Q2 2024 Expro Group Holdings NV Earnings Call

Hello and welcome to the Expo Q2 2024 earnings presentation. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad.

Chad Stephenson: I would now like to hand over to Chad Stephenson, Director of Investor Relations. Please go ahead.

I would now like to hand over to Chad Stephenson, Director of Investor Relations. Please go ahead.

Chad Stephenson: Welcome to EXPRO's second quarter 2024 conference call. I am joined today by EXPRO CEO Mike Jardon and EXPRO CFO Quinn Fanning. First, Mike and Quinn will have some prepared remarks, then we will open it up for questions.

Chad Stephenson: We have an accompanying presentation on our second quarter results that is posted on Xpro's website, xpro.com, under the Investors section. In addition, supplemental financial information for the second quarter results is downloadable on the Xpro website, likewise under the Investors section. I'd like to remind everyone that some of today's comments may refer to or contain forward-looking statements. Such remarks are subject to risk and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Welcome to EXPRO's second quarter 2024 conference call. I am joined today by EXPRO CEO Mike Jardon and EXPRO CFO Quinn Fanning.

First, Mike and Quinn will have some prepared remarks, then we will open it up for questions.

We have an accompanying presentation on our second quarter results that is posted on Xpro's website, xpro.com, under the Investors section.

In addition, supplemental financial information for the second quarter result is downloadable on the Expro website, likewise under the Investors section.

Chad Stephenson: Such statements speak only as of today, 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 a forward-looking statement. A more complete discussion of these risks is included in the company's SEC filings, which may be accessed on the SEC's website, sec.gov, or on our website, again, at expo.com.

Chad Stephenson: 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 second quarter 2024 earnings release, which can also be found on our website. With that, I'd like to turn the call over to Mike. Good morning, everyone.

I'd like to remind everyone that some of today's comments may refer to or contain forward-looking statements.

Such remarks are subject to risk and uncertainties 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's 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 second quarter 2024 earnings release, which can also be found on our website. With that, I'd like to turn the call over to Mike.

Michael Jardon: I'd like to start off by reviewing the second quarter financial results presented in today's earnings press release. I will then discuss the macro environment, which we believe offers a favorable multi-year outlook for energy services companies with exposure to international and offshore markets, presenting a compelling growth opportunity for Expro. Finally, Quinn will provide some additional commentary on the just completed quarter and share some additional financial information.

Good morning, everyone. I'd like to start off by reviewing the second quarter financial results presented in today's earnings press release.

I will then discuss the macro environment, which we believe offers a favorable multi-year outlook for energy services companies with exposure to international and offshore markets, presenting a compelling growth opportunity for Expro.

Finally, Quinn will provide some additional commentary on the just-completed quarter and share some additional financial information.

Michael Jardon: For a recap of consolidated results and quarterly results by region, I'll direct you to slides 3 through 7 of the presentation that we posted to xpro.com. Turning to slide 3, I am pleased to report a very strong quarter for EXPRO with Q2 2024 revenue of $470 million and adjusted EBITDA of $95 million, both exceeding guidance in part due to the early closing of a CORTRAX acquisition. Revenues increased sequentially by $86 million, or 22%, compared to the quarter ended March 2024; excluding the impact of Cortrax, revenue was up sequentially by $65 million, or 17%.

For a recap of consolidated results and quarterly results by region, I'll direct you to slides 3 through 7 of the presentation that we posted to xpro.com.

Turning to slide three, I am pleased to report a very strong quarter for EXPRO with Q2 2024 revenue of $470 million and adjusted EBITDA of $95 million, both exceeding guidance in part due to the early closing of a CORTRAX acquisition.

Revenues increased sequentially by $86 million, or 22%, compared to the quarter ended March 2024. Excluding the impact of court tracts, revenue was up sequentially by $65 million, or 17%.

Michael Jardon: The sequential increase is to some extent consistent with historical revenue trends, as we usually experience a seasonally soft first quarter. But more importantly, results for the second quarter reflect momentum building in the offshore markets for which our outlook remains very strong. As reported, second quarter revenue increased 18% year-over-year and 13% excluding the impact of core draft.

This sequential increase is, to some extent, consistent with historical revenue trends as we usually experience a seasonally soft first quarter.

More importantly, results for the second quarter reflect momentum building in the offshore markets for which our outlook remains very strong. As reported, second quarter revenue increased 18% year-over-year and 13%, excluding the impact of contracts.

Michael Jardon: Q2 2024 Adjusted EBITDA was up 32% compared to Q2 2023. Note that Q2 2024 Adjusted EBITDA included a $7 million contribution from Cortrax, and Q2 2023 included $6 million of LWI-related unrecoverable costs. The strong adjusted EBITDA performance was driven by increased activity across all regions and product lines and solid fall-through on incremental revenue. Given our strong year-to-date momentum and the tailwinds continuing to support profitable growth in our business, we are refining our full-year guidance range to reflect expectations for revenue to be between $1.7 and $1.75 billion and expectations for adjusted EBITDA to be between $350 and $375 million.

Q2 2024 Adjusted EBITDA was up 32% compared to Q2 2023. Note that Q2 2024 Adjusted EBITDA included a $7 million contribution from Cortrax, and Q2 2023 included $6 million of LWI related unrecoverable costs.

The strong adjusted EBITDA performance was driven by the increased activity across all regions and product lines and solid fall-through on incremental revenue.

Given our strong year-to-date momentum and the tailwinds continuing to support profitable growth in our business, we are refining our full year guidance range to reflect expectations for revenue to be between $1.7 and $1.75 billion and expectations for adjusted EBITDA to be between $350 and $375 million.

Michael Jardon: I will cover our market outlook toward the end of my prepared remarks, but note that the cadence of technical inquiries and requests for budgetary pricing for projects remains high across geomarkets and product lines. Our leverage to long-cycle development, including deepwater, gives us confidence that XPRO's currently strong business momentum will be sustained over at least the next several years. Turning to the region, For North and Latin America, second quarter revenue was $157 million, an increase of 27 million, or 20%, quarter over quarter, reflecting increased activity across our product line.

I will cover our market outlook toward the end of my prepared remarks, but note that the cadence of technical inquiries and requests for budgetary pricing for projects remains high across geomarkets and product lines.

Our leverage to long cycle development, including deep water, gives us confidence that XPRO's currently strong business momentum will be sustained over at least the next several years.

Turning to the regions, for North and Latin America, second quarter revenue was $157 million, an increase of 27 million or 20% quarter over quarter, reflecting increased activity across our product lines.

Michael Jardon: The NLA well construction and subsidy well access teams had a particularly strong quarter with a good level of activity in the U.S., Guyana, and Trinidad. The NLA segment, even a margin at 28%, was up from 26% in Q1 2024, reflecting the increased activity and a more favorable activity mix in the region. Additionally, we have had further success in commercializing our C-Cure technology, which ensures optimal cement placement during the slurry pumping process. This prevents fluid contamination that could potentially have occurred without the C-Cure solution.

The NLA Well Construction and Subsidy Well Access teams had a particularly strong quarter with a good level of activity in the U.S., Guyana, and Trinidad.

NLA segment EBITDA margin at 28% was up from 26% in Q1 2024, reflecting the increased activity and a more favorable activity mix in the region.

Additionally, we have had further success in commercializing our C-Cure technology, which ensures optimal cement placement during the slurry pumping process. This prevents fluid contamination that could potentially have occurred without the C-Cure solution.

Michael Jardon: For Europe and Sub-Saharan Africa, second quarter revenue was $168 million, a sequential increase of $47 million, or 38%. Segment even a margin at 21% was flat sequentially and down approximately four percentage points relative to Q2 2023, primarily reflecting lower margin recognized on our Congo production solutions project. Our ESA business currently has good momentum as we continue to capitalize on increased activity in the region. Subsea Well Access had a particularly strong second quarter, delivering a subsea solutions package for Azul Energy and its partners, the Agogo Project.

For Europe and Sub-Saharan Africa, second quarter revenue was $168 million, a sequential increase of $47 million, or 38%.

Segment EBITDA margin at 21% was flat sequentially and down approximately 4 percentage points relative to Q2 2023, primarily reflecting lower margin recognized on our Congo Production Solutions Project.

Our ESA business currently has good momentum as we continue to capitalize on increased activity in the region.

Subsea Well Access had a particularly strong second quarter, delivering a subsea solutions package for Azul Energy and its partners, Agogo Project. As most of you know, Azul is ENI and BP's joint venture entity in Angola.

Michael Jardon: As most of you know, Azul is E&I and BP's joint venture entity in Angola. Expro was also recently awarded a contract to provide subsea technology for the nearby Ndungu field in Angola, further strengthening our relationship with E&I in Angola, where we expect activity to continue to increase over the next several years. We also advanced several other important projects in the quarter. For example, our team in Ghana completed a 21 well development campaign using X-Pro subsea landing string.

X-Pro was also recently awarded a contract to provide sub-seat technology for the nearby Ndungu Field in Angola, further strengthening our relationship with E&I and in Angola where we expect activity to continue to increase over the next several years.

We also advanced several other important projects in the quarter. Our team in Ghana completed a 21 well development campaign using X-Pro subsea landing strings.

Michael Jardon: This project ran for more than three and a half years and was completed with no injuries, no service quality events, no high-potential safety incidents, along with an operational uptime of 99.7 percent. This is an outstanding achievement from our entire team.

This project has run for more than three and a half years and was completed with no injuries, no service quality events, no high potential safety incidents, along with an operational uptime of 99.7%. This is an outstanding achievement from our entire team.

