Expro (XPRO) Q3 2025 Earnings Call Transcript

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DATE

Thursday, Oct. 23, 2025 at 11:00 a.m. ET

CALL PARTICIPANTS

Chief Executive Officer — Mike Jardon

Chief Financial Officer — Sergio L. Maiworm

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TAKEAWAYS

Revenue -- $411 million in the third quarter, with regional growth in North and Latin America offset by declines in Asia Pacific and Europe/Sub-Saharan Africa.

EBITDA -- $94 million in the third quarter, representing a 22.8% margin, a 50-basis-point sequential increase.

Adjusted free cash flow -- $46 million, or 11% of revenue, the highest quarterly adjusted free cash flow in company history.

Share repurchases -- Approximately 2 million shares bought back for $25 million, achieving the annual $40 million share repurchase target ahead of year-end; $36 million remains under the current $100 million repurchase plan.

2025 guidance raised -- Adjusted EBITDA now expected between $350 million and $360 million; adjusted free cash flow guidance increased to $110 million to $120 million; full-year capital expenditures projected at $110 million to $120 million, down from approximately $120 million.

Liquidity position -- $532 million in total liquidity at quarter-end, including $199 million in cash after voluntary repayments reduced the revolving credit facility balance to $99 million.

Backlog -- $2.3 billion backlog, providing near-term revenue visibility but not guaranteeing future results.

Regional revenue detail -- North and Latin America revenue was $151 million, up $8 million sequentially; Europe and Sub-Saharan Africa revenue decreased $7 million to $126 million; Middle East and North Africa revenue was $86 million, slightly below the prior quarter; Asia Pacific revenue was $49 million, down $8 million sequentially.

Segment EBITDA margins -- Europe and Sub-Saharan Africa segment EBITDA margin was 32%, up 200 basis points from the prior quarter; Middle East and North Africa segment EBITDA margin was 35%, down about 100 basis points; Asia Pacific segment EBITDA margin was 21%, down 500 basis points sequentially.

Operational accolade -- Expro received ENI's Best Contractor HSE Performance Award for the Congo OPT project, operating over 2 million man-hours without a lost time incident.

Technology awards -- The company won OTC Brazil Spotlight on New Technology Awards for its Qpost multiphase flow meter and Elite composition solution and was shortlisted for 10 technologies across seven categories at the Gulf Energy Awards.

Long-term contracts -- Secured a five-year extension with Chevron for Gulf of America subsea services, a significant Alaska contract with ConocoPhillips, and multiyear agreements with Perenco in Congo and with ADNOC and Petronas in the Middle East and North Africa.

Production solutions transition -- The production solutions business is shifting from being a consumer of capital to a generator of predictable, annuity-like free cash flow as projects transition from construction to operations.

Shareholder returns framework -- Committed to returning at least one-third of annual free cash flow to shareholders through repurchases, as part of a disciplined four-pillar capital allocation approach.

Margin expansion drivers -- CEO Mike Jardon said, "it will be the full-year effect of our Drive 25 initiative," along with the internationalization of recent acquisitions and technology rollout, that will drive margin expansion even if 2026 revenue is flat to slightly down.

2026 outlook -- Initial view suggests activity levels "will be largely consistent, if not slightly lower," with a slow first quarter in 2026 due to "the typical winter season effect" and NOC budget timing, but with potential for increased activity in the second half.

SUMMARY

Expro (NYSE:XPRO) management reported record quarterly adjusted free cash flow and raised full-year 2025 adjusted EBITDA and free cash flow guidance, citing improved margin performance and capital discipline. The company achieved its annual share-repurchase target ahead of schedule and highlighted a $2.3 billion backlog, providing near-term revenue visibility. Regional and product-specific results reflected mix-driven margin expansion, notably in Europe and Sub-Saharan Africa, alongside softness in Asia Pacific.

The transformation of production solutions from a capital consumer to a free cash flow generator was emphasized as a pivotal contributor to future profitability and operational flexibility. New technology wins, long-term contract extensions with Chevron (NYSE:CVX) and others, and the continued rollout of AI-enabled and digital solutions were cited as supporting scalability and competitive advantage.

CEO Mike Jardon stated that EBITDA margins (non-GAAP) are expected to expand in 2026 despite the prospect of flat or slightly lower revenue, attributing this to the full impact of the Drive 25 initiative, increased wallet share, and growth from recently acquired assets.

Management described ongoing softness in Asia Pacific and a typical first-quarter seasonal slowdown from Northern Hemisphere winter and NOC project planning, balanced by anticipated second-half activity gains in West Africa, the Gulf of America, and select Middle East markets, as discussed in the context of 2026 activity levels.

CFO Sergio L. Maiworm explained that the share repurchase pace will continue to be dynamically evaluated relative to ongoing free cash flow generation, with at least one-third of annual adjusted free cash flow intended for shareholder returns.

Recent deployment of new technologies, such as the remote clamp installation system and Vellonics pipeline pig control, are expected to provide incremental operational efficiency, safety benefits, and future revenue scalability.

