Expro Announces Fourth Quarter and Full Year 2023 Results
Strong operational performance and profitable growth driven by a rebound of NLA activity and acquisition of PRT Offshore.
Revenue of $407 million for the fourth quarter, up 10% sequentially. Revenue of $1,513 million for the full year, up 18% year-over-year.
Net loss of $12 million for the fourth quarter as compared to net loss of $14 million for the third quarter of 2023. Net loss of $23 million for the full year as compared to net loss of $20 million for 2022.
Adjusted EBITDA1 of $85 million for the fourth quarter, up 70% sequentially. Adjusted EBITDA margin1 of 21%, up sequentially from 14%. Adjusted EBITDA of $249 million for the full year as compared to $206 million for 2022. Adjusted EBITDA margin1 of approximately 16% for both 2023 and 2022.
Provides 2024 revenue and Adjusted EBITDA margin outlook
HOUSTON–(BUSINESS WIRE)–Expro Group Holdings N.V. (NYSE: XPRO) (the “Company” or “Expro”) today reported financial and operational results for the three months and year ended December 31, 2023.
Fourth Quarter 2023 Financial Highlights
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Revenue was $407 million compared to revenue of $370 million in the third quarter of 2023, a sequential increase of $37 million, or 10%, primarily driven by a rebound of activity in North and Latin America (“NLA”) and the acquisition of PRT Offshore in the beginning of the fourth quarter. |
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Net loss for the fourth quarter of 2023 was $12 million, or $0.11 per diluted share, compared to a net loss of $14 million, or $0.13 per diluted share, for the third quarter of 2023. Adjusted net income1 for the fourth quarter of 2023 was $7 million, or $0.06 per diluted share, compared to an adjusted net loss for the third quarter of 2023 of $6 million, or $0.06 per diluted share. Results for the fourth and third quarter of 2023 include foreign exchange losses of $5 million and $4 million, respectively, or approximately $0.04 per diluted share, for both periods. |
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Adjusted EBITDA was $85 million, a sequential increase of $35 million, or 70%, driven by higher activity during the fourth quarter and lower unrecoverable costs within our light well intervention (“LWI”) business. Adjusted EBITDA margin for the fourth and third quarter of 2023 was 21% and 14%, respectively. Excluding $4 million and $15 million of unrecoverable LWI-related costs during the three months ended December 31, 2023 and September 30, 2023, respectively, Adjusted EBITDA would have been $89 million and $65 million and Adjusted EBITDA margin would have been 22% and 18%.
The Company suspended vessel-deployed LWI operations during the third quarter of 2023 following a wire failure on the main crane of a third-party owned vessel working with Expro while the crane was suspending the subsea module of Expro’s vessel-deployed LWI system. We are continuing to work with the relevant stakeholders and independent experts to assess the incident. The well control package and lubricator components of this vessel-deployed LWI system have been safely recovered, but we have determined not to participate in the recovery of the subsea module from the seabed. We are continuing to determine the path forward for our vessel-deployed LWI operations, including what alternative service delivery options and service partner options are available to the Company, and the timing and cost (including potential damage claims) of completing customer work scopes for which our vessel-deployed LWI system was integral. At this time, we are not able to assess the timing and potential cost of completing customer work scopes but do not expect such costs to be material to Expro’s financial results. |
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Net cash provided by operating activities for the fourth quarter of 2023 was $33 million compared to net cash provided by operating activities of $59 million for the third quarter of 2023. The decrease was primarily due to an increase in working capital of $60 million, partially offset by an increase in Adjusted EBITDA of $35 million. Adjusted cash flow from operations1 for the fourth quarter of 2023 was $43 million compared to $64 million for the third quarter of 2023. |
