Expro Group (XPRO) Q4 2025 Earnings Transcript
Additionally, it represents the progress we have made in expanding our margins, moving us closer to our longer term goal of EBITDA margins at 25%. A key metric that registered above the guidance range was adjusted free cash flow. It came in at $127,000,000 for the year, more than doubling the amount generated in 2024. Going forward into 2026, we expect another sequential increase in the amount of free cash flow that the company can generate. For the quarter, the company reported quarterly revenue of $382,000,000 and adjusted EBITDA of $88,000,000, representing a 23% margin in the quarter. Adjusted free cash flow for the quarter was $28,000,000 or 7% of revenue.
These quarterly and annual financial results reflect the ongoing operational efficiency gains, technological product advancements and their impact on margins and cash flow, and a continued impact of our globalization strategy. Moving to slide four, Expro Group Holdings N.V.'s $2,500,000,000 backlog reflects a $196,000,000 increase during the fourth quarter. Our current backlog provides robust revenue visibility heading into 2026, and reinforces the strength of our diverse portfolio and operations across our geographic regions. Within our backlog are our long-term contracts, which provide a solid base and some stability in our revenue generation. One such recent example was a four-year $80,000,000 contract for a customer in North Africa.
This achievement represents one of Expro Group Holdings N.V.'s largest single customer awards and I will address this in a little bit more detail in some of my comments later on. Now, as we have mentioned before, this level of backlog is encouraging and supports our strategic planning visibility on revenue, but it does not represent a guarantee of future outcomes. Rather, we view our backlog as a reasonableness test and health check for our business, one that offers insight into the business going forward. As we look to the year ahead, we consider the evolving market landscape which continues to shape demand, investment, and opportunity across the sector.
Global demand for oil and gas remains resilient, supporting long-term investment particularly in the international and offshore markets to which Expro Group Holdings N.V. is well positioned. We believe the current macro environment will result in a modest recovery in upstream investment with growth concentrated in international and offshore projects, particularly deepwater developments. This will be supportive of demand for Expro Group Holdings N.V.'s well construction, well flow management, subsea, and digital solutions, while brownfield optimization and production enhancement requirements from our customers continue to provide prospects for our well intervention, production optimization, and digital offerings. Expro Group Holdings N.V.'s diverse service portfolio, strong international footprint, technology differentiation, and operational efficiency position us to capture opportunities across our geographic segments.
To summarize, Expro Group Holdings N.V. maintains a cautiously constructive outlook for 2026 and beyond, allowing us to continue supporting customers throughout the full well life cycle of their assets. Turning to slide five. We are providing our 2026 financial guidance based upon what we currently see in the global market. For the year, projected revenue for 2026 looks to be at similar levels to 2025. And although revenue expectations remain relatively flat this year, Expro Group Holdings N.V. remains strongly committed to further expanding EBITDA margins and free cash flow generation. We plan to achieve this, benefiting for a full year from our Drive 25 initiative, our increased capital efficiency, and further improving our wallet share with existing customers.
To that end, we expect our 2026 CapEx to be similar to that of the 2025 level. Looking more near term and specifically at our first quarter guidance, you will notice that we expect our first quarter results to be impacted by the normal seasonal factors that we experience almost every year in our business. The U.S. activity and revenue levels for the first quarter are projected to decline from fourth quarter due to the winter season in the Northern Hemisphere, where the U.K. or Norwegian North Sea as well as the U.S. Gulf activity tends to be lower due to ongoing winter storms and rougher than normal seas, which makes it harder to operate in the offshore environment.
Additionally, the seasonal dip is due to some customers' CapEx and operational spend that tend to be lower at the start of their annual budget cycles, which tends to be the case with most of our NOC customers. To be clear, the lower level of projected revenue and margin for the quarter is due to the normal seasonality of our business and not representative of our overall expectations for the year. Overall, based on our activity outlook and our position today, I am confident in our ability to achieve these 2026 objectives.
Before turning to our customer and technology highlights, I want to revisit a few things that set Expro Group Holdings N.V. apart and that we think are important attributes for investors to consider. You see these on slide number six. Due to our exposure across the well life cycle, we see opportunities to expand our wallet share with existing customers. We can do this by providing additional or enhanced services to customers, leveraging our installed base to help expand margins, especially with the deployment of new technologies. Another theme central to Expro Group Holdings N.V. is our commitment to technology and innovation.
While the rate of technology adoption varies greatly among customers, geographic regions, and the different parts of a well life cycle, its importance cannot be overstated. Without technology and innovation, we think it is very difficult to remain competitive or relevant in this industry. We put a lot of emphasis on this as we know it creates value for both our customers as well as our shareholders. Additionally, our global footprint enables us to leverage technologies internally developed or acquired through M&A in one geography to then deploy them to another geography where we operate.
For example, our acquisition of Coretrax in 2024, that business was primarily in roughly 18 countries at the time of the acquisition, but now we are deploying those technologies that we have acquired across roughly 31 countries. Moving to our customer and technology highlights for the quarter on slide seven. During the fourth quarter, Expro Group Holdings N.V. continued to deliver safe, reliable performance to our customers across our global portfolio. We secured several major contract wins, advanced key technology deployments, and demonstrated our commitment to safety for both our employees as well as our customers. While there have been several notable operational achievements and customer successes for the quarter, I would just quickly highlight four.
This quarter, Expro Group Holdings N.V. secured one of the company's largest single customer awards, a four-year $380,000,000 contract across multiple fields in North Africa for production optimization and well management services. Also during the quarter, the company successfully deployed its proprietary extended range drilling, or XRD, Spider. It is the first and only 1,250-ton spider of its kind. This innovative technology supports drilling, tripping, and landing string operations, significantly reducing tool changeouts. Consequently, it saves substantial rig time and minimizes red zone exposure, thereby enhancing both operational efficiency and safety. Expro Group Holdings N.V. plans to deploy the XRD Spider to more customer operations and expand the fleet in accordance with customer demand.
In Australia, