Expro Group Holdings N.V.

Hello and welcome to today's EXPRO fourth quarter earnings 2021 conference call. My name is Elliot and I will be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I would now like to hand over to our host, Karen David-Green. Please go ahead.

Welcome everyone to EXPRO's fourth quarter 2021 conference call. I'm joined today by Mike Jardin, CEO and Quinn Fanning, CFO. First, Mike and Quinn will share their prepared remarks, and then we will open it up for questions. The condensed consolidated financial statements of the company reflect the financial position, results of operations, and cash flows of only Legacy Expo for all periods prior to October 1, 2021, the merger date, and of the combined company, including activities of Frank, for all periods subsequent to the merger date. We have an accompanying presentation on our fourth quarter results that is also posted on the Expro website, Expro.com, under the Investor section. The presentation, along with the downloadable financials, both reflect the pro forma combined company results of Legacy Expro and Legacy Pay. 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 by such statements. Such statements speak only as of today's date, and the company assumes no responsibility to update any forward-looking statements as of future dates. The company has included in its SEC filing cautionary language identifying importance factors that could cause actual results to be materially different from those set forth in any forward-looking state. A more complete discussion of these risks is included in the company's SEC filings, which may be accessed on the SEC's website or on our website 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 fourth quarter 2021 earnings release, which can be found on our website. With that, I'd like to turn the call over to Mike.

