new tariff-driven uncertainty and commodity prices near current levels, reflecting a seasonal rebound in Europe and a return to normal operations in Asia-Pacific.

Looking at the full year 2025, Expro forecasts revenue to be generally flat relative to 2024, exceeding $1.7 billion. Adjusted EBITDA is expected to meet or exceed 2024 results, with margins stable or modestly higher year-over-year, driven by activity mix and operating efficiency gains from the Drive 25 initiative. Free cash flow margin is projected to be around 7%, or approximately $120 million, with capital expenditures planned between $120 million and $130 million. Management expects a further uptick in activity in the second half of 2025, supported by planned project startups.

While the long-term outlook for international and offshore markets remains bullish, driven by economic growth, energy security, and the need to replace reserves, the near-term presents several risks. Commodity price volatility, influenced by geopolitical tensions and OPEC+ decisions, could impact customer spending. Uncertainty surrounding global trade policies and tariffs, particularly between the U.S. and China, poses a risk to demand growth and could lead to reduced activity in certain markets like the Gulf of America. Project delays, especially for non-committed exploration and appraisal wells and new FID approvals, could push activity further into 2026 or beyond, impacting the pace of growth. Specific market contractions, such as expected lower activity in U.S. land, Mexico, and offshore Saudi Arabia, also present headwinds.

Management is actively addressing these risks through cost and capital discipline, adjusting spending based on revenue realities. The Drive 25 program is a direct response to the need for efficiency in a potentially softer market. Expro's focus on resilient markets and its zero net debt balance sheet provide flexibility to navigate uncertainty. While acknowledging the challenging backdrop, the company believes its leverage to long-cycle development and its differentiated technology portfolio position it well to capitalize on the expected multiyear upcycle in its core markets.

Conclusion

Expro Group Holdings N.V. is strategically positioned to capitalize on the long-term growth trajectory of the international and offshore energy markets. Despite facing near-term volatility driven by macroeconomic uncertainty and geopolitical factors, the company's foundational strengths—a comprehensive service portfolio, a global operating footprint, and a commitment to technological innovation—provide a robust platform. Recent accretive acquisitions of Coretrax and PRT Offshore have expanded its capabilities and market reach, enhancing its ability to offer high-value, technology-enabled solutions across the well lifecycle.

The company's focus on operational efficiency through initiatives like Drive 25, coupled with a disciplined approach to capital allocation and a strong balance sheet, is expected to support margin expansion and healthy free cash flow generation, even in a challenging environment. While 2025 may prove to be a transition year with potential project timing shifts, Expro's leverage to long-cycle development and its differentiated technologies offer a competitive moat. Investors should monitor the pace of offshore project sanctioning, the impact of global trade policies, and the successful execution of the company's efficiency and integration initiatives as key indicators of its ability to deliver on its medium-term targets and create sustained shareholder value.