Executive Summary / Key Takeaways

• Record Free Cash Flow Generation Signals Structural Transformation: Expro generated its highest quarterly free cash flow in company history in Q3 2025 while simultaneously expanding EBITDA margins to 22.8%, demonstrating that operational efficiency gains from the "Drive 25" campaign are creating durable earnings power independent of revenue growth.

• Strategic Positioning in Resilient International Markets: With 80% of revenue derived from outside the United States and heavy exposure to offshore and international projects, Expro is insulated from the U.S. land market's volatility while benefiting from multi-year offshore development cycles in Brazil, Guyana, and West Africa.

• Technology Differentiation Drives Pricing Power: Proprietary innovations like the AI-enabled iTong , Skyhook wireless cement head, and QPulse multiphase flow meter command premium pricing by reducing safety risks and operational downtime, supporting segment EBITDA margins that reach 34.7% in MENA and 32.2% in ESSA.

• Capital Allocation Discipline Creates Shareholder Value: Management's framework targets returning at least one-third of free cash flow to shareholders through share repurchases ($40.1 million in 2025 YTD) while integrating accretive acquisitions (PRT Offshore, Coretrax) that expand margins and geographic reach without diluting returns.

• 2026 Outlook Hinges on Execution, Not Market Recovery: Management expects flat to slightly lower activity levels in 2026 yet remains confident in margin expansion, making execution of technology rollouts and cost optimization—not commodity price recovery—the critical variable for investors.

Setting the Scene: A Transformed Oilfield Services Specialist

Expro Group Holdings N.V., founded in 1938 and headquartered in the Netherlands, has evolved from a traditional energy services provider into a technology-enabled specialist focused on the entire well lifecycle. The company's business model centers on four capability areas: well construction, well flow management, subsea well access, and well intervention and integrity. These services enhance production and improve recovery from exploration through abandonment, generating revenue across four geographic segments: North and Latin America (NLA), Europe and Sub-Saharan Africa (ESSA), Middle East and North Africa (MENA), and Asia-Pacific (APAC).

The modern Expro story begins with the October 2021 merger with Frank's International, which initiated a multi-year margin improvement trajectory. This transformation accelerated with two strategic acquisitions: PRT Offshore in October 2023 for $90.8 million, expanding subsea well access in North and Latin America, and Coretrax in May 2024 for $186.7 million, bolstering well intervention and integrity solutions, particularly in MENA. These moves reflect a deliberate strategy to build a diversified, technology-led business with clear market leadership positions in higher-margin, less-cyclical service lines.

Expro operates in over 50 countries, giving it a global footprint that rivals larger competitors but with a more focused service portfolio. Unlike integrated giants Schlumberger (SLB) and Halliburton (HAL) that compete across the entire oilfield services value chain, Expro concentrates on critical intervention and flow management niches where technical complexity creates barriers to entry. This positioning allows Expro to command premium pricing while avoiding the commoditized drilling services that pressure margins for larger peers. The company's 2.2% market share in oilfield services belies its strength in specific high-value segments like deepwater tubular running services, where it claims market leadership.

The industry structure favors specialists as operators prioritize capital discipline and production optimization over exploration spending. Upstream investment is projected to remain flat in 2025 before a modest recovery in 2026, with offshore projects accounting for 80% of new approvals. This environment plays to Expro's strengths: brownfield-focused offerings, digital solutions that reduce operating costs, and modular production systems that generate annuity-like cash flows. While Baker Hughes (BKR) diversifies into LNG and carbon capture, and Weatherford (WFRD) focuses on operational efficiency, Expro's differentiation lies in its technology-enabled safety and efficiency solutions that reduce customer risk.

Technology, Products, and Strategic Differentiation

Expro's competitive moat rests on proprietary technologies that address the oil and gas industry's dual imperatives: improving safety while reducing operational downtime. The AI-enabled iTong for tubular makeup represents a breakthrough in automating critical operations that traditionally required personnel in hazardous "red zone" areas. By removing workers from dangerous environments, iTong doesn't just improve safety metrics—it allows operators to run completions faster and with greater precision, creating measurable value that justifies premium pricing. Management notes that while they could double market uptake by reducing prices, they maintain pricing discipline because "it brings such tremendous value."

The Skyhook wireless cement head technology, deployed on the Blackhawk Gen 3 system, set a new offshore world record for the heaviest casing string deployment in the Gulf of America. This achievement matters because it demonstrates Expro's ability to handle the most challenging deepwater operations safely and reliably. For supermajors operating in ultra-deep, high-pressure environments, this capability isn't just convenient—it's essential. The technology creates switching costs because operators who standardize on Expro's systems build their drilling programs around Expro's specifications, making it difficult to substitute competitors even at lower prices.

