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EXPRO GROUP HOLDINGS N.V. (XPRO)·Q2 2025 Earnings Summary

Executive Summary

  • Expro delivered a clean beat across revenue and normalized EPS versus consensus and posted a third consecutive record Adjusted EBITDA margin, driven by mix, Drive25 cost actions, and strong execution; revenue $423M vs ~$397M consensus, normalized EPS $0.30 vs ~$0.19 consensus, Adjusted EBITDA $94.5M with 22% margin. * *
  • Management reaffirmed FY25 guidance: revenue circa $1.7B, Adjusted EBITDA ≥$350M, and adjusted free cash flow 7% of revenue ($110M), alongside buybacks of roughly one‑third of adjusted FCF (~$40M).
  • Backlog held at ~$2.3B with second‑highest quarterly new orders of $595M, underpinned by multi‑year awards in Guyana, North Africa, and APAC; liquidity strengthened via a new $400M RCF and $100M bridge facility.
  • Potential stock catalysts: sustained margin expansion path, reaffirmed FY outlook despite macro volatility, visible award momentum, and clarified FCF definition with continued buyback commitment.

What Went Well and What Went Wrong

What Went Well

  • Record quarterly Adjusted EBITDA margin of 22% and above-range performance (Adjusted EBITDA $94.5M vs guidance $80–$90M), reflecting execution, favorable mix, and Drive25 savings; CEO: “third consecutive quarter of margins at the highest levels in the company’s history.”
  • Robust commercial momentum: ~$595M second‑highest quarterly new orders and backlog of ~$2.3B, supported by Guyana ($120M+) and MENA compression contracts ($100M and $60M) and APAC wins.
  • Technology leadership and safety innovation: launched BRUTE Armor deepwater packer (20k capability), Remote Clamp Installation System (RCIS) hands‑free operations, and first fully remote five‑plug cementing; “innovation with a purpose” theme.

What Went Wrong

  • Subsea well access softness: sequential declines tied to project timing (Malaysia) with management expecting a rebound in Q4; analysts flagged SWS revenue down double‑digits Q1–Q2.
  • MENA revenue and margin ticked down slightly QoQ (revenue $91M vs $94M; margin 36% vs 37%) due to lower well construction in KSA/UAE, though region remains most profitable.
  • Near‑term macro caution on short‑cycle intervention/OPEX activity and offshore rig whitespace risk; management highlighted customers’ hesitancy on incremental production projects amid OPEC+ dynamics.

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$469.6 $436.8 $390.9 $422.7
GAAP Diluted EPS ($)$0.13 $0.19 $0.12 $0.16
Adjusted EPS ($)$0.27 $0.36 $0.25 $0.30
Adjusted EBITDA ($USD Millions)$94.6 $100.4 $76.2 $94.5
Adjusted EBITDA Margin (%)20% 23% 20% 22%
Gross Margin (%)13% 15% 10% 13%
Net Income Margin (%)3% 5% 4% 4%
Segment Revenue ($USD Millions)Q2 2024Q1 2025Q2 2025
North & Latin America (NLA)$157.0 $134.3 $142.6
Europe & Sub‑Saharan Africa (ESSA)$168.4 $112.4 $132.4
Middle East & North Africa (MENA)$81.4 $93.6 $91.0
Asia Pacific (APAC)$62.8 $50.7 $56.8
Total$469.6 $390.9 $422.7
Segment EBITDA ($USD Millions) and MarginQ2 2024Q1 2025Q2 2025
NLA$44.5 (28%) $30.4 (23%) $33.9 (24%)
ESSA$35.0 (21%) $29.2 (26%) $39.6 (30%)
MENA$28.6 (35%) $34.2 (37%) $32.6 (36%)
APAC$15.2 (24%) $10.9 (21%) $14.8 (26%)
Adjusted EBITDA (Total) / Margin$94.6 (20%) $76.2 (20%) $94.5 (22%)
KPIsQ1 2025Q2 2025
Cash from Operations ($USD Millions)$41.5 $48.4
Capital Expenditure ($USD Millions)$33.1 $21.2
Free Cash Flow ($USD Millions)$8.4 $27.2
Adjusted Free Cash Flow ($USD Millions)$16.2 $36.2
Share Repurchases ($USD Millions)$10.0 $5.0
Cash & Equivalents ($USD Millions)$179.3 $206.8
Total Liquidity ($USD Millions)$316 $343
Long‑term Borrowings ($USD Millions)$121.1 $121.1
Estimates vs Actuals (Q2 2025)Q2 2025 Consensus*Q2 2025 Actual
Revenue ($USD Millions)$396.8*$422.7
EPS Normalized ($)$0.192*$0.30
EBITDA ($USD Millions)$80.9*$88.6*

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025Stable to modestly up YoY; comparable to 2024 results Circa $1.7B Raised specificity
Adjusted EBITDAFY 2025Margin up ≥100 bps YoY (no dollar target) ≥$350M Raised specificity
Adjusted Free Cash FlowFY 2025Targeted ~10% margin longer‑term; 2025 less clear 7% of revenue ($110M) Set explicit target
Share RepurchasesFY 2025Program extended to $100M; opportunistic one‑third of adjusted FCF ($40M) in 2025 Clarified dollar intent
CapexH2 2025Remaining 9 months $90–$100M (as of Q1) Remaining 6 months ~$65–$75M Lower run‑rate H2
Liquidity FacilitiesPost‑Q2$340M RCF pre‑amendment New $400M RCF (matures 2029) + $100M 364‑day bridge Increased capacity
DividendFY 2025Not prioritizedFocus on buybacks; dividend considered longer‑term when FCF return reaches 40–60% Maintained no dividend

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Margin expansion & Drive25Mid‑20s margin medium‑term; Drive25 initiative to standardize, improve leverage Record 22% Adjusted EBITDA margin; reaffirm margin expansion in 2025 Improving
Orders/backlogQ4: $314M wins across product lines ~$595M orders; backlog ~$2.3B, multi‑year wins (Guyana, MENA, APAC) Strengthening
Technology, automation, AIiTONG deployments and digital solutions BRUTE Armor packer, RCIS automation, remote cementing firsts Advancing
Macro (OPEC+, commodity vol.)Anticipated sanctioning late‑2025/2026; whitespace risk noted Brent in $20 range; OPEC+ ramp; customer caution on short‑cycle activity Mixed/cautious near‑term
Subsea well accessQ4: strong Angola subsea revenue Sequential softness (Malaysia timing); rebound expected Q4 Soft ST, rebound LT
Regional mixQ1: NLA/ESSA seasonality; MENA resilient ESSA +18% QoQ; MENA −3% QoQ; APAC improving Mixed, constructive
Capital returnsExtended $100M program ~$40M 2025 buybacks re‑affirmed; $15M YTD Ongoing
Balance sheet/liquidityLiquidity $320M as of YE24 Liquidity $343M; new $400M RCF + $100M bridge Strengthened

Management Commentary

  • “Second quarter Adjusted EBITDA margin of 22% represents our best second quarter performance ever and third consecutive quarter of margins at the highest levels in the company’s history.” — CEO Mike Jardon.
  • “Commercial activity and tenders remain robust... new order awards of $595 million in the Second Quarter, marking it the second highest quarter of new order intake in our company's history.” — CEO Mike Jardon.
  • “We are reaffirming our annual financial guidance with revenues of circa $1.7 billion and EBITDA of at least $350 million... free cash flow, as adjusted, to be plus or minus $110 million for the full year.” — CFO Sergio Maiworm.
  • “We have taken another look at our own free cash flow definition and decided to make it more aligned with industry peers... we intend to report both free cash flow and adjusted free cash flow.” — CFO Sergio Maiworm.

Q&A Highlights

  • Orders timing and durability: Management attributed the ~$595M intake to renewals/extensions and broad tender strength, not one‑off projects.
  • Free cash flow conversion levers: Margin expansion, flexing capex tied to projects, and working capital optimization; ~50% of $30M Drive25 run‑rate savings to be captured in 2025.
  • Segment cadence: Expect continued 2025 margin expansion; Q2 was “solid execution,” not driven by one‑offs.
  • Offshore rig whitespace: Forecast incorporates rig maintenance/availability; caution more acute in short‑cycle intervention/OPEX activity.
  • Capital return policy: ~$40M 2025 buybacks reaffirmed; dividends considered when sustainable FCF return reaches 40–60%.

Estimates Context

  • Q2 2025 beat vs consensus: revenue $422.7M vs ~$396.8M*, normalized EPS $0.30 vs ~$0.192*, EBITDA actual ~$88.6M* vs ~$80.9M*. The EBITDA delta reflects differing definitions (company reports Adjusted EBITDA $94.5M). * *
  • Implications: Street likely to raise margin assumptions and second‑half FCF cadence; visibility improved via backlog/awards and reaffirmed FY guide.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Execution driving durable margin expansion (22% in Q2) with favorable mix and Drive25 benefits; margin trajectory remains a core thesis pillar.
  • Backlog/order momentum and multi‑year awards support FY guide despite macro volatility; narrative shifts from whitespace risk to contracted visibility.
  • Clarified FCF definition and reaffirmed ~$110M adjusted FCF target with ~$40M buybacks create a tangible capital return framework into H2.
  • Subsea softness appears timing‑related with management pointing to Q4 rebound; monitor Q3 commentary for confirmation.
  • MENA remains the profit anchor; Saudi unconventional gas and Algeria production optimization underpin stability.
  • Liquidity upgrade ($400M RCF + $100M bridge) provides optionality for accretive M&A while funding buybacks.
  • Near‑term trading: bias positive on beats and guide reaffirmation; watch short‑cycle intervention demand and subsea trajectory; medium‑term thesis anchored in offshore/international mix and technology differentiation.