INDUSTRY GLOSSARY

Drive 25 initiative: An internal cost-efficiency and margin-expansion program referenced by management as a major driver for future EBITDA margin gains.

OPT project: Offshore gas treatment facility for ENI in the Congo, referenced as an example of Expro Group Holdings' production solutions capabilities.

NOC: National Oil Company; referenced in the context of customer budgeting cycles contributing to seasonal activity lulls.

Vellonics: Expro Group Holdings' proprietary pipeline pig control technology focused on optimizing maintenance efficiency and reducing emissions.

Full Conference Call Transcript

Sergio L. Maiworm: Thank you, Operator. Good morning, everyone, and welcome to Expro Group Holdings N.V.'s third quarter 2025 call. I am joined today by Expro Group Holdings N.V. CEO, Mike Jardon. First, Mike and I will have some prepared remarks, then we will open it up for questions. We have an accompanying presentation on the third quarter results that is posted on the Expro Group Holdings N.V. website expro.com, under the Investors section. In addition, supplemental financial information for the third quarter results is downloadable on the Expro Group Holdings N.V. website likewise under the Investors section. I would like to remind everyone that some of today's comments may refer to or contain forward-looking statements.

Such remarks are subject to risks 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 website sec.gov, or on 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 third quarter 2025 earnings release, which can also be found on our website. With that, I would like to turn the call over to Mike.

Mike Jardon: Thank you, Sergio. Good morning, everyone, and welcome to Expro Group Holdings N.V.'s third quarter call. I will begin by reviewing the third quarter 2025 financial results from today's press release. Expro Group Holdings N.V. achieved its highest quarterly free cash flow ever and continued to improve its EBITDA margin. We expect a strong fourth quarter and have raised our annual guidance. Next, I will cover operational highlights, macro trends, a preliminary 2026 outlook, and key strategic themes. Sergio will provide further details on financials, updated 2025 guidance, and our overall capital allocation framework. Let's begin on slide one. Expro Group Holdings N.V. reported quarterly revenue of $411 million and EBITDA of $94 million, representing a 22.8% margin.

Adjusted free cash flow was $46 million or 11% of revenue, which was the highest recorded by the company to date. The financial results reflect ongoing operational efficiency gains relating to margins and free cash flow. This record-breaking free cash flow generation marks a significant milestone for Expro Group Holdings N.V., highlighting the company's successful strategy in improving operational efficiency and maximizing cash conversion. Achieving the highest adjusted free cash flow in the company's history underscores our commitment to financial discipline, creating and returning value to shareholders. Such performance sets a new benchmark and demonstrates our focus on increasing performance amidst dynamic market conditions.

In the third quarter, Expro Group Holdings N.V. also repurchased around 2 million shares for roughly $25 million, achieving our annual target of $40 million ahead of schedule. We are also raising the 2025 annual guidance for EBITDA and free cash flow to reflect anticipated performance to date and for the rest of the year. Further details will be provided by Sergio later in the call. Moving to slide two. Expro Group Holdings N.V.'s $2.3 billion backlog provides solid revenue visibility and demonstrates the company's diverse portfolio and operations across regions. Securing long-term contracts and delivering cost-effective solutions strengthens customer trust and underpins ongoing growth. Maintaining safety, service quality, and performance highlights Expro Group Holdings N.V.'s strengths.

As we look to the future, the strong backlog and steady customer relationships help guide our planning for 2026. It's also important to note that while the backlog is encouraging and supports our strategic planning and visibility on revenue, it isn't a guarantee of future outcomes. Primarily, the backlog acts as a valuable health check for our business, offering insight into its current strength and helping guide informed decisions amid changing market conditions. As we look ahead, it's important to consider the broader market context shaping our industry and our outlook. Despite the current softer commodity price environment, the outlook for Expro Group Holdings N.V.'s core markets remains constructive.

We fundamentally believe that oil and gas investments remain resilient, with continued investment in offshore and international projects supporting demand for our services in Expro Group Holdings N.V.'s core regions. Long-term demand for hydrocarbons remains resilient, particularly in non-OECD markets and offshore developments. Upstream investment is expected to remain largely flat globally in 2025. We do, however, see pockets of growth in some international markets. We expect upstream investments to recover later in 2026 and into 2027 and beyond, with growth led by offshore projects in Latin America, the Middle East, and West Africa, regions where Expro Group Holdings N.V. is very well positioned.

Natural gas fundamentals have temporarily softened, but gas remains critical to the global energy mix and therefore supports long-term demand for Expro Group Holdings N.V.'s services and technology. As operators prioritize capital discipline and production optimization, we see sustained demand for our brownfield-focused offerings and digital solutions. The ongoing shift towards decarbonization and increased investment in geothermal and carbon capture or CCS projects, particularly in Asia Pacific, ESA, and North America, positions Expro Group Holdings N.V.'s sustainable energy business for continued growth. While macroeconomic risks persist, Expro Group Holdings N.V.'s diversified portfolio and strategic offshore and international exposure enable us to navigate near-term headwinds and capitalize on emerging opportunities across the full asset life cycle.

