Expro Group Holdings - Earnings Call - Q4 2024

Executive Summary

• Q4 revenue was $437M, up 3% q/q and 7% y/y, with Adjusted EBITDA of $100M and a record 23% margin since the Expro/Frank’s merger; GAAP EPS was $0.19 and Adjusted EPS was $0.36.
• Revenue modestly under-shot prior Q4 guidance ($440–$470M) while EBITDA landed within guidance ($90–$105M), driven by strong subsea deliveries in Angola, MENA well flow activity, and the non-repeat of Congo project losses from Q3.
• Congo project variation orders were resolved; Expro transitioned from construction/commissioning to O&M with improved economics via higher O&M rates and additional services, removing a prior earnings headwind.
• 2025 outlook: revenue stable to modestly up to $1.7–$1.75B, Adjusted EBITDA margin +100+ bps y/y (implying $350–$370M EBITDA), FCF margin ~7%, with Q1 2025 seasonally lower revenue of $370–$380M and EBITDA of $65–$75M before an activity rebound in Q2.
• Capital allocation: $100M buyback program extended; 1.2M shares repurchased in Q4 (~1% of shares) for ~$14M, alongside year-end liquidity of ~$320M (cash ~$185M, RCF availability ~$136M) and debt of ~$121M.

What Went Well and What Went Wrong

What Went Well

• Record profitability since the merger: “Fourth quarter Adjusted EBITDA and Adjusted EBITDA margin of $100 million and 23%…our best quarterly performance since we completed the Expro/Frank’s merger in Q4 2021”.
• Subsea strength and regional execution: ESSA revenue rose 9% q/q to $143M with segment EBITDA margin up to 37% on Angola subsea deliveries and Congo variations resolution; MENA revenue rose 7% q/q with 35% margins.
• Operating cash flow inflection: Q4 operating cash flow increased to $97M vs $55M in Q3, supported by EBITDA growth and working capital/tax timing, positioning for FY25 FCF margin ~7%.

What Went Wrong

• Revenue missed prior guidance midpoint: Q4 revenue of $437M trailed the earlier $440–$470M range, with NLA a bit below expectations due to lower well construction/tubular sales and Coretrax delivery delays, and softer APAC well flow management.
• Q1 seasonality and deepwater “whitespace”: Management guided Q1 revenue down ~15% q/q and EBITDA margin down ~400 bps sequentially on typical Northern Hemisphere seasonality and non-repeat of Q4 subsea project deliveries.
• Congo headwind lingered into H2 before resolution: Q3 incurred a $7M negative impact; only a modest Q4 lump-sum tailwind realized, though O&M phase now margin-accretive going forward.

Transcript

Operator (participant)

Hello and welcome to the Expro Q4 2024 earnings presentation. My name is Carla, and I will be coordinating your call today. During the presentation, you will have the opportunity to ask questions by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I would now like to hand you over to Chad Stephenson, Director of Investor Relations, to begin. Chad, please go ahead when you're ready.

Chad Stephenson (Director of Investor Relations)

Welcome to Expro's fourth quarter 2024 conference call. I'm joined today by Expro CEO Mike Jardon and Expro CFO Quinn Fanning. First, Mike and Quinn have some prepared remarks, then we'll open it up for questions. We have an accompanying presentation on our fourth quarter results that is posted on the Expro website, expro.com, under the Investor section. In addition, supplemental financial information for the fourth quarter results is downloadable on the Expro website, likewise under the Investor section. I'd like to remind everyone that some of today's comments may refer to or contain forward-looking statements.

Such remarks are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such statements speak only as of today's date, and the company assumes no responsibility to update forward-looking statements as of any future date.

The company has included in its SEC filings cautionary language identifying important factors that could cause actual results to be materially different from those set forth in any forward-looking statements. A more complete discussion of these risks is included in the company's SEC filings, which may be accessed on the SEC's website, sec.gov, or our website again at expro.com. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable GAAP financial measure in our fourth quarter 2024 earnings release, which can also be found on our website. With that, I'd like to turn the call over to Mike.

Mike Jardon (CEO)

Good morning, everyone. I'd like to start off by reviewing the fourth quarter and full year 2024 financial results as was summarized in today's earnings press release. I will then discuss what I would characterize as a dynamic macro environment, which, despite our expectation of a near-term moderating of upstream investment, we believe supports a positive multi-year outlook for energy services companies with exposure to international and offshore markets. Finally, Quinn will provide some additional commentary on the just completed quarter, the full year, and share some additional financial information.

For a recap of consolidated results and quarterly results by region, I'll direct you to slides two through seven of the presentation we posted to expro.com. Turning to slide two, I am pleased to report a solid quarter for Expro with Q4 2024 revenue of $437 million and Adjusted EBITDA of $100 million, or 23% of revenue. Q4 adjusted cash flow from operations and free cash flow were $115 million and $75 million, respectively. Of note, Q4 2024 results reflect our best financial performance in terms of Adjusted EBITDA, Adjusted EBITDA margin, adjusted cash flow from operations, and Free Cash Flow since we closed the Expro-Frank's merger in October of 2021.

The sequential increase in revenue of $14 million in the fourth quarter was primarily due to increased activity in Angola within our subsea well access business and higher well flow management services in Algeria, Iraq, and Saudi Arabia. Compared to Q4 2023, revenue was up $30 million, or 7%, again reflecting a strong quarter for the subsea well access business as well as results of the acquired Coretrax business, partially offset by lower revenue from our Congo Production Solutions project.

As highlighted in our press release, we recently resolved outstanding variation orders related to the Congo project, allowing us to successfully close out the construction and commissioning phase of the project. Our customer also approved an adjustment to the contract rate for the multi-year operations and maintenance, or O&M, phase of the project to incentivize higher throughput from the Expro-built onshore pretreatment plant and our provision of additional services for the facility.