1. A non-GAAP measure.
Full Year 2023 Financial Highlights
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Revenue was $1,513 million for the year ended December 31, 2023, an increase of $234 million, or 18%, compared to $1,279 million for the year ended December 31, 2022. Activity and revenue across all geography-based operating segments increased during the year ended December 31, 2023, most notably in Europe and Sub-Saharan Africa (“ESSA”). |
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Net loss was $23 million for the year ended December 31, 2023, or $0.21 per diluted share, compared to a net loss of $20 million, or $0.18 per diluted share, for the year ended December 31, 2022. Adjusted net income for the year ended December 31, 2023 was $20 million, or $ 0.19 per diluted share, compared to adjusted net income for the year ended December 31, 2022 of $19 million, or $ 0.18 per diluted share. |
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Adjusted EBITDA increased by $43 million, or 21%, to $249 million for the year ended December 31, 2023 from $206 million for the prior year. The increase in Adjusted EBITDA is primarily attributable to higher revenue and a more favorable activity mix. Adjusted EBITDA margin was approximately 16% for both 2023 and 2022, respectively. Adjusted EBITDA for the year ended December 31, 2023 includes unrecoverable LWI-related costs in Asia Pacific (“APAC”) of $36 million. Adjusted EBITDA for the year ended December 31, 2022 includes unrecoverable LWI-related costs of $28 million. Excluding unrecoverable LWI-related costs, Adjusted EBITDA for the years ended December 31, 2023 and 2022 would have been $285 million and $234 million, and Adjusted EBITDA margin would have been 19% and 18%, respectively. |
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Net cash provided by operating activities for the year ended December 31, 2023 was $138 million compared to $80 million for year ended December 31, 2022, primarily due to an increase in Adjusted EBITDA (as referenced above) and favorable movement in working capital, partially offset by higher payments for income taxes. Adjusted cash flow from operations for the year ended December 31, 2023 was $170 million compared to $115 million for year ended December 31, 2022. |
Michael Jardon, Chief Executive Officer, noted, “Expro has delivered strong fourth quarter financial results with revenue and Adjusted EBITDA exceeding our most recent guidance ranges. We begin 2024 in a strong position. As activity is strengthening, we are continuing to see a positive demand trend for our services and solutions and believe that the energy services sector and Expro’s business are in the early phase of a multi-year growth cycle.
“Earlier this month we announced that Expro has entered into a definitive agreement to acquire Coretrax, a technology leader in performance drilling tools and wellbore cleanup, well integrity and production optimization solutions. Coretrax has a complementary offering to Expro with little overlap and will bolster the portfolio of technology-enabled services and solutions offered through our Well Construction and Well Intervention & Integrity product lines, adding significant value to our clients from innovative technologies that reduce risk and cost, optimize drilling efficiency, extend the life of existing well stock, and optimize production.
“We also celebrated 40 years since the launch of our first subsea test tree system. Since then Expro has remained at the forefront of subsea landing string technology. Recognizing our dedication to subsea well access applications, Expro was named Intervention Champion of the Year at the OWI Global Awards 2023 that was held in November. Our capabilities in this space have also been bolstered with the recent acquisition of PRT Offshore at the beginning of the fourth quarter of 2023 and we are already making significant progress on our integration.
“We built a healthy order book in 2023, capturing strategically important contract wins. As we look ahead, we are well positioned to support our customers as activity ramps up across our regions and product lines. I am very proud of the team of experts throughout the company and what they have accomplished. We believe our business is well positioned to be a leading provider of services and solutions in the international and offshore markets while delivering on the financial and other objectives of the company in the years to follow.
“For 2024, we expect improving profitability to drive improved cash flow generation as we capitalize on tailwinds in our industry. Based on our strong performance in 2023 and a positive activity outlook, we currently anticipate generating revenues of between $1,600 million to $1,700 million in 2024. Adjusted EBITDA in 2024 is expected to be between $325 million and $375 million, and Adjusted EBITDA margin is expected to be between 20% and 22%. Full-year guidance assumes our proposed acquisition of Coretrax will be completed at the beginning of the third quarter. Consistent with historical patterns, revenue and profitability in the first quarter of 2024 are expected to be negatively impacted by the winter season in the Northern Hemisphere and the budget cycles of our national oil company customers. First quarter revenue is expected to be within a range of $365 million and $375 million. First quarter Adjusted EBITDA is expected to be within a range of $63 million and $73 million and Adjusted EBITDA margin is expected to be approximately 18%.”
Notable Awards and Achievements
Expro was named Energy Transition Pioneer of the Year at the OWI Global Awards 2023, recognizing its commitment to sustainable energy solutions. This recognition reflects Expro’s proactive efforts to contribute to a cleaner and more sustainable future. The company also won Intervention Champion of the Year recognizing Expro’s commitment to Subsea Well Access. In 2023 we achieved over 40 years of Subsea Test Tree Assemblies (“SSTTA”) operations and more than 3,000 subsea deployments across exploration and appraisal, completion, and intervention applications, building a strong reputation and market share that is supported by the industry’s largest large-bore global SSTTA fleet.
Expro’s Tubular Running Services (“TRS”) business accomplished an industry milestone in the U.S. Gulf of Mexico by successfully completing an operator’s well using a fully non-marking completion running package – a significant achievement in the field.
This tubular running package provides the industry’s only truly non-marking tubular running solution, which helps preserve well integrity and extends the life cycle of the well. This was also the first deployment of the Collar Load Support (CLS™) System for Stands in the region, in which the performance of the system exceeded customer expectations. The success of this completion run was the culmination of extensive planning and testing and is another example of Expro’s ability to provide solutions and positive results for the industry’s most complex wells.
Expro has been awarded a Corporate Frame Agreement to deliver well testing services for Equinor in the Norwegian Continental Shelf. The four-year contract, with the potential of three two-year options, builds on Expro’s previous seven-year agreement. The scope of work includes well flow management and production optimization services to enhance Equinor’s assets across completion, intervention, production, and abandonment operations.