Turning to Slide three, at this stage, it is a bit too soon to provide definitive guidance for 2026. However, our current outlook for Expro Group Holdings N.V. suggests that activity levels in 2026 will be largely consistent, if not slightly lower, than those anticipated in 2025. Preliminary assessments indicate that operational activity will likely increase in the second half of the year following a slower start during the first quarter. We will have the typical winter season effect from operations in the Northern Hemisphere and the NOC planning effect early in the year.

Although revenue expectations remain relatively flat to slightly down for the year, Expro Group Holdings N.V. remains strongly committed to further expanding EBITDA margins and free cash flow generation. Based on our activity outlook and our position today, I am confident in our ability to achieve these objectives. It should be noted that this outlook is informed by initial discussions with our customers and our historical experience across various market cycles. As we are in the early stages of developing the 2026 budget, numerous factors, including continued customer engagement and geopolitical developments, could influence our perspective prior to releasing formal guidance in February alongside our fourth quarter earnings report.

Before turning to our operational update, I wanted to discuss a few things that make Expro Group Holdings N.V. unique and we think are important attributes for investors to consider beyond the broader macro dynamic. That is also on Slide four. We believe Expro Group Holdings N.V.'s future stock performance will also be driven by several company-specific factors that set us apart from peers and position us for sustained value creation. One of our most powerful differentiators is our ability to expand our wallet share with existing customers. By providing additional or enhanced services to customers we already serve, while leveraging the existing cost base, we are able to significantly expand our margins with new technology deployments.

This approach not only deepens our customer relationships but also drives incremental profitability and efficiency without the need for increased personnel on board. Another unique driver is the transformation of our production solutions business. Historically, as a consumer of capital, this segment is maturing into a generator of free cash flow. This evolution reflects both operational discipline and the successful execution of our strategy to optimize asset utilization and drive higher returns from our installed base. As production solutions continue to scale, we expect it to be a meaningful contributor to our overall financial strength and flexibility. In addition, Expro Group Holdings N.V.'s commitment to technology leadership remains a core pillar of our differentiation.

Our ongoing investments in technologies, digitalization, and artificial intelligence enable us to deliver innovative, high-value solutions to our customers. This not only enhances our competitive positioning but also supports margin expansion and operational efficiency enhancements across our portfolio. Finally, a disciplined approach to margin expansion and free cash flow generation, combined with a track record of integrating value-accretive acquisitions, further distinguishes Expro Group Holdings N.V. By focusing on international and offshore markets and executing on cost efficiency programs like our Drive 25 initiative and others, we can deliver superior returns and create long-term shareholder value independent of broader market dynamics. Moving to our operational performance on Slide five.

During this quarter, Expro Group Holdings N.V. has consistently demonstrated strong operational performance. We continue to secure new business and remain dedicated to delivering our services safely and efficiently in the field, a commitment validated by our customers and recognized within the industry. Expro Group Holdings N.V. was recently honored with ENI's Best Contractor HSE Performance Award for our contributions to the Congo OPT project. This accolade coincided with the first anniversary of our OPT plant operating without a single lost time incident, with over 2 million man-hours of activity, underscoring our team's success and highlighting our exemplary standards in safety and operational excellence.

We received the OTC Brazil Spotlight on New Technology Award for both the Qpost multiphase flow meter and the Elite composition solution, with the official presentation scheduled at next week's OTC Brazil event. At the Gulf Energy Awards here in Houston, Expro Group Holdings N.V. was shortlisted for a record 10 technologies across seven categories, further affirming our leadership and innovative capabilities in the sector. Notably, Expro Group Holdings N.V. earned the Best Health, Safety, and Environmental Contribution in Upstream Award for our vigilance, intelligent safety, and surveillance solution. Our purposeful approach to innovation ensures we address client requirements directly, contributing to industry progress and delivering measurable value.

In addition to these achievements, Expro Group Holdings N.V. successfully completed the inaugural deployment of Vellonics, an optimized pipeline pig control technology for a US midstream client. This implementation resulted in a reduction of approximately 7 million pounds of carbon dioxide emissions, generated cost savings for the customer, and improved data quality to support accelerated decision-making, further exemplifying Expro Group Holdings N.V.'s commitment to operational excellence and sustainability. As detailed in our September 8 press release, Expro Group Holdings N.V. has established a new offshore world record for the heaviest casing string deployment, utilizing the advanced Blackhawk Gen three wireless top drive cement head with Skyhook technology.

Conducted in the Gulf of America, this milestone set the benchmark for safe and reliable offshore cementing operations in ultra-deep, high-pressure environments. These achievements demonstrate how Expro Group Holdings N.V.'s technology portfolio delivers a competitive edge, unlocks future revenue opportunities, and supports margin expansion through scalable, differentiated solutions. Building on these technology milestones, our regional performance this quarter further underscores our commitment to efficient, effective innovation across our global operations. This quarter, we secured a five-year extension with Chevron for subsea services in the Gulf of America. This long-term contract reflects the trust Chevron places in Expro Group Holdings N.V. and reinforces our reputation for high-quality service.