Thank you, Karen. Good morning and good afternoon, everyone. I'm excited to be speaking with all of you today to discuss Expro's strong results for the fourth quarter, which marks the first full quarter of our new company after completing our merger with Franks International. While Expro and Franks were both leaders in their own right, together we have a more resilient business model that is positioned to continue to win in the market and lead the next chapter of our industry, given the following. Our balanced portfolio of services and solutions that span the well life cycle, which provides true cycle resilience and ability to better capture cyclical recovery upside. Our diversified global footprint with operations in key growth markets, Our best-in-class innovation platform and technology portfolio that enables us to support our customers' carbon capture reduction goals. And finally, our strong balance sheet and merger-related synergies, which bring a significant degree of operational flexibility and strategic optionality in order to accelerate growth and create long-term shareholder value. The fourth quarter results we announced today and our outlook for 2022 underscore the strong business combination that we have created through the merger and the opportunities ahead for our business as we continue to capitalize on positive industry trends. On today's call, I plan to first walk you through our fourth quarter performance, secondly, give you an update on our integration process, and finally, provide some perspective on trends we are seeing in the broader industry environment. Starting with our fourth quarter performance, we delivered outstanding results that demonstrate our progress, unlocking the value inherent in our scale, broad portfolio of solutions, global operating footprint, true cycle capabilities, and strong financial profile. For the fourth quarter, we delivered revenue of $296 million and adjusted EBITDA of $51 million. Our growth was broad-based across our regions and product lines with particularly notable growth in the areas of production, subsea well access, and well intervention and integrity services. Importantly, we saw the significant benefit of our diversified portfolio as we enhanced our business mix and our team continued to capitalize on improving industry fundamentals and our broad suite of innovative solutions to win new business and expand our relationship with existing customers. We achieved contract wins and extensions totaling $235 million, which is a true testament to our team's resilience and the traction that our solutions are gaining on the market. On a regional basis, in North and Latin America, we rewarded contracts across Argentina, the Gulf of Mexico, Trinidad, Guyana, and Canada for case toll services, flowback services, the provision of tubulars, advanced reservoir testing, and integrated testing services for exploration and appraisal well. During the quarter, we also successfully completed our first operation for a distributed fiber optic system in Argentina. The Europe and Sub-Saharan Africa team secured contracts in Angola, the Eastern Mediterranean, and the UK for subsea and well test, again, as a direct result of our continued focus on service delivery. In the fourth quarter, we also commissioned our first automated tong system, which uses artificial intelligence to optimize tubular makeups. This groundbreaking system will facilitate a step change in drilling rig efficiency and safety, reducing manpower requirements, and improving well integrity. This one-touch automated system is well aligned to our customer's drive for automation and will build on our record-setting rig operations performance. In the Middle East and North Africa, we secured a significant contract in Northeast Africa for the provision of multi-phase pumps, which allow enhanced production from challenging production wells. During the quarter, we also successfully carried out a large trace element campaign supporting the design of a future gas plant in Iraq. A $67 million contract was secured in Saudi Arabia, the first contract that we can directly attribute to the merger of the two companies for the provision of tubular running services. We also achieved a significant milestone in the region as we passed half a million hours of data transmission. This is a testament to the breadth of our data analytics capabilities and is a win for our team in the region if they are able to harness the data to develop more targeted solutions for our customers. In Asia Pacific, the team secured contracts in Thailand for well intervention. Tubing conveyed perforating solutions in Indonesia and subsea work for a four-well abandonment campaign in Australia, all as a result of our service delivery performance. We also performed a radio cutting service for a new geothermal customer in Indonesia where we were able to successfully perform operations which had previously proven problematic. In November, we announced four significant subsea well access contracts in Southeast Asia and Australia worth in excess of $50 million. This award includes the delivery of an integrated subsea solution including our industry leading intervention riser system to access the wells and undertake plug and abandonment work. During the quarter, we also continue to advance our innovation platform to develop the next generation of solutions that will serve as differentiators for EXPRO and we believe will help bring on board new customers. A key highlight from this work is our successful integration test of a legacy EXPRO electrohydraulic subsystem umbilical with a legacy Frank's tubular running services sheaveless Cobra control line manipulator arm. This combination of technologies provides deployment efficiency while improving the safety of operations. This test generates significant customer interest, and we already have one large customer committed to using this offering in a key operation in the Eastern Mediterranean in the first quarter of 2022. Additionally, in the quarter, we announced the launch of Galea, the world's first fully autonomous well intervention system that's designed to maximize production by reducing intervention costs, HSE risks, and overall environmental impact. This system builds on our commitment to developing new technologies that help our customers achieve their carbon reduction goals and create a more sustainable future. While our technology is a key differentiator, one of the main reasons we are seeing customers continue to choose Expro over our competition is our consistently excellent service. I want to specifically highlight the work of our Europe and Sub-Saharan Africa team whose flexibility and commitment to our customers led to growth and new business in December with a record score for our job performance across all of our operating areas. Our customers' feedback averaged 97%, meaning the majority of our customers ranked our service in all categories as excellent. This is a testament to the strong project execution by our team, combined with Expro's cost-effective, technology-driven solutions offering. Our service quality, based on our customer job performance rate, is historically very strong, and we ended 2021 with an average of 94.6% across all the regions, where North and Latin America, Europe, Sub-Saharan Africa, and Asia Pacific were all in excess of 94%, and the Middle East and North Africa was over 95%. We expect to continue to enhance our service delivery as we continue implementing our integration plans to enhance the coordination and collaboration of our legacy Franks and Expro teams to work as one seamless organization. We have already made significant progress executing on the comprehensive plans we developed prior to close. As we have worked through this process, we have begun to see the true power of our new team. Our strong financial profile provides us the flexibility to continue to invest in our portfolio through market cycles to develop the next generation of solutions that address our customers' needs and support their carbon reduction goals as part of the energy transition. This past year, we allocated 40% of our research and development spending to carbon reduction initiatives and efforts, and we expect that percentage to approach 50% in 2022. In doing so, we are developing and advancing solutions that will play a critical role in enabling our customers to achieve their own emission reduction goals. EXPRO is committed to playing a leading role in the low carbon energy transition through transforming our portfolio and achieving net zero emissions by 2050. We continue to pursue work across the value chain with suppliers and customers to not only reduce our own environmental impact, but to support the sustainability initiatives of our customers. EXPRO has established operations and technologies within geothermal and flare reduction and gas recovery segments, and has continued to develop our offerings within the energy transition space. In particular, we have seen increasing growth in carbon capture and storage, or CCS, since our involvement in a successful Northern Lights CCS project in Norway. Before I turn the call over to Quinn, I want to provide some perspective on trends we are seeing in the market and what we expect in the year ahead. We continue to see strengthening signals of a multi-year recovery. We expect demand for our services and solutions to increase throughout 2022 as operators look both to increase production from existing assets and to develop new fields. We anticipate better business conditions and activity levels throughout 2022 and beyond and are confident that the pipeline of projects we are seeing will support multi-year growth for the energy services sector. is particularly strong potential for a number of the geomarkets within North and Latin America, the Middle East, Africa, and Asia. Natural gas demand has remained strong in the U.S. and internationally due to increased economic activity, which is forecast to drive new infrastructure developments and further increased activity levels. Although Expo has traditionally had minimal revenue in Russia and the Ukraine, less than 1%, we are disheartened to see the ongoing conflict in Ukraine and hope that a peaceful resolution will soon be achieved. There is also a trend for the IOCs to increase the natural gas share of their overall production and thereby better balance their gas-liquids portfolios. In parallel to this, national oil companies are focused on accelerating field development efforts in order to stimulate their country's economic recovery. Internationally, the super majors are increasingly focused on lower risk phase developments. In addition, efforts to reduce emissions and more broadly to position themselves for the energy transition continue to gather momentum and be a priority for our IOC customers. We believe international exploration activity will become more near field and infrastructure-led in the near term. The outlook for the first and second quarter of 2022 indicates a continuing modest recovery in E&P expenditures, albeit at different rates in individual countries. In the medium term, With final investment decision approvals anticipated to continue growing, nearly 60% of those commitments are expected to be offshore. We also believe oil and gas demand will soon recover to 2019 levels, resulting in operators that will need to again focus on reserves replacement following a multi-year period of underinvestment and lower volumes of discoveries. For now, operators seem most focused on maximizing the investments that they have made previously. Consistent with past recoveries, incremental off-ex spending and brownfield enhancement programs are expected to be an initial area of customer focus. And in select markets, we are seeing some signs of a recovery in intervention and well integrity projects, execution of which is a traditional strength of Expro. More broadly, we believe offshore deepwater activity and shale or tight-fell projects will be the largest growth areas, which should support sustained growth for EXPRO given our capabilities in subsidy well access services, complex well construction services, and production optimization. Bolstered by constructed commodity pricing, we are experiencing increased activity, which we expect to gain momentum as we progress through 2022 and beyond. EXPRO is uniquely positioned to serve our clients in the current market environment. We anticipate increased demand for existing services and more opportunities to provide new solutions from our enhanced portfolio. We are differentiating ourselves in the market as well experts across the full well lifecycle with a focus on integrity in all its forms, whether that means ensuring connection integrity, integrity in our services to our customers, or ability to enhance management integrity. We are also leading the industry in technology supporting energy transition, which will become increasingly important as customers around the world look to accelerate their carbon reduction strategies. Combined with technology and know-how, prioritizing QHSE allows the company to get absolute focus on advancing the company and delivering maximum value to our customers, shareholders, and other stakeholders. With that, I will hand the call over to Quinn to discuss our financial results.