Expro Group Holdings N.V.

Company Overview

Business Model: Expro Group Holdings N.V. is a global provider of energy services, offering cost-effective, innovative solutions across the entire well life cycle. The Company's extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity solutions. Revenue is primarily generated from equipment service charges, personnel charges, run charges, and consumables, as well as the design, manufacture, and sale of equipment, often in conjunction with operations and maintenance arrangements. For the year ended December 31, 2024, approximately 82% of revenue was generated outside the United States, with 67% from offshore oil and gas operations. Services tied to drilling and completions-related activities, typically funded by capital expenditures, accounted for 68% of revenue, while production optimization activities, generally funded by operating expenditures, contributed 32%.

Market Position: Expro Group Holdings N.V. positions itself as a leading provider of energy services, with a market-leading position in deepwater tubular running services and solutions. The Company leverages nearly 50 years of experience in subsea well access, offering what it considers to be reliable, efficient, and cost-effective systems. Key differentiators include a portfolio of cost-effective, technology-enabled products and services, a high level of customer service, innovative solutions, and a global operating footprint. The Company serves a diverse and stable customer base, including national oil companies, international oil companies, independent exploration and production companies, and service partners, maintaining strong, decades-long relationships with several major clients. One customer in the Europe and Sub-Saharan Africa segment accounted for 10.5% of total revenue in 2024 and 12.5% in 2023.

Recent Strategic Developments: Expro Group Holdings N.V. has actively pursued strategic acquisitions to expand its service portfolio. In February 2023, it acquired DeltaTek Oil Tools Limited, enhancing its low-risk open water cementing solutions. In October 2023, the Company acquired Professional Rental Tools, LLC (PRT Offshore), expanding its subsea well access sector in North and Latin America and accelerating the growth of surface equipment offerings in Europe, Sub-Saharan Africa, and Asia Pacific. Most recently, in May 2024, Expro Group Holdings N.V. acquired CTL UK Holdco Limited (Coretrax), further expanding its Well Construction and Well Intervention & Integrity solutions. The Company's corporate strategy for 2025 focuses on "relevancy, resilience and results," aiming to exceed safety and operational expectations, advance its product portfolio for efficient and lower-carbon oil, gas, and geothermal resource production, enhance asset utilization, nurture its culture, and leverage data for business and customer value.

Geographic Footprint: Expro Group Holdings N.V. operates in over 50 countries, with its operations organized into four geographic reporting segments: North and Latin America (“NLA”), Europe and Sub-Saharan Africa (“ESSA”), Middle East and North Africa (“MENA”), and Asia-Pacific (“APAC”).

• NLA: 33.0% of total revenue in 2024.
• ESSA: 33.0% of total revenue in 2024.
• MENA: 19.4% of total revenue in 2024.
• APAC: 14.6% of total revenue in 2024. Approximately 18% of the Company's total revenue in 2024 was generated in the U.S., with no other individual country representing more than 10% of total revenue.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 22.2%
• Operating Margin: 5.5%
• Net Margin: 3.0%
• Adjusted EBITDA: $347.4 million (+39.6% YoY)
• Adjusted EBITDA Margin: 20.3%

Investment in Growth:

• Capital Expenditures: $143.6 million
• Strategic Investments:
  • Coretrax acquisition (May 15, 2024) for an estimated fair value of $187.2 million.
  • PRT Offshore acquisition (October 2, 2023) for an estimated fair value of $90.8 million.
  • DeltaTek Oil Tools Limited acquisition (February 8, 2023) for an estimated fair value of $18.4 million.

Business Segment Analysis

North and Latin America (“NLA”)

Financial Performance:

• Revenue: $566.0 million (+10.6% YoY)
• Operating Margin: 25.1% (Segment EBITDA margin)
• Key Growth Drivers: Higher subsea well access revenue in the U.S. and Trinidad and Tobago, increased well flow management revenue in the U.S. and Mexico, higher well intervention and integrity activity in South America, and contributions from the Coretrax acquisition.
• Segment EBITDA: $142.0 million (+9.1 million YoY). The Segment EBITDA margin decrease from 26.0% in 2023 to 25.1% in 2024 reflects reduced activity on high-margin well construction projects.