In Alaska, we won a significant contract with ConocoPhillips (NYSE:COP), expanding our well-testing leadership and creating new opportunities to deploy our multiphase flow meters and fluid analysis services. In Congo, we secured a multiyear slick line service contract with Perenco. This contract significantly strengthens our intervention services in West Africa and demonstrates our technical expertise. In the Middle East and North Africa, we secured key well flow management contracts for ADNOC and Petronas. The first contract is for well test services for four packages over two years, while the second contract involves six well test packages and a multiphase pump that will be used as a zero-flaring solution for the well test activities.

These wins enhance our reputation as a trusted partner in unconventional well development and reinforce our commitment to innovative, sustainable solutions. Turning to the Asia Pacific region. In the second quarter, we reported that Expro Group Holdings N.V. completed the first rig-less conductor driving operation on a client's platform in over a decade. Delivered ahead of schedule, demonstrating our commitment to innovative solutions in the region. I am also pleased to share that in the third quarter, this Bass Strait campaign received highly positive feedback from NOPSEMA, Australia's offshore safety regulator, and was formally recognized for achieving ALARP, as low as reasonably practical safety standards. This recognition reaffirms our dedication to operational excellence and the highest safety protocols.

Across every phase, we champion safety through best practices, strict procedures, and continuous improvement, underscoring our robust safety culture and commitment to protecting our workforce and partners. Across all regions, Expro Group Holdings N.V.'s operational and technology achievements this quarter demonstrate our ability to deliver value-driven innovation and maintain the highest standards for safety and efficiency. These results position us strongly for continued growth and margin expansion in the quarters ahead. Before turning over to Sergio, I would like to remind everyone of Expro Group Holdings N.V.'s value proposition we've highlighted on slide six. Expro Group Holdings N.V.'s long-term strategy is anchored in building a large, diversified, and compelling business mix company with clear market leadership positions.

Our overarching goal is to maximize and sustainably generate free cash flow through industry cycles, ensuring resilience and value creation for our shareholders. First, we are committed to continuously improving our financial results. This means driving margin expansion and robust free cash flow generation, underpinned by disciplined cost efficiencies through initiatives like our Drive 25 campaign. We are also focused on reducing the capital intensity of the business and consistently delivering top quartile performance across our operations. Second, we see significant opportunity to grow Expro Group Holdings N.V. through inorganic, scalable acquisitions. Our approach is to target international and offshore opportunities with adjacent offerings that present strong industrial logic and accretive financial profiles.

We have developed a proven blueprint for integrating businesses efficiently and in a timely manner, and our track record demonstrates our ability to create shareholder value through disciplined M&A. Third, we are high-grading our business by leveraging technical leadership. We continue to invest in technologies across our core business segments and are actively scaling our digital capabilities, including artificial intelligence and digitalization. Importantly, we are globalizing the technology platforms acquired through recent M&A, ensuring that innovation and technical excellence remain at the heart of our value proposition. In summary, Expro Group Holdings N.V.'s strategy is designed to deliver sustainable growth, operational excellence, and superior returns.

By maintaining a disciplined focus on financial performance, pursuing targeted acquisitions, and investing in technology leadership, we are well-positioned to lead our industry and deliver long-term value for our shareholders. With that, I would like to turn the call over to Sergio to review our financial results in detail.

Sergio L. Maiworm: Thank you, Mike, and good morning again to everybody on the call. As Mike noted, Expro Group Holdings N.V. continues to deliver consistent and above-expectations financial results. In the third quarter, we reported revenue of $411 million. EBITDA for Q3 reached $94 million, with a margin of 22.8%, up about 50 basis points from last quarter and 270 basis points year over year. Slide seven illustrates our quarterly and annual margin growth. We are confident in further margin expansion in 2025 and 2026, with the latter being driven by the full impact of Drive 25, increased customer wallet share at higher margins, international growth from acquisitions like Cortrax, and ongoing cost optimization and efficiency improvements.

EBITDA margin expansion is not the goal in itself on slide eight, but a means to increase free cash flow generation. In the third quarter, Expro Group Holdings N.V. posted its highest quarterly free cash flow in the company's history, generating over $46 million on an adjusted basis. We aim to further reduce the capital intensity of the business and expect even stronger free cash flow in 2026, both as a percentage of revenue and in absolute terms. We have increased our 2025 guidance for free cash flow, though we are cautious about Q4 due to potential working capital effects. The Q4 guidance is conservative and already accounts for these factors.

Expro Group Holdings N.V. also bought back $25 million in shares in the third quarter, achieving our $40 million goal ahead of time, and we still have another $36 million available under the current $100 million repurchase plan. Turning to liquidity, the company closed the quarter with $532 million in total liquidity. That includes $199 million in cash on the balance sheet after accounting for the revolving credit facility repayments and the share repurchases during the quarter. During the third quarter, the company completed a $22 million voluntary prepayment of its revolving credit facility. The voluntary repayments reduced the outstanding draw balance on the RCF from $121 million to $99 million as of September 30.

