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Expro Group Holdings NV (XPRO) Q1 2024 Earnings Call Transcript Highlights: Strong Revenue and ...

GuruFocus Research
·3-min read

  • Q1 2024 Revenue: $383 million, a 13% increase year-over-year, but a 6% decrease sequentially.

  • Q1 2024 Adjusted EBITDA: $67 million, up 61% from Q1 2023.

  • Net Loss: $3 million, or $0.02 per diluted share.

  • Adjusted Net Income: $10 million, or $0.09 per diluted share.

  • Adjusted EBITDA Margin: 18%, an increase of approximately 600 basis points year-over-year.

  • Backlog: Approximately $2.3 billion, consistent with end of Q4 2023.

  • Q2 2024 Revenue Guidance: Expected to be between $400 million and $420 million.

  • Q2 2024 Adjusted EBITDA Guidance: Expected to be between $80 million and $90 million.

  • Full Year 2024 Revenue Guidance: Anticipated to be between $1.6 billion and $1.7 billion.

  • Full Year 2024 Adjusted EBITDA Guidance: Expected to be between $325 million and $375 million.

  • Free Cash Flow Margin: Expected to be between 8% and 9% for 2024.

  • 2024 CapEx: Expected to be between 7% and 8% of revenue.

Release Date: April 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Can you discuss your confidence around the guidance provided and the factors that could lead to achieving the high end of the annual guidance? A: Quinn P. Fanning, CFO of Expro Group Holdings N.V., mentioned that the guidance considers several factors, including the timing of project starts and the potential early closure of the Coretrax acquisition. He highlighted that certain projects, like the Congo project and significant subsea projects on the African coast, are key drivers. Additionally, closing Coretrax earlier could add significant revenue and EBITDA. Michael Jardon, CEO, added that the timing of subsea projects towards the end of Q2 could impact the quarter's results, but overall customer engagement and activity levels remain strong, supporting confidence in the guidance.

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Q: What are the next areas outside of subsea test trees and deepwater TRS where you expect to see net pricing gains? A: Michael Jardon responded that as exploration and appraisal activities increase, there will be opportunities for pricing gains in well test activities like flowbacks and cleanups. He noted that 70% of their activities are tied to drilling and completions, which will present pricing opportunities as the recovery cycle progresses.

Q: How does Expro view the potential for initiating a dividend, and what are the considerations around this decision? A: Michael Jardon explained that discussions about initiating a dividend are ongoing with the board, emphasizing the importance of the sustainability of such payouts. Currently, the company prefers buybacks over dividends, but as cash generation increases, discussions about dividends are expected to become more concrete.

Q: Could you elaborate on the integration processes from your acquisitions and how they are evolving? A: Michael Jardon detailed that the integration process is built on a robust playbook developed during the Frank's transaction, which is adaptable for both large and smaller scale integrations. This structured approach helps in efficient integration of acquired companies, focusing on regional integrations for transactions like PRT and Coretrax, which are expected to be executed more quickly.

Q: What is Expro's strategy and outlook regarding mergers and acquisitions? A: Quinn P. Fanning and Michael Jardon both emphasized that M&A activities are driven by industrial logic and the potential to add value to customers and shareholders. They are open to both bolt-on acquisitions and larger scale deals, provided they make strategic sense and offer clear industrial logic that is easily understandable to both customers and investors.

Q: Can you discuss the market dynamics and growth opportunities in TRS and cementing internationally and offshore? A: Michael Jardon highlighted that both TRS and cementing technologies are focused on efficiency gains and improving operations, which are increasingly valuable as rig rates rise. He mentioned specific technologies in cementing and TRS that reduce operational times and enhance safety, which are critical for driving growth in these segments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.