Hello, everybody, and welcome to the Expro Q2 2025 Earnings Presentation. My name is Elliot, and I will be your coordinator for today. [Operator Instructions] I would now like to hand over to Chad Stephenson, Director of Investor Relations. Please go ahead.

Welcome to Expro's Second Quarter 2025 Conference Call. I am joined today by Expro's CEO, Mike Jardon; and Expro's CFO, Sergio Maiworm. First, Mike and Sergio 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, expro.com, under the Investors section. In addition, supplemental financial information for the second quarter results is downloadable on the Expro 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 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 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 Maiworm, Expro's new Chief Financial Officer, to discuss our financial results today. Sergio has more than 2 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 multiyear outlook for energy services companies like Expro, who have technology-enabled services supporting the long-cycle development projects. We will 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 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. On Slide 2, Expro reported an excellent quarter, reporting increased revenue to $423 million. EBITDA growth to $94 million and expanded EBITDA margin, representing 22% of revenue. Expro also generated a robust $36 million in free cash flow on an adjusted basis, or 9% of revenue. This marks the third consecutive quarter of financial results above expectations. In fact, Expro has reported financial results above expectations in 6 of the last 7 quarters, evidencing the Expro's continued focus on operational execution despite market headwinds. Our…

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 Expro and I wanted to take a brief moment to thank every Expro 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 in 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 coworkers 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 the 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 are my own initial observations, but they were somewhat confirmed by many of my former peers and colleagues and upstream companies that reached out to me to praise Expro and 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 million 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 ESSA. EBITDA for the second quarter was $94…

Thank you, Sergio. We believe Expro is well positioned with our market-leading core 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 multiyear 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 and offshore markets will perform better than other sectors. With our strong balance sheet and liquidity positions, Expro 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.

[Operator Instructions] First question comes from David Smith with Pickering Energy Partners.

Congratulations on a very strong quarter. I wanted to say also just really impressive Q2 orders. I wanted to ask if that was mostly timing, just large multiyear projects coincidentally booking in the quarter? Or good commercial discussions suggest 2025 orders that could be up 20% or more versus '24?

Yes. I mean, David, it really -- it's really kind of all of the above. I mean, a number of those were contract awards we had in places like Guyana or in North Africa, that were more contract renewals, contract extensions, those type of things. It really was just kind of the timing of it. We continue to see a robust level of bidding and tendering activity. And that just kind of translated into a strong quarter of order intakes.

Great. I appreciate that. And I know it's early to talk about 2026, but conceptually -- and just following on from Sergio's prepared remarks. If activity growth were to flatten or stall, can you talk about opportunities you're seeing maybe for improved free cash flow conversion compared to historical the last few years? Maybe if there's flexibility for the CapEx spend, potential thoughts on working capital improvement, maybe fewer merger integration and severance charges?

Yes. No, I mean, it's a really good question. I guess, how I would kind of decouple that is, number one, I think we've continued to demonstrate, as we've been saying all year, even if 2025 is in a flattish kind of year-on-year top line, we're still going to expand margins here in 2025. That's a combination of our own internal engineering efforts. We've launched a number of new technologies that we're starting to get good market penetration. We've continued to realize the synergies both from a cost standpoint as well as from the revenue standpoint of some of the recent acquisitions we've made. And then fundamentally, we kicked off a cost efficiency exercise last summer, in the summer of 2024, that is -- really was timely. I wish I could say that we anticipated we were going to see things like Liberation Day in April of this year and those type of things, but obviously, we didn't. But it really was kind of our focus on continuous improvement and really focusing on taking costs out, driving efficiency. So we're seeing some benefits from that. We've said here that we'll exit this year with $30 million of run rate cost savings, about half of that we'll see in the 2025 numbers. So it's really is kind of all of the above those type things. We can and will flex CapEx spend to some degree. As a reminder, we don't spend CapEx dollars speculatively. We spend CapEx dollars based upon projects. So all those things will kind of help flex us into that. But fundamentally, our continued focus on margin expansion is paramount to us, at the same time, expanding our free cash flow generation. So these things kind of all -- they all line up together and they're all being choreographed very intentionally and very purposefully. So Sergio, you want to comment anything that I missed? Feel free.

No, Mike, that's it. I think the -- Dave, as you mentioned, the focus is 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 and perhaps flexing on the capital intensity of the business, those are the main drivers that we see at this point.

We now turn to Ati Modak with Goldman Sachs.