Our customers continue to highlight their desire to optimize production from existing wells and assets and reduce their emissions, and the Congo project is an excellent example of how we enable our customers to achieve these objectives. I congratulate our Production Solutions team for developing and delivering a cost-competitive, differentiated solution for this important customer and doing so within a very ambitious timeline. With over 800 team members working at site for over 22 months, we also achieved nearly 1.9 million man-hours without an HSE-related lost-time incident.

This is a significant milestone, the achievement of which all my Expro colleagues can take pride. For full year 2024, Expro delivered revenue of $1.7 billion, up 13% year-over-year, with performance led by the North and Latin America, Europe, and Sub-Saharan Africa, and Middle East/North Africa regions, with the growth in MENA in particular being bolstered by the Coretrax acquisition. Full year Adjusted EBITDA was $347 million, or 20% of revenue, and was up 40% year-over-year in dollar terms.

Adjusted EBITDA margin was up approximately 400 basis points year-over-year and up approximately 800 basis points relative to combined results for Legacy Expro and Frank's International over the four quarters prior to our completing the merger. In terms of commercial activity across the company, we have continued to build on our momentum, capturing roughly $314 million of new contract awards, including contract extensions worth more than $50 million for plug and perforation solutions in Argentina, $35 million for tubular running services in Norway, and $25 million for well test and TRS services in the UK.

Our backlog remains healthy at approximately $2.3 billion at the end of the fourth quarter, which is consistent with the end of the previous quarter. During the past year, our team managed the business through a dynamic macro environment and, starting in the second half of 2024, a more subdued short-term growth outlook for the sector as customers adopted a more cautious approach around mid-year due to concerns about a potentially oversupplied oil market.

In fact, the oil market remained relatively balanced, and prices were generally stable over the fourth quarter, with continued production restraint and a focus on price stability from OPEC Plus, largely offsetting an apparent reduction in geopolitical risk premium and a tepid demand growth, particularly in China. The U.S. Energy Information Administration is currently forecasting global liquids demand to average 104.1 million barrels per day in 2025, an increase of roughly 1.3 million barrels over 2024. Demand is further expected to grow by another 1.1 million barrels in 2026 to average roughly 105 million barrels per day.

The EIA forecasts that global liquid fuels production will grow by 1.8 million barrels per day in 2025 to average 104.4 million barrels per day. Global liquid supply is then predicted to grow a further 1.5 million barrels per day in 2026 to average 105.9 million barrels per day. Production growth in 2025 is due to a combination of an expected relaxation of OPEC Plus production cuts and further production growth from countries outside of OPEC, including the U.S., Canada, Brazil, and Guyana.

OPEC Plus countries are expected to contribute 0.2 million barrels per day to global supply growth in 2025, as voluntary production cuts are expected to gradually unwind, whereas countries outside of OPEC Plus are expected to collectively increase production by roughly 1.6 million barrels per day. With a relatively well-balanced outlook for demand and supply, oil prices are expected to see modest upward movement in early 2025 amid global oil inventory withdrawals before beginning a modest decline from mid-2025 through to 2026, as expected global oil production modestly outpaces what is currently expected to be a relatively weak demand growth.

EIA currently forecasts that the Brent price will average $74 per barrel in 2025 and $66 per barrel in 2026. However, several uncertainties are not factored into this outlook, not the least of which is the impact of new sanctions on Iranian exports and the go-forward volume and destination of Russian exports if there is a negotiated peace deal between Russia and Ukraine.

As a general matter, if customers have confidence that oil prices will remain above $65 to $70 per barrel, we believe the outlook for our business will be stable to positive, largely due to what is expected to be steady to modestly increasing global liquids demand through 2030 and the break-even costs and carbon advantages of deep-water barrels. The global gas market remains fundamentally tight, likely supporting prices and significant investment through the remainder of this decade.

In the near to medium term, replacing lost Russian pipeline supplies, growth in U.S. LNG export capacity, energy security, and diversification of supply will remain key themes in the industry. Longer term, there is massive upstream and infrastructure investments required to support AI and data-center-driven demand, and we believe gas will remain the most cost-competitive transition fuel towards renewables, if not a structural source of lower carbon electricity generation. Translating the commodity backdrop to what it means for our business, a high cadence of sanctioning activity is forecast to continue in 2025, maintaining levels observed in 2024.

The majority of new projects are expected to be in the lower-cost, lower-carbon offshore segment. Offshore project approvals are expected to account for 72% of greenfield CapEx in 2025, growing further to 75% of all final investment decisions in 2026. Consequently, a sustained level of project sanctioning by operators should support growth in demand for the services and solutions that energy services companies provide. We believe Expro and other companies that are more levered to international and offshore markets will be better positioned on a relative basis.

Customer OpEx spending is also set to continue growth in 2025, facilitating increased brownfield activity as operators remain focused on cost-effectively increasing production from existing assets and reducing their emissions. Like deep-water development, we believe cost-effective and carbon-advantaged production enhancement will be a secular theme, and adding additional exposure to OpEx-funded production optimization activity remains a strategic objective for the company.

Overall, we expect upstream investments to be stable to up modestly in 2025 as compared to 2024, with several geo markets, including the U.S. onshore, Mexico, the U.K., offshore Saudi Arabia, and offshore Australia, currently expected to contract. Other markets, including U.S., offshore, Guyana, and Norway, should be relatively stable, and still other markets such as Brazil, Argentina, onshore Saudi, the Emirates, and onshore Australia should provide scope for growth.

