Expro Group Holdings N.V. Announces First Quarter 2022 Results

Source: www.gulfoilandgas.com 5/5/2022, Location: North America

Expro Group Holdings N.V. reported financial and operational results for the three months, ended March 31, 2022.

First Quarter 2022 Highlights
- Revenue was $280 million compared to revenue of $296 million in the fourth quarter of 2021, a decrease of $16 million, or 5% driven by lower activity across the Europe and Sub Sahara Africa (ESSA) and Asia Pacific (APAC) segments, partially offset by higher activities in the North and Latin America (NLA) and Middle East and North Africa (MENA) segments.
- Net loss for the first quarter of 2022 was $11 million, or $0.10 per diluted share, compared to a net loss of $91 million, or $0.84 per diluted share, for the fourth quarter of 2021. Adjusted net income for the first quarter of 2022, excluding certain items, was $1 million, or $0.01 income per diluted share, compared to adjusted net loss for the fourth quarter of 2021 of $4 million, or $0.03 loss per diluted share.
- Adjusted EBITDA (a non-GAAP measure) was $37 million, a sequential decrease of $14 million, or 27%, driven by a combination of seasonally lower activity, mobilization costs incurred, and project start-up delays in regards to, the expansion of our subsea services offering during the current quarter, partially offset by lower corporate costs. Adjusted EBITDA margin for the first quarter of 2022 and fourth quarter of 2021 was 13% and 17%, respectively.
- Net cash used in operating activities for the first quarter of 2022 was $(14) million compared to net cash provided by operating activities of $16 million for the fourth quarter of 2021. Adjusted cash flow from operations (a non-GAAP measure) for the first quarter of 2022 was $(1) million compared to $41 million for the fourth quarter of 2021, primarily reflecting a seasonal decline in operating results and an increase in net working capital.
- Michael Jardon, Chief Executive Officer, noted, “Expro delivered solid operational performance and encouraging financial results in the first quarter as we continue to unlock the benefits of the recently completed merger while capitalizing on our increased scale, broad portfolio of services and solutions, global operating footprint, through-cycle capabilities and strong financial profile.

“Despite a dynamic operating environment, Expro executed on a number of corporate priorities during the first few months of 2022. This is testament to our team’s expertise and resilience, combined with our broad portfolio of technology solutions and ability to be flexible in adapting to our customers’ evolving needs.

“We achieved growth across North and Latin America and Middle East and North Africa, with notable growth in our well construction business and equipment sales related to well flow management, respectively. We also continue to realize the benefits of our investments to date to further develop our technology offerings, having recently completed a high temperature production profiling survey using our Distributed Fiber Optic Sensing (“DFOS”) technology following our recent acquisition of SolaSense, which we believe will significantly enhance Expro’s well data acquisition and analysis capabilities.

“Expro continues to support our customers’ energy transition goals through expanding our portfolio of carbon reduction solutions. In particular, we are seeing increasing potential in the geothermal market and have recently been awarded a geothermal well contracts in ESSA and APAC, thereby strengthening our position as an integrated services provider. This is a growing and increasingly important sector and key element of the energy services industry's journey toward a lower carbon future.

“Looking forward, we continue to see strengthening signals of a multi-year recovery as our customers seek to balance their energy security and sustainability priorities, and we expect demand for our services and solutions to increase throughout 2022 and beyond. In particular, operators are increasingly looking at short-cycle projects to boost production from existing assets and longer-cycle, new field development projects in order to increase production capacity and thereby improve the diversity and reliability of energy supply. Expro is uniquely positioned to serve our customers in the current market through our combined technology and know-how while prioritizing safety and service quality, enabling us to deliver maximum value to our customers, shareholders and other stakeholders.”

Notable Awards and Achievements
Expro recently published its inaugural Environmental, Social and Governance (“ESG”) report which provides transparency on the Company's performance and establishes Expro's near- and long-term ESG priorities. The 2021 ESG report outlines our vision for creating a more sustainable future. As a leading well expert and one of the most trusted partners in the energy industry, Expro is playing a key role in supporting a lower carbon world and a brighter future for our customers, employees and communities.

As a demonstration of Expro’s commitment to new technologies, during the first quarter, the company enhanced its well integrity offering with the acquisition of DFOS company SolaSense. Access to representative well data is key for making informed well performance and well integrity decisions. The SolaSense acquisition will allow Expro to build on its existing well intervention and integrity portfolio, leveraging our expertise to extend the lifespan of our customers’ wells while reducing time and costs.

Highlighting how technology is used to deliver efficiency, it was announced in the first quarter that Expro’s Autonomous Well Intervention System, Galea™, will be recognized at the 2022 Offshore Technology Conference (OTC) in Houston with a Spotlight on New Technology® Award. Galea, the world’s first fully autonomous well intervention system, is designed to maximize production while reducing intervention costs, HSE risks and the carbon footprint of operations.

In the first quarter, Expro also conducted a well integrity surveillance program in Norway, using its Octopoda™ system to deploy a unique set of survey technologies, including a powerful suite of annular monitoring services together with a downhole camera. The survey results enabled the customer to define its late-life production strategy. This is a truly unique service offering which for the first time in our industry enables operators to proactively monitor and manage wellbore annular integrity.

In addition, Expro deployed the latest generation CoilHose™ from a light well intervention vessel to provide nitrogen lift services for a customer in Norway. This advanced hose design not only enables open water subsea intervention at higher pressures and greater depths, but also increases the operating envelope for conventional operations, significantly increasing the applicability of this exciting technology.

