Executive Summary / Key Takeaways

• Expro Group Holdings N.V. is demonstrating a compelling financial transformation, achieving record free cash flow and consistent EBITDA margin expansion, driven by rigorous operational efficiencies and strategically accretive acquisitions.
• The company's specialized technology, including AI-enabled solutions and advanced well construction tools, provides a significant competitive edge, enhancing safety, efficiency, and market penetration in high-value international and offshore segments.
• Strategic initiatives like the "Drive 25" cost optimization program and the successful transition of its Production Solutions business into a free cash flow generator are pivotal for sustained margin expansion and robust cash generation through 2026 and beyond.
• Despite near-term commodity price volatility and macroeconomic uncertainties, Expro maintains a constructive long-term outlook, supported by a substantial backlog, a disciplined capital allocation framework, and a commitment to returning capital to shareholders.
• Expro's competitive standing is reinforced by its deep regional expertise and extensive global operational reach, enabling it to effectively capture and grow market share in niche, high-margin segments of the energy services industry.

The Foundation: A Global Energy Services Powerhouse with a Strategic Vision

Expro Group Holdings N.V. (NYSE:XPRO) stands as a global provider of energy services, with roots tracing back to 1938 and operations spanning over 50 countries. The company's core business encompasses a comprehensive portfolio across the well lifecycle: well construction, well flow management, subsea well access, and well intervention and integrity solutions. This extensive offering positions Expro as a critical partner for exploration and production companies in both onshore and offshore environments.

The industry landscape in which Expro operates is characterized by its inherent dependence on global oil and gas prices, which directly influence customer capital expenditure and operational spending. However, a significant trend is the increasing focus on international and offshore long-cycle developments, areas where Expro possesses a strong competitive advantage. Expro's overarching strategy is to build a diversified and resilient business, aiming to sustainably generate free cash flow across industry cycles. This is achieved through a multi-pronged approach: continuous improvement in financial results, selective and highly accretive mergers and acquisitions, leadership in technology, and a disciplined return of capital to shareholders, all supported by a robust balance sheet.

The competitive arena for Expro includes major integrated oilfield service providers such as Halliburton Company , Schlumberger N.V. , Baker Hughes Company , and TechnipFMC plc . While these larger players offer broader portfolios, Expro carves out its niche through specialized expertise, regional focus, and a commitment to operational execution in targeted, high-value segments. The company's strategic responses to market dynamics are deeply informed by its history of organic growth and targeted acquisitions, which have consistently enhanced its service capabilities and geographic footprint.

Technological Edge: Driving Efficiency, Safety, and Differentiation

Expro's commitment to technological leadership is a cornerstone of its investment thesis, providing a tangible competitive moat and directly contributing to its financial performance. The company's core differentiated technologies are designed to optimize well operations, enhance safety, and improve efficiency across the well lifecycle.

For instance, the iTong system, an AI-enabled tubular makeup solution, revolutionizes well construction by significantly reducing personnel exposure in hazardous "red zones" on the rig floor. This technology also increases operational speed and consistency, with management expressing an ambition to achieve over 75% uptake on floating assets in the coming years. The Remote Clamp Installation System (RCIS), another innovation, automates the installation of control line clamps during completions operations. Its first full deployment in the North Sea demonstrated a remarkable 50% reduction in clamp installation time (approximately 2 minutes per clamp), while completely removing personnel from the red zone, thereby enhancing safety and efficiency.

In deepwater environments, the BRUTE Armor Packer system offers advanced high-pressure, high-tensile capabilities with a leading differential rating and retrievability, ensuring sealing integrity under extreme conditions. This allows operators to work more efficiently and with greater confidence. Expro's QPulse multiphase flow meter provides non-intrusive, real-time flow data, eliminating the need for conventional test separators and offering rapid, cost-efficient data for production allocation and well performance monitoring. Similarly, the wireless dropping cement head with Skyhook technology streamlines cementing operations, improving safety by removing personnel from the red zone and enhancing operational efficiencies. The Velonix optimized pipeline pig control technology, deployed for a U.S. midstream client, notably reduced approximately 7 million pounds of carbon dioxide emissions, generated cost savings, and improved data quality.

These technological advancements are not merely incremental improvements; they represent "innovation with a purpose," directly addressing customer challenges and providing quantifiable benefits. They contribute to Expro's competitive moat by offering differentiated services that command higher margins, improve market positioning, and support long-term growth by making operations safer, more efficient, and more environmentally sound.