Michael Jardon: Last quarter, we shared that we had reached a milestone in suppressing 1 million man hours of LTI free as part of our E&I Congo project to design, construct, operate, and maintain a fast-track onshore LNG pretreatment facility. Since then, we have moved into the commissioning phase. In June, incremental gas from the Expro built pretreatment facility was first introduced to the client's floating liquefied natural gas facility. First gas was within 22 months of contract award.

Last quarter, we shared that we had reached a milestone in suppressing 1 million man-hours LTI-free as part of our E&I Congo project to design, construct, operate, and maintain a fast-track onshore LNG pretreatment facility.

Since then, we have moved into the commissioning phase. In June , incremental gas from the X-Pro built pretreatment facility was first introduced to the client's floating liquefied natural gas facility. First gas was within 22 months of contract award.

Michael Jardon: The Middle East and North Africa team delivered another excellent quarter with revenue at $81 million, up 14% sequentially, largely driven by the CORTRAC acquisition with good fall through on incremental revenue, meaning a segment EBITDA margin at 35% was up 1 percentage point quarter over quarter and about 4 percentage points year over year. This quarter, EXPERT has received the approval to commence operations for a five-year well test contract onshore in the Middle East. The contract requires the mobilization of conventional testing units and multi-phase meters along with 150 additional personnel.

The Middle East and North Africa team delivered another excellent quarter with revenue at 81 million dollars up 14 percent sequentially largely driven by the CORTRAX acquisition with good fall through on incremental revenue.

MENA segment EBITDA margin at 35% was up 1 percentage point quarter over quarter and about 4 percentage points year over year.

This quarter, Expert has received the approval to commence operations for a five-year well test contract onshore Middle East. The contract requires the mobilization of conventional testing units and multi-phase meters along with 150 additional personnel.

Michael Jardon: Finally, in Asia Pacific, second quarter revenue was $63 million, up 5% from the previous quarter, primarily reflecting increased activity in Malaysia and Australia. The Asia Pacific segment EBITDA margin of 24% was up over six percentage points from the prior quarter, which reflects higher activity in the region and lower LWI-related costs. In Brunei, we saved 30 hours of rig time using our hydraulic hammers for the installation of a platform.

Finally, in Asia Pacific, second quarter revenue was $63 million, up 5% relative to the previous quarter, primarily reflecting increased activity in Malaysia and Australia.

Asia Pacific segment EBITDA margin of 24% was up over 6 percentage points from the prior quarter, which reflects higher activity in the region and lower LWI related costs.

In Brunei, we saved 30 hours of rig time using our hydraulic hammers for the installation of a platform. This efficiency was achieved by using our proprietary jet-string elevator, which enhances safety and efficiency, in part, by eliminating need for man-riding during operations.

Michael Jardon: This efficiency was achieved by using our proprietary jet-string elevator, which enhances safety and efficiency, in part, by eliminating the need for man-riding during operations. Experts team in Australia successfully executed well intervention services for the recompletion of a CO2 injector well in the Otway Basin for Australia's leading CCUS research organization. We have supported CTUS globally for over 10 years, gaining valuable experience in these types of projects while And we continue to believe that it will be a key industry enabler to support our own, as well as our clients', net zero goals.

Experts team in Australia successfully executed well intervention services for recompletion of a CO2 injector well in the Otway Basin for Australia's leading CCUS research organization.

We have supported CCUS globally for over 10 years, gaining valuable experience in these types of projects while delivering excellent results. And we continue to believe that it will be a key industry enabler to support our own, as well as our clients, Net Zero goals.

Michael Jardon: In April, we also published our third sustainability report, highlighting XPRO's achievements in 2023, the progress we have made in working towards our environmental, social, and governance objectives, and our commitment to being a citizen of the world. These efforts resulted in MSCI increasing XPRO's rating from a single A to double A, the second highest rating they have.

In April , we also published our third sustainability report highlighting EXPRO's achievements in 2023, the progress we have made in working towards our environmental, social, and governance objectives, and our commitment to being a citizen of the world.

These efforts resulted in MSCI increasing XPROS rating from a single A to double A, the second highest rating they have.

Michael Jardon: In terms of commercial activity, I'm pleased we have continued to build on our strong momentum, capturing roughly $196 million in new contract awards, including subsea contracts worth approximately $20 million in Africa and a sonar meters contract in the Middle East for $16 million. Our backlog remains healthy at approximately $2.2 billion at the end of the second quarter. The sequential decrease of approximately 5% was due to the strong revenue performance in the quarter, the transition of the Congo project to the operations and maintenance phase, and the conversion of other large projects.

In terms of commercial activity, I'm pleased we have continued to build on our strong momentum, capturing roughly $196 million of new contract awards, including subsea contracts worth approximately $20 million in Africa, and a sonar meters contract in the Middle East for $16 million.

Our backlog remains healthy at approximately $2.2 billion at the end of the second quarter. The sequential decrease of approximately 5% was due to the strong revenue performance in the quarter, the transition of the Congo project to the operations and maintenance phase, and conversion of other large projects.

Michael Jardon: As previously announced, we also successfully closed our acquisition of Cortrax with an effective date of May 1, which was earlier than assumed in our guidance. Cortrax is a leading well integrity and production optimization company that will enable us to expand our portfolio of cost-effective, technology-enabled, well-construction, and well-intervention integrity solutions.

As previously announced, we also successfully closed our acquisition of Cortrax with an effective date of May 1, which was earlier than was assumed in our guidance.

CORTRACT is a leading well integrity and production optimization company that will enable us to expand our portfolio of cost-effective, technology-enabled, well construction and well intervention integrity solutions.

Michael Jardon: As a reminder, the acquisition was completed at a transaction value of less than five times our estimate for Cortrax's standalone 2024 EBITDA, with synergies providing incremental upside. We expect the acquisition to accelerate the growth of Qortrax's innovative, high-value-adding drilling optimization, well-integrity, and production-enhancing technology solutions by leveraging Xpro's global operating footprint. Integration efforts are well underway, with our teams across the world working on tenders together to realize the potential of pull through revenue centers.

As a reminder, the acquisition was completed at a transaction value of less than five times our estimate for CORTRAC's standalone 2024 EBITDA, with synergies providing incremental upside.

We expect the acquisition to accelerate the growth of Cortrax's innovative, high-value-adding drilling optimization, well integrity, and production-enhancing technology solutions by leveraging Expro's global operating footprint.

Integration efforts are well underway with our teams across the world working on tenders together to realize the potential of pull-through revenue synergies.

Michael Jardon: Regarding M&A more generally, we continue to believe additional consolidation is good for the long-term health of the energy services sector and that synergies-focused M&A can be an effective means for experts to accelerate growth and create additional shareholder value. Our team continues to evaluate acquisition opportunities that would allow us to advance our strategy and position Expro to be more relevant to our customers and more relevant to our shareholders. We have a disciplined approach to M&A, and any opportunities we pursue will meet a rigorous set of criteria that starts with industrial logic, which includes a plan to capture cost and revenue synergies, and has a financing plan that preserves our currently strong financial profile.

Regarding M&A more generally, we continue to believe additional consolidation is good for the long-term health of the energy services sector, and that smart, synergies-focused M&A can be an effective means for experts to accelerate growth and create additional shareholder value.

Our team continues to evaluate acquisition opportunities that would allow us to advance our strategy and position Expro to be more relevant to our customers and more relevant to our shareholders.

We have a disciplined approach to M&A, and any opportunities we pursue will meet a rigorous set of criteria that starts with the industrial logic, which includes a plan to capture cost and revenue synergies, and has a financing plan that preserves our currently strong financial profile.

Michael Jardon: We like our leverage to what we expect to be a multi-year growth phase for drilling completions activity but continue to look for opportunities that allow us to increase our exposure to production optimization solutions and thereby better balance business between CapEx and OpEx funded revenue. While we will be patient for the right opportunities, improving experts through psycho-resilience continues to be a strategic objective.

We like our leverage to what we expect to be a multi-year growth phase for drilling completions activity, but continue to look for opportunities that allow us to increase our exposure to production optimization solutions, and thereby better balance business between CAPEX and OPEX funded revenues.

While we will be patient for the right opportunities, improving experts through psycho-resilience continues to be a strategic objective.

Michael Jardon: Turning to our market outlook, we anticipate the growth observed over the past few quarters will continue, driven by favorable underlying market fundamentals in the energy services sector. Strong investment and activity growth support a positive multi-year outlook for our services and solutions, with oil demand forecasted to reach record levels of 103 million barrels per day in 2024 and nearly 105 million barrels per day in 2025. Expected consumption growth will be primarily fueled by a sustained global economic recovery, with a significant contribution from non-OECD countries in Asia, as well as the Middle East and the United States.

Turning to our market outlook, we anticipate the growth observed over the past few quarters will continue, driven by favorable underlying market fundamentals in the energy services sector.

Strong investment and activity growth support a positive multi-year outlook for our services and solutions, with oil demand forecasted to reach record levels of 103 million barrels per day in 2024 and nearly 105 million barrels per day in 2025.

Expected consumption growth will be primarily fueled by a sustained global economic recovery with significant contribution from non-OECD countries in Asia, as well as the Middle East and the United States.

Michael Jardon: We believe that a robust rebound in demand coupled with the recent extension of production cuts by OPEC plus will lead to a market deficit in 2024. A tighter liquids market may result in upward pressure on prices. At a minimum, it will underpin a positive fundamental backdrop and support continued growth in investment and activity. Brent prices rose from $80 per barrel in January and were above $87 per barrel earlier this month, bolstered by continued OPEC plus supply discipline and geopolitical uncertainties, most notably in the Middle East and in Europe due to the ongoing conflict in Ukraine.