During the first quarter, the Company also continued to expand its Centri-Fi™ system, implementing its first run with an operator in the Gulf of Mexico. The customer provided positive feedback on the safety and efficiency of the system, while racking back stands of tubulars. Expro’s Centri-Fi system represents another step forward in reducing the risk of injuries on the rig floor while optimizing operations by enabling the remote consolidated control of tubular running equipment.

Finally, Expro delivered downhole fluid capture services for a customer during the first quarter using its recently developed non-reactive sampling system. This unique technology provides an inert environment from sample capture through final analysis, while delivering the most accurate assessment of the hydrocarbons under investigation with no absorption of trace elements. This is critical to ensure the design of production facilities and pipelines are optimized for the produced fluids.

Segment Results
Unless otherwise noted, the following discussion compares the quarterly results for the first quarter of 2022 to the results for the fourth quarter of 2021.

North and Latin America (NLA)
NLA revenue totaled $104 million for the three months ended March 31, 2022, an increase of $4 million, or 3%, compared to $100 million for the three months ended December 31, 2021. The increase was primarily driven by well construction services in the U.S. and Mexico as a result of higher customer activity and equipment sales, partially offset by lower subsea well access and well flow management revenues in the U.S. due to lower activity and subsea equipment sales in the previous quarter that did not recur during the current quarter.

NLA Segment EBITDA was $22 million, or 21% of segment revenue, during the three months ended March 31, 2022, compared to $21 million, or 21% of segment revenue, during the three months ended December 31, 2021. The increase of $1 million was attributable to higher well construction activity.

Europe and Sub Sahara Africa (ESSA)
ESSA revenue totaled $82 million for the three months ended March 31, 2022 compared to $94 million for the prior quarter, a decrease of $12 million. The sequential decrease of 13% was primarily driven by lower well flow management and well construction services revenue in, United Kingdom, Azerbaijan and Angola due to a combination of lower customer activity levels and project delays during the current quarter, as well as non-recurring equipment sales in Norway that occurred in the prior quarter.

ESSA Segment EBITDA during the three months ended March 31, 2022 was $12 million, or 14% of segment revenue, compared to $20 million, or 21% of segment revenue, in the prior quarter. The decrease of $8 million was primarily attributable to lower activity levels and a less favorable activity mix during the current quarter.

Middle East and North Africa (MENA)
MENA revenue totaled $51 million for the three months ended March 31, 2022 compared to $49 million for the three months ended December 31, 2021. The sequential increase in revenue of $2 million, or 3%, was driven by well flow management equipment sales in the United Arab Emirates and Saudi Arabia in the first quarter.

MENA Segment EBITDA for the three months ended March 31, 2022 was $15 million compared to $16 million in the prior quarter. Segment EBITDA margin declined to 30% during the current quarter compared to 33% during the previous quarter, primarily due to lower activity on higher margin contracts and a less favorable activity mix.

Asia Pacific (APAC)
APAC revenue for the three months ended March 31, 2022 totaled $44 million compared to $52 million in the prior quarter, a reduction of $8 million. The 15% decrease in revenue was primarily due to a combination of lower customer activity levels, non-recurring equipment sales and the completion of certain projects during the previous quarter in Brunei, Thailand, Malaysia, India and Indonesia. This decrease was partially offset by higher subsea well access revenues in Australia.

APAC Segment EBITDA for the three months ended March 31, 2022 totaled $5 million, or 12% of segment revenue, compared to $12 million, or 24% of segment revenue, in the prior quarter. The reduction was primarily due to a less favorable activity mix and mobilization costs incurred during the first quarter related to a COVID-19-related and other project start-up delays with a subsea project, as well as lower activity on higher margin contracts.

Other Financial Information
On March 10, 2021, Frank’s International N.V. (“Frank’s”) and New Eagle Holdings Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of Frank’s (“Merger Sub”), entered into an Agreement and Plan of Merger with Expro Group Holdings International Limited (“Legacy Expro”), an exempted company limited by shares incorporated under the laws of the Cayman Islands, providing for the merger of Legacy Expro with and into Merger Sub in an all-stock transaction, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of Frank’s (the “Merger”). The Merger closed on October 1, 2021, and Frank's was renamed to Expro Group Holdings N.V.

The Company’s capital expenditures totaled $11 million in the first quarter of 2022. Expro plans for capital expenditures in the range of approximately $80 million to $90 million for the remainder of 2022. In addition, during the quarter the Company completed a technology acquisition to bolster its well intervention and integrity product offering for total consideration of approximately $11 million.

As of March 31, 2022, Expro’s consolidated cash and cash equivalents, including restricted cash, totaled $218 million. The Company had no outstanding debt as of March 31, 2022 and has no outstanding debt today. The Company’s total liquidity as of March 31, 2022 was $348 million. Total liquidity includes $130 million available for drawdowns as loans under the Company’s revolving credit facility (the “New facility”) entered into in connection with the Merger.

Expro’s provision for income taxes for the first quarter of 2022 was $5 million compared to $8 million in the prior quarter. The change in income taxes was primarily due to changes in taxable profits in certain jurisdictions.

In the context of recent geopolitical events, we note we have minimal activity in Russia and Ukraine. Such countries accounted for less than 1% of our revenue in 2021.


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