Executive Summary / Key Takeaways

• Technological Edge Drives Resilience: Expro's strategic investments in proprietary, industry-first technologies like BRUTE Armor Packer, RCIS, and remote cementing systems enhance safety and efficiency, providing a critical competitive moat and enabling higher-margin service offerings in the challenging deepwater and international markets.
• Consistent Margin Expansion & Cash Generation: The company has demonstrated a multi-year trend of Adjusted EBITDA margin improvement, reaching a record 22% in Q2 2025, driven by favorable activity mix, operational leverage, and cost optimization initiatives like Drive25, translating into robust free cash flow generation.
• Strategic Acquisitions Bolster Portfolio: Accretive acquisitions such as PRT Offshore and Coretrax have successfully expanded Expro's capabilities in subsea well access and well intervention/integrity, yielding significant revenue synergies and strengthening its market position in key growth geographies.
• Favorable Long-Cycle Market Exposure: With a primary focus on international and offshore markets, Expro is well-positioned to capitalize on the multi-year growth cycle in long-cycle development, which is less susceptible to short-term commodity price volatility and supported by sustained global energy demand.
• Commitment to Shareholder Returns: Despite market uncertainties, Expro has reaffirmed its full-year 2025 guidance of approximately $1.7 billion in revenue and at least $350 million in Adjusted EBITDA, alongside a commitment to return capital to shareholders through share repurchases, backed by a strengthened balance sheet and enhanced liquidity.

The Deepwater Imperative: Expro's Strategic Foundation

Expro Group Holdings N.V. (NYSE:XPRO) stands as a global energy services provider with roots tracing back to 1938, building a formidable presence across the well lifecycle. The company's core business revolves around well construction, well flow management, subsea well access, and well intervention and integrity solutions. This comprehensive portfolio is strategically deployed across over 50 countries, serving leading exploration and production companies in both onshore and offshore environments. Expro's long-standing expertise, particularly its nearly 50 years in subsea well access, underpins its foundational strength in specialized, high-value operations.

The company's strategic evolution gained significant momentum with the October 2021 merger with Frank's International, a pivotal event that initiated a multi-year trend of margin improvement, notably an approximate 800 basis point increase in Adjusted EBITDA margin compared to the combined legacy entities. This focus on enhancing profitability and relevance to customers has been further amplified by targeted acquisitions. The October 2023 acquisition of PRT Offshore expanded subsea well access capabilities in North and Latin America, while the May 2024 acquisition of Coretrax strategically bolstered well construction and well intervention integrity solutions, particularly in the Middle East and North Africa. These inorganic moves are designed to broaden Expro's service offerings and deepen its market penetration, driving pull-through revenue synergies by leveraging its extensive global operating footprint.

Expro's competitive positioning is anchored in its differentiated technology and specialized service delivery, particularly in the international and offshore segments. While larger competitors like Schlumberger (SLB), Halliburton (HAL), and Baker Hughes (BKR) offer broader portfolios, Expro carves out its niche through focused expertise and innovation. For instance, Expro's EBITDA margin ranks among the top in its peer group, reflecting its operational efficiency. The company's strategic emphasis on long-cycle development, which is less sensitive to short-term commodity price fluctuations, provides a degree of insulation compared to rivals with greater exposure to more volatile short-cycle or U.S. land markets.

Technological Prowess: The Engine of Differentiation

Expro's commitment to "innovation with a purpose" is a cornerstone of its competitive strategy, directly addressing customer challenges to enhance safety, efficiency, and operational performance. This focus on differentiated technology is a key driver of its competitive moat and financial performance.

In well construction, Expro has introduced several game-changing technologies. The BRUTE Armor Packer, its most advanced high-pressure, high-tensile packer system, is designed for extreme deepwater conditions, offering a leading differential rating and superior retrievability. This allows operators to work more efficiently and confidently, with two super majors already successfully deploying the system in the Gulf of America. Another significant innovation is the Remote Clamp Installation System (RCIS), which fully automates control line clamp installation on tubing during completions. This technology eliminates manual steps, speeds up the process by approximately 2 minutes (a 50% reduction per clamp), and crucially, removes personnel from hazardous "red zones," a critical safety benefit for operators. Following its successful North Sea deployment, the customer awarded additional work scopes. Furthermore, Expro delivered the world's first fully remote five-plug cementing operation using its Generation-X Remote Plug Launcher (RPL) and SkyHook cement-line make-up device. This system enhances safety and control by removing personnel from the red zone, marking a major step in expanding cementing services in the Middle East offshore.

