Q2 2025 Expro Group Holdings NV Earnings Call

Hello everybody and welcome to the Expro Q2 2025 earnings presentation. My name is Elliot and I'll be your coordinator for today.

If you would like to register a question during today's event, please press star 1 on your telephone key pad.

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

Welcome to xros second quarter 2025 conference call. I am joined today by xro CEO, Mike, Jordan, an expert CFO Sergio, my worm first, my concern you will have some prepared remarks. Then we will open up for questions.

We have an accompanied presentation on our second quarter results that is posted on the Expro website.

Xpro.com under the investor 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 risks and uncertainties that could cause actual results to differ materially from those expressed or implied in 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 included in the SEC filings which may be accessed on the sec's website sec.gov or on our website again at expo.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, 2025 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'm happy to welcome Sergio, our new Chief Financial Officer, to discuss our financial results today.

Sergio has more than two decades of experience in financial roles in the energy industry and brings a proven track record of driving financial performance and operational excellence. I look forward to working closely with Sergio as we continue to advance our strategic initiatives and build on our strong financial foundation. Now, I'd like to start off by reviewing the second quarter 2025 financial results as summarized in today's earnings press release.

I am proud to announce very strong quarterly results. This marks the third sequential record-setting quarterly EBITDA margin and robust free cash flow generation.

I will then discuss the broader revolving macro environment which we believe the underinvestment in traditional hydrocarbons in both the international and offshore markets, supports a positive multi-year outlook for Energy, Services companies like xpro, who have technology enabled Services supporting the long cycle development projects.

We move on to our operational highlights for the second quarter, discuss our Outlook and then turn the call over to Sergio to share additional financial information.

For a recap of the consolidated results and quarterly results by region, I'll direct you to slides 2 through 9 of the presentation that we posted to expro.com.

A quarter reporting increased revenue to $423 million, with a growth to $94 million and an expanded margin representing 22% of revenue.

Xpro also generated robust $36 million in free cash flow on an adjusted basis, or 9% of revenue.

This March the third consecutive quarter of financial results above expectations. In fact, expert has reported Financial results above expectations and 6 of The Last 7 quarters.

Evidencing experts continued, focus on operational execution, despite Market headwinds our second quarter Financial results. Also represent a record setting second quarter. Even a margin

Or even a margin ranks. Among the top in our peer group and is a continuation of a multi-year trend of margin Improvement.

Our results demonstrate, we're on the right track to deliver. The robust free cash flow generation to our shareholders and the success of the organic, and inorganic, Investments that we have made to drive growth and expand margins.

It's also the result of permanent structural cost savings through our Drive. 25 initiatives, improved business activity, mix and operational, Leverage,

Additionally, we are capitalizing and continue to see meaningful benefits on our diverse Geographic footprint, which is mainly focused on the international and offshore markets.

As discussed in other calls.

Has very limited exposure in regions, such as us, land, Mexico, and ashore, Saudi markets, that will continue to be soft in 2025.

Commercial activity and tenders remain robust in our main markets with New Order, Awards of 595 million in the second quarter, marking at the second highest quarter of New Order intakes. In our company's history, these awards were spread across key markets and product lines. Highlighting the diversity of our portfolio, and setting a new Benchmark for our Core Business performance. Our results and success in the marketplace, reflect the confidence. Our customers have in us and our focus on safety service, quality and delivering cost-effective technology-driven Solutions across the well life cycle.

To highlight the more significant awards, we had contract wins in Guyana, covering well construction services with revenues in excess of $120 million, and 2 contracts in North Africa for gas compression services. Additionally, production solutions generated revenues of approximately $100 million and $60 million, respectively.

our backlog has increased to approximately 2.3 billion, at the end of the second quarter remaining both healthy and in line with our expectations

All in all this quarter presented, a challenging Market backdrop yet, we continue to deliver operationally and financially. From a continuous innovation point, we deployed 3, new industry first Technologies, those Innovations and Industry firsts are a direct result of expert. Understanding the challenges that our customers face and their operations day in and day out and finding new Creative Solutions to address those challenges.

This is what we refer to as innovation with a purpose.

That is how we continue to provide differentiated services to our customers. And that is why we continue to get repeat business from our customer base. With that, we continue to drive efficient, and safe operations, to our customers, and every single 1 of our Global operations.

Turning to the market outlook, the second quarter of 2025 presented a dynamic operating environment marked by commodity price fluctuations driven by ongoing trade negotiations, OPEC+ production increases, and geopolitical conflicts. As a result, Brent crude traded within a $20 per barrel range, peaking at $80 per barrel in June.

As geopolitical tensions received in certain areas. The Market's Focus has returned to fundamentals particularly on Supply Dynamics and seasonal demand.