I guess, Sergio and Mike, on the quarterly EBITDA margin cadence, is there anything that you can provide us in terms of how to think about the segments for the remainder of the year?

Yes. So Ati, thanks for joining us. I mean, we always kind of start off Q1 of the year is always -- that's always going to be our lightest quarter. We're particularly affected by the Northern Hemisphere kind of winter season. That's always -- especially in the North Sea. That's always going to be a little bit of -- is going to provide a little bit of softness. And historically, our NOC customers tend to be kind of slower out of the gate. So Q1 is always kind of like that. We did have a -- we had a solid revenue quarter here in the second quarter, and we're able to translate that through to a really good fall through. Fundamentally, we still anticipate, and I'd be very disappointed if we don't expand margins in 2025 versus 2024. And we don't see anything right now that would give us a particular pause for that. So Q2 is just a solid execution quarter. It wasn't like we had some particular one-offs or those kind of things that help prop up margins. It was just a really solid execution quarter and based on a tremendous amount of customer dialogue that we've had here, we still see the second half of the year playing out as we've anticipated. That's why we try to give a roughly $1.7 billion outlook for the second half for the total year. That's really based on that customer feedback. So right now, I wouldn't anticipate anything changing from a margin standpoint beyond that.

That's very helpful, Mike. And then it seems like M&A in the market is heating up. I know we've spoken about this a few times before, but I'm just curious if you're seeing anything that will suggest increased opportunities or any thoughts you can provide there?

Yes. I mean we continue to be very, very active out there to look at M&A opportunities. We are -- obviously, we've had good success in looking at things that are accretive, and looking at things that help us improve our relevancy and help us expand our portfolio. We've got a really, really good playbook of how to conduct diligence and how to execute on M&A, and how to bring them in. And more importantly, how to do proper integration. And it's really key to be able to drive synergies and those type of things. So yes, there are things that we continue to look at out there that make sense. And quite frankly, there's a lot of what I refer to as dislocated 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 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 focus on and hope to continue to be able to execute on some of those.

Our next question comes from Eddie Kim with Barclays.

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

No. Eddie, it's a good question. I can say it's something we continue to -- and as I alluded to when I was responding to an earlier question, 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 literally down to the point where we're sitting down with customers, we're looking at what are their drilling programs? What their completion programs? And we're going to drill well X, and then when are we going to complete it kind of translate that into next activity set for us. So yes, there's some puts and takes of rigs going on maintenance or those type of things. We've really tried to layer that into what our forecast looks like in the second half of the year. And that's why we've been able to stand up and say with the best information we have today is we still think we're going to be in that $1.7 billion ZIP code, and $350 million plus EBITDA range. The area that I'm seeing more, it's a bit of an interesting phenomenon that we're seeing right now, is really around the more of the short cycle activity, more of the intervention activity, more of the OpEx-related activity. That's one that in my 30-plus years, that normally is the one that gets flexed up. And right now, we're seeing customers be, I think, particularly cautious around that. So that's one that we're kind of continuing to monitor that and trying to better understand kind of what the customer plans are there. But fundamentally, Eddie, our forecasting and our outlook for it has really been based upon a very detailed customer engagement, almost a bottoms up rig by rig, completion by completion type of analysis.

Got it. That's very helpful. There was one blemish in the quarter. And obviously, you guys posted very strong results, but if there's one blemish, it was in the subsea 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 subsea well access revenue in Malaysia. But could you provide some more color on the recent softness in this segment? And is that likely to sort of remain stable at these levels in the back half of the year? Or should we expect a rebound from second quarter levels?

Yes. I mean it's a -- I wouldn't say it's a one-off, but it's not something we anticipate to be sustained. We think that fourth quarter will be particularly strong in that aspect. We did have in 2024, we did have some subsea 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 operational execution that was strong revenue generation at this point in time. So not something that gives me a particular pause. It was just really kind of project timing and those type of things right now, Eddie.

We now turn to Derek Podhaizer with Piper Sandler.

Maybe I want to ask a question on the Middle East segment. Obviously, revenues came down a little bit, margins down a touch even though margins are still up historically at a nice level here. But maybe just help me understand some of the puts and takes within the region, maybe some of the spots -- soft spots versus the strong spots, why we see a 60% decremental here? Just maybe further help and color around what are the moving pieces within the middle -- your MENA region.