For Expro, our 2025 outlook is for stable, if not modest, growth in revenue and stable to improving margins, reflecting one, the relative size of our business in the markets that are expected to decelerate and the markets that we expect to be more resilient. Secondly, our strong relationships with our blue-chip global customers, and third, an ability to offer differentiated services and solutions. Fourth, our recently initiated operating efficiency campaign, and lastly, our strategic and margin-accretive acquisitions. We remain focused on building a business that is relevant and resilient and one that more consistently delivers strong financial results.

We continue to invest in high-return projects and opportunistically pursue smart, synergies-focused acquisitions to broaden our portfolio of cost-effective, technology-enabled services and solutions, enable margin expansion, and capture the opportunities that should come with global economic growth, increasing demand for energy and security of supply considerations.

Investments in our core businesses, such as well construction, have allowed us to remain on the forefront of the industry, and we continue to offer leading-edge technologies to the market, which is demonstrated through several of the contract awards that were highlighted in our press release, including the first deployment in West Africa of our AI-enabled iTONG, the industry's most advanced tubular makeup solution. Similarly, offshore Saudi Arabia, we successfully displaced conventional plug manifolds through our first deployment of the wireless dropping cement head and Skyhook.

This follows the successful deployment by one of our super majors of our cement head with Skyhook in Trinidad. Like ITONG, our cement head system with Skyhook creates operational efficiencies while improving safety by removing personnel from the red zone. Performance is a differentiator in the markets like Saudi, and while Aramco has announced the suspension of several jackups and the deferral of several offshore development projects in 2024, our operations success with cementing and other technologies has resulted in additional opportunities and revenue growth.

Within our well intervention and integrity business, over the last several years, we have selectively invested in deployment solutions to facilitate the introduction of cased-hole services and data acquisition and data interpretation capabilities. Compared to our traditional mechanical slick line business, this has resulted in a higher quality OpEx-funded business with improved margins and better returns on invested capital. For example, revenue generated from our well intervention and integrity business in Brunei is about 50% larger than it was three years ago, and margins have improved by about 10 percentage points over the same timeframe.

More value-added intervention capabilities have also led to recent contract awards such as in Algeria, where we achieved the first commercial deployment of our distributed fiber optic sensing capability, as well as a new multi-year wireline and cased-hole services contracts. Overall, our well intervention and integrity business is expected to be over $300 million in 2025, with contribution margins in the low 30s, which lags our drilling and completions-levered businesses, but is a stable production-levered business. Margins continue to move in the right direction as a result of the investments in technology and overall cost discipline.

Within well flow management, Expro recently partnered with Petrobras to develop a new flow meter technology, which will provide flow rates and identify flow patterns, generating online and real-time data availability for remote monitoring and control to increase efficiency and optimize the production of wells. The key requirement in this technology development is the non-intrusive aspect of the clamp-on design, as well as the absence of any radioactive sources. Our global operating footprint and service delivery franchise also provide a platform to deploy value-adding services and solutions added through technology and business acquisitions.

You can see our global platform at work to the commercial success of CoreTrax in markets that are new to the CoreTrax business following our acquisition in May of 2024. A great example of this is offshore Qatar, where a client recently deployed CoreTrax's HyPR Hole Saver hydraulic pipe recovery system. In this case, the bottom hole assembly was severed efficiently, allowing for a timely cementing operation and the deployment of the next drilling assembly within a single day. This milestone underscores the technology's ability to support rapid decision-making and minimize operational downtime in challenging drilling environments.

Similarly, in December, the CoreTrax team utilized the ReLine M&S expandable casing integrity solution for the first well of an intended 15-well campaign onshore Australia, successfully addressing corrosion issues and bringing production back online, with the remaining wells scheduled for completion in early 2025. ReLine M&S is a new technical solution for the market, positioning Expro as the only service company capable of delivering a full suite of remediation solutions, including short, medium, and long expandable patches.

With recent contract awards and ongoing pilot programs in several markets, including the onshore U.S., onshore basins in Eastern Australia, and in Brazil, we are excited about the growth potential for CorTrax's expandable solutions. Markets with high well counts and systematic casing integrity or corrosion issues, such as Argentina and Colombia, also have untapped potential. Importantly, our expandable solutions are conveyance agnostic, meaning that we can deploy via coiled tubing, wireline, or drill pipe.

Regarding our operating efficiency campaign, what we are calling DRIVE25, we have identified a seven%-eight% reduction in run rate support costs that we plan to realize over the next 12 to 18 months, about half of which should be captured in 2025. As was highlighted in our press release, the DRIVE25 campaign is focused on standardizing practices across geo markets, product lines, and job functions in order to improve operating leverage and facilitate margin expansion.

Consistent with my comments on our third quarter earnings call, my view remains that 2025 will start slow, again primarily driven by near-term concerns related to oversupplied oil market, and then build momentum as the year progresses. We believe our business and revenue, which are largely levered to long-cycle development, will be stable or grow modestly over the next year, resulting in full-year revenues that are stable to up modestly relative to 2024. Thus, our initial guidance is that full-year revenue will be within the range of $1.7 billion-$1.75 billion.

While 2025 seems to be setting up to be a transition year for the energy services industry, the outlook for oil and gas investment and Expro remains quite compelling for the rest of the decade. So we are cautious about near-term and more bullish over the medium to long term. That said, our intent is to size our support structure and calibrate CapEx and other investments based on revenue realities rather than revenue aspirations. So cost and capital discipline will be key themes at Expro until we have better clarity around the direction of international and offshore markets and the timing of deep-water projects that we expect will be sanctioned beginning in the second half of 2025.

As highlighted in our press release, driven by an improved activity mix, which includes business and backlog and a full-year contribution and pull-through revenue opportunities from the acquired CoreTrax business, efficiency gains, we expect 2025 Adjusted EBITDA margin will be up more than 100 basis points, implying 2025 Adjusted EBITDA within a range of $350-$370 million. Please note that guidance assumes the conversion of backlog at contracted rates, but does not embed material gains in net pricing. With that, I'll hand the call over to Quinn to further discuss our financial results.