OPC Plus has accelerated the phase-out of production cuts in a strategy pivot from output constraint to regain market share.

Although ongoing increases in production may exert downward pressure on commodity prices,

The elimination of OPEC plus voluntary Cuts provides more clarity and is anticipated to support longer terms Market stability.

Barring any significant shifts in the current commodity price range, the industry is expected to demonstrate continued resilience.

Though, the market has experienced challenges in the recent quarters, the oil and gas industry, demonstrated fortitude, and set operational expectations with limited impact on Upstream spending and our key Geo markets here today which highlights the positive within the cycle for xpro.

Despite current customer caution, new project approvals are expected to return to growth in 2026, with offshore approvals accounting for 80% of all 2025 and 2026 sanctioning.

What's up dude? Greenfield activity and the current volatility operators are focusing on optimizing production from existing assets to generate Revenue, driving, sustained, Opex, spending and subsequent Brownfield activity.

The strategic focus aligns with experts in well-intervention production, optimization, and digital services.

Overall, in the current market environment, we will continue to focus on maintaining costs and capital discipline, and otherwise controlling what we can control.

With disciplined execution, a strong International, and offshore presence, and a focus on operational, efficiency experiments. Well, positioned to navigate the current market

We expect our differentiated service lines and resilient business model will allow us to continue to expand margins year over year.

And commodity prices at current levels, steady demand growth, and continued project sanctioning will drive demand for exposed services and solutions. We maintained a positive multi-year perspective on the overall opportunity set and expertise relative to our market position.

Living to our operational performance for the quarter, safety and innovation with a purpose are both central to who we are as a company. Just as safety is embedded in everything we do, so too is our drive to innovate with purpose.

And the second quarter, we achieved industry first through the deployment of our Innovative Technologies. Each designed to reduce the operational risk and increase efficiencies for our customers.

With artificial intelligence, machine learning, automation, and digitalization playing key roles.

First, we introduced the Brute Armor Packer, our most advanced high-pressure, high-tensile packer system.

It's built for the extreme conditions of deep-water wells, with a leading differential rating and retrievability that ensures sealing integrity in harsh environments.

This allows operators to work more efficiently and with more confidence in the extreme conditions of deep water wells. We expect customers to rapidly deploy this technology as 2. Super Majors have already successfully deployed the system in the Gulf of America.

Second, we completed the First full deployment of xpros remote. Clamp Installation System or rcis.

This technology was developed with and partially sponsored by a super major with a focus to provide a unique industry solution, that fully automates, the installation of control line clamps on the tubing during the completions operations.

It eliminates manual steps, speeds up the process, and most importantly, removes people from the red zone.

The rcis technology was deployed in the North Sea, where xpro successfully ran a fully hands-free, upper completion and reduced each clamp insulation, Time by approximately 2 minutes or 50% per clamp, based on the success of the operation, the customer has awarded additional work scopes for future deployments of the technology. And finally, we delivered the world's first fully remote 5, plug cementing operation using xpros Generation X, remote, plug launcher, and Skyhook cement line make up device.

This is designed for safety control and field. Adaptability removing the need for anyone to enter the Red Zone while giving operators more operational, control the deployment marks, a major step forward in the company's expansion of cementing services in the Middle East offshore and reflects the progress of the Strategic initiatives for the region.

These are not just technical wins. They're real-world examples of how we bring innovation, efficiency, and safety together to move the industry forward. These technologies provide extra competitive advantages and highly specialized service offerings, creating future revenue opportunities by enabling scalable technology applications with improved margins.

We are also demonstrating that Innovation can be both effective and efficient and that focus is evident in our regional activity this quarter.

Beginning with the North and Latin America region, as we anticipated in the first quarter activity, operations in Brazil and Guyana have remained stable. This stability is due to the development plans stemming from high volumes of FIDs in recent years.

We capitalize on its improving environment. As we secured a 5-year multi-region, access of 120 million dollars to provide completion and healer running services and Guyana.

We similarly continue to drive activity in Brazil, securing contracts with revenue of more than 50 million across production optimization and well, decommissioning related activities highlighting, the breadth of capability, across the life cycle of the, well,

And as referenced in our July 14th press release, we secured a significant 3-year contract award with Woodside Energy to support the tree on deep water oil and gas development offshore Mexico.

Drive cost efficiencies and enhance operational reliability throughout the project life cycle.

Moving to Europe and subsets in Africa. We successfully completed a multi-well campaign for a major operator in Angola. Conducting 11 cleanup and 12 well intervention operations.

Uh, over approximately 5,000 man-hours with a 98% job performance rating.