Product Portfolio:

• Provides well construction, well flow management, subsea well access, and well intervention and integrity solutions. The Coretrax acquisition contributed to the segment's product offerings.

Market Dynamics:

• North American drilling activity is projected to decrease by 3% in 2025, with operators focusing on increasing lateral length of horizontal wells. Latin American drilling activity is also projected to decrease by 3% in 2025, with onshore activity declining by 6% and offshore activity increasing by 7%. Key markets include Mexican offshore, Argentinean shale, offshore Brazil, Colombia’s mature fields, and ongoing development in Guyana.

Europe and Sub-Saharan Africa (“ESSA”)

Financial Performance:

• Revenue: $564.4 million (+8.3% YoY)
• Operating Margin: 25.8% (Segment EBITDA margin)
• Key Growth Drivers: Increased subsea well access activity in Angola, higher well flow management revenue in the U.K., Norway, and Denmark, and contributions from the Coretrax acquisition. This was partially offset by lower well flow management revenue in Congo.
• Segment EBITDA: $145.4 million (+9.4 million YoY). The Segment EBITDA margin decreased from 26.1% in 2023 to 25.8% in 2024, primarily reflecting a decrease in expected margins for the construction phase of the Congo production solutions project.

Product Portfolio:

• Offers well construction, well flow management, subsea well access, and well intervention and integrity solutions. The Coretrax acquisition contributed to the segment's product offerings.

Market Dynamics:

• European drilling activity is projected to decrease by 2% in 2025, driven by oil price outlook, energy transition, and fiscal policies in the UK. African drilling activity is expected to fall by 1% in 2025, with onshore activity slowing by 2% and offshore activity projected to grow by 5%, particularly in Senegal, Namibia, Nigeria, and Angola.

Middle East and North Africa (“MENA”)

Financial Performance:

• Revenue: $332.2 million (+42.3% YoY)
• Operating Margin: 34.8% (Segment EBITDA margin)
• Key Growth Drivers: Higher well flow management activity in the KSA and Algeria, increased well construction revenue in the United Arab Emirates, Egypt, and Oman, and contributions from the Coretrax acquisition.
• Segment EBITDA: $115.8 million (+44.6 million YoY). The Segment EBITDA margin increased from 30.5% in 2023 to 34.8% in 2024, primarily due to increased activity on higher-margin well flow management projects in Algeria and additional activity from the Coretrax acquisition.

Product Portfolio:

• Provides well construction, well flow management, subsea well access, and well intervention and integrity solutions. The Coretrax acquisition contributed to the segment's product offerings.

Market Dynamics:

• Middle East drilling activity is projected to increase by 3% in 2025, driven by higher activity in the UAE (gas expansion) and Kuwait. The KSA, Abu Dhabi, and Iraq are expected to collectively account for approximately 60% of overall Middle Eastern rig activity.

Asia-Pacific (“APAC”)

Financial Performance:

• Revenue: $250.1 million (+1.5% YoY)
• Operating Margin: 23.1% (Segment EBITDA margin)
• Key Growth Drivers: Increased well construction activity in Indonesia and Australia, higher well flow management revenue in Thailand, and contributions from the Coretrax acquisition. This was partially offset by lower subsea well access activity in Australia.
• Segment EBITDA: $57.7 million (compared to $1.8 million in 2023). The Segment EBITDA margin significantly increased from 0.7% in 2023 to 23.1% in 2024, primarily due to increased activity from the Coretrax acquisition and the non-recurrence of $35.9 million in unrecoverable light well intervention-related costs incurred in 2023.

Product Portfolio:

• Offers well construction, well flow management, subsea well access, and well intervention and integrity solutions. The Coretrax acquisition contributed to the segment's product offerings.