Quinn Fanning (CFO)

Thank you, Mike. Good morning and good afternoon to everyone on the call. As Mike noted, we reported revenue of $437 million for the quarter ended December 31st. As compared to the guidance range for Q4 2024, revenue of $440-$470 million that was provided on our Q3 earnings conference call. Revenue was up sequentially $14 million, or 3%, relative to the third quarter of 2024. Year over year, revenue was up $30 million, or approximately 7%, relative to the fourth quarter of 2023.

North and Latin America came in a bit below Q4 revenue expectations, primarily reflecting lower-than-expected well construction activity and tubular sales in the Gulf of Mexico and lower CorTrax revenue, which was largely driven by delivery delays within the expandables product line. Additionally, lower well flow management revenue in APAC, specifically in Malaysia and Australia, impacted Q4 results. Looking at the full year, revenue at $1.71 billion was up $200 million, or approximately 13% year over year.

Activity and revenue across all of our regions increased during the year ended December 2024, most notably in NLA, ESA, and MENA. As Mike noted, MENA in particular was bolstered by the CorTrax acquisition. Adjusted EBITDA for the fourth quarter of 2024 was $100 million, as compared to Q4 guidance of $90-$105 million, representing a sequential increase of approximately $15 million, or 18%, relative to the third quarter of 2024. Adjusted EBITDA margin for the fourth quarter was 23%, was up approximately 300 basis points quarter over quarter.

On a full year 2024 basis, adjusted EBITDA was $347 million, which represents an increase of almost $100 million, or approximately 40%, relative to 2023. Adjusted EBITDA margin for the full year was approximately 20%, which represents an increase of approximately 400 basis points year over year. Turning to regional results for North and Latin America, or NLA, fourth quarter revenue was $139 million, or flat quarter over quarter, again reflecting lower activity in well construction, while well flow management activity was higher in the U.S. and in Brazil.

NLA segment EBITDA margin at 22% was down from 24% in Q3 2024, again reflecting a decrease in well construction activity and resulting in less favorable activity mix in the region. Full year NLA segment EBITDA margin was 25%. We expect mid-single digit revenue growth and relatively stable segment EBITDA margin for NLA in 2025. Following our rationalization of the lower 48 TRS business over the course of 2024, we are not particularly exposed to the expected continued contraction in the U.S. onshore market.

That said, we are excited about several U.S. onshore applications to the expandables product line, which should provide scope for higher margin revenue within the U.S. land business without requiring additional base infrastructure or significant personnel additions. While the average float account in 2025 is expected to be flattish in the Gulf of Mexico and Guyana is expected to be down one rig year on year on average, we have secured several new multi-year awards within the well construction business, which should allow us to sustain a high level of well construction activity in NLA in 2025.

While activity in Mexico will be tempered by decreased spending, we continue to see positive activity across South America, where we have secured several contracts in Brazil within our well construction and well flow management businesses, as well as a contract extension in Argentina within the well intervention and integrity product line, valued at more than $50 million, and highlighted in both our press release and Mike's prepared remarks. Note that revenue generated in the U.S. land and Mexico markets was about 4% and 2% of consolidated 2024 revenue, respectively.

For Europe and Sub-Saharan Africa, or ESA, fourth quarter revenue was $143 million, a sequential increase of $11 million, or 9%, primarily driven by higher subsea well access revenue in Angola. Segment EBITDA margin at 37% was up 13 percentage points sequentially, reflecting the increased subsea activity and a positive contribution from the Congo Production Solutions project as we closed out the construction and commissioning phase of the project. Full year ESA segment EBITDA margin was 26%. Our ESA business sustained good momentum through 2024 as we continued to capitalize on increased activity in the region.

As anticipated in the UK, we are seeing increased activity in P&A opportunities, which is reflected in a December press release announcing our support of an operator's 52 well plug and abandonment campaign. As Mike highlighted, in Norway, Expro secured a contract in excess of $40 million for TRS and well cleanup services during the startup phase, covering eight wells for the largest gas fields on the Norwegian continental shelf.

For 2025, we expect ESA revenue will be down about 10% year over year, largely reflecting the completion of the construction and commissioning phase of the Congo project and a non-repeat of several Angola subsea projects that were delivered in 2024. ESA segment EBITDA is expected to improve several hundred basis points year over year based on expected activity mix. While ESA activity and revenue is currently assumed to be down year on year, expected FIDs beginning in H2 2025 should support a strong rebound in 2026.

For reference, for full year 2024, the construction and commissioning phase related to our Congo Production Solutions project contributed revenue of approximately $42 million and negative margin of approximately $14 million. As Mike noted, variation orders that were pending when we reported Q3 results were recently resolved with a positive, albeit modest, impact on fourth quarter results.

Based on the incentive structure and our provision of additional services during the multi-year operations and maintenance phase of the project, we should have a bit of revenue margin upside on a go forward basis relative to our initial assumptions for the O&M phase of the project. The Middle East and North Africa, or MENA team, delivered another excellent quarter. Q4 revenue in MENA was $93 million, or up 7% sequentially, driven by higher well flow management services revenue in Algeria, Iraq, and Saudi Arabia.

MENA segment EBITDA margin at 35% was flat quarter over quarter and up about five percentage points year over year. Full year MENA segment EBITDA margin was also 35%. For 2025, with a full year contribution from the acquired CorTrax business, we are expecting mid- to high-single-digit revenue growth within MENA and still strong, but modestly lower segment EBITDA margin based on expected activity mix. The geo markets generally driving the MENA region are Saudi Arabia, Algeria, and the Emirates. Saudi and Algeria each accounted for about 37% of MENA revenue in 2024, and the Emirates accounted for about 8% of MENA revenue.