In the UK and North Sea, our 30-year partnership with a major operator remains strong. As we recently secured a 3-year contract extension with Revenue, approximately $30 million for well intervention, well services, and well testing operations.

This is a testament to our exceptional service, delivery, and strong client relationships.

In North Africa, we have further expanded our production optimization business. We secured a significant 7-year, approximately $100 million contract to deliver a gas compression system on low-pressure gas wells in order to maintain throughput at the processing facility.

Additionally as a result of the high service quality delivered to the customer. The team is secured a 6-month contract extension with revenue of approximately 60 million dollars for early production facilities and gas compression services.

Shifting focus to the Asia Pacific, particularly Indonesia. We have won four contracts from a single customer, with revenue totaling approximately $15 million. This covers well intervention and integrity services, which play a critical role in brownfield production authorization by enhancing reservoir access, restoring well integrity, and maximizing hydrocarbon recovery.

These new Awards demonstrate the ongoing strategic, focus on, production optimization and these mature basins.

And finally, in Australia, within TRS Expert, we performed the first Regulus conductor driving operation on a customer's platform in over a decade, underscoring our commitment to reintroducing and delivering solutions to the region.

The team successfully completed a 6 slot, conductor insulation safely and ahead of schedule.

Before we move to our financial performance, I'll comment on the guidance for the full year. 2025 that was included in our press release.

The macro environment has created challenges for the entire industry, and we also see that several pockets in the market are softening and will remain challenging for the next 12 to 18 months.

We are still assessing what that means for Expro in 2026. However, we firmly believe the international and offshore segments of the market will generally perform better than other segments.

Those are markets with longer. Duration, development plans, and primarily dominated by the super Majors large ioc's and the nocs

Those customers tend to be less susceptible to short-term market volatility and tend to focus more on the longer-term fundamentals of their business.

If we combine our presence weighted to the international optional markets with our strong relationships, with customers leading market positions, and key services, we still see relative stability and a relatively constructive outlook for the business.

In the near term for 2025, we are reaffirming our full year outlook and the stated during the q1's earning earnings call, we continue to expect at least mid single digit Revenue. Growth in the second half of 2025 compared to the first half of the year.

This is supported by our line of sight and the customer scheduled activities and delivery of products and services. For the next 2 quarters. More specifically we are not relying on binary outcomes of large individual projects to meet our guidance.

Our anticipated annual revenue is Circa 1.7 billion and ibida of at least 350 million. We continue to anticipate our free cash flow on adjusted basis to be approximately 7% of revenue for the full year 2025

Despite the definition of change, we announced this morning in our earnings release.

Sergio will go into more detail on that shortly.

Consistent with historical Trends. We expect free cash flow generation to be more weighted to the second half of the year.

Overall, we have seen customers, prioritize key projects and it is expected that our customers Upstream investments will be largely unaffected by short-term commodity price movements through 2025, and several of our GM markets are proving to be more resilient as the current markets perception.

In our NLA region, activity should be stable in Brazil and Guyana as a result of a continuation of existing development plans. In the Gulf of America, we anticipate steady to slight increases in activity in the second half of 2025.

Similarly we see growth from last time countries such as Brazil and Colombia.

Overall, for the second half of the year, we anticipate NLA revenue to demonstrate growth over the first half of the year.

And Issa the Outlook is constructed for the North Sea and parts of Europe with a stable outlook on revenue and improving margins based on activity. Mix in the region for the remainder of the year.

And as a reminder in Saudi, our business is levered to onshore and unconventional gas more so than offshore oil.

And Algeria. Our business is levered to production optimization activity, which provides more productivity.

An agent Pacific. The remainder of 20125, we are expecting an increase in activity for Southeast Asia specifically, in Indonesia Brunei, and Thailand related to well, construction and well intervention services.

Additionally, in Australia, we see incremental activity in subzi. Well, access related to project timing and the onshore core tracks, expandables business. For these reasons, we believe the region will see Revenue growth with improved margins in the second half of 2025. Compared to the first half of the year.

With that, I'll turn a call to Sergio to review our financial results in detail.

Thank you, Mike, and good morning to everyone on the call.

First of all, it's a great pleasure to be here. I'm very excited to have joined xpro. And I wanted to take a brief moment to thank every xpro, team member for the warm welcome that I've received from all parts of the organization and from every region and product line.

Tomorrow marks my first 30 days with Expro, and I wanted to share some initial observations. As Mike noted, we reported very strong financial results for the second quarter.

And this wasn't an isolated occurrence. The team has been consistently delivering results above expectations.

That is due to the talent and dedication of our almost 9,000 co-workers in all parts of the globe.

And that is my first observation the quality and passion of the team to solve our customers most complex challenges.

My second observation is that depth of our conversations with our customers.