Market Dynamics:

• Asia-Pacific drilling activity is forecast to increase by 1% in 2025, driven by the outlook for oil prices and large gas and LNG projects. India, Indonesia, and Australia remain the most active drilling markets in the region.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Expro Group Holdings N.V. repurchased approximately 1.2 million shares of its common stock for $14.2 million in 2024, following repurchases of 1.2 million shares for $20.0 million in 2023.
• Dividend Payments: The Company's Board of Directors determines future dividend payments based on earnings, financial condition, liquidity, capital requirements, and financing agreements. No dividends were paid in 2024 or 2023.
• Future Capital Return Commitments: The Board authorized an extension to its stock repurchase program in December 2024, allowing the Company to acquire up to $100.0 million of outstanding common stock from October 25, 2023, through November 24, 2025. Approximately $75.8 million remained authorized for repurchases as of December 31, 2024.

Balance Sheet Position:

• Cash and Equivalents: $183.0 million (2024)
• Total Debt: $121.1 million (2024)
• Net Cash Position: $61.9 million (2024)
• Debt Maturity Profile: The Amended and Restated Facility Agreement, a revolving credit facility, has a maturity date of October 6, 2026.

Cash Flow Generation:

• Operating Cash Flow: $169.5 million (2024)
• Free Cash Flow: $25.9 million (2024)

Operational Excellence

Production & Service Model: Expro Group Holdings N.V. provides energy services across the entire well life cycle, focusing on cost-effective and innovative solutions. Its portfolio includes advanced technology for well construction (e.g., tubular running services, cementing, drilling, wellbore cleanup), global well flow management systems for safe hydrocarbon production and measurement, subsea well access solutions for exploration, development, intervention, and abandonment, and well intervention and integrity services (e.g., CoilHose™, Octopoda™, Galea™, expandable casing patches). The Company emphasizes optimizing rig floor efficiency, developing new tubular handling methods, and mitigating well integrity risks.

Supply Chain Architecture: Key Suppliers & Partners:

• Component & Raw Material Suppliers: Acquires component parts, products, and raw materials from foundries, forge shops, and original equipment manufacturers.
• Sourcing Strategy: Maintains a broad international sourcing capability to procure low-cost raw materials and components, such as steel castings and forgings.
• Quality Assurance: Implements quality assurance and testing programs for raw materials and components.
• Limited Suppliers: Certain equipment lines depend on a limited number of third-party suppliers.

Facility Network:

• Manufacturing: Largest manufacturing facilities are located in Aberdeen, Scotland, and Lafayette, Louisiana, where the Company designs, manufactures, and/or assembles a substantial portion of its service equipment.
• Research & Development: Internal engineering is a component of R&D costs.
• Distribution: Operates regional facilities globally to support operations in over 50 countries.
• Key Locations: Corporate offices in Houston, Texas, and Reading, United Kingdom. Regional operations, manufacturing, engineering, and administration in Aberdeen, Scotland, and Lafayette, Louisiana. Other regional operations include Georgetown, Guyana; Macaé, Brazil; Neuquen, Argentina; New Iberia, Louisiana; Broussard, Louisiana; Villahermosa, Mexico; Den Helder, the Netherlands; Stavanger, Norway; Al Khobar, Kingdom of Saudi Arabia; Dubai, United Arab Emirates; Hassi Messaoud, Algeria; Kuala Lumpur, Malaysia; Labuan, Malaysia; and Perth, Australia.

Operational Metrics:

• Lost Time Injury Frequency (LTIF) rate: 0.00 in 2024 (0.06 in 2023, 0.36 in 2022).
• Total Recordable Case Frequency (TRCF) rate: 1.05 in 2024 (0.61 in 2023, 1.07 in 2022).
• The Company maintains comprehensive compliance policies, programs, and standardized global training processes to ensure high safety and quality standards.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Primarily engages with customers through direct service purchase orders or master service agreements, supplemented by individual call-out provisions.
• Integrated Services: Procures third-party products and services on behalf of customers, often with a mark-up or as part of integrated services contracts.
• Equipment Sales: Designs, manufactures, and sells equipment, typically linked to related operations and maintenance arrangements.