Note also that the majority of our revenue generated in the KSA is from onshore activity, which is weighted to gas and unconventionals and is largely unaffected by Saudi's announcement of the suspension of offshore jack-up rigs and the deferral of several offshore oil developments. Finally, in Asia Pacific, or APAC, fourth quarter revenue was $62 million, a decrease of 5% relative to the September quarter, primarily reflecting decreased well flow management activity in Malaysia and Australia. Asia Pacific segment EBITDA margin at 25% was flat from the prior quarter, and full year APAC segment EBITDA was 23%.

For 2025, we are expecting APAC revenue to be flat and down a couple of percentage points with declines in activity offshore Australia, largely offset by increased activity in Indonesia, Malaysia, Thailand, and Brunei. APAC segment EBITDA margin should be relatively stable year on year. Total support costs for Q4 2024 and full year 2024 were $88 million and $340 million, respectively, and for both Q4 and full year 2024, total support costs were approximately 20% of revenue. Corporate G&A is a subset of total support costs. It was about 3.5% of revenue in 2024.

To expand on our DRIVE25 initiative and assuming full year 2025 revenue is relatively stable compared to 2024, the 7%-8% reduction in support costs that Mike referenced implies an approximate $25 million reduction in run rate support savings by Q4 2025, half of which we expect to capture in 2025 results. This will allow us to establish a new baseline for support costs at around 19% of revenue, which should provide scope for improved operating leverage and further margin expansion with growth.

Turning to liquidity, full year Adjusted cash flow from operations, which excludes cash paid for interest net, cash paid for severance and other expense, and cash paid for merger and integration expense, was $225 million, a year over year increase of $55 million. Working capital increased $55 million year over year, and 2024 cash taxes were approximately $39 million.

2024 cash conversion or adjusted cash flow from operations as a percentage of adjusted EBITDA was 65%. Full year adjusted EBITDA less capital expenditures was approximately $210 million, and free cash flow or adjusted cash flow from operations less CapEx was approximately $87 million.

Non-operating uses of cash included CapEx of $144 million, $24 million for the cash portion of the CorTrax acquisition net of post-closing adjustments, which were in Expro's favor, $13 million for the final settlement of contingent consideration related to the 2023 PRT Offshore acquisition, and $14 million for the repurchase of 1.2 million Expro common shares at an average price per share of $11.80. Acquired shares were approximately 1% of total shares outstanding.

Expro had total available liquidity at year end of approximately $320 million, with cash and cash equivalents, including restricted cash of approximately $185 million, and availability under revolving credit facility of $136 million. Turning to our outlook, page nine of our accompanying slides summarizes our guidance for Q1 and full year 2025. As Mike noted, we are currently expecting full year 2025 revenue to be stable to up modestly year on year, and adjusted EBITDA margin is expected to be up more than 100 basis points year on year.

On this basis, our initial full year 2025 guidance is for revenue to be within a range of $1.7-$1.75 billion, and for adjusted EBITDA to be within a range of $350-$370 million. Free cash flow margin, or free cash flow as a percentage of revenue, is expected to be about 7%. Finally, full year guidance for 2025 is based on aggregate support costs and cash taxes of between 19%-20% of revenue and approximately 4% of revenue, respectively.

As is typical, Q1 is expected to reflect seasonal impacts of the winter season in the Northern Hemisphere and the budget cycles of our national oil company customers, with revenue expected to be in a range of $370-$380 million, or down about 15% sequentially from the strong Q4 results and relatively flat year over year in both cases based on the midpoint of guidance. As highlighted in our press release, the year-on-year trend largely reflects the non-repeat of first quarter 2024 revenue associated with the construction and commissioning phase of the Congo Production Solutions project, largely offset by revenue from the acquired CorTrax business.

Based on Q1 Adjusted EBITDA guidance of $65-$75 million, Q1 2025 Adjusted EBITDA margin is expected to be sequentially lower by about 400 basis points and up 50-100 basis points year on year. As Mike noted, we expect the traditionally weak first quarter to be followed by an activity rebound in the second quarter, particularly in international markets, and momentum building in international offshore markets as the year progresses. We are planning for 2025 capital expenditures of $120-$130 million, or approximately 7% of revenue at the midpoint of guidance.

Note that our revenue and CapEx guidance does not contemplate significant new production solutions projects. As we have highlighted in the past, larger production solutions projects can result in elevated capital expenditures relative to what is required to sustain our business and support more typical non-production solutions project-related growth. However, our PS projects usually do provide for milestone payments. To the extent new production solutions project awards will have a material impact on our guidance, we'll highlight such projects in future earnings calls or other investor communications. With that, I'll turn the call back to Mike for a few closing comments.

Mike Jardon (CEO)

Thank you, Quinn. Expro accomplished a lot in 2024 with solid financial performance, including year-over-year growth in revenue of 13% and year-over-year growth in adjusted EBITDA of 40%. Some key operational highlights include the acquisition of CoreTrax, which enhances our depth of talent and the capabilities of our product offerings, the successful integration of the PRT Offshore team, and the completion of the construction and commissioning phase of the large Congo Production Solutions project.

While we believe the macro backdrop sets up 2025 to be a transition year for the energy services industry, Expro's outlook is for steady revenue, if not modest growth, relative to 2024. Activity mix and operating efficiency gains should translate into adjusted EBITDA dollars and margins at or above 2024 levels. Absent further geopolitical disruptions, we expect momentum to build in the international and offshore markets as the year progresses and concerns about oil supply abate.

Beyond 2025, we remain very bullish on the outlook for long-cycle development driven by economic growth, security of supply considerations, and market policymakers accepting that hydrocarbons and particularly natural gas will remain a key element of the global energy slate for the foreseeable future. With that, we can open up the call for questions.