As mentioned before, we are raising our EBITDA and free cash flow guidance for 2025. The details are on slide nine. We now expect our adjusted EBITDA to be between $350 million and $360 million, compared to a notional $350 million plus before. We are lowering our CapEx guidance. We now expect our capital expenditures for the year to be between $110 million and $120 million, whereas before, we had approximately $120 million. Lastly, we are also increasing our free cash flow guidance. We now expect our adjusted free cash flow to be between $110 million and $120 million, compared to the approximately $110 million we were estimating before.

As mentioned, the free cash flow guidance is somewhat conservative given the possibility of working capital use in the quarter. We certainly have some upside potential from here. Now I would like to quickly address our segment performance this quarter before finalizing with our capital allocation framework. A reminder that details around our segment's performance can also be found in the appendix of the presentation. Turning to regional results, the North and Latin America or NLA third quarter revenue was $151 million, up $8 million quarter over quarter, reflecting higher well construction and well flow management revenue in the Gulf of America, partially offset by lower well intervention and integrity revenue in Argentina.

For Europe and Sub-Saharan Africa, or ESA, third quarter revenue decreased $7 million to $126 million sequentially, primarily driven by lower well flow management and subsea well access revenue in the UK and Norway. Segment EBITDA margin at 32% was up 200 basis points sequentially, reflecting higher activity and a favorable product mix. The Middle East and North Africa or MENA delivered another solid quarter but slightly lower compared to Q2, with revenues at $86 million, driven by lower well construction and well intervention integrity revenue in the Kingdom of Saudi Arabia, the UAE, and Qatar.

MENA segment EBITDA margin was 35% of revenues, a decrease of about 100 basis points from the prior quarter, reflecting the lower well construction activity. Finally, in Asia Pacific, or APAC, third quarter revenue was $49 million, a decrease of $8 million relative to the second quarter, primarily reflecting the lower well management, well intervention and integrity, and well construction revenue in Malaysia, and lower well construction and subsea well access revenue in Australia, partially offset by higher well construction and well flow management revenue in Indonesia. Asia Pacific segment EBITDA margin at 21% of revenues decreased about 500 basis points from the prior quarter, reflecting decreased activity and mix.

Now, I would like to briefly discuss our capital allocation framework on Slide 10. Expro Group Holdings N.V.'s capital allocation framework is designed to maximize long-term value creation by maintaining a disciplined and balanced approach across four equally important priorities. Our philosophy is that every dollar of capital must be deployed where it can generate the highest risk-adjusted returns. As such, each of these four areas continuously competes for capital on an ongoing basis. First, we are committed to investing in our business to drive organic growth with superior return profiles. This includes funding projects and initiatives that enhance our core capabilities, improve efficiency, and support innovation across our service lines.

Every investment is rigorously evaluated to ensure it meets our standards for superior returns throughout the business cycle. As a reminder, the vast majority of our capital expenditures are geared towards specific projects with known return profiles. These are not speculative investments. Second, we pursue selective, highly accretive mergers and acquisitions that complement our existing capabilities and customer relationships. Our M&A strategy is focused on opportunities that offer clear industrial logic, scalable technologies and synergies, and the potential to expand our presence in attractive markets. We apply the same disciplined capital allocation criteria to acquisitions as we do to organic investments, ensuring that only the most compelling opportunities receive funding. Third, we are committed to returning capital to shareholders.

Our framework targets the return of at least one-third of free cash flow to shareholders annually, primarily through share repurchases. This commitment reflects our confidence in the company's ability to generate sustainable free cash flow and our focus on delivering direct value to our investors. Finally, we maintain a fortress balance to ensure financial flexibility and resilience. Preserving a strong balance sheet enables us to navigate market cycles, invest in growth opportunities as they arise, and protect the company's long-term stability. Importantly, these four pillars—organic investments, M&A, shareholder returns, and balance sheet strength—are not ranked in order of priority. Instead, they are managed dynamically, with each area continuously competing for capital based on the quality of opportunities available.

This disciplined, balanced approach ensures that Expro Group Holdings N.V. remains agile, resilient, and focused on maximizing value for all shareholders. With that, I will turn the call back to Mike for a few closing comments.

Mike Jardon: Sergio, thank you. As we conclude our prepared remarks and before opening up for questions, I would like to conclude with the following thoughts. Despite the softer commodity market backdrop in the near term, we continue to see resilient, if not robust, investments in upstream oil and gas in the international markets. We also expect the offshore sector to further recover starting in 2026 and into 2027 and beyond. Looking ahead, we remain confident in our ability to deliver resilient performance even as we navigate softer market backdrops. Our diversified business mix, disciplined capital allocation, and relentless focus on operational excellence position us to weather industry cycles and continue creating value for our stakeholders.

We expect to finish 2025 on a strong note with a robust fourth quarter that reflects both the strength of our customer relationships and the successful execution of our strategic initiatives. As we move into 2026, we are well-positioned to further expand our EBITDA margin, driven by ongoing cost efficiencies, margin-accretive growth, and the maturation of our production solutions business into a significant free cash flow generator. Moreover, we anticipate continued growth in our free cash flow generation in 2026, supported by our balanced approach to capital allocation and our commitment to maximizing returns across all areas of the business.