We believe that a robust rebound in demand coupled with the recent extension of production cuts by OPEC Plus will lead to a market deficit in 2024.

A tighter liquids market may result in upward pressure on prices. At a minimum, it will underpin a positive fundamental backdrop and support continued growth in investment and activity.

Grant prices rose from $80 per barrel in January , and were above $87 per barrel earlier this month. Bolstered by continued OPEC-plus supply discipline and geopolitical uncertainties, most notably in the Middle East and in Europe due to the ongoing conflict in Ukraine.

Michael Jardon: The market is anticipated to tighten further over the remainder of 2024 as demand increases over the northern hemisphere summer months are expected to support prices in the mid 80s. However, inventories are expected to return to moderate levels in 2025 following the unwinding of OPEC plus cuts, and forecast supply growth from non-OPEC-plus countries is likely to offset the increase in global oil demand, possibly leading to a modest weakening of prices over 2025 Most importantly, relatively stable prices above $70 per barrel should support long-cycle investment decisions by our oil company customers and provide tailwinds for the international and offshore markets to which XPRO is most leveraged.

The market is anticipated to tighten further over the remainder of 2024 as demand increases over the northern hemisphere summer months is expected to support prices in the mid-80s.

Inventories are expected to return to moderate bills in 2025 following the unwinding of OPEC plus cuts.

and forecast supply growth of non-OPEC-plus countries is likely to offset increase in global oil demand, possibly leading to a modest weakening of prices over 2025.

Most importantly, relatively stable prices above $70 per barrel should support long-cycle investment decisions by our oil company customers and provide tailwinds for the international and offshore markets to which XPRO is most levered.

Michael Jardon: Outside of the US, gas markets remain fundamentally tight with LNG demand, particularly in China and India, expected to recover. Longer-term domestic demand and exports are forecasted to increase with gas continuing to play a crucial role in lower carbon electricity generation and as a critical transition fuel towards a global net zero target.

Outside of the U.S., gas markets remain fundamentally tight with LNG demand, particularly in China and India, expected to recover.

Longer term, domestic demand and exports are forecasted to increase, with gas continuing to play a crucial role in lower carbon electricity generation and as a critical transition fuel towards global net zero targets.

Michael Jardon: Robust commodity prices continue to drive long-term investment decisions by energy companies with record levels of final investment decisions in 2023 and sustained high levels of sanction expected in 2024 and beyond. This multi-year pipeline of projects drives demand for our services and solutions, especially in the offshore segment, which is expected to comprise more than 75% of total greenfield investments in 2024. This trend supports increasing activity in our well construction and subsidy well access businesses, as well as elements of our well flow management business, which we expect to grow further throughout 2024 and beyond. Forecasts for upstream investments in 2024 indicate the highest levels of spending since 2015.

Robust commodity prices continue to drive long-term investment decisions by energy companies with record levels of final investment decisions in 2023 and sustained high levels of sanction expected in 2024 and beyond.

This multi-year pipeline of projects drives demand for our services and solutions, especially in the offshore segment, which is expected to comprise more than 75% of total greenfield investments in 2024.

This trend supports increasing activity in our well construction and subsidy well access businesses, as well as elements of our well flow management business, which we expect to grow further throughout 2024 and beyond.

Forecasts for upstream investments in 2024 indicate the highest levels of spending since 2015.

Michael Jardon: Significant growth is expected, particularly in the offshore deepwater and shelf segments. This growth will be supported by large projects in the Middle East driven by Saudi Arabia and the UAE, as well as in China, Norway, and Guyana and in Brazil in Latin America. Targeted Exploration and Appraisal Activity in mature areas, especially in Europe, Sub-Saharan Africa, and South America, is also driving growth. International land activity growth continues, especially in the Middle East, with the ongoing large gas and LNG developments in Abu Dhabi, Kuwait, Oman, and Saudi Arabia.

Significant growth is expected, particularly in the offshore, deep water, and shelf segments. This growth will be supported by large projects in the Middle East, driven by Saudi and the UAE, as well as in China, Norway, and Guyana, and in Brazil and Latin America.

Targeted exploration and appraisal activity in mature areas, especially in Europe , Sub-Saharan Africa, and South America, are also driving growth.

International land activity growth continues, especially in the Middle East, with the ongoing large gas and LNG developments in Abu Dhabi, Kuwait, Oman, and Saudi.

Michael Jardon: Operators are increasingly focusing on maximizing sustainable returns from their existing assets, striving for cost efficient, lower carbon intensive production. This drives demand for our production optimization capabilities within the Willowfield Management and Well Intervention Integrity product lines, particularly in the Asia Pacific and Latin America regions. Finally, investments in lower carbon energies are also increasing, with notable activity growth in geothermal, particularly in Asia Pacific and Europe, and in carbon capture and storage in North and Latin America and Europe, as our customers aim to reduce their upstream emissions to achieve a net zero target.

Operators are increasingly focusing on maximizing sustainable returns from their existing assets, striving for cost-efficient, lower-carbon intensive production.

This drives demand for our production optimization capabilities within the low flow management and well intervention integrity product lines, particularly in the Asia-Pacific and Latin America regions.

Finally, investments in lower carbon energies are also increasing, with notable activity growth in geothermal, particularly in Asia Pacific and Europe , and in carbon capture and storage in North and Latin America and Europe , as our customers aim to reduce their upstream emissions to achieve net zero targets.

Michael Jardon: As we have discussed previously, we expect the current energy services upcycle to be characterized by margin expansion more so than capacity additions, highlighting the importance of both cost and capital discipline. We are committed to continuing to rationalize support costs, and we are committed to optimizing equipment utilization and increasing operational efficiency, both of which will positively impact overall profitability. We also continue to engage in constructive conversations with customers about Expro capturing more of the value we provide through technology, process efficiency, safe well access, and enhanced production. Overall, the outlook for Expro and the wider energy services sector remains very positive. With that, I'll hand the call over to Quinn to further discuss our financial results. Thank you, Mike. Good morning, everyone.

As we have discussed previously, we expect the current energy services upcycle to be characterized by margin expansion more so than capacity additions, highlighting the importance of both cost and capital discipline.

We are committed to continuing to rationalize support costs, and we are committed to optimizing equipment utilization and increasing operational efficiency, both of which will positively impact overall profitability.

We also continue to engage in constructive conversations with customers about XPro capturing more of the value we provide through technology, process efficiency, safe well access, and enhanced production.

Overall, the outlook for Expro and the wider energy services sector remains very positive. With that, I'll hand the call over to Quinn to further discuss our financial results.

Quinn P. Fanning: As Mike noted, we reported revenue of $470 million for the quarter ended June, which represents a new high-water mark for quarterly revenue since we completed the Expo Franks merger. 4th quarter of 2021. For reference, our guidance for Q2 revenue that was provided in our Q1 earnings conference call was for a range of revenue of $400 to $420 million. However, guidance assumed no contribution from Cortrax, which accounted for approximately $21 million of EXPRO's $50 to $70 million outperformance relative to guidance.

Thank you, Mike. Good morning, everyone.

As Mike noted, we reported revenue of $470 million for the quarter ended June .

which represents a new high watermark for quarterly revenue since we completed the Expo Franks merger in the fourth quarter of 2021.

For reference, our guidance for Q2 revenue that was provided in our Q1 Earnings Conference Call was for a range of revenue of $400 to $420 million.

Guidance assumed no contribution from Cortrax, which accounted for approximately $21 million of expo's $50 to $70 million outperformance relative to guidance.

Quinn P. Fanning: Revenue was up $86 million sequentially, or approximately 22% due to higher revenue in NLA, which was largely driven by well construction and subsea well access, and Anissa, which was largely driven by SubseaWELL-X. Year over year, revenue was up by $73 million, or approximately 18% relative to the second quarter of 2023, within NLA well construction, offshore tubular running services revenue, and tubular product sales were both up solidly quarter over quarter, and the PRT offshore business which we acquired in Q4 of 2023, had a particularly strong second quarter, with Anissa, as Mike mentioned, we are in the late stages of the commissioning of the onshore pretreatment or OPT facility in Congo.

Revenue was up $86 million sequentially, or approximately 22%, due to higher revenue in NLA, which was largely driven by well construction and subsea well access.

and Anissa, which was largely driven by subsea well access.

Year over year, revenue was up by $73 million, or approximately 18% relative to the second quarter of 2023.

Within NLA well construction, offshore tubular running services revenue and tubular product sales were both up solidly quarter over quarter, and the PRT offshore business, which we acquired in Q4 of 2023, had a particularly strong second quarter.

Speaker Change: With ANISA, as Mike mentioned, we are in the late stages of the commissioning of the onshore pretreatment or OPT facility in Congo.

Quinn P. Fanning: Q2 revenue related to the Congo project was approximately $30 million, but contribution margin during the construction phase has been dilutive to overall profitability. In addition, as Mike noted, we successfully delivered a large subsidy project for Azul Energy in Angola. TRS and Tubular Products should sustain their current momentum into Q3. However, revenue from the Congo project is expected to decrease in Q3 as we move into the operations and maintenance phase of the project.

Speaker Change: Q2 revenue relayed to the Congo project was approximately $30 million, but contribution margin during the construction phase has been dilutive to overall profitability.

Speaker Change: In addition, as Mike noted, we successfully delivered a large subsea project for Azul Energy in Angola.

Speaker Change: TRS and tubular products should sustain their current momentum into Q3.

Speaker Change: Revenue from the Congo project, however, is expected to decrease in Q3 as we move into the operations and maintenance phase of the project.

Quinn P. Fanning: Contribution Margin will become accretive rather than dilutive during the O&M phase. In addition, the expected timing of H2 subsidy well access projects, including those within the acquired PRT offer, will also result in a step down in revenue in Q3, followed by an expected rebound in Q4. Net income for the second quarter of 2024 was $15 million, or 13 cents per diluted share, compared to net income of $9 million, or $0.08 per diluted share, in the second quarter of 2023.

Speaker Change: with Contribution Margin becoming accretive rather than dilutive during the O&M phase.

Speaker Change: In addition, the expected timing of H2 subsea well access projects, including those within the acquired PRT offshore business, will also result in a step down in revenue in Q3, followed by an expected rebound in Q4.

Speaker Change: Net income for the second quarter of 2024 was $15 million, or $0.13 per diluted share.

Speaker Change: compared to net income of $9 million, or $0.08 per diluted share, in the second quarter of 2023.

Quinn P. Fanning: Adjusted Net Income, which excludes merger and integration expense, as well as Severance and other expense and stock-based compensation expense, for Q2 2024 was $31 million or 27 cents per diluted share, compared to $19 million for $0.17 per diluted share for Q2 2023. Adjusted EBITDA for the second quarter of 2024 was $95 million, as compared to Q2 guidance of $80 to $90 million, representing a year over year increase of approximately $23 million or 32% relative to the second quarter of 2023. Adjusted Dividend Margin for the second quarter was 20%, up roughly 200 basis points year-over-year.

Speaker Change: Adjusted net income, which excludes merger and integration expense, severance and other expense, and stock-based compensation expense for Q2 2024 of $31 million, or $0.27 per diluted share.

Speaker Change: as compared to $19 million or $0.17 for diluted share for Q2 2023.

Speaker Change: Adjusted EBITDA for the second quarter of 2024 was $95 million, as compared to Q2 guidance of $80 to $90 million, representing a year-over-year increase of approximately $23 million, or 32 percent, relative to the second quarter of 2023.

Speaker Change: Adjusted dividend margin for the second quarter is 20%, up roughly 200 basis points year-over-year.

Quinn P. Fanning: Year over year increase in adjusted EBITDA and adjusted EBITDA margin primarily reflects good fall through on incremental revenue due to activity mix, operating leverage, and a non repeat of unrecoverable LWI related costs in Q2 2023. As noted on prior calls, the key drivers for our financial targets will be an increase in activity, and a shift towards a more favorable business mix that is increasingly weighted to customer CapEx related spending. Operational Leverage, and lastly, Net Price and Game. All related to business, Nick.

Speaker Change: The year-over-year increase in adjusted EBITDA and adjusted EBITDA margin primarily reflects good fall-through on incremental revenue due to activity mix, operating leverage, and a non-repeat of unrecoverable LWI-related costs in Q2 2023.

Speaker Change: As noted on prior calls, the key drivers for our financial targets will be an increase in activity, a shift towards a more favorable business mix that is increasingly weighted to customer CapEx-related spending, operational leverage, and lastly, net pricing gains.

Quinn P. Fanning: Deepwater Well Construction, which is our largest early cycle business, continues to exhibit good momentum. Based on its current backlog, we expect that momentum to be sustained at least over the medium term. The landing string driven subsea well access business, which is levered to subsea completions activity, also seems to be trending in a positive direction. Both product lines, which provide mission-critical, technology-enabled, high-value-adding services, generate attractive contribution margins. Therefore, faster relative growth should result in improvement in overall profitability.

Speaker Change: Related to the business mix, Deepwater Well Construction, which is our largest early cycle business, continues to exhibit good momentum.

Speaker Change: Based on current backlog we expect that momentum to be sustained at least over the medium term.

Speaker Change: The landing string driven subsea well access business, which is levered to subsea completions activity, also seems to be trending in a positive direction.

Speaker Change: Both product lines, which provide mission-critical, technology-enabled, high-value-adding services, generate attractive contribution margins for XPRO.

Speaker Change: So, faster relative growth should result in improvement in overall profitability.

Quinn P. Fanning: In addition, both product lines are capacity-constrained industry-wide and, as a result, should provide scope for pricing gains based on our current outlook for activity. Support costs for Q2 2024 of $86 million represented 18% of revenue, and we're up approximately 5% sequentially, largely reflecting Cortrex-related overheads from the effective date of the transaction. We continue to expect that support costs for the full year 2024 will be at or below 20% of revenue.

Speaker Change: In addition, both product lines are capacity-constrained industry-wide, and as a result, should provide scope for pricing gains based on our current outlook for activity.

Speaker Change: Support costs for Q2 2024 of $86 million represented 18% of revenue and were up approximately 5% sequentially, largely reflecting Cortrax related overheads from the effective date of the transaction.

Speaker Change: We continue to expect that support costs for the full year 2024 will be at or below 20% of revenue.

Quinn P. Fanning: Beyond 2024, we expect that support costs will grow in line with inflation and that operating leverage, like ActivityMix, will provide scope for adjusted event-to-margin expansion. Pricing is also trending positively, at least within our deepwater well construction and subsea landing string business, but net pricing gains are not yet a material driver of reported results. Nonetheless, relative to 2023, we continue to expect that we will get a modest benefit to adjust the dividend margin from net pricing for the full year 2025.

Speaker Change: Beyond 2024, we expect that support costs will grow in line with inflation, and that operating leverage, like activity mix, will provide scope for adjusted EBITDA margin expansion.

Speaker Change: Pricing is also trending positively at least within our deepwater well construction and subsea landing string driven business.

Speaker Change: But net pricing gains are not yet a material driver to reported results.

Speaker Change: Nonetheless, relative to 2023, we continue to expect that we will get a modest benefit to adjust the dividend margin from net pricing for the full year 2024.

Quinn P. Fanning: Moving to liquidity, Q2 adjusted cash flow from operations, which excludes cash paid for interest net, cash paid for severance and other expense, and cash paid for merger and integration expense, was $6 billion compared to $36 million in Q2 2023, which was largely driven by an increase in net working capital of approximately $72 million in the just completed quarter, primarily reflecting the step-up in revenue in the quarter and a pending milestone payment related to In conjunction with the close of the Cortrex acquisition, Expro increased its bank credit facility from $250 million to $340 million and subsequently drew down approximately $76 million to finance the cash portion of the acquisition.

Speaker Change: Moving to liquidity, Q2 adjusted cash flow from operations.

Speaker Change: which excludes cash paid for interest net, cash paid for severance and other expense, and cash paid for merger and integration expense with $6 million compared to $36 million in Q2 2023.

Speaker Change: which was largely driven by an increase in networking capital of approximately 72 million dollars in the just completed quarter.

Speaker Change: primarily reflecting the step-up in revenue in the quarter and a pending milestone payment related to the Congo project.

Speaker Change: Consistent with historical patterns, the building networking capital should reverse in the second half of the year.

Speaker Change: In conjunction with the close of the Cortrax acquisition, Expro increased its bank credit facility from $250 million to $340 million and subsequently drew down approximately $76 million to finance the cash portion of the acquisition.

Quinn P. Fanning: At quarter end, we had $121 million drawn on the credit. Expro had total available liquidity at quarter end of approximately $271 million with cash and cash equivalents, including restricted cash of approximately $135 million and approximately $136 million available for borrowing on our credit.

Speaker Change: At quarter end, we had $121 million drawn on the credit facility.

Speaker Change: Expro had total available liquidity at quarter end of approximately $271 million with cash and cash equivalents including restricted cash of approximately $135 million and approximately $136 million available for borrowings on our credit facility.

Quinn P. Fanning: Turning to our outlook, page nine of our accompanying slides summarizes our guidance for Q3 and the full year 2025, based on our strong performance in the first half of 2024 and a positive activity outlook. As Mike noted, we are refining full year 2024 guidance with anticipated revenues between $1.7 and $1.75 billion, and Adjusted EBITDA of between $350 million and $375 million. Adjusted EBITDA margin is expected to be plus or minus 21%.

Speaker Change: Turning to our Outlook, page 9 of our accompanying slides summarizes our guidance for Q3 and the full year 2024.

Speaker Change: Based on our strong performance in the first half of 2024,

Speaker Change: and a positive activity outlook. As Mike noted, we are refining full year 2024 guidance with anticipated revenues between 1.7 and $1.75 billion and adjusted EBITDA of between $350 million and $375 million.

Quinn P. Fanning: Free Cash Flow Margin or Free Cash Flow as a Percentage of Revenue is still expected to be in the high single digits but again is expected to be weighted to the second half of 2025. For your guidance, for 2024 assumes cash taxes of between three and 4% of revenue, and capex is a percentage of revenue of between seven and 8%. Moving to the Q3 2024 guidance, revenue is expected to be within a range of $410 and $430 million, applying year-on-year growth of approximately 14% and a sequential decline of approximately 10% for sequential comparisons.

Mike: Adjusted EBITDA margin is expected to be plus or minus 21%, and free cash flow margin, or free cash flow as a percentage of revenue, is still expected to be in the high single digits, but again is expected to be weighted to the second half of 2024.

Speaker Change: For your guidance, for 2024 assumes cash taxes of between 3% and 4% of revenue and CapEx as a percentage of revenue of between 7% and 8%.

Speaker Change: Moving to the Q3 2024 guidance, revenue is expected to be within a range of $410 and $430 million, implying year-on-year growth of approximately 14% and a sequential decline of approximately 10%.

Quinn P. Fanning: Note that Q2 2024 revenue included two months of Cortrax's results, and Q3 will include three months of court tracks. As I noted at the top of my remarks, also note that second quarter revenue included a total of approximately $60 million of revenue related to our LNG expansion project in the Congo and revenue related to subsea projects that were delivered in Q2 that will not be repeated in the third quarter. Regarding the L&G expansion project, Q3 revenue guidance reflects a shift in work scope from the fast-track plant delivery phase to a multi-year operations and maintenance phase.

Speaker Change: For sequential comparisons, note that Q2 2024 revenue included two months of Qortrax's results, and Q3 will include three months of Qortrax's results.

Speaker Change: As I noted at the top of my remarks, also note that second quarter revenue included a total of approximately $60 million of revenue related to our LNG expansion project in the Congo and revenue related to subsea projects that were delivered in Q2 that will not be repeated in the third quarter.

Speaker Change: Regarding the L&G expansion project, Q3 revenue guidance reflects a shift in work scope from the fast-track plant delivery phase to a multi-year operations and maintenance phase.

Quinn P. Fanning: As Mike noted, lower revenue expectations for subsea well access, and Q3 largely reflects the strong second quarter results in the Gulf of Mexico and offshore Angola and the expected startup and completion of other projects. Adjusted EBITDA is expected to be within a range of $85 and $95 million.

Speaker Change: As Mike noted, lower revenue expectations for the subsea well access business in Q3 largely reflects the strong second quarter results in the Gulf of Mexico and offshore Angola, and the expected startup and completion of other projects.

Quinn P. Fanning: Applying Q3 Adjusted EBITDA Margin within a range of 21 and 22%, or up approximately 100 to 200 basis points sequentially. Our current 2024 guidance assumes Cortrax will contribute approximately $100 million of revenue to Expro's reported results at an adjusted EBITDA margin that is accretive to standalone Expro results. Looking ahead, we have previously stated and continue to believe that the current fundamental backdrop and underlying business momentum provide a clear path to $2 billion of revenue, a mid-20s adjusted EBITDA margin, and a free cash flow margin of 10% over the medium term.

Speaker Change: Adjusted EBITDA is expected to be within a range of $85 and $95 million, implying Q3 adjusted EBITDA margin within a range of 21 and 22 percent, or up approximately 100 to 200 basis points sequentially.

Speaker Change: Our current 2024 guidance assumes Cortrax will contribute approximately $100 million of revenue to Expro, reported results, and an adjusted EBITDA margin that is accretive to standalone Expro results.

Speaker Change: Looking ahead, we have previously stated and continue to believe that the current fundamental backdrop and underlying business momentum provide a clear path to $2 billion of revenue, a mid-20s adjusted EBITDA margin, and a free cash flow margin of 10% over the medium term.

Quinn P. Fanning: With customer spending priorities focused on offshore development, the deepwater TRS and subsea landing stream driven business, which again are our product lines most levered to drilling and completions activity, tend to come with high fall through margin and incremental revenue and have the greatest potential for improved prices, and are expected to remain the key drivers of X-Pro's overall results over the near to medium term. The Menting Technologies and Performance Drilling Solutions businesses, which we have grown through organic investment in M&A, should also provide margin accretion over the medium term.

Speaker Change: With customer spending priorities focused on offshore development, the Deepwater TRS and subsea landing stream driven business, which again are our product lines most levered to drilling and completions activity, tend to come with high fall through margin and incremental revenue and have the greatest potential for improved pricing.

Speaker Change: and are expected to remain the key drivers of X-Pro's overall results over the near to medium term.

Speaker Change: The cementing technologies and performance drilling solutions businesses, which we have grown through organic investment in M&A, should also provide margin accretion over the medium term.

Quinn P. Fanning: As Mike mentioned, we are in the early stages of the integration efforts for CORTRAX with cost and revenue synergies, providing some incremental margin upside, most likely beginning in 2025. With that, I'll turn the call back over to Mike for a few closing comments. Thank you, Quinn.

Speaker Change: As Mike mentioned, we are in the early stages of the integration efforts for CORTRAX with cost and revenue synergies providing some incremental margin upside, most likely beginning in 2025.

Speaker Change: With that, I'll turn the call back over to Mike for a few closing comments.

Michael Jardon: 2024 has been an exciting year for Expro with solid financial performance and the successful acquisition of Cortrex, which enhances our depth of talent and the capabilities we offer. And we feel the business is strategically positioned to continue to become more meaningful to customers and shareholders. As Quinn stated, the fundamental macro backdrop is set for Expro to deliver value to our customers through our cost-effective technology-enabled services and solutions, while delivering enhanced returns to our shareholders.

Mike: Thank you, Quinn.

Mike: 2024, year to date, has been an exciting year for Xpro with solid financial performance and the successful acquisition of Quartrax, which enhances our depth of talent and the capabilities we offer, and we feel the business is strategically positioned to continue to become more meaningful to customers and shareholders.

Speaker Change: As Quinn stated, the fundamental macro backdrop is set for Expro to deliver value to our customers through our cost-effective, technology-enabled services and solutions, while delivering enhanced returns to our shareholders.

Michael Jardon: This will require the team to execute on our strategic initiatives and continue to both champion safety and deliver best-in-class service. Closing where I began, we believe that the international and offshore markets are in the early stages of a multiyear growth phase that, based upon project sanctioning levels and customer dialogue, could be sustained through the end of the decade. With that, we can now open the call to questions. Thank you.

Speaker Change: This will require the team to execute on our strategic initiatives and continue to both champion safety and deliver best-in-class service.

Speaker Change: Closing where I began, we believe that the international and offshore markets are in the early stages of a multi-year growth phase that, based upon project sanctioning levels and customer dialogue, we believe could be sustained through the end of the decade. With that, we can now open the call for questions.

Michael Jardon: If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally.

Speaker Change: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally.

Operator: Our first question comes from Luke Lemoine with Piper Sandler. Your line is open. Please go ahead. Hey, good morning, Mike Quinn. Gordon Luke, how are you doing?

Speaker Change: Our first question comes from Luke Lemoine with Piper Sandler. Your line is open, please go ahead.

Speaker Change: Hey, good morning, Mike Quinn.

Michael Jardon: You raised your 24 EBITDA guide, and it sounds like your confidence in the long-term outlook is increasing. But maybe there's a little shift between 3Q and 4Q with just some project timing and startup. Could you elaborate on this a little more? And then maybe talk about some of the puts and takes between the high-end and the low-end of the guidance range this year? Sure. And Luke, a lot of it was, was really a strong Q2.

Quinn P. Fanning: Gordon Luke, how you doing?

Quinn P. Fanning: Thanks. You're doing great.

Luke Michael Lemoine: You raised your 24 EBITDA guide, and it sounds like your confidence in the long-term outlook is increasing.

Speaker Change: But maybe there's a little shift between 3Q and 4Q with just some project timing and startups. Could you elaborate on this a little more and then maybe talk about some of the puts and takes between the high end and the low end of the guidance range this year?

Michael Jardon: You know, we had some of the, in particular, a couple of subsea projects that literally were within days of where they were going to fall in Q2, or they were going to fall in Q3. So, you know, part of the really strong Q2 was some of that revenue that shifted by a couple of days from Q3 into Q2. We'll kind of be back in that more normal rhythm of things as we exit Q3 and go into Q4.

Speaker Change: Sure. And Luke, a lot of it was, was really a strong Q2, you know, we had some of the, in particular, a couple of subsea projects that, that literally were within days of were they going to fall in Q2 or we're going to fall in Q3.

Speaker Change: So, you know, part of the really strong Q2 was some of that revenue that shifted by a couple of days from Q3 into Q2. We'll kind of be back in that more normal rhythm of things as we, you know, exit Q3 going into Q4.

Speaker Change: The Q4 step-up is likewise generally related to subsea well access projects.

Speaker Change: PRT, as I mentioned in my remarks, had a very strong second quarter. Their expectations based on project timing is to step down in Q3 and then the recovery in Q4. It's a very similar story for the Africa coast, you know, from the subsea well access business.

Michael Jardon: No more quiet in Q3 within subsea, you know, Legacy Expo, and likewise, recovery in the fourth quarter, you know, an incremental contribution from Cortrax as we, you know, pick up the Cortrax and the revenue synergy possibilities. But is there any way to maybe frame this potential kind of on a multi-year basis? And then could you also talk about how the integration is progressing with CoreTrack? All right, perfect. Thanks a bunch.

Speaker Change: Mike mentioned the AGOGO-related deliveries in Q2.

Speaker Change: A little more quiet in Q3 within subsea, you know, Legacy Expo and likewise recovery in the fourth quarter. I guess as you look into kind of the larger movements, I would have highlighted the subsea projects as well as the project phasing on the Congo project.

Speaker Change: And then we'll continue to get, you know, you know, an incremental contribution from Quartrax as we, you know, pick up the extra month.

Quinn P. Fanning: Okay. And then, Mike, you talked about Cortrex and the revenue synergy possibilities, but is there any way to maybe frame this potential kind of on a multi-year basis? And then could you also talk about how the integration is progressing with Cortrex?

Quinn P. Fanning: Sure. You know, it's...

Quinn P. Fanning: So fundamentally for us with with Cortrax, it's it's a business today that is

Speaker Change: You know, we probably have strong activity in six or seven countries.

Quinn P. Fanning: You know, and in broader expro, we operate in somewhere between 60 and 70 kind of depending upon the day of the week.

Quinn P. Fanning: So really it's that internationalization of our ability to go ahead and deploy that into additional markets.

Quinn P. Fanning: You know, we're going to focus on those. We're not going to try to roll out to 60 plus countries on day one, we're really kind of looking at a phased implementation process.

Quinn P. Fanning: and you know we'll focus in the you know places like the Middle East continue to expand the portfolio there. Australia for some of the expandable technology we think we really got to see some good traction there.

Quinn P. Fanning: So that's that you know, that's that's actually going really well. I was pleased that we could close it earlier than anticipated.

Quinn P. Fanning: because what we've really been able to do more than anything is really start to leverage both, you know, both the legacy Cortrex sales team as well as the broader X-Pro sales team and now they can really start having those kind of conversations.

Quinn P. Fanning: Until we got it closed, you know, that's, we're not allowed to do that, we've got to kind of keep that wall in between them.

Quinn P. Fanning: So we're really just leaning hard into that now here over the course of the last...

Speaker Change: Chad Stephenson, Michael Jardon

Speaker Change: All right, perfect. Thanks a bunch.

Michael Jardon: All right, thanks, Luke. We now turn to Neil Mehta with Goldman Sachs. Your line is open, please go ahead.

Luke Michael Lemoine: Thanks, Luke.

Speaker Change: We now turn to Neil Mehta with Goldman Sachs. Your line is open, please go ahead.

Michael Jardon: Yeah, good morning team and really strong performance. You know, Neil, the Cortex integration is going really well. Part of one of the things we spent a lot of time on when we did the broader integration with Xpro and Franks was we really developed an integration playbook because we knew that was not going to be the only integration we were going to do. And so it's made us much more efficient to go out and know what to focus on and know how we should sequence things and how we should organize ourselves to go out and do integrations from acquisitions.

Speaker Change: Yeah, good morning team and really strong performance in the

Speaker Change: The Africa geography. I just love your perspective on

Neil Singhvi Mehta: How you're thinking about that on a multi-year basis, is there more market share and projects to be won? And then tie that into any views on West Africa specifically, which seems to be the case.

Speaker Change: to be eaten up here.

Speaker Change: Sure. No, Neil, thanks for the question. I think it's...

Speaker Change: It's probably, I wouldn't say it's so much of a market share opportunity for us in West Africa. I think it's just as we start to see more of a ramp up in activity in Africa and in West Africa in particular.

Speaker Change: because let's let's let's let's bear in mind I've talked about this a number of times but let's bear in mind if we look at

Speaker Change: You know, we're finally kind of back to the same FID levels in the kind of 24 to 26 period that we had historically back in 2012 to 2014. But, but Africa and West Africa in particular still kind of underrepresented in that.

Speaker Change: And as I allude to in some of my prepared remarks.

Speaker Change: You know, just based on pricing inquiries, technical discussions, budgetary, you know, pricing discussions with customers and those kind of things, we continue to see some ramp up in what I believe is going to be additional project sanctioning in West Africa here in 24 and going into 2025. So I think that's a market that's going to continue to grow and be more robust.

Speaker Change: And keep in mind, you know, part of that is just related to our customers, you're not going to go to someplace like Ghana or Equatorial Guinea and drill one or two wells, you're going to go with a project of

Speaker Change: you know, 6, 8, 10, 12, 25 well, you know, type projects. So I think as they have more confidence

Speaker Change: Based on our discussions from a technical inquiries, those type things, like we're going to continue to see kind of a ramp up in project sanctioning. And, you know, we know that we will win more than our fair share of projects in in West Africa. So it's really kind of a timing of when those projects get kicked off.

Speaker Change: I think it's also one of the reasons why you're seeing

Speaker Change: You know some of the some of the tree providers, you know, their backlogs are starting to build. They're having strong backlog numbers. They're having strong

Speaker Change: you know, inquiries and those types of things. I think we'll see that translate into more activity for us from a service standpoint in, you know, coming quarters and coming years.

Unknown Executive: Akin, I just love your perspective on how the core tracks integration is going so far, and it's tracking at or above schedule.

Speaker Change: Thank you. I just love your perspective on how the CoreTrax integration is going so far and to the extent it's tracking at or above schedule. Do you see the capacity of the organization to do incremental M&A? Are there other CoreTraxes out there?

Unknown Executive: Do you see the capacity of the organization to do incremental M&A?

Unknown Executive: Are there other core tracks without them?

Neil Singhvi Mehta: Neil, the core tracks integration is going really well.

Speaker Change: You know, so deal with the

Neil Mehta: Part of one of the things we spent a lot of time on when we did the broader integration with Expro and Franks was we really developed an integration playbook because we knew that was not going to be the only integration we were going to do. And so it's made as much more efficient to go out and know what to focus on and know how we should sequence things and how we should organize ourselves to go out and do integration from acquisitions. The other benefit is really with both the PRT acquisition as well as core tracks.

Speaker Change: The Cortrax integration is going really well. Part of one of the things we spent a lot of time on when we did the broader.

Speaker Change: Integration with Xpro and Franks was we really developed an integration playbook.

Speaker Change: Because we knew that was not going to be the only integration we were going to do. And so it's made us much more efficient to go out and know what to focus on and know how we should sequence things and how we should organize ourselves to go out and do integrations from acquisitions.

Michael Jardon: The other benefit is really with both the PRT acquisition as well as Cortex; those are not big global companies, you know; we don't have activity in all 60 countries with Cortex. So it's more straightforward for us to integrate that because it's a smaller number of countries.

Speaker Change: The other benefit is, really with both the PRT acquisition as well as Cortrex,

Neil Mehta: Those are not big global, you know, we don't have activity in all 60 countries with core tracks. So it's more straightforward for us to integrate that because it's a smaller number of countries, and really a lot of our efforts at this point is really much more on how do we create the revenue synergies, how do we deploy into additional countries. So we continue to look for other core tracks or PRT type acquisitions, and it does not give me pause or concern on our ability to go out and be able to integrate additional opportunities like a core tracks.

Speaker Change: Those are not big global, you know, we don't have activity in all 60 countries with Cortrax. So it's more straightforward for us to integrate that because it's a smaller number of countries.

Michael Jardon: And really, a lot of our efforts at this point are really much more on how do we create the revenue synergies, how do we deploy into additional countries. So we continue to look for other Cortex or PRT-type acquisitions. And it does not give me pause or concern about our ability to go out and be able to integrate, you know, additional opportunities like a Cortex. The organization has the bandwidth to take those things on board, so that's not a limiting factor. How does the technology fit in?

Speaker Change: And really a lot of our efforts at this point is really much more on how do we create the revenue synergies, how do we deploy into additional countries. So

Speaker Change: We continue to look for other CORTRACTS or PRT type acquisitions, and it does not give me pause or concern on our ability to go out and be able to integrate additional opportunities like a CORTRACTS

Neil Mehta: The organization has a bandwidth to take those things on board. So that's not a limiting factor. It's more of the, how does the technology fit, how does, you know, where the economics of transactions, those kind of things that were focused on.

Speaker Change: The organization has the bandwidth to take those things on board, so that's not a limiting factor. It's more the, how does the technology fit, how does, you know, what are the economics of transactions, those kind of things that we're focused on.

Michael Jardon: How does, you know, what are the economics of transactions, those kind of things that we're focused on. Thank you, sir. Great. Thanks, Neil. Good to speak. Yeah, I think the Congo is the one you're certainly right to focus on it.

Unknown Executive: Thanks, Neil; good to speak.

Speaker Change: Thank you, sir.

Unknown Executive: We now send to Iran with JP Morgan; your line is open. Please go ahead.

Speaker Change: Great. Thanks, Neil. Good to speak.

Speaker Change: We now turn to Arun Jayaram with J.P. Morgan. Your line is open, please go ahead.

Unknown Executive: Yeah, good morning, gentlemen. My first question is just on the updated 2020 for Outlook. You raised your revenue outlook by 75 million in EBITDA by 12.5 million at the midpoint. The coin, that would suggest kind of an incremental EBITDA margin around 17%, which is kind of below the corporate number for the quarter.

Arun Jayaram: Yeah, good morning, gentlemen. My first question is just on the updated 2020 for Outlook.

Speaker Change: You raised your revenue outlook by $75 million and EBITDA by $12.5 million at the midpoint.

Speaker Change: Quinn, that would suggest kind of an incremental EBITDA margin of around 17%, which is kind of below the corporate number for the quarter. So, I know there's some moving pieces with Congo, but wanted to get a little bit more color on the incrementals post your updated guide.

Unknown Executive: So I know there's some moving pieces with Congo, but wanted to get a little bit more color on the incremental post erupted guide. Yeah, I think the Congo is the one you certainly write to focus on it. I mean, we had $30 million in revenue in the quarter. We've had higher than expected commissioning costs, kind of in the late rounds of phase one. So really, a $30 million in revenue in the second quarter came with no margin. It's percentage of completion. So, we've adjusted the project; economic expectations, all of that got hooked to it too.

Quinn P. Fanning: I mean, we had $30 million in revenue in the quarter. We've had higher than expected commissioning costs kind of in the late rounds of phase one. So really, the $30 million in revenue in the second quarter came with no margin, as well as its percentage of completion, so as we've adjusted the project and economic expectations, all of that got booked into two. So we're essentially beyond the commissioning phase at this point. Revenue will drop from that, but, you know, margin on a percentage basis will go up.

Speaker Change: Chad Stephenson, Michael Jardon

Speaker Change: Yeah, I think the Congo is the one, you're certainly right to focus on it. I mean, we had $30 million in revenue in the quarter.

Speaker Change: We've had higher than expected commissioning calls.

Speaker Change: And then the late rounds of phase one, so really the $30 million in revenue in the second quarter came with no margin because it's percentage of completion. So as we've adjusted the

Unknown Executive: So we're essentially beyond the commissioning phase; at this point, revenue will drop from that. But you know, margin on a percentage basis will go up. So, you know, so, which is where we recognize the Congo project to expect to be at a good quarter, low revenue, but higher segment EBITDA margin.

Speaker Change: Project, Economic Expectations, all of that got booked into Q2.

Speaker Change: So we're essentially beyond the commissioning phase at this point. Revenue will drop from that, but...

Quinn P. Fanning: So ESO, which is where we recognize the Congo project, is expected to be a good quarter, a lower revenue, but higher segment EBITDA margin. So I think that you're focused on the right thing. Not sure I'd say that, all through for the broader businesses. Unknown Executive, Sungeun Kim, Michael Jardon, Arun Jayaram, Atidrip Modak, Chad Stephenson, makes sense makes sense.

Speaker Change: Margin on a percentage basis will go up, so ESO, which is where we recognize the Congo project, is expected to be a good quarter, lower revenue, but higher segment EBITDA margins.

Speaker Change: So I think that you're focused on the right thing. I'm not sure I'd say that the, you know, fall through for the broader businesses, you know, you know, viewed more negatively, it's really just the elimination of high or lower margin projects, you know, and the results.

Michael Jardon: The follow-up question is you guys have highlighted a medium-term target of $2 billion in revenue, and a 25% kind of EBITDA margin. Yeah, I think that again the most significant thing will be the, you know, phasing of the OPT project. But other than that, I think broader businesses are trending positively, both from a growth perspective, I think the industry-wide expectations are high single-digit, low double-digit growth on the left, puts and takes. Probably the most significant headwind will be the non-repeat of the Congo type revenue, but again, it will be at a better margin. So, you know, we have. Ultimately, optimistic. Great, thanks. Our next question comes from Eddie Kim with Barclays. Your line is open. Please go ahead.

Speaker Change: Makes sense, makes sense.

Speaker Change: The follow-up question is, you guys have highlighted a medium-term target of $2 billion in revenue, 25% kind of EBITDA margins.

Speaker Change: And maybe just give us a sense of, I believe that Outlook does assume some kind of contribution from M&A and just maybe thought

Speaker Change: Your thoughts on how the business should evolve into next year, you know, streets generally modeling around 7% revenue growth relative to your updated guide and about 200 basis points of margin expansion next year.

Speaker Change: Yeah, I think that again, the most significant thing is will be the, you know, phasing of the OPT project. But other than that, I think

Speaker Change: The broader business is trending positively, both from a growth perspective. I think the industry-wide expectations are for high single-digit, low double-digit, growth, and lift.

Speaker Change: You know, puts and takes, probably the most significant headwind will be the non-repeat of the Congo type revenue, but again, it will be at better margins, so, you know, we haven't

Speaker Change: Really kicked off in earnest our budget cycle for 2025, but I would expect we'll be at or above Industry-wide growth just because of investments in technology and you know, probably optimistic expectations for again the cementing and performance drilling business

Speaker Change: forms drilling being most significantly impacted by the Cortrax deal.

Speaker Change: Got it. Short version of saying as I would expect as we pull together our budget for next year, you know, 7% growth year-over-year would probably be at the low end of my expectations for the rest of today.

Clint: Great. Thanks, Clint.

Speaker Change: Thanks a lot.

Speaker Change: Our next question comes from Eddie Kim with Barclays. Your line is open, please go ahead.

Michael Jardon: Hi, good morning. I just have a bigger picture question for you, Mike. But if I look back a year ago, oil prices were almost in the exact same place as they are today, with Brent in the low 80s. And yet, it seems, you know, like offshore activity and sentiment have gotten much better since then. What would you say is the biggest change in your conversations with customers today versus a year ago? And is that part of what led to the four-year revenue and EBITDA guidance raised today? No, it's a great question. And, you know, you're, you're, spot on. There's not a significant difference in commodity prices between a year ago and today.

Eddie Kim: Hi, good morning. Just a bigger picture question for you here, Mike, but if I look back a year ago, oil prices were almost in the exact same place as they are today with Brent in the low 80s and yet it seems

Speaker Change: You know, like offshore activity and sentiment have gotten much better since then. What would you say is the biggest change in your conversations with customers today versus a year ago? And is that part of what led to the four-year revenue and EBITDA guidance raised today?

Quinn P. Fanning: No, Eddie, it's a great question and, you know, you're spot on. There's not a difference in commodity prices significantly between a year ago versus today. I think it's...

Michael Jardon: I think it's fundamentally for our customers, it's really been, they've got more confidence in kind of a stable commodity price environment that it's not, we're not going to see a, I think if we have numbers that are mid-60s and above, I think a lot of offshore deepwater projects will continue to be sanctioned, and largely because they've become much more efficient. The batch drilling concepts and those type things have really driven break-even numbers down to the 40s.

Speaker Change: I think fundamentally for our customers, it's really been, they've got more confidence in in kind of a stable commodity price environment that it's not, we're not going to see a

Speaker Change: You know, I think if we have numbers that are, you know, mid-60s and above, and I think a lot of offshore deepwater projects will continue to be sanctioned, and largely because they've become much more efficient. You know, the batch drilling concepts and those type things have really driven break-even numbers down to, you know, in the 40s. So I think that's what's driven that today. And just the, you know, the number of technical inquiries, those type discussions we have just continues to be really strong and really robust, and there's just more.

Michael Jardon: So I think that's what's driving that today. And just the number of technical inquiries and those types of discussions we have just continues to be really strong and really robust. And there's just more, I guess I would characterize it, there's just more confidence from our customers in sanctioning projects and moving forward. And as I said earlier, I think that's one of the reasons why you're seeing the tree providers start to build backlogs and those type things, because the tree is probably the biggest limiting factor for some of those projects. So that's why immediately after they approve an FID, the first thing they do is secure trees, and the second thing they do is trying to make sure they get on a rig schedule.

Speaker Change: I guess I would characterize it, there's just more confidence from our customers in sanctioning projects and moving forward. And as I said earlier, I think that's one of the reasons why you're seeing the, you know, the three providers start to build backlogs and those type things because

Speaker Change: You know, the tree is probably the biggest limiting factor for some of those projects, so that's why...

Speaker Change: Immediately after they approve an FID, the first thing they're doing is securing trees, and the second thing they're doing is trying to make sure they get on a rig schedule. So I think there's just all kind of lining up for that kind of confidence with our customers.

Michael Jardon: So I think there's just all kind of lining up for that kind of confidence with our customers. I would actually expect the current quarter to be more reflective of expectations going forward. LWI was... a drag for not a quarter or two but for, you know.

Speaker Change: Got it. That's great to hear. And just my follow-up is on the EBITDA margins and APAC, which were really impressive this quarter at 24%.

Speaker Change: Can you just expand a bit on the improvement there? I know you mentioned higher activity and lower.

Speaker Change: LWI related costs, but just looking back historically, I mean, this region hasn't been above 20% EBITDA margin since late 2021. So

Speaker Change: Is there any reason why APAC EBITDA margins shouldn't continue at this kind of 20% plus level going forward? Or should we expect some moderation maybe back to the teens over the coming quarters?

Speaker Change: I would actually expect the current quarter to be more reflective of expectations going forward. LWI was a

Speaker Change: you know, a drag for not a quarter or two, but for, you know, a couple of years here. So I would say Asia-Pac returning to kind of, you know, low 20s, not as high as some of the other regions because of activity mix.

Speaker Change: Unless, of course, there's a recovery in subsea, which we haven't seen a significant amount of activity. You know, project sanctioning has been slow, particularly offshore Australia. Hopefully, we'll see that pick up in 2025 as well.

Speaker Change: Again, I would say what you're seeing in Asia-Pac is what our expectations are going forward, and hopefully we can move up from here with some incremental subsea activity.

Quinn P. Fanning: Hopefully, we can move up from here with some incremental subsea activity. Yeah, it's great. Thanks, Quinn. Asia Pacific is also an area for us to focus on technology deployment and cementation with, you know, some of the core tracks services with expandables, those type things, because it does give us some competitive opportunities, some competitive advantages, some technological benefits, and we will use that to help us, you know, kind of reestablish our, you know, margin footprint in Asia Pacific. Because it has been behind our expectations.

Quinn: Great. Thanks, Quinn.

Quinn: Thanks, Eddie. And Ed, I guess one thing I would add there, too, is I think it's...

Speaker Change: It's also, Asia-Pacific is also an area for focus for us on technology deployment with cementation, with, you know, some of the Cortrax services, with expandables, those type things because it does, it does give us.

Speaker Change: Competitive Opportunities, some Competitive Advantages, some Technology Benefits.

Speaker Change: and we will...

Speaker Change: Chad Stephenson, Michael Jardon

Michael Jardon: So we'll use that to kind of try to try to accelerate that and try to get back to where we think that that particular region should be operating. Our next question comes from Steve Ferazani with Sidoti. Your line is open, please go ahead.

Speaker Change: Our next question comes from Steve Farazani with Sudoti. Your line is open, please go ahead.

Quinn P. Fanning: You know, if we back into your EBITDA and revenue for the year, then you take out your guidance for 3Q, it indicates 4Q margin will be by far the highest margin order for the year. I think you pointed out a couple of PRT and sub C that's coming in 4Q. But, Yes, I mean, if you look at kind of Q2 and Q3, at the midpoint of guidance, you know, Q4 historically is a strong one for us, where we'd like to see the next full year results play out.

Speaker Change: Morning, Mike. Morning, Quinn.

Stephen Michael Ferazani: You know, if we back into your EBITDA and revenue for the year, then you take out your guidance for 3Q.

Speaker Change: It indicates 4Q margin will be by far the highest margin quarter for the year. I think you pointed out a couple of PRT and sub-C that's coming in 4Q.

Speaker Change: Can we use that to some degree as a run rate, or would you not? Obviously, knowing Q1 is always seasonally lower. But is that getting to a level that you think is more reasonable? If you can hit the midpoint of guidance this year.

Speaker Change: Yes, I mean, if you look at kind of Q2 and Q3, you know, at the midpoint of guidance, you know, you $185 million, you have to have a little less than $900 million of revenue.

Speaker Change: Q4 historically is a strong one for us.

Speaker Change: It certainly is the starting point for where we'd like to see the next full year results play out. Can we always have a step down in Q1, but if we finish in the 22-ish or better zip code for Q4, I think that's a good setup for 25.

Quinn P. Fanning: Can we always have a step down in Q1? [inaudible] I think that's a good set up for twenty- Right, and I don't want to harp on this too much because you covered it pretty extensively, but on the ESA margin, we understand why it was lower in Q2, but as you roll into the lower revenue, but accretive margin phase of Congo. But if you're talking about marginal percentage terms, you know, yeah, I think if you look at late 23, you know. That's what we'd like to see, so back.

Speaker Change: And I don't want to harp on this too much because you covered it pretty extensively, but on the ESA margin, we understand why it was lower in Q2, but as you roll into the lower revenue but accretive margin phase of Congo.

Speaker Change: Do those margins get back to those really high margins you were getting in that region the back half of last year or not quite because the revenue in Congo is lower?

Speaker Change: But if you're talking about margin and percentage terms, you know, yeah, I think if you look at, you know.

Speaker Change: Late 23, you know, that's where we'd like to see ESA back to, you know, MENA has consistently been above 30%.

Speaker Change: NLA and ESA have kind of bounced recently, and if you look over a couple quarter run rate in the high 20s, I'd like to see all three of those regions above 30%.

Quinn P. Fanning: As Mike mentioned, AsiaPAC will be a work in progress, and that's going to take a little bit more time, largely driven by the type of activity, customers extending payment terms, whether it's Q3 or Q4. Thanks, Mike. Thanks, Quinn. Hi, Mike and Quinn.

Speaker Change: As Mike mentioned, AsiaPAC will be a working process and that's going to take a little bit more time, largely driven by the type of activity.

Speaker Change: Great. And if I could get one in on cash flow. Last year, the working capital reversal really was entirely 4Q, and you're guiding for a really strong 4Q. Is it reasonable to assume the bulk of your cash flow, this free cash flow this year is 4Q?

Speaker Change: It's tough to put too fine a point on it, Steve, you're right, working capital is the big driver.

Stephen Michael Ferazani: You know, I think with, you know, 70 plus million dollar build in working capital in the quarter.

Speaker Change: You know, 20 plus of that is milestone payment related on the Congo project.

Speaker Change: Customers are trying to improve their cash flow profile on the back of the services industry. To some extent, you've got a combination of revenue growth, customers extending out payment terms, whether it's Q3 or Q4.

Speaker Change: I'm not sure I'd predict that at this point, but we should see a much better cash flow profile for H2.

Speaker Change: Thanks Mike, thanks Quinn.

Speaker Change: Thanks Dave, appreciate it.

Speaker Change: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now.

Speaker Change: We now turn to Colby Sasso with Daniel Energy Partners. Your line is open, please go ahead.

Michael Jardon: You put out a press release in May highlighting your 100th global CQR job, and you also highlighted this technology in an event you held in Houston back in May. I'm curious if you could provide some color around the time frame it took to get these 100 jobs, what the runway looks like going forward, and what some of the economics around the cost savings look like for your customers who use this technology. That's a great question; it's a great question, and thanks for asking that one.

Colby Sasso: Hi, Mike and Quinn.

Colby Sasso: You put out a press release in May highlighting your 100th global CQR job, and you also highlighted this technology in an event you held in Houston back in May. I'm curious if you could provide some color around the time frame it took to get these 100 jobs, what their run rate looks like going forward.

Speaker Change: and what some of the economics around the cost savings look like for your customers who use this technology.

Michael Jardon: It's something that you'll keep in mind, Delta Tech was an acquisition that we closed in February of 2023. So, relatively short time, short timeline for us to get that number of operations completed. You know, this is really what the Delta Tech technology really helps with, in riserless deep water cementation jobs. And, you know, for each deep water well, you're going to have one to two job opportunities for this type of technology because it's really only on the first couple of strings. And what it really does is it helps improve the overall cement quality, which is extremely important because it's kind of the foundational casing strings that are run in those first couple of casing liners.

Speaker Change: That's a great question, and thanks for asking that one. Keep in mind, Delta Tech was an acquisition that we closed in February of 2023.

Speaker Change: So, relatively short timeline for us to get that number of operations completed.

Speaker Change: You know, this is really what the Delta Tech technology really helps with is really in riserless deep water cementation jobs.

Speaker Change: And, you know, so for each, you know, deepwater well, you're going to have one to two job opportunities for this type of technology because it's really it's only on the first couple of strings.

Michael Jardon: And fundamentally, what that really allows us to do is, it helps us save the operators typically somewhere between 12 and 24 hours per job. And nothing pleases me more than to hear rig rates keep going up. You know, we saw some rig rates for Econore that are going up that are starting to approach, you know, almost $600,000 a day. I think that's really healthy.

Speaker Change: And fundamentally what that really allows us to do, it helps us save the operators typically somewhere between 12 and 24 hours per job.

Speaker Change: [inaudible]

Michael Jardon: And for us, when we can save, you know, 12 to 24 hours a rig time when it's $500,000 plus day rates, that becomes much more of an economic incentive for customers to invest in this type of technology. And, you know, we've really been able to continue to, prior to the acquisition of Delta Tech, that technology was predominantly being deployed in the U.K. North Sea, and we've been able to start to internationalize that, you know, the Gulf of Mexico in particular.

Speaker Change: That becomes much more of an economic incentive for customers to invest in this type of technology.

Speaker Change: And we've really been able to continue to, you know, prior to the acquisition of Delta Tech, that technology really was

Speaker Change: that is phenomenal being deployed in the U.K. North Sea and we have been able to start internationalizing that and the Gulf in particular and it is starting to become available.

Michael Jardon: It's kind of starting to become, for a number of our customers, it's kind of becoming the standard. They've run it on, you know, those first, you know, two to three casing strings, you know, across the board. So we'll continue to see that, you know, accelerate, but it's just a great technology that really drives efficiency, really drives, you know, cementation quality improvement, and both of those are paramount to operators today. That sounds amazing.

Speaker Change: For a number of our customers, it's kind of becoming the standard they run it on.

Speaker Change: on, you know, those first, you know, two to three casing strings, you know, across the board. So we'll continue to see that, you know, accelerate, but it's just a great technology, really drives efficiency, really drives, you know, cementation quality improvement, and both of those are paramount to operators today.

Michael Jardon: What other technologies do you view as potentially disruptive in the current environment that we may hear more about over the next 12 months? Yeah, you know, I think that, you know, I'll kind of stick with the theme around well construction in particular, because as operators are really trying to drive, you know, drilling completion efficiency, those type things, you know, as batch drilling has become more common in, in deep water projects, you have a number of drilling completion days down dramatically.

Speaker Change: [inaudible]

Speaker Change: That sounds amazing. What other technologies do you view as potentially disruptive in the current environment that we may hear more about over the next 12 months?

Speaker Change: Yeah, you know, I think that, um...

Speaker Change: You know, I'll kind of stick with the theme around around well construction in particular, because as operators are really trying to drive

Speaker Change: You know, drilling completion deficiency, those type things, you know, as batch drilling has become more common in deep water projects.

Michael Jardon: That's part of the reason why, as I spoke earlier about, you know, the breakeven economics for customers. So really, some of our technology around, you know, like our ITONG, which is, which provides automation for, you know, for, for, for, makeup of casing running operations, removes personnel from the red zone, improves efficiency, and makes it much more repeatable. Those are kind of some key areas that we see for our customers as they go forward and allow them to fundamentally sanction more projects because they've got better break-even economics as they have more drilling and more efficient drilling completions operations.

Speaker Change: You know, the number of drill and complete days is...

Speaker Change: [inaudible]

Speaker Change: [inaudible]

Speaker Change: And fundamentally, our next generation design will be deployed, it was deployed early this year, and we've got really strong demand for that in the Gulf of Mexico, as well as in Guyana. It really just improves operational efficiency, reduces...

Speaker Change: personnel on the rig floor, those type things. So we see it as an area we continue to invest in technology.

Speaker Change: You know, we did, you know, even throughout the downturn over the last 10 or 12 years, and even during the pandemic, we've invested in our own engineering development of technologies, and we've supplemented that with some of the M&As that we've made as well, because we think it helps.

Speaker Change: really, really reduces rig time, reduces the number of personnel on board, improves operational efficiency. Those are kind of some key areas that we see for our customers as they go forward and allows them to fundamentally sanction more projects because they've got better break-even economics as they have more drilling.

Michael Jardon: So, good, very, very, very good questions. Thank you. Thanks, I'll turn it back. Appreciate it. Ladies and gentlemen, we have no further questions. So this concludes our Q&A and today's Expo Q2 2024 earnings presentation. We'd like to thank you for your participation. You may now disconnect your line.

Speaker Change: More efficient drilling completions operations. So good very very very good questions. Thank you

Speaker Change: Thanks, I'll turn it back.

Speaker Change: We appreciate it.

Speaker Change: Ladies and gentlemen, we have no further questions. So this concludes our Q&A and today's Expo Q2 2024 earnings presentation. We'd like to thank you for your participation. You may now disconnect your lines.