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01/11 03:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with record revenue and EBITDA growth, a robust backlog, and a significant share repurchase program. Despite geopolitical and regulatory risks, Expro's strategic focus on growth in MENA and Latin America, along with strong contract performance, provides a positive outlook. The cautious customer engagement and unclear management responses in the Q&A suggest some uncertainty, but the overall sentiment remains positive, supported by strong financial metrics and strategic initiatives.
Revenue $391 million, up $7 million or approximately 2% year-over-year compared to Q1 2024.
Adjusted EBITDA $76 million, up $9 million or 13% year-over-year compared to Q1 2024.
Adjusted EBITDA Margin 20%, up about 200 basis points year-over-year compared to Q1 2024.
New Contract Awards $272 million in new contract awards in Q1 2025.
Backlog Approximately $2.2 billion at the end of Q1 2025.
Adjusted Cash Flow from Operations $53 million, a year-over-year increase of $14 million.
Free Cash Flow Approximately $20 million.
Total Available Liquidity Approximately $315 million at the end of Q1 2025.
Capital Expenditures $33 million.
Share Repurchase $10 million for the repurchase of 1 million shares at an average price of $10.08.
Support Costs $85 million, approximately 22% of revenue.
Corporate G&A Approximately 3.9% of revenue in Q1 2025.
New Contract Awards: Secured $272 million in new contract awards in Q1 2025, including $50 million in U.S. for well construction, over $30 million in Brazil for drilling completions, and approximately $15 million in Indonesia for electric line and slickline services.
Technology Deployment: Successfully deployed CENTRI-FI consolidated control console in Indonesia, marking its first international deployment, reflecting increased demand for operational efficiencies.
Acquisition Performance: PRT Offshore, acquired in 2023, performed well, executing operations for seven subsea customers in the Gulf of America and securing new awards for surface handling equipment in Asia-Pacific and Sub-Saharan Africa.
Market Outlook: Despite expected near-term moderation in upstream investment, the long-term outlook for international and offshore markets remains positive, with global oil consumption forecasted to increase by 0.9 million barrels per day in 2025.
Geopolitical Impact: Current geopolitical tensions and tariff announcements have introduced market uncertainty, but long-term demand for oil and gas is expected to remain resilient.
Regional Stability: Activity expected to remain stable in Brazil, Guyana, and parts of West Africa, with a rebound anticipated in Asia-Pacific post-monsoon.
Operational Efficiency: Launched Drive 25 efficiency campaign aimed at achieving $30 million in run rate support cost savings, enhancing operating leverage and margin expansion.
Cost Management: Maintaining cost and capital discipline to navigate market volatility, with a focus on profitability and cash generation.
M&A Strategy: Continued focus on M&A to complement organic growth, enhancing service offerings and operational capabilities.
Long-term Growth Focus: Positioned for long-term growth driven by economic growth and energy security considerations, with hydrocarbons, particularly natural gas, remaining key to the energy slate.
Market Volatility: The company faces significant near-term uncertainty and volatility across global oil markets due to tariff announcements and production increases by OPEC+, which have lowered macroeconomic visibility and GDP growth expectations.
Commodity Price Fluctuations: Weaker and more volatile commodity prices are expected until prices stabilize, leading to cautious customer spending and potential delays in new project sanctioning.
Geopolitical Risks: A potentially protracted trade war between the U.S. and China poses a risk to China's long-term oil demand, while geopolitical tensions and sanctions on Russia, Iran, and Venezuela create supply risks.
Regulatory Issues: Changes in trade policies and tariffs could impact global oil demand and supply, affecting the company's operations and market conditions.
Supply Chain Challenges: The energy services industry is navigating global economic uncertainty and supply-demand imbalances, which could lead to reduced activity in key markets.
Project Delays: Approval of offshore projects may be postponed to 2026 or 2027 as customers reevaluate project economics in light of current conditions.
Economic Factors: The overall economic backdrop may lead to a global recession, impacting customer spending and project approvals.
Operational Risks: Despite a strong operational performance, the company must maintain cost and capital discipline to navigate the uncertain market conditions.
Contract Awards: Secured $272 million in new contract awards in Q1 2025, including $50 million in the U.S. for well construction services, $30 million in Brazil for drilling completions, and $15 million in Indonesia for electric line and slickline services.
Backlog: Backlog at approximately $2.2 billion at the end of Q1 2025.
Drive 25 Initiative: Targeting $25 million in run rate support cost savings by Q4 2025, with over $30 million identified.
M&A Strategy: Acquisition of PRT Offshore in 2023 continues to perform well, enhancing operational capabilities.
Q2 2025 Revenue Guidance: Expecting Q2 revenue of $400 million to $410 million, up about 4% sequentially.
Full Year 2025 Revenue Guidance: Expecting full year 2025 revenue to be generally flat relative to 2024, exceeding $1.7 billion.
Adjusted EBITDA Guidance: Expecting adjusted EBITDA for full year 2025 to meet or exceed 2024 results.
Free Cash Flow Guidance: Free cash flow margin expected to be around 7%, approximately $120 million.
H2 2025 Outlook: Expecting mid-single-digit revenue growth in the second half of 2025, supported by new project startups.
Share Repurchase Program: During Q1 2025, Expro repurchased 1 million shares at an average price of $10.08, totaling $10 million. This represents approximately 1% of total shares outstanding. Following these repurchases, approximately $66 million remains available under the current $100 million share repurchase program. The company intends to allocate about one-third of its annual free cash flow to acquire Expro shares.
The earnings call highlights strong financial performance, including record high free cash flow and successful share repurchases, indicating effective capital management. Despite some regional revenue declines, the company maintains a solid backlog and liquidity. The Q&A reveals confidence in margin expansion through new technologies and operational efficiency, although management was vague on some specifics. The stable EBITDA outlook and strategic market positioning suggest a positive market reaction. Given the market cap of $2.7 billion, the stock is likely to see a moderate positive movement of 2% to 8% over the next two weeks.
The earnings call summary presents a generally positive outlook with strong Q2 orders, a healthy backlog, and regional revenue growth in key areas. Despite some revenue declines in specific segments, management expects rebounds and has strategies for margin expansion and cash flow improvement. The Q&A section supports this sentiment, with management addressing concerns and highlighting opportunities for M&A and shareholder returns. The market cap suggests moderate stock price movement, leading to a positive prediction for the next two weeks.
The earnings call reveals strong financial performance with record revenue and EBITDA growth, a robust backlog, and a significant share repurchase program. Despite geopolitical and regulatory risks, Expro's strategic focus on growth in MENA and Latin America, along with strong contract performance, provides a positive outlook. The cautious customer engagement and unclear management responses in the Q&A suggest some uncertainty, but the overall sentiment remains positive, supported by strong financial metrics and strategic initiatives.
The earnings call showed strong financial performance with significant revenue and EBITDA growth, improved margins, and solid cash flow. The share repurchase indicates shareholder returns, and the Q&A provided optimism about future growth, particularly with strategic M&A and technology expansion. Despite some unclear responses, the overall sentiment is positive, supported by a robust market cap, leading to a likely stock price increase of 2% to 8%.
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