We believe these strengths will enable Expro Group Holdings N.V. to deliver sustainable long-term value for our shareholders regardless of the broader market environment. I thank our employees, customers, and shareholders for their continued support and look forward to building on our momentum in the quarters and years ahead. With that, I would like to open up the call for questions.

Operator: We would now like to start the Q&A section of today's call. As a reminder, to raise a question, please press star followed by one now. Our first question comes from Adi Modak from Goldman Sachs. Adi, your line is now open.

Adi Modak: Hi. Good morning, guys. A quick question on the margin expansion comment for 2026. On flat to slightly lower revenue, can you help us understand what the drivers there are? Is it largely the Drive 25 initiative? Are there other factors that are driving that expectation?

Mike Jardon: No. Thanks for the questions. Thanks for joining today. I guess a couple of things I would try to highlight is, yes, it will be the full year effect of our Drive 25 initiative. If you recall, although we changed the total target throughout the year as we have expanded and increased it, we have really targeted taking out about 50% of that benefit in 2025. So we will see the national margin expansion from that in 2026, which will help us offset some of the inflationary costs and pressures and those kinds of things. Additionally, we will continue to internationalize some of the M&As we have made, Cortrax in particular.

And then, the third element really is as we continue to roll out new technologies, and I think I have highlighted this to you and to others before, but just keep an eye on the number of big technologies you see us continue to roll out. We will continue to get market uptake. That helps us expand our wallet share. It really helps us position ourselves. It is really a combination of all those. And, frankly, what we have the organization focused on today is, you know, we cannot control the activity, the overall activity. We are going to continue to get our fair share. We are going to continue to position ourselves with customers globally.

But we are going to stay focused on the things that we can really affect, which is operational efficiency, execution, rolling out new technology, you know, those types of things.

Adi Modak: Thank you. That is very helpful. And then on the comment that offshore activity could pick up in the second half, what are you keeping an eye on? And can you give us any additional sort of regional color in terms of how you are seeing activity play out at the moment?

Mike Jardon: Sure. You know, and I will start with the one that I think is going to be the laggard. And I think the laggard is probably going to be Asia Pacific. I think it is the one in 2026 that is, you know, we are seeing some softness here in Q3 and even in Q4 in Asia Pacific. I think it is still going to be the one that is going to be a little bit of a laggard. That is not altogether different than how we foresaw 2025 overall. You know, we kind of highlighted early in the year that we felt like Australia was going to be a bit soft overall.

But I do think going into 2026, and I think where we will start to see some activity ramp up in the second half, it is really going to be the golden triangle. It is going to be West Africa. It is going to be, you know, Gulf of Mexico, you know, those types of areas. I also think that two others to keep in mind are, you know, we are starting to see some positive sentiments and some positive commentary in Saudi in particular with the jackup activity.

Although we do not generate a lot of activity in the jackup market in Saudi, it kind of goes to the tone and the tenor that is going on in the kingdom. I think it is going to be more constructive. And then I think some of the things we are starting to see out of Mexico are going to be helpful for us as an overall. So those are the ones I would really highlight. Sergio, anything I missed?

Sergio L. Maiworm: No. Mike, I think that is it.

Adi Modak: That is very helpful, guys. Maybe if I can squeeze in one more. The share repurchases, you mentioned you reached ahead of schedule. What does that mean for repurchases for the rest of the year? Would you not do anything? And then what is reasonable to think for 2026?

Sergio L. Maiworm: Yeah. Adi, that is a great question. We will continue to evaluate as we always do in line with the capital allocation framework that we laid out on this call as well. We will continue to look for opportunities to return more capital to shareholders. We adjusted our free cash flow guidance to $110 million to $120 million. So the $40 million that we have already repurchased represents at least a third of that already. So as we continue to see more free cash flow generation, we will continue to evaluate opportunities to repurchase shares. So that is a continuous effort for us, but we will continue to do that.

Mike Jardon: And we still have plenty of room in the, you know, still have plenty of headroom in the pre-authorized, you know, amount. So we will continue to be thoughtful about that here. And just as we kind of see what are the market dynamics and how do we see things playing out for Q4.

Adi Modak: Thank you. Appreciate it.

Sergio L. Maiworm: Great. Thanks, Adi. Appreciate it. Thank you, Adi.

Operator: Thank you very much. Our next question comes from Eddie Kim from Barclays. Eddie, your line is now open.

Eddie Kim: Hi, good morning. Just wanted to circle back on your comments on 2026 activity levels being consistent, if not slightly lower than 2025 levels. You mentioned activity is likely going to increase in the second half of next year, which implies that the first half of next year could be a little softer than normal, even considering typical seasonality. So could you talk about maybe what is driving that softness in the first half of next year? Is it all being driven by Asia Pacific? Or is there something else going on there?