In well flow management, the QPulse multiphase flow meter and ELITE Composition solution earned the OTC Brasil Spotlight on New Technology award. More importantly, successful piloting in Saudi Arabia's Jafurah field demonstrated excellent correlation across three phases compared to traditional test separators, allowing QPulse to function as a stand-alone production testing technology. This eliminates the need for conventional separators, reducing both capital expenditure and operating costs for customers. The non-intrusive design offers rapid, cost-efficient data for production allocation and well performance monitoring, expanding Expro's addressable market from services into permanent monitoring solutions.

The Remote Clamp Installation System (RCIS) exemplifies Expro's automation strategy. By robotically installing clamps on completions, RCIS increases installation speed while "almost completely eliminating the risk of having an HSE incident," in management's words. Deployed in the North Sea, the system reduced clamp installation time by approximately 50% per clamp. This technology creates a compounding advantage: as Expro deploys more RCIS units, it accumulates operational data that improves performance, creating a feedback loop that competitors cannot easily replicate.

The BRUTE Armor Packer , designed for deepwater wells requiring the highest differential pressures, has been successfully deployed by two super majors in the Gulf of America. Its ability to set higher in the wellbore saves rig time and simplifies regulatory compliance, addressing critical pain points for operators facing stricter safety regulations. This positions Expro as the go-to provider for the most technically demanding applications, insulating it from price competition in commoditized segments.

Integration of recent acquisitions strengthens the technology portfolio. Coretrax's expandable casing patches, deployed via coiled tubing, wireline, or drill pipe, address corrosion issues in mature fields. The Relign MNS solution successfully restored production onshore Australia, positioning Expro as the only service company offering a full suite of remediation solutions. This completeness matters because operators prefer single-source providers for well integrity issues, increasing Expro's wallet share and reducing competitive bidding pressure.

Financial Performance & Segment Dynamics: Evidence of Strategy

Expro's Q3 2025 results provide compelling evidence that the efficiency strategy is working. Revenue of $411.4 million declined 2.7% sequentially, primarily due to lower activity in ESSA, MENA, and APAC segments. Yet adjusted EBITDA of $94 million declined just 0.5%, and the margin expanded 50 basis points to 22.8%. This decoupling of margin from revenue demonstrates the structural cost improvements from the Drive 25 initiative, which targets reducing support costs and improving operating leverage.

The segment performance reveals a deliberate shift toward higher-margin service lines. In ESSA, revenue fell 4.9% year-over-year to $125.8 million, yet segment EBITDA jumped 25.8% to $40.5 million, expanding margins from 29.9% to 32.2%. This improvement came from a favorable product mix and higher-margin projects, particularly in well construction and flow management in Cyprus and subsea access in the U.K. and Norway. The Congo production solutions project, which contributed negative $14 million margin in 2024 during construction, transitioned to operations and maintenance in Q4, providing modestly positive impact and setting up an accretive annuity stream going forward.

MENA remains Expro's most profitable geography, delivering 34.7% segment EBITDA margins in Q3 despite a 5.4% revenue decline. For the nine months ended September 2025, MENA revenue grew 12.9% to $270.6 million, with margins expanding to 35.7%. Management emphasizes that "MENA is the most profitable geography we have" with "very strong levels of activity," particularly in Saudi Arabia and Algeria. The majority of Saudi revenue comes from onshore unconventional gas activity, which is unaffected by the kingdom's suspension of offshore jack-up rigs, insulating Expro from regional spending shifts.

NLA demonstrates resilience with 24.4% segment EBITDA margins in Q3, up from 23.8% year-over-year, despite revenue growing just 5.8%. The segment benefited from higher-margin projects in the Gulf of America (Gulf of Mexico) and a $120 million, five-year contract for completion and tubular running services in Guyana. This contract, secured in Q2 2025, exemplifies Expro's ability to win long-term, high-value work in growing offshore basins. Brazil also contributed with over $50 million in contracts for production optimization and well decommissioning.

APAC remains the laggard, with revenue declining 14.4% in Q3 and margins compressing to 20.7% from 26.1% year-over-year. Management expects Asia Pacific to be a "laggard" in 2026, with softness observed in Q3 and Q4 2025. However, even here Expro is winning differentiated work, including four contracts totaling $15 million in Indonesia and the first rigless conductor driving operation on an Australian platform in over a decade.