Beyond these new deployments, Expro integrates advanced digital technologies like CENTRI-FI and iCAM into its tubular running services. These systems serve as operational hubs, driving efficiencies by reducing personnel time in the red zone and allowing the company to cover more rigs with the same headcount. The iTong system, for example, allows for precise, repeatable torqueing of connections, moving beyond manual methods and significantly reducing the opportunity for HSE incidents. The company aims for over 75% uptake of iTong on its active floating rigs in the coming years, reflecting the substantial value it brings. Expro's strategy is to introduce these technologies at an "appropriate rate," ensuring that the value created is reflected in its pricing, rather than "giving them away."

In well flow management, the QPulse technology, successfully piloted in Saudi Arabia's Jafurah field, provides excellent correlation and multiphase flow data. This non-intrusive solution eliminates the need for traditional test separators, offering rapid and cost-efficient data for field production allocation and well performance monitoring. Similarly, a new flow meter technology developed with Petrobras (PBR) offers real-time, non-intrusive flow rate identification without radioactive sources, enhancing efficiency and optimizing well production.

For well intervention and integrity, the Coretrax acquisition brought the Relign MNS expandable casing integrity solution. This technology successfully addresses corrosion issues and brings production back online, as demonstrated in a 15-well campaign onshore Australia. Expro now stands as the "only service company capable of delivering a full suite of remediation solutions, including short, medium, and long expandable patches," which are conveyance agnostic. This unique offering targets markets with high well counts and systematic casing integrity issues, such as Argentina and Colombia, presenting significant growth potential. The first commercial deployment of Distributed Fiber Optic Sensing (DFOS) in Brunei also delivered unique insights for optimizing injection profiles and refining well completions, transforming well performance monitoring.

These technological differentiators are not merely technical achievements; they are critical to Expro's competitive advantage. They enable the company to offer highly specialized services that reduce operational risk, increase efficiency, and enhance safety for its customers. This translates into stronger customer relationships, repeat business, and the ability to command better pricing, ultimately contributing to higher margins and a more resilient business model.

Financial Performance and Operational Momentum

Expro's financial performance in recent periods underscores the effectiveness of its strategic initiatives and technological advantages. The company reported its third consecutive quarter of financial results above expectations in Q2 2025.

For the three months ended June 30, 2025, Expro reported revenue of $422.74 million, exceeding the top end of its guidance range. Net income for the quarter was $18.00 million, representing a net income margin of 4.3%. Adjusted EBITDA reached $94.45 million, translating to a record-setting Adjusted EBITDA margin of 22.3%. This marks a significant sequential increase of 23.9% in Adjusted EBITDA from Q1 2025, primarily driven by higher revenue and a more favorable activity mix, particularly in the Europe and Sub-Saharan Africa (ESSA) segment.

Looking at the first half of 2025 (six months ended June 30, 2025), total revenue was $813.61 million, a 4.6% decrease year-over-year, primarily due to lower activity in NLA, ESSA, and APAC, partially offset by higher activity in MENA. Despite this, net income for the six months surged to $31.95 million, a 153.4% increase from the prior year, reflecting higher Adjusted EBITDA, lower income tax expense, and favorable foreign exchange movements. Adjusted EBITDA for the first half was $170.68 million, up 5.4% year-over-year, with an Adjusted EBITDA margin of 21.0%. The increase in Adjusted EBITDA and margin, even with a revenue decrease, highlights the company's focus on higher-margin services and operational efficiency.

Segmental Performance:

• North and Latin America (NLA): Q2 2025 revenue increased 6.2% sequentially to $142.58 million, with Segment EBITDA margin improving to 23.8% due to higher-margin projects. However, H1 2025 revenue decreased 3.7% year-over-year, leading to an 18.5% drop in Segment EBITDA, reflecting a less favorable activity mix.
• Europe and Sub-Saharan Africa (ESSA): Q2 2025 revenue jumped 17.8% sequentially to $132.37 million, with Segment EBITDA margin expanding to 29.9%, driven by increased activity and a favorable product mix in the North Sea and Angola. Despite a 15.7% year-over-year revenue decrease in H1 2025 (due to non-recurring 2024 projects), Segment EBITDA increased 14.3%, and margin improved to 28.1% from 20.7%, reflecting a shift to higher-margin services. The Congo Production Solutions project, while incurring negative margins during its construction phase in 2024, has seen its variation orders resolved, positioning it for positive contributions in the multi-year O&M phase.
• Middle East and North Africa (MENA): Q2 2025 revenue saw a slight sequential decrease of 2.7% to $91.02 million, with Segment EBITDA margin at 35.8%. However, H1 2025 revenue surged 20.7% year-over-year to $184.57 million, with Segment EBITDA up 25.6% and margin at 36.2%. MENA remains Expro's "most profitable geography," driven by robust activity in Saudi's unconventional gas and Algeria's production optimization.
• Asia-Pacific (APAC): Q2 2025 revenue increased 12.1% sequentially to $56.78 million, with Segment EBITDA margin rising to 26.1% due to higher activity and a favorable product mix, particularly in well flow management and well construction. H1 2025 revenue decreased 12.4% year-over-year, but Segment EBITDA margin improved to 23.9% from 21.2%, driven by higher-margin well construction services.
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Expro's liquidity position is robust. As of June 30, 2025, total available liquidity stood at $343.10 million, comprising $207.50 million in cash and cash equivalents and $135.60 million available under its revolving credit facility. Subsequent to the quarter, Expro further strengthened its financial flexibility by entering into a new senior secured revolving credit facility of up to $500 million (including a $100 million bridge facility), maturing in July 2029. This new facility replaces the previous one and provides ample resources for general corporate purposes, acquisitions, and investments, while maintaining prudent financial covenants.