That understanding of our customers needs and our passion to provide solutions that lead to our Innovation with a purpose DNA.

And that innovation mindset materializes in every way possible, from the new AI-driven tool to utilizing day-to-day creativity to improve our own processes.

these were my own initial observations, but there were somewhat confirmed by many of my former peers, and colleagues in Upstream companies, that reached out to me to place xpro in the team

Now, moving on to the quarterly results, we reported revenue of 423 million for the second quarter as compared to guidance range of 400 to 410 million.

Revenue was up 32 million or about 8% relative to the first quarter of 2025, reflecting a seasonal recovery in the Northern Hemisphere and increased activity globally. More specifically in Issa

If it offered a second quarter was 94 million where guidance was between 80 and 90 million.

This quarter's EBITDA represents a sequential increase of approximately $18 million, or 24%, relative to the first quarter.

Even a margin for the second quarter was 22% and was up about 200 basis points quarter over quarter.

Similarly, as compared to Q2 of last year, the EBITDA margin increased by about 200 basis points as well.

As Mike noted Q2 2025 was the best ibida margin quarterly result in the company's history and builds on Experts established track record of margin expansion.

We also generated over $36 million of free cash flow on an adjusted basis in the second quarter and repurchased $5 million in shares in the open market.

We're extremely proud of the cash flow and performance of the company for the quarter, and we will remain focused on improving the capital efficiency of the business.

This morning's earnings release. I'd like to take a moment to discuss free cash flow and share buybacks.

Generating significant free cash flow and growing our free cash flow is of the utmost importance to us.

Therefore, we have taken another look at our own free cash flow definition and decided to make it more aligned with industry peers.

Beginning in the current period or second quarter of 2025 and going forward. Free cash flow will be our reported cff minus capex. Both numbers straight from our statement of cash flows.

We also intend to further adjust it for truly one-time items, either positive or negative, to come up with an adjusted free cash flow that is more reflective of the steady-state business performance and therefore better aligned with corporate finance principles.

Those adjustments will also be very transparent and sourced straight from the income statement on a quarterly and year-to-date basis.

We intend to report both free cash flow and adjusted free cash flow, along with their respective reconciliations. With that said, we will mainly refer to the adjusted number, as we believe it better represents the operational performance of the company.

On share buybacks, we remain committed to repurchasing the same one-third of free cash flow, or circa $40 million, as previously guided.

The form of percentages, but given the changes in the definition of free cash flow, we concluded that it would be clearer to guide the dollar amount. However, nothing has changed in that regard.

Year to date Expo, has repurchased 15 million in stock with 5 million of that in the second quarter.

We still have approximately $61 million available under our current $100 million authorization and expect to catch up on our annual repurchases in the second half of the year.

As Mike mentioned before, we are reaffirming our annual financial guidance, with revenues of circa $1.7 billion and EBITDA of at least $350 million.

Our general expectation of the revenue progression is that third quarter (Q3) will be flattish relative to the second quarter (Q2), with expected revenue growth in the fourth quarter (Q4).

We expect free cash flow, as adjusted, to be plus or minus $110 million for the full year.

We acknowledge there's an element of market uncertainty, but based on the team's ongoing dialogue with customers, we expect the demand for extra services to continue, guided by a line of sight on projects in 2025, particularly in international and offshore markets.

In other words, our guide to numbers represents our best view of the business performance today. But to be sure, the numbers have both downside risks and upside opportunities.

As it relates to the second half of the year, we expect our results to reflect a moderate increase in activity across NLA and APAC. While the Mina and Issa regions are expected to be relatively stable.

As we've highlighted, we continue to optimize costs and streamline processes through our Drive 25 operating efficiency campaign.

With that, if operators' plans change, we expect to adjust costs and capex accordingly to preserve our ability to generate and maximize free cash flow and maintain our commitments to share buybacks.

My general philosophy around guidance is that no one benefits from aggressive targets. It often leads to future disappointments.

But I'm not a sandbagger either. Neither one of those two extremes creates credibility, in my opinion.

My belief is that credibility is built around having an honest view of the business, the associated downsides and upsides, and ultimately working tirelessly to execute on the operational front to meet or exceed those expectations, and do that consistently.

I believe our guidance this year reflects that philosophy.

Turning to our regional results for North and Latin America (NLA), second quarter revenue was $143 million, an increase of $8 million quarter over quarter, reflecting higher activity in well construction. However, well flow management activity was down in Mexico and Brazil.

Note that revenue generated from the U.S. and Mexico markets was about 4% and 2% of consolidated 2024 annual revenue, respectively, and continues to be a very small part of the global Expo business.

For Europe and Sub-Saharan Africa, our second quarter revenue increased by $20 million to $132 million sequentially.