Free cash flow generation represents the most compelling financial story. Net cash from operating activities reached $63.2 million in Q3 and $153.1 million for the nine months ended September 2025, driven by favorable working capital movements and higher Adjusted EBITDA. The company generated record quarterly free cash flow, prompting management to raise full-year guidance to $110-120 million, representing approximately 7% of revenue. This transformation is particularly notable in the production solutions business, which "historically, as a consumer of capital, is maturing into a generator of free cash flow."

Capital allocation reflects disciplined value creation. During the nine months ended September 2025, Expro repurchased 3.7 million shares for $40.1 million, representing at least one-third of expected free cash flow as targeted by the capital allocation framework. The new $500 million senior secured credit facility, maturing in 2029 with financial covenants requiring minimum interest coverage of 3.5x and maximum net leverage of 2.75x, provides ample liquidity while maintaining conservative leverage. With $198.6 million in cash and $333.4 million available under the revolver, total liquidity of $532 million comfortably funds operations, acquisitions, and shareholder returns.

Outlook, Management Guidance, and Execution Risk

Management's 2025 guidance reflects confidence in the business model's resilience. Adjusted EBITDA is expected between $350-360 million, up from prior "notional $350 million+" guidance, while capital expenditures are reduced to $110-120 million from approximately $120 million. The free cash flow target of $110-120 million represents a meaningful increase from the $25.9 million generated in 2024, underscoring the structural shift toward cash generation. As CFO Sergio Maiworm stated, "EBITDA margin expansion is not the goal in itself, but a means to increase free cash flow generation."

The preliminary 2026 outlook is notably cautious yet optimistic on margins. Management expects activity levels to be "largely consistent, if not slightly lower than those projected in 2025," with a slower start in Q1 due to Northern Hemisphere winter seasonality and national oil company budget cycles. However, they remain "strongly committed to further expanding EBITDA margins and free cash flow generation." Michael Jardon, the CEO, was explicit: "I will be very disappointed if we don't expand EBITDA margins in 2026."

This margin expansion thesis rests on three pillars. First, the full-year effect of Drive 25 initiatives will deliver approximately 50% of targeted savings in 2025, with the remainder flowing through in 2026. Second, internationalization of recent M&A, particularly Coretrax's expandable solutions into U.S. land, Australia, and Brazil, will drive higher utilization and margins. Third, continued rollout of premium technologies like iTong and RCIS will increase wallet share and pricing power.

Key assumptions underlying this outlook include Brent crude prices remaining above $60-70 per barrel to support upstream investment, continued offshore project sanctioning (accounting for 80% of greenfield CapEx in 2025-2026), and stable customer OpEx spending on brownfield optimization. Management acknowledges "significant near-term uncertainty and volatility" from trade tensions and geopolitical risks, but believes Expro's "diversified business mix, disciplined capital allocation and relentless focus on operational excellence" will enable margin expansion even if activity softens.

Execution risks center on technology adoption rates and customer caution. Management notes that "more of the short cycle activity, more of the intervention activity, more of the OpEx-related activity" is being "flexed down" as customers remain "particularly cautious" amid macro uncertainty. This creates a headwind for well intervention and integrity services, which are expected to generate over $300 million in 2025 with contribution margins in the low thirties. Any further slowdown in this high-margin segment could pressure overall profitability.

Risks and Asymmetries: What Could Break the Thesis

The most material risk is a sustained downturn in offshore investment. While Expro is insulated from U.S. land cyclicality, it remains exposed to offshore project delays. Management acknowledges that "non-committed exploration and appraisal wells and final investment decision approvals may be delayed as customers reevaluate project economics" if oil prices fall below $60 per barrel. The Congo production solutions project exemplifies this risk: while the O&M phase is now accretive, the construction phase consumed capital and generated negative margins for over a year. A slowdown in West Africa or Brazil project sanctions could impact 2026 revenue more than management's "flat to slightly down" scenario suggests.

Customer concentration presents another vulnerability. The company's largest customers are major NOCs and IOCs, and spending decisions can shift quickly. The recent softness in Saudi Arabia due to "operational issues with a vendor" reduced MENA revenue 5.4% in Q3, illustrating how single-customer issues can move regional results. While management notes that most Saudi revenue comes from onshore unconventional gas (unaffected by offshore rig suspensions), any broader slowdown in Saudi spending would disproportionately impact Expro's most profitable geography.