The company's focus on cash flow generation is paramount. Net cash provided by operating activities for the six months ended June 30, 2025, was $89.92 million, a significant increase from $16.77 million in the prior year, primarily driven by favorable working capital movements and increased Adjusted EBITDA. Expro has also refined its free cash flow definition to align with industry peers, now defining it as cash flow from operations minus capital expenditures, with adjustments for truly one-time items. The company remains committed to its shareholder return targets, having repurchased approximately $15.00 million in stock year-to-date in 2025, with approximately $61 million remaining under its current $100 million authorization. Management expects to accelerate these repurchases in the second half of the year, aiming to return approximately $40 million in stock for the full year.

Outlook, Risks, and the Path Forward

Expro has reaffirmed its full-year 2025 guidance, anticipating annual revenue of circa $1.7 billion and Adjusted EBITDA of at least $350 million. Adjusted free cash flow is projected to be approximately $110 million (around 7% of revenue), with generation weighted towards the second half of the year. This outlook is supported by a detailed, bottoms-up analysis of customer scheduled activities and project line of sight, particularly in the resilient international and offshore markets. Management expects Q3 2025 revenue to be flattish sequentially, with growth resuming in Q4. For the second half of 2025, a moderate increase in activity is expected across NLA and APAC, while MENA and ESSA are anticipated to remain relatively stable.

The company's confidence in its outlook is rooted in its exposure to long-cycle development projects, which are less susceptible to short-term commodity price movements. While upstream spending is expected to ease in 2025 following a strong 2024, offshore investments continue to grow, driven by key regions like Guyana, Brazil, West Africa, Saudi Arabia, and Southeast Asia. New project approvals are expected to return to growth in 2026, with offshore projects accounting for 80% of all 2025 and 2026 sanctioning. This aligns perfectly with Expro's strengths in well construction and subsea well access. Furthermore, operators' focus on optimizing production from existing assets (brownfield activity) drives sustained OpEx spending, benefiting Expro's well intervention, production optimization, and digital services.

Despite this positive long-term view, Expro acknowledges the dynamic operating environment. Key risks include continued market volatility driven by trade negotiations, OPEC+ production increases, and geopolitical conflicts. The impact of new legislation, such as the One Big Beautiful Bill Act (OBBBA), on tax provisions is still being evaluated. Customers are exhibiting caution around short-cycle, discretionary spending, and there's an industry-wide discussion around offshore rig white space, though Expro's direct customer conversations suggest limited impact on its specific activity. Management's philosophy on guidance is to provide an "honest view of the business, the associated downsides and upsides," rather than aggressive targets.

Expro's strategic response to these risks includes maintaining strict cost and capital discipline through its "Drive25" initiative, which targets at least $30 million in run-rate support cost savings. This program focuses on standardizing practices and improving operating leverage, with at least 50% of savings expected in 2025. The company's limited exposure to contracting markets like U.S. land and Mexico further enhances its resilience. Expro's strong balance sheet and enhanced liquidity provide the flexibility to manage market fluctuations and pursue accretive M&A opportunities, while continuing to return capital to shareholders.

Conclusion

Expro Group Holdings N.V. presents a compelling investment thesis built on its deep-rooted expertise, strategic acquisitions, and a relentless pursuit of technological innovation. The company's ability to consistently expand its Adjusted EBITDA margins, even amidst a volatile macro backdrop, is a testament to its operational execution and disciplined cost management. By leveraging its market-leading technologies, particularly in deepwater well construction and intervention, Expro has carved out a defensible competitive position, offering tangible benefits to customers in terms of safety, efficiency, and cost reduction.

While the energy services industry faces near-term uncertainties, Expro's strategic focus on resilient international and offshore markets, coupled with a strong backlog and a clear roadmap for operational efficiencies, positions it for sustained performance. The company's commitment to robust free cash flow generation and shareholder returns, alongside a strengthened balance sheet, underscores its financial prudence. As the industry transitions towards a multi-year growth cycle in long-cycle development, Expro's technological leadership and strategic agility are poised to unlock significant value, making it a noteworthy consideration for discerning investors seeking exposure to the evolving energy landscape.