Primarily driven by activity in the North Sea from well flow management and Subsea, well access, and activity in Angola from well flow management and well construction product lines.

Segments EBITDA margin of 30% was up 400 basis points sequentially, reflecting higher activity and a favorable product mix.

The Middle East and North Africa, or MENA, delivered another solid quarter, but slightly lower compared to Q1, with revenue at $91 million, driven by lower well construction revenue in Saudi Arabia and the UAE.

Partially upset by wealth flow management Revenue in North Africa.

Mina segment margin was 36% of revenues, a decrease of 70 basis points from the prior quarter, reflecting lower well construction activity.

Finally in Asia, Pacific, or APAC? The second quarter revenue was $57 million, an increase of $6 million relative to the first quarter, primarily reflecting the higher well flow management activity in Malaysia, Indonesia, and Brunei.

Asia, Pacific segments ibida, margin was 26% of revenues increased about 500 basis points from the prior quarter reflecting increased activity and mix.

To provide an update on the drive, the 25 Initiative Expo is well into the implementation phase of this cost optimization program.

On the first-quarter earnings conference call, Expro announced an updated target of $30 million in run rate cost savings. We continue to anticipate capturing at least 50% of that run rate target during the current year.

At the end of Q2, we had approximately $343 million in total liquidity, with available cash and cash equivalents of approximately $107 million and availability under our revolving credit facility of approximately $136 million. Subsequent to the June 30th quarter end, Expro entered into an amended credit facility to, among other things, extend the maturity and increase the bank commitments.

The new facility has a 4-year maturity and matures in July 2029.

Additionally, it increases the total RCF commitments from $340 million to $400 million.

Concurrently, we entered into a $100 million, 364-day bridge facility.

In aggregate, these facilities provide up to $500 million in available liquidity, further strengthening our balance sheet and providing plenty of flexibility to execute on future M&A opportunities while continuing to return capital to shareholders.

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

Thank you, Sergio.

We Believe experts, well, positioned, with our market-leading court product lines and good exposure to International and offshore markets, that will support the ongoing activity. Not only for the remainder of 2025, but for a multi-year growth cycle expected to start in the back half of 2026.

We will continue to focus on free cash flow generation by continuing to expand our EBITDA margins and looking for ways of reducing the capital intensity of our business.

We work hard every day to continue to earn our customers' trust, create value for our shareholders, and deliver solid financial results every quarter.

Despite the uncertain market backdrop, we continue to focus on what we can control while being ready for every scenario.

That being said, we remain confident that our main international offshore markets will perform better than other sectors.

With our strong balance sheet and liquidity positions, xpro is equipped to manage anticipated, Market fluctuations and deliver sustained, free cash flow and value to its stakeholders with that. We can open up the call for questions.

Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2.

I'm preparing to ask you a question. Please, ensure your device is unmuted locally.

First question comes from David Smith with Pickering Energy. Partner, your line is open. Please go ahead.

Hey, good morning. Thanks for taking my question, and congratulations on a very strong quarter.

Good morning, David. Thank you for joining us. We appreciate it.

I wanted to, um, say also just really impressive Q2 orders, and I wanted to ask if that was mostly timing, you know, just large multi-year projects coincidentally booking in the quarter, or, you know, good commercial discussions suggest 2025 orders that, you know, could be up 20% or more versus 2024.

Yeah. I mean David it really. It's it's

to kind of all the

Guy on a or in North Africa. Um, you know that were that were more contract, renewals contract, extensions, those types of things, it really was just kind of the timing of it. Um, you know, we continue to see a, you know, robust level of of, of bidding and tendering activity. Um, and that just kind of translate into, uh, into into a strong quarter of of order intakes.

Great. Appreciate that.

And yeah, I know it's early to talk about 2026. Yeah, but conceptually and just

Calling on from Sergio compared to Mark's, you know?

If this activity growth forecasts flattened or first, all could you talk about opportunities? You're seeing maybe for improved free cash flow conversion, you know, compared to historical. Um, you know, the last few years, maybe if there's, you know, flexibility for the capex spend, you know, potential thoughts on working capital improvements, maybe fewer, you know, merging integration and severance charges.