Operator (participant)

We will now begin the question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We will make a quick pause here for the questions to be registered. Our first question comes from the line of Eddie Kim with Barclays.

Eddie Kim (VP of Equity Research)

Hi, good morning. Just wanted to ask about the full year 2025 revenue guide of stable to modestly up year over year, which is a little bit higher than what others have indicated, more kind of in the maybe flat or maybe even flat to down kind of level. Is that more a function of maybe Expro gaining share or just a better than expected outlook than what others are saying, or is it maybe a function of kind of Expro-specific differences? I know there are a lot of moving parts with the CorTrax acquisition last year and the Congo project moving into the O&M phase of the contract. So just more details around your full year revenue guidance would be great.

Mike Jardon (CEO)

Sure. No, Eddie, good morning and thanks for the question. I guess I would frame it up like this. Part of it has to do with the markets that we have a lot of exposure to, whether it's U.S. land, which I think is going to have some choppiness this year, or the announced reduction in spend by Pemex in Mexico. We have very minimal spend. We're about 4% and 2% respectively of revenue from those. It also has to do with our exposure to the Saudi market. As we try to highlight in a discussion, most of our exposure in Saudi is really unconventional land gas. So the jack-up reduction and the offshore reduction is not going to have as much of an impact on us.

And then the other one is really kind of what's going to happen in the offshore Australia market. So it's really kind of us. It's a combination of the markets we're exposed to. It also, frankly, is we very intentionally and strategically have done some accretive M&A in the last few years. We're going to see the benefit of those as we're internationalizing those businesses. And frankly, we're also going to see the benefit of some of the investments we've made in our own engineering efforts, whether it's introduction of technology around cementation or introduction of technology to reduce personnel in the red zone.

We're really starting to see the benefit of it. So some of it's related to our business, the markets where we're in, and really continue to see some of the internationalization of our overall business.

Eddie Kim (VP of Equity Research)

Understood. Understood. My follow-up is just on the first quarter guidance. The 15% kind of sequential decline in revenue is a bit more steep than historically. If I look at past years, I think the sequential decline has been kind of in the mid-single digits range. So just any more color on why this first quarter is the decline is a little bit more steep than historically. And then I guess just your confidence level in the rebound in []Q2 and the rest of the year. Is that more your expectation for the overall market to kind of rebound, or is it based on kind of projects you're working on currently?

Quinn Fanning (CFO)

Hey, it's Quinn. I'll take that. So number one on the sequential decline in the first quarter, I think a couple of things that I would highlight would be number one, we had a very strong quarter in terms of subsea project deliveries in Q4 2024. So we won't repeat that in the first quarter. And beyond that, it's really the kind of, as expected, and as has happened the last number of years, the winter season in the Northern Hemisphere, which most significantly impacts the North Sea activity. And I guess if you look at it from a year-over-year perspective, we did have Congo project-related revenue in last year, which somewhat insulated the step down. That was also true in 2023.

So essentially, when you remove the Congo benefit in the last two years, it's actually pretty consistent with the seasonality that we've experienced in the past. Though, again, the Q4 2024 subsea projects probably magnifies it a bit. Regarding the rebound, our internal forecasting and budgeting processes very much bottoms up. A lot of it relates to expected project timing, in part benefiting from the winter season in the Northern Hemisphere kind of passing. So that is expected uptick. But beyond that, we had some relative weakness in terms of NLA in the tubulars deliveries and the expandables product line.

And at least based on the visibility that we have today, that will somewhat reverse. So it's really kind of as the team sees projects lining up in 2024. Hopefully, the macro situation improves a bit, but we have relatively good visibility on our Q2 activity. And based on what we know today, we should see the typical recovery.

Eddie Kim (VP of Equity Research)

Okay. Great. All very clear. Thank you. I'll turn it back.

Quinn Fanning (CFO)

Thanks, Eddie.

Operator (participant)

Thank you. And our next question comes from Ati Modak with Goldman Sachs.

Ati Modak (VP of Energy Equity Research)

Hi, good morning, team. I guess on the thanks for all the color on the DRIVE25. I was just wondering if you can give us more color on the free cash flow progression as well from the 7% of revenue this year into the 10% target over time?

Mike Jardon (CEO)

Yeah. Addie, thanks for the question. I'll comment on the DRIVE25 initiative. This was something that we actually highlighted in our Q3 call that we had kicked off kind of at the middle of the summer last year. Really felt like we had an opportunity to start to go through and look at efficiency opportunities and look at how we can drive more throughput through the organization. And as much as anything, as we get out into 2026 and beyond, as we see revenue step up, how do we drive more efficiency with the business from a support cost standpoint?

So we've spent a lot of time over the course of, and we had some external help kind of in the late fall timeframe to really go through and look at how are the regions and how are the product lines and how are the support functions operating today? How can we become more efficient? How can we drive additional cost out? And part of that has been to continue to expand our shared service center operations. We stood up a support center in Bogota and Colombia last year to support largely the Americas activity. But also, how do we drive more of that, more of the transactional kind of things? How do we drive more operating efficiency, more operating leverage there?

So the good thing was we started that off back in the summertime, not because we necessarily anticipated any market softness in 2025, but more around a we have a lot of focus on continuous improvement. And that's really what that was around. So to some extent, we were kind of ahead of the curve, so to speak, so we could move into an implementation mode. As we've moved into 2025, we're able to embed many of those expectations in our 2025 budget process.

So I think kind of as we try to highlight in the prepared remarks, it's about $25 million of cost improvements, about half of which we think will seek kind of pop out the bottom of the P&L, so to speak, here in 2025. But it's very much part of how we really focus a lot on continuous improvement around our HSE performance and our service delivery performance. And it's really applying that same kind of approach and efficiency expectation to our own kind of internal support efforts as well.