Building on the Corporate Frame Agreement, the work scope will see the delivery of hydraulic intervention well services using Expro’s innovative CoilHose™ Light Well Circulation System (“LWCS”) that is designed to provide a more efficient and lower operational carbon footprint approach to operations. A significant portion of the contract is directly linked to a demonstrable commitment to a low carbon plan, allowing Expro to implement its environmental capabilities with Equinor and further enhance the strength and depth of this partnership.
In the Middle East and North Africa, Expro’s Automated Bucking and Catwalk system delivered improved safety and record efficiency at one of its client’s challenging wells. Expro was contracted to provide a high quality, low risk tubular running services to its clients’ onshore fleet of drilling rigs. Marking an operational first for the triple catwalk in the United Arab Emirates, on the first deployment of its TRS system, Expro set a record for instantaneous tripping speed and the second-best performance overall tripping speed on 18 5/8” tubulars. The overall rate was more than twice that of the average run in the same field. The client extended their appreciation to the TRS crew along with the rig team for concluding a very challenging 18 5/8” job with reduced safety exposure to personnel and a green safety record.
Finally, in the Asia Pacific region, Expro completed the deepest deployment of MK VI CoilHose™, coupled with a successful N2 lifting application in a remote location offshore New Zealand. This marked the first-ever MK VI CoilHose™ deployment in APAC, reaching an impressive depth of 8,650 feet (2,637 meters), surpassing depths achieved globally by 25%. The CoilHose™ solution provided a swift rig-up time compared to traditional coil tubing, minimizing planning and operational duration. This streamlined approach not only reduces safety risks but also lessens the environmental impact during well interventions.
Segment Results
Unless otherwise noted, the following discussion compares the quarterly results for the fourth quarter of 2023 to the results for the third quarter of 2023.
North and Latin America (NLA)
Revenue for the NLA segment was $145 million for the three months ended December 31, 2023, an increase of $40 million, or 38%, compared to $105 million for the three months ended September 30, 2023. The increase was primarily due to additional subsea well access revenue following the acquisition of PRT Offshore at the beginning of the fourth quarter, higher well flow management revenue in Mexico, and higher well construction revenue in the U.S. due to increased customer activity.
Segment EBITDA for the NLA segment was $44 million, or 30% of revenues, during the three months ended December 31, 2023, compared to $20 million, or 19% of revenues, during the three months ended September 30, 2023. The increase of $24 million in Segment EBITDA was attributable to higher activity and the increase in Segment EBITDA margin was attributable to a more favorable activity mix during the three months ended December 31, 2023.
Europe and Sub-Saharan Africa (ESSA)
Revenue for the ESSA segment was $134 million for the three months ended December 31, 2023, a decrease of $1 million, or 1%, compared to $135 million for the three months ended September 30, 2023. The decrease in revenues was primarily driven by lower well flow management revenue in Congo, partially offset by higher well flow management and subsea well access revenue in Equatorial Guinea.
Segment EBITDA for the ESSA segment was $41 million, or 31% of revenues, for the three months ended December 31, 2023, an increase of $2 million, or 5%, compared to $39, or 29% of revenues, for the three months ended September 30, 2023. The increase in Segment EBITDA and Segment EBITDA margin was primarily attributable to a more favorable activity mix during the three months ended December 31, 2023.
Middle East and North Africa (MENA)
Revenue for the MENA segment was $65 million for the three months ended December 31, 2023, an increase of $7 million, or 13%, compared to $58 million for the three months ended September 30, 2023. The increase in revenue was driven by higher well flow management services revenue in Algeria and the Kingdom of Saudi Arabia and by higher well construction revenue in Morocco.
Segment EBITDA for the MENA segment was $21 million, or 33% of revenues, for the three months ended December 31, 2023, an increase of $4 million, or 26%, compared to $17 million, or 29% of revenues, for the three months ended September 30, 2023. The increase in Segment EBITDA and Segment EBITDA margin was primarily due to higher activity and a more favorable activity mix during the three months ended December 31, 2023.
Asia Pacific (APAC)
Revenue for the APAC segment was $62 million for the three months ended December 31, 2023, a decrease of $9 million, or 13%, compared to $71 million for the three months ended September 30, 2023. The decrease in revenue was primarily due to lower subsea well access revenue in Australia, where we suspended vessel-deployed LWI operations, and China, partially offset by higher subsea well access revenue in Malaysia and well flow management revenue in Malaysia and Australia.