Strategic Evolution: M&A, Operational Excellence, and Production Solutions

Expro's strategic narrative is further enriched by its history of calculated inorganic growth and a relentless pursuit of operational excellence. The company's merger with Frank's International in October 2021 marked a significant turning point, contributing to a multiyear trend of margin improvement. This was followed by the strategic acquisition of PRT Offshore in October 2023, expanding its subsea well access capabilities, and the acquisition of Coretrax in May 2024, which bolstered its Well Construction and Well Intervention Integrity solutions. The Coretrax acquisition, with a final goodwill of $100 million and expected annual amortization of approximately $8.9 million, has already demonstrated successful market penetration in the Middle East and Australia, particularly for expandable solutions addressing corrosion issues in wells.

A pivotal aspect of Expro's strategy is the transformation of its Production Solutions business. Historically a "consumer of capital," this segment is maturing into a "generator of free cash flow." The Congo OPT project serves as a prime example: despite initial "choppiness" during its construction and commissioning phase in 2024 (which contributed $42 million in revenue but a negative margin of $14 million), the resolution of outstanding variation orders has transitioned it into an annuity-like operations and maintenance (O&M) phase. This shift is expected to provide consistent and predictable cash streams, with potential for revenue and margin upside due to an incentive structure for higher throughput and additional services.

Complementing these strategic moves is the "Drive 25" operating efficiency campaign, a cost optimization program targeting $30 million in run-rate cost savings. Approximately 50% of these savings are anticipated to be realized in 2025, significantly improving operating leverage and facilitating further margin expansion. This initiative underscores Expro's commitment to disciplined cost management, even amidst market fluctuations.

Financial Performance and Robust Liquidity

Expro's financial performance reflects the successful execution of its strategy, demonstrating a clear trajectory towards increased profitability and cash generation. In the third quarter of 2025, the company achieved its highest quarterly free cash flow ever at $46 million, representing 11% of revenue. Adjusted EBITDA for the quarter reached $94 million, with a robust margin of 22.8%. This follows a trend of strong performance, with Q2 2025 marking the second highest quarter of new order intakes in the company's history at $595 million, and Q1 2025 achieving the highest first-quarter EBITDA and margin since the 2021 merger.

For the full year 2024, Expro reported revenue of $1.71 billion, a 13% increase year-over-year. Adjusted EBITDA for 2024 stood at $347 million, up 40% year-over-year, translating to an EBITDA margin of 20%, a 400 basis point improvement from the previous year. The company's liquidity position remains strong, with $532 million in total available liquidity as of September 30, 2025, including $198.6 million in cash and cash equivalents and $333.4 million available under its new $500 million senior secured credit facility, which matures in July 2029. This facility, comprising a $400 million revolving credit facility and a $100 million bridge loan, provides ample financial flexibility for general corporate purposes, acquisitions, and related capital expenditures.

Cash flow generation has been particularly strong, with net cash provided by operating activities reaching $153.1 million for the nine months ended September 30, 2025, an $81 million increase year-over-year, driven by favorable working capital movements and higher Adjusted EBITDA. Capital allocation priorities include investing in high-return organic growth, pursuing selective accretive M&A, and returning capital to shareholders. Expro repurchased approximately 3.70 million shares for $40.10 million during the first nine months of 2025, demonstrating its commitment to returning at least one-third of its free cash flow to shareholders.

Competitive Landscape and Strategic Positioning

Expro's competitive standing is characterized by its specialized offerings and strong regional presence, allowing it to effectively compete with larger, more diversified players. The company's EBITDA margin (TTM 17.80%) ranks among the top in its peer group, underscoring its operational efficiency.

Expro is recognized as a market leader in deepwater tubular running services and differentiates itself through its proprietary technologies. For instance, the company is positioned as the only service provider capable of delivering a full suite of remediation solutions, including short, medium, and long expandable patches, a key offering from its Coretrax acquisition.

Compared to Halliburton (HAL), Expro's specialized well construction and management services offer a more agile and customized approach, particularly in niche segments where its deep regional knowledge and service reliability provide a distinct advantage. While Schlumberger (SLB) leads in high-tech, data-intensive solutions, Expro's practical, field-oriented services and global network of locations can offer better operational execution in diverse environments, particularly in well intervention reliability. Against Baker Hughes (BKR), Expro's comprehensive well integrity solutions provide greater reliability in offshore settings, and its established presence in over 50 countries allows it to address localized needs where BKR's digital integration might not fully apply. Similarly, in subsea well access, Expro's focused well intervention services offer efficiency that competes effectively with TechnipFMC's (FTI) project-oriented approach.