Quinn Fanning (CFO)

Yeah. And I'll just pick up on the free cash flow margin progression and what are the key drivers. So activity mix is one. So the movement into the operations maintenance phase of the Congo is one example where we know we've got a change in mix that's expected that should be beneficial. But more broadly, I think it's about cost and capital discipline. Mike's talked about the DRIVE25 program. We've provided guidance for CapEx, which is down year-over-year in a more flattish type environment, whereas, Mike said, we'll be designing the cost structure and capital investments around revenue realities as opposed to revenue aspirations.

So you'll see us restrained in terms of CapEx until we have a better sense of where the market's at. And then finally, Expro and, quite frankly, the entire energy services industry has been challenged with working capital issues over the last year plus. And at least our expectation is that we'll at least moderate in a more flat revenue environment and hopefully reverse at some point. But I think we're all sitting on higher A/P or higher A/R and higher inventory than we prefer as an industry. And hopefully, that will start to, again, moderate or reverse. But those are the key drivers.

Ati Modak (VP of Energy Equity Research)

That's very helpful. Thank you, Quinn. Maybe sticking with you, if you can give us any color on capital allocation priorities throughout the year. Coretrax obviously has been very additive to []Mina. Thoughts around similar kind of M&A given where the market is? Are widest spreads becoming more interesting? What's the appetite for M&A there? And then overall capital allocation, if you can.

Quinn Fanning (CFO)

Well, the appetite is there for M&A. We've got a clean balance sheet that would allow us to execute on it without issuing shares within a certain size parameter. But we don't believe in big for big's sake. As Mike says, we focus on three things: industrial logic, industrial logic, and industrial logic. And that will continue to be our North Star. But I guess the broader capital allocation, we've highlighted the 7% that we're intending to invest in CapEx. M&A will be compared against we're effectively Expro trades. We've tried to be balanced in our approach, targeting 1%-2% of TSO in terms of buybacks per annum.

I think that will continue to be our plan or expectation. We did buy some stock in the fourth quarter, late in the fourth quarter. I would expect we'll continue to look hard at that on a go-forward basis. Again, I think our approach is balanced. The name of the game is to create long-term shareholder value. If we can convince ourselves that we can do that through M&A, we'll do so. But it's got to be relative to where Expro trades and ultimately what's in the best interest of shareholders. Is that responsive?

Ati Modak (VP of Energy Equity Research)

That's very helpful. Thank you.

Operator (participant)

Thank you. Our next question comes from Grant Hines with JPMorgan.

Grant Hynes (Equity Research Associate)

Hey, good morning, Mike, Quinn, and team. Just had one quick one here. Could you provide us a bit more color kind of on the resolution of the Congo project? I think previously, you might have represented about a $7 million headwind or so kind of in 3Q. Was this essentially reversed in 4Q? And then additionally, it sounds like you have an opportunity to maybe earn some better rates on the execution side within the O&M contract. Any more color there as well? Thanks.

Mike Jardon (CEO)

No, great. Thank you, Grant. Appreciate the question. I guess, first off, what I really want to highlight is that I am very pleased that we delivered a world-class facility in a very quick manner, all of this while maintaining a very high level of HSE performance. On top of that, the design that we had for the plant has allowed for some short-term production rates to be above the nameplate capacity, which I think gives us and the operators some operational flexibility. So fundamentally, subsequent to the close of the third quarter, we've been able to successfully resolve the outstanding variation orders.

And this really is a mix of kind of lump sum in the construction commissioning phase, lump sum that's going to be in the O&M phase, and some increase in the O&M rates. Fundamentally, as I alluded to, as we can increase the production throughput as well as provide some additional services and some additional support to them, specifically around power generation capacity. The original 10-year project economics will ultimately be delivered.

Fundamentally, despite the choppiness that we had during the percentage of completion part of the project in 2024, these are the type of production solutions projects that we really want to have. We now move into the operate and maintain phase. Fundamentally, for us, that's when margins will be accretive to our overall business. The lump sum impact in Q4 was not significant. It was $2 million. I am really pleased how we've concluded the conversations with the operator. It's really going to be a combination of small incremental revenues in the commission and construct phase, increase in the lump sum and some O&M rates, and then increase in the overall daily rate. Good conclusion.

Fundamentally, overall, we still maintain the original project economics that we had based on the project when we sanctioned it a number of years ago, albeit a little bit more choppiness during the percentage of completion construction commissioning phase, but overall, very successful.

Grant Hynes (Equity Research Associate)

Appreciate the color. I'll hand it back. Thank you.

Mike Jardon (CEO)

Sounds good. Thanks, Grant.

Operator (participant)

Our next question comes from Steve Ferrazzani with Fidelity Company.

Steve Ferazani (Analyst)

I did want to follow up on the answer to the previous question, Mike and Quinn. Obviously, you generated a really significant []EBITDA margin in 4Q. If it was only a couple of million dollars from the Congo repayment, what else was driving that really significant margin? Besides, obviously, you had the drag in the previous two quarters. It's still well above what we might have expected. And I'm assuming that's not the type of margin you want us to assume even as you go into the O&M phase with Congo next year. Is all of that kind of right?

Quinn Fanning (CFO)

Yeah. That's why I tried to walk through the regions in terms of our expectations, in terms of year-over-year progression. But as Mike highlighted, the closeout of the construction commissioning phase on Congo, I mean, it was a driver in terms of the sequential improvement because we essentially didn't repeat the losses that were recognized in Q3. So that was obviously a positive. And then we had, as Mike mentioned, a $2 million benefit that was recognized in Q4. I would say the primary driver beyond that is Subsea as one of our higher margin product lines.