As well as from the revenue standpoint of some of the recent acquisitions we've made. Um, and then fundamentally we've, you know, we we kicked off, uh, uh, a cost efficiency exercise, um, you know, last summer and the summer of 2024 that um, has really. It really was timely. I I wish I could say that we we anticipated. We were going to see um things like Liberation day in April of this year and those types of things. But obviously we didn't but it really was you know, kind of our focus on continuous Improvement and and really focusing on taking costs out driving efficiency. Um, so we're seeing some benefits from that. You know, we've we've said here that we'll uh, we'll exit this year with 30 million dollars of run rate, cost savings about half of that we'll see in, uh, in the 2025 numbers. Um, so it's really kind of all the above those type things. Um, you know, we can, you know, we can and will Flex capex spend, um, you know, to some degree. We, as a reminder, we don't spend capex dollars speculatively. We

Spend capex dollars based upon projects. Um, so all those things were kind of help help Flex us into that. But fundamentally our continued focus on margin expansion. Is is is Paramount to us um, at the same time, expanding our free cash flow generation. So these things kind of all, you know, they all line up together and they're all being choreographed very intentionally and very purposefully. So

Sergio. You want to comment anything here that I missed feel free. No mic. That's it. I think the uh, Dave as you mentioned, the focus is uh generating an increase in the free cash flow generation of the business. I think there are many levers and Mike already touched on all of them but expanding the margins further uh and perhaps flexing on the on the capital intensity of the business that those are the the main drivers that we see at this point.

I really appreciate all the callers. Thank you. I'll send it back.

Sounds good. Thank you. David.

We now turn to our modak with Goldman Sachs. Your line is open. Please go ahead.

Hey guys. Good morning. Thanks for taking the question. Um, I guess Sergio and, like, I mean on the quarterly EBITDA margin cadence, is there anything that you can provide us?

Um, in terms of how to think about the segments for the remainder of the year.

Yeah, so I I thank you. Thanks for thanks for joining us. I mean, it's um,

You know, we always kind of start off, you know?

1 of the year is always. Um, that's always going to be our lightest quarter. We're particularly affected by the norm or, you know, the Northern Hemisphere, um, kind of winter season. That's always, um, you know, especially in the North Sea. That's always going to provide a little bit of, uh, um, is going to provide a little bit of softness. And historically, our NOC customers tend to be kind of slower out of the gate. Um, so Q1 is always kind of like that. Um, you know, we did have.

Have a we had a solid Revenue quarter here in uh in the second quarter. And we're able to translate that through to a really good fall through. Um, you know, fundamentally, you know, we're we're we we still anticipate and I'd be very disappointed if we don't expand margins. Um, in 2025, versus 2024 and we don't see anything right now that would give us um, particular pause for that. So, you know, Q2 was just a solid execution quarter. It wasn't like we have some particular 1 offset. Those kind of things that help prop up margins. It was just a really solid execution quarter. And you know, based on a tremendous tremendous amount of customer dialogue that we've had here. Um, you know, we we still see the second half of the year playing out as we've anticipated. That's why we tried to give a, you know, roughly 1.7 billion dollar, um, you know, outlook for the second half of or for the total total year. Um, and that's really based on that customer feedback. So, right now I wouldn't anticipate, uh, you know, anything changing from a, from a, from a margin standpoint.

Might be on that.

And that's very helpful with Mike. Um, and then seems like m&a in the market is heating up. Um, you know, we've spoken about this a few times before, but I'm just curious if you're seeing anything that is, uh, that would suggest increased opportunities or any thoughts, you can provide their

Assets. So to speak, that don't have a really good home and I think we've been able to demonstrate a good track record of being able to bring those in-house um and really leverage it from a Synergy standpoint, leverage it from a customer relationship standpoint. So it's something we continue to be able to um you know focus on and and and hope to continue to be able to execute on some of those

Thanks, Mike. I appreciate that.

Great. Thanks. Appreciate

Oh, the next question comes from Eddie Kim with Barclays. Your line is open. Please go ahead.

Morning. Uh, I I apologize in advance, but I have to, uh, ask the, uh, the offshore rig white space question. Uh, it's been a theme as you, well, know, for for, over a year now. But, uh, the reason I ask is that more recently, we started to hear more mentions of it, uh, from the larger service companies and, and actually another offshore company recently, lowered their rovs utilization, uh, expectations for the full year. So it seems like we're starting to see some, uh, expected impact to this in the second half of the Year from companies that are not not offshore Drillers. So, all that to ask is there any part of your business, uh, where you expect to see some impact from offshore rig white space uh, in the second half? Um, just any thoughts around? That would be great.