Mike Jardon: Sure. No. I think, Eddie, thanks for joining us. Appreciate the question. I guess how I would frame it up is, you know, we are just now in the early stages. You know, we are kind of in the first, maybe the, you know, if not the top, maybe the bottom of the first inning right now in terms of our budget preparation process. So, you know, we are going out to kind of start that bottoms-up exercise with our customers and literally look at kind of project by project.

This fundamentally, this is my sense from customer conversations and customer discussions that I have had with kind of trying to understand how do they see their spend for the rest of 2025 and how it goes into 2026. I think they are thoughtful and mindful of some of the things going on today. You know, commodity pricing, what is happening in the geopolitical sphere, you know, does the peace agreement in the Middle East hold, does something happen more meaningfully with Russia and Ukraine. All those kinds of things, I think, kind of causing a little bit of a cautious sentiment for them to kind of wait and see how this is.

And then fundamentally, how we see kind of going into the next year. Yes, you are right. It is softness in Asia Pacific, and we, as much as I would like to whisk it away, we always have a Q1 effect. The Northern Hemisphere is slow because of the winter season. Our NOC customers are always historically, over the last thirty-plus years of my career, they are always a little bit slow getting out of the gate in Q1. That is really kind of what we are seeing. But as we, you know, we will get a better sense here over the next, you know, eight weeks or so as we go through the budget process.

But my sense is we are probably talking about a, you know, flattish to slightly down 2026. And fundamentally, as I said in the earlier question, what we have the organization focused on is control what we can control, and we cannot control how much activity there is. But we can control our service delivery, our agency performance, the rollout of our technology, continue to enhance efficiency. That is what I want the team really focused on. And if we see a ramp-up in activity in, you know, the middle of Q2, we will take it. We will be ready to be positioned.

If it is more like the end of Q2, then, you know, we will deal with it that way as well.

Eddie Kim: Understood. Thanks for that color, Mike. My follow-up, just tailing on those comments. Understand you will provide more detailed guidance during the fourth quarter earnings call, but you mentioned activity levels flat or slightly lower next year. At the same time, you said you expect continued margin expansion. So just putting those two things together, is it fair to assume that EBITDA for next year should be at least similar to 2025 levels, or how should we think about that just directionally?

Mike Jardon: Yeah. I think that is a good way to think about it directionally. You know, I will be very disappointed if we do not expand EBITDA margins in 2026. And what is the overall activity set look like to determine it as an absolute number. But, you know, kind of in the range to where I think, you know, flat slightly down going into next year. I would think we would be similar, EBITDA numbers. And quite frankly, what we are, I would say we are more focused on, but what we have a real sense of urgency around is better conversion of that into cash generation.

Eddie Kim: Understood. Thanks, Mike. I will turn it back.

Mike Jardon: Great. Thanks, Eddie. Thank you, Eddie.

Operator: Thank you very much. Our next question comes from Derek Podhaizer from Piper Sandler. Derek, your line is now open.

Derek Podhaizer: Hey, good morning, guys. I just have a couple of education questions. Maybe we could first start on the production solutions opportunity that you mentioned a number of times on the call. Can you help us understand what types of services you are talking about, the technologies, and maybe, you know, which regions are best suited for our production solutions?

Mike Jardon: Sure. No, Derek. Thanks for joining us, and thanks for the question. So it is fundamentally, these are, you know, a great example of it is the early pre-facility that we put together, that we collaborated with ENI on in the Congo. And that really was a facility that helped treat gas to ensure it met the export spec, which meant they could actually load it on an FLNG vessel. So that was an enhancement to an existing facility. We can also have production optimization or production enhancement where we are actually providing, you know, some place like Algeria where we are providing gas recompression, gas reinjection, you know, helping to reduce the flaring opportunity that those things have.

But, really, it is existing infrastructure. It can be production facility type things. We do not pursue the big, massive, epic type projects. What we are really focused on is smaller, modular kind of accelerated monetization of existing assets. And those are predominantly for us very strong presence in the Middle East. Strong opportunities for us in West Africa, and then also some that we see here in South America as well. So the good geographic spread. It is more brownfield type activity than it is greenfield activity.

Derek Podhaizer: Got it. Okay. That is helpful. And then I know you mentioned those were big consumers of cash, but now you believe this is going to flip to cash generation. So you maybe help us frame the magnitude of these projects that were consuming cash, but now what it could be when it is generating cash?

Sergio L. Maiworm: Yeah, Derek. No. That is a good question. So we actually embarked on a bunch of these projects over the last few years. So this just be the construction of those facilities, as Mike pointed out, and the investments that we had to make. And we had a few of those projects back to back. So you consumed a bit of capital. But now that a lot of these projects are already online, like the OPT project for ENI in the Congo, basically, that just becomes an annuity for us. There is a very low operating cost to continue to operate those facilities. And there is just a consistent stream of cash. It is very visible.

It is very predictable for us. So as we back up some of these projects that have been concluded and as those projects go from the construction phase into the operations and maintenance phase of that, it just becomes an annuity, and you just start stacking one on top of the other. So that actually contributes a lot to the free cash flow generation of the business. Does that make sense?