Customer Portfolio: Enterprise Customers:

• Client Base: Serves a diverse and stable global customer base, including national oil companies (“NOC”), international oil companies (“IOC”), independent exploration and production companies (“Independents”), and service partners.
• Strategic Partnerships: Maintains strong, long-standing relationships with several of the world’s largest NOCs and IOCs.
• Customer Concentration: One customer in the Europe and Sub-Saharan Africa segment accounted for 10.5% of total revenue in 2024 and 12.5% in 2023. No single customer accounted for more than 10% of revenue in 2022.
• Credit Risk Management: Conducts ongoing credit evaluations and maintains reserves for potential credit losses, but generally does not require collateral for trade receivables.

Geographic Revenue Distribution:

• U.S.: 18% of total revenue in 2024.
• Regional Breakdown (2024): North and Latin America (33.0%), Europe and Sub-Saharan Africa (33.0%), Middle East and North Africa (19.4%), Asia-Pacific (14.6%).
• Growth Markets: International, offshore, and deepwater activities strengthened in 2024. Significant projects are noted in Guyana, Brazil, Mexico, the Kingdom of Saudi Arabia, the United Arab Emirates, and China. Gas and liquefied natural gas production and associated asset development are growing in the ESSA and MENA regions.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics:

• Competitive Landscape: Operates in competitive markets characterized by continuous technological advancements and potential for rapid improvements in equipment quality and scope.
• Customer Consolidation: The industry has experienced and may continue to undergo consolidation among major customers, leading to increased purchasing power and demands for pricing concessions.
• Offshore Cyclicality: Demand for offshore services is historically cyclical, influenced by oil and gas prices and various other factors, including weather, geopolitical conditions, and exploration success.
• Market Outlook: Global liquids demand is expected to grow in 2025, albeit at a reduced rate, with international, offshore, and deepwater activity strengthening. There is increased demand for brownfield, production enhancement, and production optimization technologies, particularly for gas and LNG developments.
• Energy Transition: The global energy sector is transitioning towards cleaner alternatives, with hydrocarbons, especially natural gas, expected to play a vital role.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Expro Group Holdings N.V. competes with several companies, some of which possess greater financial and other resources.
• Peer group for performance comparison includes: Baker Hughes Company, ChampionX Corporation, Core Laboratories, Inc., Innovex International, Inc., TechnipFMC plc, Halliburton Company, Helix Energy Solutions Group Inc., National Energy Services Reunited Corp., Patterson-UTI Energy, Inc., Oceaneering International, Inc., NOV Inc., and Schlumberger Limited.

Emerging Competitive Threats:

• The development of alternative products and services that could compete with or displace current offerings.
• New market entrants and disruptive technologies.
• Increased competitiveness from alternative energy sources (e.g., wind, solar, geothermal, tidal, biofuels) could reduce demand for hydrocarbons and, consequently, for the Company's products and services.

Competitive Response Strategy:

