Expro Group Holdings N.V.

Thank you for standing by. My name is Carly and I will be your conference operator today. At this time, I would like to welcome everyone to the ExPro Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Press star 1 again. Thank you. I would now like to turn the call over to Dave Wilson, Vice President, Investor Relations. Mr. Wilson, you may begin.

Thank you, operator. Good morning, everyone, and welcome to EXPRO's second quarter 2026 earnings call. I'm joined today by Mike Jardon, CEO, and Sergio Maiworm, CFO. Both Mike and Sergio will have some prepared remarks after which we'll open the call for questions. In association with today's call, we have an accompanying presentation on our second quarter results, which is posted on the Expro website, Expro.com, under the Investors section. Before we begin today's call, I'll remind everyone that some of today's comments may refer to or contain forward-looking statements. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These statements speak only as of today's date, and the company assumes no responsibility to update such forward-looking statements. The company has included in its SEC filings cautionary language identifying important risk 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 is included in the company's SEC filings, which may be found on the SEC website, sec.gov, or on our website, again, expo.com. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most recently comparable GAAP financial measures in our second quarter earnings release, which was issued this morning and can also be found on our website. With that said, I'll turn the call over to Mike.

Good morning, everyone, and welcome to EXPRO's second quarter call. I'll begin by reviewing the second quarter 2026 financial results from today's press release. I'll then cover off a couple of additional key topics, some commentary on the overall macro environment, to write some more thoughts around our enhanced drilling acquisition, which we closed on just recently. Then we'll revisit our outlook for the second half of 2026, which will include the enhanced drilling operations. And finally, I will conclude with some operational highlights for the quarter. Following my comments, Sergio will then address the company's ongoing capital allocation framework. Let's begin on slide number three. For the second quarter, the company saw a good sequential increase coming out of the seasonally weaker first quarter that we experience in our business on an annual basis. This increase would have been more profound had it not been for the operational and financial impacts caused by the ongoing Middle East conflict, which we previously disclosed. As a reminder, our MENA region is comprised of both Middle East and North Africa operations, and there have been no disruptions to our operations in North Africa, which continue to perform really well. I will address the impact of the Middle East conflict on our business later in the call in conjunction with our outlook for the second half of 2026. For the quarter, the company generated $393 million of revenue and $76 million of adjusted EBITDA, representing a 19% margin. Adjusted free cash flow for the quarter was $56 million. Additionally, during the quarter, we announced the enhanced rolling acquisition, which we have now fully closed. Also during this quarter, Expro shareholders approved the company's re-domicile from the Netherlands to Cayman Island, which also was recently completed and resulted in the company's legal name changing from Expro Group Holdings to Expro Limited. Now, before revisiting the enhanced drilling acquisition, I want to spend a few moments relaying how we currently see the market. We continue to see a supportive backdrop for offshore and international energy markets. This view really has not changed over the past six months. The Middle East conflict was not the genesis of this as our business is long cycle, and the industry started seeing indications of this as far back as late last year with increasing subsea tree orders and offshore rig utilization rates. The Middle East conflict and resulting instability has really heightened the importance of energy security, supply diversification, and having a resilient energy infrastructure, which will likely only add to additional offshore and international momentum in the near term. While this industry is routinely characterized by change and volatility, one thing that has remained constant is the operator's focus on project economics. As part of that, efficiency has become an increasingly important consideration in making those economics as attractive as possible. Consequently, we are seeing operators place a greater emphasis on technology-enabled performance improvements. Whether that be through automation, increasing reliability and consistency, or process optimization, or a combination of all the above. This is what gets me really excited about Expro and our future. These technology-based efficiency gains desired by our customers is what we deliver and is something we focus on in continuing to grow within our portfolio of service offerings. Along these lines, we recently closed on the enhanced drilling acquisition, which brings another differentiated technology into our portfolio. In our quarterly presentation on slides four through seven, We provide a little more on enhanced drilling and its technology. Slide four contains a brief recap of the transaction, which we previously discussed last quarter. Slide five and six reflect a high level comparison of conventional MPD and enhanced drilling's next generation technology. While on slide seven, we provide some value added examples of this technology, as well as real world uses of the technology in various basins and the benefits realized by the operators. With the acquisition now complete, EXPRO is positioned to offer enhanced drilling MPD technology, often referred to as Controlled Mud Level Drilling, or CML. We believe that these technologies will enable EXPRO to work even more closely with customers, especially earlier in the well-designed and planning phases, where we can assist customers in addressing critical technology challenges that will ultimately result in a reduction of operational risks and improvement in execution, consistency, and reliability. and a lowering of total well costs. Put simply, the value add is we believe this technology can reduce total well costs. For example, drilling a well with one less casing