Derek Podhaizer: Got it. Okay. That is very helpful. And then just kind of a follow-up to the follow-up. Back in 2026 that Adi and Eddie were talking about on the margin expansion story, maybe could you help us provide a little bit more color on where we will see the most impact, that is from a region line perspective or a product line perspective. Just want to start thinking about kind of the shape of 2026 from either the product lines or the regions how you report it.

Mike Jardon: Yeah. I mean, it is, and again, it is kind of early for me to give too much granularity on what 2026 is going to look like. I think we are going to, you know, Gulf of Mexico, I guess, what I am supposed to call it now, is probably going to be, you know, similar, flattish, kind of year on year. We do not see a massive change in kind of what is going to happen with rig count, those types of things. I think they will continue to move from, you know, magically on Wednesday, the rig frees up. It is going to move to another operator on Thursday, so to speak.

So I think the Gulf is going to be pretty consistent. I think South America will have some particular strength. I think MENA is going to, again, be solid and probably have a little bit of upside in there. You know, there has been some softness here for us in the last, you know, couple of months because of some of the Saudi activity. They had operational issues with a vendor that created some slowness there. So I think it will be solid. And I think West Africa will be, you know, will be kind of consistent year on year. I do not think we will start to see some of the impact of some of the new FIDs.

That is what we will start to see in kind of 2026. That is kind of how I frame it up. And then Asia Pacific is the one in which I think it is going to continue to be a little bit softer than what we would like to see it, but I think that is just kind of how the customer activity sets are going to be really until Australia, in particular, kind of gets kicked back off into more of a drilling phase.

Derek Podhaizer: Got it. Okay. All makes sense. Thanks for the color. I will turn it back.

Sergio L. Maiworm: Thank you, Derek. Perfect. Thanks, Derek.

Operator: Thank you very much. Our next question comes from Joshua W. Jayne from Daniel Energy Partners. Joshua, your line is now open.

Joshua W. Jayne: Thanks for taking my question. I just wanted to dig into the margin question that Derek just asked a little bit incrementally. So when I think about looking into 2026, one of the reasons you highlighted is for potential strength is the Middle East. And just when we think about the margin difference between that region and, you know, something like Asia Pacific, for example, which you expect to be, I guess, a bit on the softer side in 2026.

Is that part of what is ultimately driving the margin uplift, or could that, or if you get a higher contribution there moving into 2026, could that lead margins to expand further than what you are projecting outside of Drive 25?

Mike Jardon: No, Josh. It is a really good question. It is a perceptive question. It really is going to be, so for us, a lot of the driver is going to be the mix. And the mix can be what is the geographic mix. You know, if we actually see a, you know, what is the impact of the Middle East? Is it flat year on year? Is there, you know, historically, we have kind of had some, you know, some single-digit growth in the Middle East. And, obviously, when there is growth in the Middle East for us, it really moves the needle because it has such a high margin profile.

But also, what is the impact of as we roll out new technologies or we continue to expand our customer wallet, those generally come with higher margins. They are more accretive. That really is the mix that has an impact on us that, you know, it is a little bit more difficult for us at this point in time to really kind of predict what is going to happen there. And then the other element, I know we have kind of been, you know, cautious on Mexico activity because we do not have a massive amount of Mexico activity.

With Pemex, we are actually going to see some, we will start some activity in 2026 with non-Pemex operations, and that will be a positive as well. So long answer is that it depends, a lot of it depends on the mix. And, you know, we are trying to continue to accelerate technology rollout, those types of things, and we will try to continue to expand our presence in places like the Middle East.

Joshua W. Jayne: Okay. Thanks for that. And then one technology question, one release that I thought was pretty interesting over the course of Q3. You highlighted the launch of your remote clamp installation system. So it was deployed in Q4 of last year and then deployed again in 2025. Maybe just use that as an example of, like, when I think about a technology like that, how ultimately scalable do you see something like that? And when you could really see acceleration of a product like that taking hold in the market?

Is that something that happens in 2026, more in 2027, maybe just a timeline when we see announcements of, you know, successful deployment once and then a second one and just moving forward.

Mike Jardon: So, and Josh, it is a good perceptive question. You know, the remote clamp installation simplistically just allows us to robotically install clamps on completion. You know, when you are running completion strings, you do not have no hands on. You have no person. Nobody is in the red zone. No hands are in there. And as we have moved from concept to field trials to commercial installations, our operators are extremely pleased with this. We increased the speed at which we can run completions and install control lines. And install clamps on those.

More importantly, if you do not have people with their hands in the red zone or their fists playing in the red zone, it reduces their, almost completely eliminates the risk of having an agency incident. I think this is one that will continue to get more and more uptake from customers on it. We have had really, really good support in the North Sea. I think it is one we will be able to continue to accelerate. So we will start to see more installations in 2026 and really ramp up as we go into 2027.

Joshua W. Jayne: Thanks. I will turn it back.

Mike Jardon: Great. Thanks, Josh.

Operator: Thank you very much. We currently have no further questions. This will conclude the Q&A. And this will conclude today's call. We would like to thank everyone for joining. You may disconnect your lines.

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