• Differentiates through superior customer service, innovative products and solutions, and global support capabilities.
• Emphasizes quality assurance systems, experienced personnel, and a strong reputation for safe operations, environmental stewardship, compliance, and ethical engagement.
• Continuously advances well construction methods by optimizing rig floor efficiency, developing new tubular handling techniques, and mitigating well integrity risks.
• Invests in technologies to enhance the sustainability of customer operations and digital transformation initiatives to support commercial and environmental goals.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Oil & Gas Price Volatility: Business performance is highly dependent on oil and gas exploration, development, and production activity, which is significantly influenced by commodity prices and market expectations. Higher prices do not always translate to increased activity.
• Global Economic Conditions: Stagnation or deterioration in global economic conditions can reduce demand for products and services, leading customers to cut capital spending.
• Geopolitical Events: Ongoing conflicts (e.g., Russian war in Ukraine, Middle East tensions) contribute to price volatility and can disrupt financial and commodities markets.
• OPEC+ Decisions: Production decisions by OPEC+ nations significantly impact oil and gas prices and supply.
• Energy Transition: The global shift towards renewable energy sources could reduce customer expenditures on fossil fuels, impacting demand for the Company's services and products if the transition occurs faster or differently than anticipated.
• Customer Consolidation: Consolidation among major customers can lead to reduced capital spending, increased pricing pressure, and decreased demand for services.
• Technology Disruption: Rapid technological developments in the industry mean new products and services could displace existing offerings, requiring continuous innovation to maintain competitiveness.
• Customer Concentration: Reliance on a single large customer (10.5% of 2024 revenue) poses a risk if that customer experiences financial difficulties or reduces activity.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Certain product lines rely on a limited number of third-party suppliers, creating vulnerability to disruptions in price, quality, availability, or timely delivery of components.
• Physical Dangers & Operating Hazards: Operations involve hazardous drilling, completion, and production applications, with inherent risks such as equipment malfunctions, explosions, blowouts, and natural disasters, potentially leading to personal injury, loss of life, operational suspensions, and significant property or environmental damage.
• Insurance Coverage: Insurance and contractual indemnity protection may not cover all risks or be sufficient in all circumstances, and the Company generally does not carry business interruption insurance.

Financial & Regulatory Risks

Market & Financial Risks:

• Customer Credit Risk: Concentration of customers in the energy industry exposes the Company to credit risk, as customers may be similarly affected by adverse economic conditions or commodity price changes, potentially leading to delayed payments or uncollectible receivables.
• Foreign Exchange: Exposure to fluctuations in exchange rates between the U.S. Dollar and other currencies can impact reported consolidated statements of operations and cash flows. A 5% appreciation (depreciation) in the U.S. Dollar is estimated to change net income by approximately $0.9 million.
• Interest Rate Risk: Borrowing activities, particularly under the revolving credit facility (which bears interest at SOFR plus a margin), expose the Company to interest rate changes. A 5% change in interest rates is estimated to impact results of operations and cash flows by approximately $6.1 million.
• Credit & Liquidity: Restrictions and financial covenants in the Revolving Credit Facility could limit financial flexibility and, if violated, trigger remedies that materially affect the business.

Regulatory & Compliance Risks:

• Environmental & Occupational Health and Safety Regulation: Subject to numerous stringent environmental and safety laws globally, with non-compliance potentially resulting in significant penalties, criminal prosecution, and costly remedial actions.
• Climate Change Regulation: Increasing global and national efforts to limit greenhouse gas emissions could lead to higher compliance costs, reduced demand for fossil fuels, and decreased demand for the Company's services.
• Hydraulic Fracturing Regulation: Potential for new or stricter regulations on hydraulic fracturing could reduce or delay well drilling and completion activities, impacting demand for services.
• Offshore Regulatory and Marine Safety: Moratoria or stricter regulations on offshore drilling could limit operations and reduce demand.
• Trade & Export Controls: Subject to complex and changing international trade laws, tariffs, economic sanctions, and export controls, with non-compliance risking penalties, sanctions, and loss of privileges.
• Anti-Corruption Laws: Required to comply with laws like the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010, with risks of unauthorized payments by employees or agents, potentially leading to severe sanctions and reputational damage. The Company paid $1.0 million in 2023 related to an SEC cease-and-desist order for FCPA violations.
• Data Privacy: Subject to evolving data protection and information security regulations (e.g., GDPR), with non-compliance potentially leading to fines, sanctions, and reputational harm.
• AI Risks: Integration of AI tools presents risks including privacy/security breaches, inaccurate results, and compliance challenges with rapidly evolving regulatory standards.