Segment EBITDA for the APAC segment was $5 million, or 9% of revenues, for the three months ended December 31, 2023, an increase of $9 million compared to ($4) million, or (6)% of revenues, for the three months ended September 30, 2023. The increase in Segment EBITDA (despite the decrease in revenues) was primarily due to lower costs within our LWI business during the three months ended December 31, 2023 compared to the three months ended September 30, 2023. For the three months ended December 31, 2023, APAC Segment EBITDA includes unrecoverable LWI-related costs of $4 million. Segment EBITDA for the three months ended September 31, 2023 includes unrecoverable LWI-related costs of $15 million. Excluding unrecoverable LWI-related costs, Segment EBITDA for the fourth and third quarter of 2023 would have been $9 million or 15% of revenue and $11 million or 15% of revenue, respectively.
Other Financial Information
The Company’s capital expenditures totaled $37 million in the fourth quarter of 2023 and approximately $122 million for the full year 2023. Expro plans for capital expenditures in the range of approximately $130 million to $140 million for 2024.
As of December 31, 2023, Expro’s consolidated cash and cash equivalents, including restricted cash, totaled $152 million. The Company had outstanding debt of $20 million as of December 31, 2023. The Company’s total liquidity as of December 31, 2023 was $299 million. Total liquidity includes $147 million available for drawdowns as loans under the Company’s revolving credit facility.
Depreciation and amortization expense was $63 million for the fourth quarter of 2023 compared to $37 million for the third quarter of 2023. The increase was primarily due to $19 million of accelerated depreciation expense related to the subsea module (“SSM”) of Expro’s vessel-deployed LWI system and related equipment.
On October 25, 2023, the Company’s Board of Directors (the “Board”) approved an extension to the stock repurchase program first approved on June 16, 2022. Pursuant to the extended stock repurchase program, the Company is authorized to acquire up to $100 million of its outstanding common stock from October 25, 2023 through November 24, 2024. During the year ended December 31, 2023, under the Stock Repurchase Program we repurchased approximately 1 million shares of our common stock at an average price of $16.70 for a total cost of approximately $20 million, including shares repurchased prior to the extension of the Stock Repurchase Program. During the year ended December 31, 2022, we repurchased 1 million shares at an average price of $11.81 per share, for a total cost of $13 million under the preceding program.
Expro’s provision for income taxes was $13 million for both the fourth quarter of 2023 and the prior quarter primarily due to a similar mix of taxable profits between jurisdictions. The Company’s effective tax rate on a U.S. generally accepted accounting principles (“GAAP”) basis for the three months and year ended December 31, 2022 also reflects liability for taxes in certain jurisdictions that tax on an other than pre-tax profits basis, including so-called “deemed profits” regimes.
The financial measures provided that are not presented in accordance with GAAP are defined and reconciled to their most directly comparable GAAP measures. Please see “Use of Non-GAAP Financial Measures” and the reconciliations to the nearest comparable GAAP measures.
Additionally, downloadable financials are available on the Investor section of www.expro.com.
Conference Call
The Company will host a conference call to discuss fourth quarter 2023 results on Wednesday, February 21, 2024, at 12:00 p.m. Central Time (1:00 p.m. Eastern Time).
Participants may also join the conference call by dialing:
US: +1 (833) 470-1428
International: +1 (929) 526-1599
Access ID: 108879
To listen via live webcast, please visit the Investor section of www.expro.com.
The fourth quarter 2023 Investor Presentation is available on the Investor section of www.expro.com.
An audio replay of the webcast will be available on the Investor section of the Company’s website approximately three hours after the conclusion of the call and will remain available for a period of approximately 12 months.
To access the audio replay telephonically:
Dial-In: US +1 (866) 813-9403 or +1 (929) 458-6194
Access ID: 849637
Start Date: February 21, 2024, 1:00 p.m. CT
End Date: March 6, 2024, 10:59 p.m. CT
A transcript of the conference call will be posted to the Investor relations section of the Company’s website after the conclusion of the call.
ABOUT EXPRO
Working for clients across the entire well life cycle, Expro is a leading provider of energy services, offering cost-effective, innovative solutions and best-in-class safety and service quality. The Company’s extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity.
With roots dating to 1938, Expro has more than 8,000 employees and provides services and solutions to leading energy companies in both onshore and offshore environments in approximately 60 countries.
For more information, please visit: www.expro.com and connect with Expro on X (formerly Twitter) @ExproGroup and LinkedIn @Expro.
Forward Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this release include statements, estimates and projections regarding the Company’s future business strategy and prospects for growth, cash flows and liquidity, financial strategy, budget, projections, guidance, operating results, environmental, social and governance goals, targets and initiatives, estimates and projections regarding the outcome and benefits of the proposed Coretrax acquisition, the Company’s ability to achieve the anticipated synergies as a result of the proposed Coretrax acquisition and the timing of the closing of the proposed Coretrax acquisition. These statements are based on certain assumptions made by the Company based on management’s experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct.
Contacts
Chad Stephenson – Director Investor Relations
+1 (713) 463-9776
InvestorRelations@expro.com