Competitive pressure from larger players remains a constant threat. Schlumberger's scale advantages and Halliburton's cost discipline could pressure pricing in commoditized services, while Baker Hughes' diversification into LNG and carbon capture could capture growth that Expro misses. However, Expro's niche focus and technology differentiation create switching costs that mitigate this risk. As management notes, "we could probably double the market uptakes if we would reduce the pricing on it. And we're not going to because it brings such tremendous value."

Technology execution risk is real. The iTong rollout, while gaining momentum with two super major deployments, requires continued investment and customer acceptance. If adoption slows or competitors develop similar automation solutions, Expro's margin expansion thesis could weaken. The RCIS system, while successful in the North Sea, is still scaling and won't see "more installations in 2026 and really ramp up as we go into 2027."

On the upside, faster-than-expected technology adoption could drive meaningful outperformance. If iTong penetration reaches management's target of 75%+ of floating rigs, or if QPulse displaces conventional test separators at scale, revenue mix could shift more quickly toward premium services. The production solutions business, now generating positive free cash flow, could become a more significant contributor if ENI and other customers expand their use of modular early production facilities.

Valuation Context: Positioning Relative to Cash Generation

At $14.98 per share, Expro trades at a market capitalization of $1.73 billion and enterprise value of $1.72 billion, reflecting a net cash position. The stock trades at 5.38x TTM EBITDA and 13.57x TTM free cash flow, a significant discount to larger peers. Schlumberger trades at 8.50x EBITDA and 14.53x free cash flow, while Baker Hughes trades at 11.32x EBITDA despite generating lower margins. Halliburton trades at 7.13x EBITDA with weaker free cash flow conversion.

This valuation gap appears unjustified given Expro's margin profile. The company's 22.8% adjusted EBITDA margin exceeds Halliburton's 12.86% operating margin and Baker Hughes' 13.52% operating margin, while approaching Schlumberger's estimated 23% EBITDA margin. Expro's 11% free cash flow margin (on a TTM basis) is improving and should reach 7% of revenue in 2025 ($110-120 million on approximately $1.7 billion revenue), representing a 70% FCF conversion rate that rivals the best-in-class operators.

Balance sheet strength provides downside protection. With $198.6 million in cash, $333.4 million in undrawn revolver capacity, and debt-to-equity of just 0.13x, Expro has ample liquidity to weather downturns while investing in growth. The company repurchased $40.1 million of stock in the first nine months of 2025, representing 2.3% of shares outstanding, and has headroom remaining in its $100 million authorization. This disciplined capital return, combined with the "at least one-third of free cash flow" target, signals management's confidence in sustained cash generation.

The valuation multiple of 1.04x enterprise value to revenue is in line with Weatherford (1.27x) but below Schlumberger (1.85x) and Baker Hughes (1.92x). Given Expro's superior margin expansion trajectory and improving free cash flow conversion, a case can be made for multiple expansion as the market recognizes the structural shift in earnings quality. The key catalyst will be consistent delivery on the 2026 margin expansion target in the face of flat activity, which would demonstrate that Expro's business model has fundamentally de-risked from cyclicality.

Conclusion: A Cash Flow Story in a Cyclical Industry

Expro Group has engineered a rare transformation in the oilfield services sector: converting a historically capital-intensive business into a free cash flow generator while expanding margins despite flat market conditions. The company's 22.8% EBITDA margin and record quarterly free cash flow are not cyclical highs but structural improvements driven by the Drive 25 efficiency campaign, technology differentiation, and strategic positioning in resilient international markets.

The investment thesis hinges on execution rather than market recovery. Management's confidence in expanding 2026 margins amid flat activity levels suggests a business that has decoupled from commodity price volatility through premium pricing, cost discipline, and annuity-like production solutions cash flows. The integration of PRT Offshore and Coretrax is delivering tangible results, with Coretrax's expandable solutions expanding into new markets and PRT leveraging Expro's global footprint to improve asset utilization.

Key variables to monitor include technology adoption rates for iTong and RCIS, margin progression in the production solutions business, and the pace of share repurchases under the capital allocation framework. The company's low leverage and strong liquidity provide downside protection, while its technology moat and customer relationships offer upside optionality if offshore investment accelerates.

For investors seeking exposure to energy services without the cyclicality of drilling contractors or U.S. land pressure, Expro offers a compelling combination of margin expansion, free cash flow generation, and disciplined capital allocation. The stock's valuation at 5.38x EBITDA and 13.57x free cash flow appears conservative relative to improving fundamentals, making the risk/reward attractive for those willing to bet on execution in an uncertain macro environment.