Geopolitical & External Risks

Geopolitical Exposure:

• Political & Economic Instability: Operations in various countries expose the Company to risks such as political instability, expropriation of assets, inflationary pressures, and inability to collect revenue due to currency shortages.
• Trade Relations: Risks from import/export quotas, tariffs, and adverse tax policies.
• Sanctions & Export Controls: Compliance with sanctions regimes can restrict transactions with certain countries, persons, and entities.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Well Construction: Advanced tubular running services, tubular products, cementing (including proprietary SeaCure® and QuikCure® solutions), drilling, and wellbore cleanup (including proprietary downhole circulation tools and hydraulic pipe recovery systems).
• Well Flow Management: Global, comprehensive systems for safe production, measurement, and sampling of hydrocarbons, including well testing, flowback, early production facilities, production enhancement packages, and metering technologies.
• Subsea Well Access: Extensive portfolio of standard and bespoke Subsea Test Tree Assemblies (“STTA”) and motion-compensating surface handling equipment.
• Well Intervention & Integrity: Innovative solutions such as CoilHose™ (lightweight solution for wellbore lifting, cleaning, chemical treatments), Octopoda™ (fluid treatments in wellbore annuli), Galea™ (autonomous well intervention), and expandable casing patches.
• Monitoring: Non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring.

Innovation Pipeline:

• Focused on optimizing process efficiency on the rig floor, developing new methods for tubular handling and installation, and mitigating well integrity risks.
• Actively developing technologies to enhance the sustainability of customer operations and implementing digital transformation initiatives.
• Engaged in early-stage carbon capture and storage, geothermal, and flare reduction segments.

Intellectual Property Portfolio:

• Patent Strategy: Owns and controls a variety of intellectual property, including multiple U.S. and international patents and pending patent applications, proprietary information, trade secrets, and software tools. The Company does not consider any single patent or license to be critical to its business. Efforts are made to limit access to technology and trade secrets through confidentiality agreements.
• Licensing Programs: Not explicitly detailed.

Technology Partnerships:

• Strategic Alliances: Investments in joint ventures like COSL - Expro Testing Services (Tianjin) Co. Ltd. in China and PV Drilling Expro International Co. Ltd. in Vietnam provide access to challenging Asian markets and offer the full capabilities and technology of Expro Group Holdings N.V.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company maintains a strong performance management culture that supports development plans and succession planning.

Board Composition: Entities affiliated with Oak Hill Advisors, L.P. have the right to designate one non-executive director nominee to the Board as long as the Oak Hill Group collectively owns at least 10% of the total outstanding common stock as of the Merger closing date.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 8,500 employees worldwide as of December 31, 2024.
• Geographic Distribution: Approximately 14% of employees are located in the U.S.
• Skill Mix: The Company invests in learning and development programs to reinforce existing skill sets and develop new competencies, indicating a focus on a skilled and adaptable workforce.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Aims to attract, retain, and nurture a talented and diverse workforce to achieve growth ambitions.
• Retention Metrics: Approximately 19% of employees are subject to collective bargaining agreements, with 11% under agreements expiring within one year. Most U.S. employees are at-will.
• Employee Value Proposition: Offers challenging careers, training, fair pay, and competitive benefit packages tailored to local markets to attract and retain talent.

Diversity & Development:

• Diversity Metrics: Committed to equal treatment regardless of race, color, nationality, sex, disability, age, religion, or other prohibited factors, striving for a work environment free of harassment and bullying. Diversity and inclusion are considered important for varied experiences, ideas, and insights.
• Development Programs: Invests in learning and development programs to update skills and develop new areas of expertise, supported by a strong performance management culture for career progression and succession planning.
• Culture & Engagement: Guided by core values (People, Performance, Partnerships, Planet) and a Code of Conduct. Actively solicits employee feedback through initiatives like the 2024 Global Employee Survey and fosters an ownership mindset.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Expro Group Holdings N.V. is committed to advancing its product and service portfolio to enable customers to produce oil, gas, and geothermal resources more efficiently and with a lower carbon footprint.
• The Company is active in early-stage carbon capture and storage, and has established expertise and operations in geothermal and flare reduction segments.
• It is developing technologies to enhance the sustainability of customer operations, alongside digital transformation initiatives.

