8-K: Expro Group Holdings N.V. Corrects and Reaffirms 2024 Guidance After Solid First Quarter

Expro Group Holdings N.V. reported a net loss of $3 million for the first quarter of 2024, while correcting and reaffirming its full-year 2024 revenue and Adjusted EBITDA guidance.

Summary

• Expro Group Holdings N.V. announced its first quarter 2024 results, reporting revenue of $383 million, which is a 6% decrease sequentially but a 13% increase year-over-year.
• The company experienced a net loss of $3 million, an improvement from a $12 million loss in the previous quarter and a $6 million loss in the same quarter of the previous year.
• Adjusted EBITDA was $67 million, down 20% sequentially but up 61% year-over-year.
• The company's net loss margin was (1)% for the first quarter of 2024, compared to (3)% for the fourth quarter of 2023.
• Expro reaffirmed its full-year 2024 guidance, projecting revenue between $1.6 and $1.7 billion and Adjusted EBITDA between $325 and $375 million.
• Second quarter revenue is expected to grow approximately 3% year-on-year and 7% sequentially, with an Adjusted EBITDA margin between 20% and 21%.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the year-over-year growth, improved net loss, and reaffirmed guidance, but tempered by sequential declines and the expected slowdown in US land activity.

Positives

• The company's revenue increased by 13% year-over-year.
• Net loss improved significantly compared to both the previous quarter and the same quarter last year.
• Adjusted EBITDA saw a substantial increase year-over-year.
• The company reaffirmed its full-year 2024 guidance, indicating confidence in future performance.
• Expro secured over $230 million in new work globally in the first quarter.
• The backlog remained stable at approximately $2 billion.
• The company is progressing with the acquisition of Coretrax, which is expected to enhance its service offerings.
• Expro is participating in Japan's first clean hydrogen production demonstration project.

Negatives

• Revenue decreased by 6% sequentially.
• Adjusted EBITDA decreased by 20% sequentially.
• The company experienced a net loss of $3 million for the quarter.
• The NLA and ESSA segments saw a decrease in revenue and EBITDA.
• The company's performance was negatively impacted by the winter season in the Northern Hemisphere and budget cycles of national oil company customers.

Risks

• The company expects reduced activity in the US land market for the next several quarters.
• The company's performance is subject to the volatility of oil and gas prices.
• Political, economic, and regulatory uncertainties in international operations could impact results.
• The company faces competition in its industry.
• The company's results are subject to global or national health concerns, including health epidemics.
• The company's results are subject to inflationary pressures.
• The company's results are subject to the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations, and other guidance.

Future Outlook

Expro is well-positioned for additional margin expansions in its drilling and completions businesses, which will drive improved group profitability and shareholder returns. The company expects international and offshore markets to be in the early stages of a multi-year growth phase. Full-year guidance assumes the Coretrax acquisition will be completed at the beginning of the third quarter, with some upside tied to a possible closing of the transaction a month or two earlier.

Management Comments

• Michael Jardon, Chief Executive Officer, noted Expro has started 2024 in a strong position delivering solid financial results for the first quarter, with revenue surpassing expectations and Adjusted EBITDA consistent with the midpoint of guidance provided on our fourth quarter of 2023 earnings conference call.
• Michael Jardon stated that these results are encouraging for the full year 2024 outlook and a testament to our commitment to deliver excellence and innovation across all areas of operation.
• Management believes international and offshore markets are in the early stages of a multi-year growth phase and that strong business momentum will be sustained across Expro's geo-markets and product lines for at least the next several years.

Industry Context

The announcement reflects the broader trends in the oil and gas industry, with a focus on international and offshore markets as US land activity is expected to decline. The acquisition of Coretrax aligns with the industry's move towards technology-enabled solutions and efficiency improvements. The company's participation in carbon capture projects also reflects the industry's increasing focus on sustainability.

Comparison to Industry Standards

• Expro's revenue growth of 13% year-over-year is a positive sign, but the sequential decrease of 6% indicates some challenges compared to companies with more consistent growth patterns such as Schlumberger and Halliburton.
• The adjusted EBITDA margin of 18% is lower than some of its peers, such as Baker Hughes, which often report margins above 20%.
• The reaffirmation of full-year guidance is a positive signal, but the company's performance will need to be closely monitored against competitors like Weatherford International, which are also focused on international growth.
• The acquisition of Coretrax is similar to other industry consolidation moves, such as the merger of NOV and Grant Prideco, aimed at expanding service offerings and market share.

Stakeholder Impact

• Shareholders will be encouraged by the reaffirmed guidance and improved year-over-year results.
• Employees may see opportunities for growth with the company's expansion into new markets and technologies.
• Customers will benefit from the expanded service offerings and innovative solutions.
• Suppliers may see increased demand for their products and services.
• Creditors will be reassured by the company's stable financial position and reaffirmed guidance.

Next Steps

• The company will complete the acquisition of Coretrax.
• Expro will continue to focus on international and offshore markets.
• The company will participate in Japan's first clean hydrogen production demonstration project.
• Expro will host a conference call to discuss the first quarter 2024 results.

Key Dates

Keywords

Expro, Oil and Gas, Energy Services, EBITDA, Revenue, Net Loss, Acquisition, Coretrax, Guidance, Well Construction, Well Intervention, Well Flow Management