Expro's competitive advantages, or "moats," include its extensive global network and operational reach, which foster strong customer loyalty and recurring revenue from long-term contracts. Its proprietary expertise in specialized well services, such as subsea well access, delivers superior performance under demanding conditions, leading to better margins. While Expro faces vulnerabilities from commodity price fluctuations and potential technological gaps compared to rivals with larger R&D budgets, its strategic focus on high-value, long-cycle international and offshore markets, coupled with continuous innovation, helps mitigate these risks.

Outlook and Guidance: A Constructive Path Forward

Expro's management maintains a cautiously optimistic outlook, anticipating a constructive path forward despite near-term market uncertainties. For the full year 2025, the company has updated its guidance, expecting Adjusted EBITDA to be between $350 million and $360 million, with capital expenditures ranging from $110 million to $120 million. Adjusted Free Cash Flow is projected to be between $110 million and $120 million, with potential for upside. This guidance reflects a commitment to expanding EBITDA margins and free cash flow generation, even with revenue expected to be relatively flat to slightly down in 2026 compared to 2025.

The preliminary outlook for 2026 suggests activity levels will be largely consistent or slightly lower than 2025, with a slower start in the first quarter due to typical Northern Hemisphere winter seasonality and national oil company (NOC) planning cycles. However, operational activity is expected to increase in the second half of the year. Management is strongly committed to further expanding EBITDA margins and free cash flow generation in 2026, driven by the full impact of the "Drive 25" initiative, increased customer wallet share from new technology deployments, and international growth from acquisitions like Coretrax.

Underlying these projections are several key assumptions. The U.S. Energy Information Administration (EIA) forecasts Brent crude to average $69 per barrel in 2025 and $52 per barrel in 2026, with Henry Hub natural gas prices averaging $3.40 per MMBtu in 2025 and $3.90 per MMBtu in 2026. Upstream investments are expected to remain largely flat in 2025, with a modest recovery projected for 2026, led by the offshore segment, particularly deepwater developments in Latin America and the North Sea. Expro's guidance assumes the conversion of its robust backlog at contracted rates but does not embed material gains in net pricing, reflecting a prudent approach to market conditions.

Risks and Challenges

Despite the positive outlook, Expro faces several pertinent risks. Macroeconomic uncertainty, ongoing geopolitical conflicts (such as the Russia-Ukraine conflict and Middle East tensions), and potential for further sanctions could impact global oil demand and supply, leading to commodity price volatility. The accelerated rollback of voluntary production cuts by OPEC+ and the pace of China's oil inventory building also introduce uncertainties that could place downward pressure on prices.

Operational risks associated with offshore activities, severe weather, and mechanical failures are inherent to the industry. Furthermore, the broader trend toward decarbonization and the transition to lower-carbon energy sources present a long-term challenge, though Expro is selectively pursuing low-carbon opportunities like carbon capture and flare reduction. Near-term, customer caution regarding discretionary spending and new project sanctioning could lead to delays in final investment decisions (FIDs), particularly for offshore projects in regions like West Africa, potentially pushing them into 2026 or 2027. Customers are also exhibiting particular caution around short-cycle intervention activity, which normally sees quick upticks.

Conclusion

Expro Group Holdings N.V. is strategically positioned for sustainable value creation, leveraging its deep industry roots, specialized technological capabilities, and disciplined operational execution. The company's consistent track record of expanding EBITDA margins and generating record free cash flow, even amidst a dynamic market backdrop, underscores the strength of its business model. Through targeted acquisitions like Coretrax and the transformative maturation of its Production Solutions segment, Expro is enhancing its competitive offerings and securing long-term, annuity-like revenue streams.

The company's commitment to technological leadership, exemplified by innovations such as iTong and the Remote Clamp Installation System, not only drives operational efficiencies and safety but also solidifies its competitive moat in high-value international and offshore markets. While macroeconomic headwinds and commodity price volatility present challenges, Expro's robust liquidity, disciplined capital allocation, and focus on long-cycle developments provide resilience. For discerning investors, Expro represents a compelling opportunity, poised to deliver sustained returns through its strategic focus on innovation, efficiency, and a strong presence in critical energy markets.