Social Impact Initiatives:

• Community Investment: Encourages and celebrates employee participation in diverse community activities aligned with its core values (People, Performance, Partnerships, Planet), supported by a company-wide social steering committee.
• Product Impact: Aims to assist and enable customers in developing more sustainable energy solutions.
• Employee Health and Wellbeing: Prioritizes employee health and wellbeing, providing encouragement for supportive networks, collaborative culture, regional online wellness hubs, and 24/7 online support through its Employee Assistance Program (“EAP”).
• Safety: Safety is a critical component of the Company's core values. It continuously monitors and improves safety performance, with a Lost Time Injury Frequency (LTIF) rate of 0.00 in 2024 and a Total Recordable Case Frequency (TRCF) rate of 1.05 in 2024.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Seasonal weather changes and significant weather events (e.g., winter in the North Sea, monsoon season in South and Southeast Asia, hurricanes/typhoons) can temporarily reduce activity levels and disrupt operations.
• Economic Sensitivity: Customer spending patterns can lead to higher or lower activity in the fourth quarter (based on annual budgets) and first quarter (based on new year budget approvals). Energy consumption is seasonal, and variations from normal weather patterns can significantly impact demand.
• Industry Cycles: Offshore activity is historically cyclical, characterized by large fluctuations in response to changes in oil and gas prices and other factors.

Planning & Forecasting:

• The Company's outlook for 2025 anticipates a stable market with relatively flat-to-modest growth, supported by commodity prices and energy security requirements, despite a slowing in demand growth.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Expro Group Holdings N.V. is subject to numerous stringent foreign, federal, state, and local environmental, occupational health and safety, and other governmental and regulatory requirements worldwide.
• These include laws governing emissions, discharges, worker safety, and environmental protection, with potential for significant sanctions for non-compliance.
• The Company's business is affected by changing taxes, price controls, and other regulations in the oil and gas industry, including potential for laws curtailing exploration and development.
• Some non-U.S. countries may favor or require local contractors or employment of local citizens, potentially disadvantaging the Company.

Trade & Export Controls:

• The Company's international operations are subject to extensive trade laws and regulations, including customs laws, import/export controls, and economic sanctions imposed by governments.
• Compliance with U.S. anti-boycott laws and potential tariffs is also required. Non-compliance can result in criminal and civil penalties, sanctions, and loss of privileges.

Legal Proceedings:

• In April 2023, the SEC issued a cease-and-desist order against the Company related to an internal investigation into possible U.S. Foreign Corrupt Practices Act violations in West Africa. The Company paid $1.0 million in disgorgement, prejudgment interest, and civil penalty.
• The Company is subject to lawsuits and claims in the ordinary course of business but believes the ultimate outcome of these matters will not have a material adverse effect on its financial position, results of operations, or cash flows.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate was 56.5% in 2024, 547.4% in 2023, and 768.0% in 2022. These rates are significantly influenced by permanent differences, the effect of overseas tax rates, net tax charges related to attributes with full valuation allowance, withholding taxes, foreign exchange movements on tax balances, and movements in uncertain tax positions.
• Geographic Tax Planning: Operates in over 50 countries and is subject to various domestic and foreign taxing jurisdictions, agreements, and treaties. The Company does not recognize deferred taxes on accumulated unremitted earnings of foreign subsidiaries, considering them indefinitely reinvested.
• Tax Reform Impact: Evaluated the impact of the OECD’s Pillar Two Model Rules for a global minimum tax and determined they do not have a material impact on its consolidated financial statements.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains insurance coverage for general liability, umbrella liability, sudden and accidental pollution, personal property, vehicle, workers’ compensation, and employer’s liability, with various limits and deductibles. The Company generally does not procure business interruption insurance.
• Risk Transfer Mechanisms: Contracts typically include indemnification provisions where customers indemnify the Company for claims related to their employees, equipment, reservoir damage, and pollution emanating from customer equipment or the reservoir. Conversely, the Company indemnifies customers for claims related to its employees, equipment, or pollution from its equipment.
• Uninsured Risks: Assets are generally not insured against loss from political violence such as war, terrorism, or civil unrest.