We had significant subsea deliveries in terms of projects in Q2, which was also a good margin quarter, though somewhat offset by the Congo project, and then 4Q, we had another large project delivery, again, in Angola within the subsea well access product line, so subsea can be a bit lumpy at times, but it is very high value added, mission-critical service, and customers value that, and we tend to generate better margins from it.

Steve Ferazani (Analyst)

Okay. That's helpful. When we think about your margin assumptions for 2025 guidance, and you're talking about 10 basis points, but when we put together all the pieces you walked through, the cost cuts related to DRIVE25, the phasing into O&M, and you won't have the drag from the cost overruns last year in Congo, we think about a full year of Coretrax, which is higher margin. A lot of this would bias towards higher margin. What's offsetting it? Less subsea well access projects this year? Or what limits margin improvement as we just go through those three pieces, which clearly drive better margins next year, even in a flat market?

Quinn Fanning (CFO)

Yeah. I think you might have misspoke. So the margin benefit that we should get from the operating efficiency campaign on a run rate basis should close in on 100 basis points itself. We obviously won't get the full benefit of that in 2025. It's a phased program, but again, the biggest drivers are going to be activity mix, and as Mike mentioned, we've built in the pricing that's embedded in our backlog, but we're not assuming, given the current market tone, that we'll get incremental net pricing gains. Though certainly, within well construction subsea, we have high value added mission-critical services that have limited sideline capacity.

So as the market tightens up, we should see benefits from that, but we're not embedding it in our guidance today. So again, I think what we're focused on is where can we expand margins within the things that we can 100% control, and that's really costs. So I would say that primarily costs and maybe a little bit of activity that's embedded in backlog is what drives the guidance. And hopefully, as the year progresses and the market tightens up a little bit, we can improve upon that. But I think we and others are going into 2025 cautious, both in terms of expectations and the guidance that we're providing the market.

Steve Ferazani (Analyst)

Okay. Fair. If I could get one more in just in terms of progress with CoreTrax and DeltaTek. []Delta Tech, you just lapped two years on that acquisition. When you made it, you talked about potentially doubling the cementing business. How far are you towards that target? And CorTrax, you won that Australia contract in terms of winning awards outside of the core markets where you are with that progress?

Mike Jardon (CEO)

No, it seems a great question. I can tell you we continue to make good progress on the expansion of our cementation product line. This helps us drive a lot of rig efficiency. When you start dramatically reducing the waiting on cement cure time for offshore deep water rigs, that's 18 to 24 hours, it starts to become meaningful. We continue to make really good progress on that. At the same time, I can also tell you that we're going to be patient on our introduction because we have value creation and revenue generation expectations for those new services, and we're not going to give them away.

I can tell you I was in Europe a week ago with one of our international customers, and they pressed me really hard on why we don't have ITONG on every one of their rigs globally, and my answer was, "As soon as you guys agree to the rates that we have expectations around, we'll continue deployment," so we're going to be patient. We're going to get those things out there, but we're making good progress with that. CoreTrax is another one that we're going to have an ability to expand our footprint in U.S. land, land Australia, and some of the coal bed methane fields where they have a lot of corrosion issues and a lot of casing integrity issues.

Brazil land, we tried to highlight Argentina and Colombia. There's a lot of places that expandable tubulars, whether it's short section patches or it's full production string relining, we think we're going to have some great opportunities there. It's as much as anything making sure we focus on the right markets. We can't try to go to 60 countries tomorrow to operate CoreTrax in. We want to make sure we go to the top five and then the next five and the next five. It's really a matter of us trying to be methodical and patient to get the maximum benefit out of these things.

Steve Ferazani (Analyst)

That's great. Thanks, Mike. Thanks, Quinn.

Mike Jardon (CEO)

Thanks, Steve. Appreciate it.

Operator (participant)

Our next question comes from Josh Jayne with Daniel Energy Partners.

Josh Jayne (Managing Director)

Thanks. Good morning. Mike, in your last question that you just responded to, you talked about ITONG a little bit, and you also highlighted it in the presentation, first deployment in West Africa. Maybe you could just speak to the sense of urgency among customers to pay for this type of technology, especially when we think about rig safety and also the ability to take 15 rig hours out a month. How many of these systems are in the market today, and what do you think the growth runway is for this over the next couple of years?

Mike Jardon (CEO)

No, Josh, it's a great question. I can tell you some of our customers, some of our IOC customers are much more focused on the HSE importance of this and reducing the number of personnel in the red zone and those types of things. I think we'll continue to gain momentum. I mean, quite frankly, I was in Europe with an executive level meeting with the customer, and I'll be honest, I was quite surprised that one of the key topics they want to talk about was ITONG and introduction of it and how much value they see it bringing to them. It was a kind of specific technology importance that I wouldn't have thought would have kind of bubbled up to that level.

But we've got good momentum behind it. We're going to put those into the marketplace at an appropriate rate because, frankly, we have an expectation around what we're going to charge for that. And we could probably double the market uptake if we would reduce the pricing on it. And we're not going to because it brings such tremendous value. And so we're going to push it out there at the right rate. Ideally, we today probably operate on somewhere north of 70 of the total floating assets in well construction.

I would like to think that at some point in time down the road in the next couple of years that we would have 75% plus iTONG, Centri-Fi uptake on those rigs because it does drive efficiency. And more importantly, it really reduces the exposure for personnel in the red zone. So I think we'll continue with that kind of uptake.

Josh Jayne (Managing Director)

Okay. Thanks very much. I'll turn it back.

Mike Jardon (CEO)

Great. Thanks, Josh.

Operator (participant)

That was our final question. So this does conclude today's call. Thank you, everyone, for joining, and thank you for your participation. Have a great day, and you may now disconnect.