Yes. I mean it was -- let's remind ourselves that MENA is the most profitable geography we have. It's got very strong levels of activity. So really strong, good -- very strong margin delivery there. up just slightly because of project timing in there. We're really driven by Saudi and by Algeria. And just to reiterate what I said in my prepared remarks, Saudi for us really is unconventional gas on land and that continues to be robust. I think especially in Saudi if you go back to the administration's visit into the Middle East a couple of months ago, an awful lot of discussion around data centers and AI and those type things. And natural gas is going to be the feedstock for power generation in the Middle East and in Saudi in particular. That's why there's such a strong focus from Aramco on continuing to expand their gas production capabilities, and we're really well positioned to be able to capitalize on that. And then, of course, activity in Algeria, which is very robust for us, is much more around production optimization, compression, those type things and just really, really solid projects. So MENA is one that it just continues to deliver at a really, really high level and being off very slightly on a quarter-on-quarter margin standpoint, is not something that we're particularly concerned about at all.

Yes. I just was curious. And then just my second question, it was nice to see 3 quarters of shareholder returns here on the buyback. Maybe just your latest thoughts on how we should think about cadence or percentage of free cash flow or even potentially a dividend coming into the picture?

Derek, this is Sergio. Yes, so I think we communicated that through our press release and in our prepared remarks. We expect to repurchase roughly $40 million in stock this year. We've done already $15 million in the first half of the year. Mike alluded to 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 as that being the case, we expect to accelerate those repurchases in the second half here. So I think to us, a strong free cash flow generation and returning capital to shareholders. These are things that are very important to us, and we're going to continue to do that. So that should be a feature of Expro in 2025 and beyond.

Also on the dividend?

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

And I think it's really -- and Derek, it's an ongoing discussion we have with the Board. That's clearly a board-level type decision. But what I will say is that I think this is -- as a company, I think anybody generally needs to get to the point where they're not roughly 1/3 of free cash flow return. 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 it starts to make good sense 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 for us to get to that point where we can start to expand that percentage, and we're going to return and then start to change what the mix of 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 focused on. And that's why free cash flow generation becomes such a key driver for that.

[Operator Instructions] We now turn to Josh Jayne with Daniel Energy Partners.

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 the -- how would you characterize the overall sense of urgency of your customer base today? Obviously, some nice contract wins and backlog adds this quarter. But maybe just given the volatility that we've seen, conversations today versus where we were 90 days ago, do customers have, I guess, more comfort with where we sit today just from a macro standpoint?

No. Josh, thanks for joining. It's a great question. I can tell you that my -- so my view today is, I think, especially for the deepwater and the ultra-deepwater projects. And frankly, that's we're very heavily tied to that type of activity. Our customers are very much -- they're in execution, implementation phase. They're focused on those type things. So that sentiment hasn't changed. We're going to have to start kind of translating that into what's it going to look like from an activity set for 2026. I think the ongoing projects we have will continue to be executed and implemented. We've all observed that the pace of new FID approval for deepwater and ultra-deepwater has moderated a little bit here. 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 pursuing some of those incremental oil production opportunities today that we normally would observe. I think part of it is because they too are trying to understand what's going to happen with commodity prices. What's the continued behavior going to be from OPEC+? What's the geopolitical situation going to be? So I think there's just caution on anything new, but kind of a conviction on continuing to execute on things that are more existing is how I would frame it.

Okay. And then one for Sergio. First conference call in the seat. Maybe you could just -- maybe just give you the opportunity to expand on how you see the world from a financing perspective? You guys just closed a new credit agreement. And also just broadly, how you see Expro's opportunity set to maximize shareholder value over the next couple of years? I know you answered questions about the buyback and the dividend, but maybe just talk through your -- just how you view the importance of free cash flow conversion and it's used going forward?

Yes. I appreciate that, and thanks for that. So you're absolutely right. I think the focus of the organization is to continue to increase that free cash flow conversion. There are obviously several avenues to get there, and we intend to attack all of them. And as Mike said before, that has continued to expand on our EBITDA margins. That is continue to look for opportunities to be more effective on our capital deployment. 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 doing all of those things. Look, Expro is a fantastic organization, right? So in the spirit of great companies wanting to be even better kind of that's part of kind of what I'm going to try to help the organization kind of turn under every rock, looking for things with a fresh perspective, looking for ways for us to continue to fine-tune our strategic objectives, looking for accretive acquisitions and so on. So I think the company is in great shape. The execution -- the operational execution of the business is fantastic. So I'm just going to be looking to help the company get even better than what it is already today.

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.