string could potentially save on approximately five to seven days of drilling time. And we also believe that it can reduce the operational risk of targeting reserves, especially in an area where there has been previous production and an operator has to drill through a depleted reservoir in order to access or unlock additional reserves from another reservoir section. We have highlighted this on slide number seven. Currently, enhanced drilling is utilizing this technology primarily in Norway and the U.S. Gulf, but we see opportunities for it to be deployed in West Africa, South America, including Brazil, as well as in Asia Pacific. Here again, this leverages EXPRA's global operating footprint to accelerate the international adoption and deployment of key technologies, like we've been able to accomplish with previous acquisitions. So now let's jump on to slide number eight. Here we are providing our updated 2026 financial guidance. We are taking a conservative approach given the uncertainty in the Middle East, but I remain confident we will achieve what we've set out to do. This guidance includes the cumulative impacts from the Middle East conflict on our business operations. To clarify, The cumulative impact includes those disruptions experienced thus far in the first and second quarters, as well as what we expect for the balance of the year in terms of further disruptions and inhibiting near-term growth opportunities in the Middle East. Our updated guidance also accounts for the recently closed enhanced drilling acquisition, of which five months of operations will be included for 2026. We remain constructive on our second half of 2026, especially during the fourth quarter, where we expect a sizable ramp up in revenue, adjusted EBITDA, and margin generation. With this expected ramp, there are a few items to call out, similar to those we mentioned previously, which are helping to drive this. In our North and Latin America region, we expect incremental contribution from subsea well access and well flow management projects, as well as tubular sales in the U.S. Gulf in the fourth quarter, as well as some well intervention and integrity work in Columbia. In our Middle East and North Africa region, we still expect increasing contributions from our North Africa operations, particularly around a sizable production solutions project that should be recognized during the fourth quarter. Additionally, we expect some equipment sales in the region during the back half of the year, which will also contribute to the increase. In our Asia Pacific region, we expect the back half of the year to be sequentially higher than the first half, with our well construction and well management businesses contributing incrementally more, along with subsea equipment sales in China. In the Europe and Sub-Saharan Africa region, while we do not expect much incremental growth in the back part of the year, we project there will be some at the margin with this segment being a steady and sizable contributor to overall revenue and EBITDA for the company. And finally, the inclusion of enhanced drilling operations during the last five months of the year. Offsetting some of the expected increases in financial performance during the back half of the year relates to some of our Middle East operations, which are now projected to be impacted by the conflict for the balance of the year. Instead of returning to more normalized operating levels, which would have been additive during the second half, some operations are still being impacted and we have assumed they will be for the balance of the year. On a related note, We had anticipated our high margin core tracks business to generate incremental contributions during the second half of the year, particularly in the Middle East, where that product line has its largest exposure. Previously, we had expected incremental contributions from this product line across our geographic regions. However, those incremental contributions are now lower than previously anticipated this year, with some activity moving into 2027. To be clear, we still see this product line improving over the back half of the year, just not as much as we had anticipated at the beginning of this year. Additionally, it's worth mentioning here that EXPRO has successfully completed all internal projects related to our Drive 25 self-help program. In 2026, we expect to fully realize more than $40 million of structural cost renewables. Furthermore, we remain focused on driving efficiency and optimizing our cost base. As part of this continuous process, The company is currently assessing targeted actions across selected geographies and product lines to continue to improve returns, enhance operating leverage, and support sustained margin expansion and free cash flow growth. Now, moving on to our customers and technology highlights for the quarter on slide number nine. During the second quarter, we continued to demonstrate our customer successes and technological capabilities. Similar to last quarter, we had several examples to choose from, but only highlight a few here. and the U.S. Gulf, EXPROS successfully completed all field trials for its 1,250-ton extended-range drilling spider with a major operator, which culminated in a final wellbore cleanout run. These trials demonstrated reliable performance in demanding offshore conditions and confirmed that this system's operational readiness for commercialization and broader deployment. This technology reduces conventional rig up and rig down activities, streamlining operations while minimizing manual equipment handling which delivers value for customers to reduce rig time and also with improved rig floor safety. In the UK, we successfully completed an abandonment campaign for a customer achieving 2,490 operating hours or 104 days with zero non-productive time. This is a great example of productivity and efficiency which we provide to our customers. In Namibia, we delivered fluid lab services to an operator where the significance here is it was the first in-country service of this type. These services include fluid restoration, pressure volume and temperature analysis, as well as compositional analysis and demonstrated our advanced reservoir fluid characterization capability to locally support client operations. All of these are good examples of how we are increasing our relevancy to our customers, one of our key strategic focus areas. With that, I'll turn the call over to Sergio for his comments on the quarter.