No, Eddie. It's a good question. I can say it's something we continue to. Um and as I alluded to uh, when I was responding earlier question, you know, we've had a, we've had a

Tremendous amount of customer engagement to really look at how the rest of the year is going to shape up. And and literally down to the point where we're sitting down with customers, we're looking at, you know, what are their drilling programs, what are their completion programs? And, you know, we're going to drill well X. And then, when are we going to complete it? Kind of trains like that into to an activity set for us. Um, so so yes, there's some, there's some puts and takes of rigs going on maintenance or, you know, those type things. We've really tried to layer that into what our forecast looks like, um, in the second half of the year. Um, and that's why we've been able to, you know, stand up and say with the best information we have today is we still think we're going to be in that billion 7 zip code, and you know, 350 million plus even a range. Um, yeah, the area that I'm seeing more, uh, it's a bit of an interesting phenomenon that we're seeing right now is really around the, um, you know, more of the short cycle activity, more of the intervention activity, more of the Opex related activity,

That's 1 that that in my 30 plus years that normally is the 1 that gets flexed up and right now we're seeing customers be I think particularly cautious around that. So that's 1 that um, you know, we're we're kind of continuing to monitor that and trying to better understand kind of what the customer plans are there. But, you know, fundamentally Eddie our forecasting, and our outlook for it has really been based upon a very detailed customer engagement. Almost a Bottoms Up, you know, rigged by rig completion, by completion, type, um, type uh, you know of of analysis.

Got it. That's very helpful. Um,

There was 1 in the quarter, and obviously, you guys posted a very strong results, but if there's 1 bleach, it was in the, uh, the subsc well access segment where your Revenue declined, 16% sequentially after kind of a similar double digit decline in the first quarter in your release. You mentioned lower substitute will assess Revenue in Malaysia. Uh, but but could you provide some more color? Um, on the recent softness, uh, in this segment and is that likely, to sort of remain stable at these levels? Uh, in in the back half of the year? Should we expect? Um, a rebound, uh, from from, from second quarter levels?

Yeah, I mean it's it it's a I wouldn't say it's a 1 off but it's not something we anticipate, you know, to be sustained. We think that um you know, fourth quarter will be uh, will be particularly strong in that that aspect. Um, you know, we did have in 2024. We did have some, um, some sub subk projects that delivered more from an equipment standpoint. And you saw we referred to some of the activity in Angola. We had a lot of, um, of of operational execution that was, um, you know, strong Revenue Generation. Um, you know, at this point in time so that not not, not something that, you know, gives me a particular pause. It was just really kind of project timing and those type things right now, Eddie

understood.

Thank you very much. I'll turn it back.

Okay, thanks Eddie.

We now turn to direct Port Heiser with Piper Sandler. Your line is open. Please go ahead.

Still up, historically on a nice level here, but maybe just just help me understand some of, the, the puts and takes within the region. Maybe some of the spots, uh, soft spots versus the strong spots. You know why? We see a 60% decremental here just just maybe further helping color around. What are the moving pieces? Uh, within the the middle, uh, your Mina, uh, region.

Yeah. I mean it it was, you know, let's let's let's remind ourselves that, you know, Mina is, is the most profitable um, geographer. We have. It's got very strong levels of activity. Um, so really strong, um, you know, good good, good, very strong margin, um, you know, delivery there, um, you know, up just slightly because of, um, project timing in there. You know, we're really driven by Saudi, um, and by, uh, and by Algeria and just, to just to reiterate what I said my prepared remarks. It's, you know, I'm Saudi for us really is unconventional gas, um, you know, on land, um, and that continues to be robust. Um, I think a specially in Saudi, you know, if you go back to, um, you know, the administration's visit into the Middle East, a couple months ago, um, an awful lot of discussion around, um, you know, data centers and Ai and those types of things, um, and natural gas is going to be the feed stock for power generation, um, in the Middle East. And in Saudi in particular,

That's why there's such a strong Focus from uh from a ramco on um continuing to expand their their gas production capabilities and we're really well positioned to be able to, um, you know, to to to, to capitalize on that. And then, of course, activity in Algeria, which is very robust for us is much more around. Um, you know, production optimization, um, compression, those types of things and just really, really solid, um, solid projects. So, um, mean is 1 that it just continues to deliver to really really high level and being, you know, off very slightly on a on a quarter on quarter margin standpoint. Um is not something that we're particularly concerned about at all.

Yeah, I was just curious. And then my second question was, it was nice to see three quarters of shareholder returns here on the buyback. Maybe just your latest thoughts on how we should think about a cadence, or a, you know, percentage of free cash flow or even potentially a dividend coming into the picture.

Hey, Derek, this is Sergio. Uh, yeah, so I think we, uh, we communicated that through our press release. And on our prepared remarks, uh, we expect to repurchase roughly 40 million dollars in in stock this year. Uh, we've done already 15 million dollars in the first half of the Year. Mike alluded to uh some of this in his prepared remarks and saying that free cash flow generation tends to be kind of weighted towards the back half of the year and uh as that being the case where we expect to accelerate those

Purchases into second half here. So I, I, I think to us, uh, strong freak, cash flow, generation and returning Capital to shareholders. These are things that are very important to us and we're we're going to continue to do that. So uh, that that that should be a feature of uh of xpro in in 2025 and Beyond.

Awesome, and dividend.

Uh, I mean, as of now, we still think that, uh, share repurchases are the best avenue to return capital to shareholders. But we're continuously evaluating what, uh, what that means, and if things change in the future, we'll, uh, we'll pivot as well. But as of now, share repurchase, then we still think it's the best avenue for us to return capital to shareholders.

and, and I think,

think really, uh,

America, it's an ongoing.

Um, you know, it's it that's clearly a board level type type decision. But what I will say is that I think this is um, you know, as a company, I think anybody generally needs to get to the point where they're not roughly a third of free cash flow returns. They're, they're getting into that 40 50, 60% range. I think when you can get to that and you have visibility for an extended period of time, that's when um it starts to make um good send strategically to look at dividends. So very much is I think it's why we have so much focus on free. Cash flow generation is um, for us to get to that point where we can start to expand that percentage. And we're going to, we're going to return and then start to change what the mechs.

So that is whether it's continues to be share repurchases or it's a balance between that and dividends, that's very much what we're uh what we're focused on and that's that. That's why free cash flow generation becomes such a a key driver for that.

Thank you.

Thanks, appreciate it.

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

We now turn to Josh, Jane with Daniel Energy Partners. Your line is open. Please go ahead.

First question, Mike, in your prepared remarks, you highlighted a lot of the volatility that we've seen in crude over the course of Q2. Could you just speak to how you would characterize the overall sense of urgency of your customer base today? Obviously, there have been some nice contract wins and backlog additions this quarter, but maybe just given the volatility that we've seen, how do the conversations today compare to where we were 90 days ago? Do customers have, I guess, more comfort with where we sit today, just from a macro standpoint?

No, it's a it Josh and and thanks for joining. It's a it's a it's a great question. I can tell you that my so my view today is I think a special for the, you know, the deep water and the ultra deep water projects. And frankly that's you know, we're very heavily tied to that type of activity. Our customers are very much you know, they're in an execution um you know, implementation phase, they're focused on those type things. Um so that that sentiment hasn't hasn't changed. Um, you know, we're going to have to start um you know kind of Translating that into. What's it going to look like from an activity set for 2026? Um I think the ongoing projects we have will continue to be executed and and and implemented, you know, um, the we've all observed that the pace of new F ID approval for deep water and Ultra deep water has moderated a little bit here, um but I think we'll continue to start to see how that plays out and it's more. I alluded to it earlier, it's more the kind of some of the short cycle activity.

Right now that I'm just seeing more caution from customers, they're not going out and and, you know, pursuing some of those incremental oil production um, you know opportunities today that we normally would observe, I think part of it's because, you know, they're they too are trying to understand what's going to happen with commodity prices. You know, what's the continued Behavior going to be from OPEC Plus what's the geopolitical um you know, situation going to be? So I I think there's just you know caution on anything new but you know kind of a conviction on continued to execute on things that are more existing is how I would frame it.

Okay, thanks and then and then 1 for Sergio. Um, first conference call in the seed, maybe you could just uh maybe just give you the opportunity to expand on how you see the world from a financing perspective. I mean, you guys just uh, closed the new uh, credit agreement. And um, also, just broadly, how you see experts opportunities set to maximize shareholder value over the next couple of years? I, I know you answered questions about the buyback and the dividend but maybe just talk through your, um, just how you view the importance of free cash flow conversion. And uh it's use going forward. Thanks.

Yeah, I appreciate that and thanks for that. So, no, you're you're absolutely right. I think the uh, the focus of the organization is to continue to increase that free cash flow conversion. Uh, there are obviously, uh, several Avenues to get there and we we intend to attack all of them and that, as Mike said before, that is continue to expand, uh, on our ibida. Margins, that is continued to look for opportunities to be more, uh, effective on on our Capitol deployments. Uh, there are ways of actually collecting from our customers a little faster. So there's a lot of ways and I'm going to be heavily focused on uh on doing all of those things. Look, xpro is a fantastic organization, right? So in the spirit of great companies, wanting to be even better, uh, kind of, that's part of kind of what I'm what I'm going to try to to, to help the organization kind of turning uh, under every Rock, looking for things with a fresh perspective. Uh, looking for ways for us to continue to fine-tune our strategic objectives looking for a creative Acquisitions, and

So on. So I think the companies in is in great shape, the execution, the operational execution of the business is fantastic. Uh, so I'm I'm just going to be looking to help the company. Get even better than what it is already today.

Thanks, so I'll turn it back.

Thanks Josh.

Thank you, Josh.

Ladies and gentlemen, we have no further questions. So this concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.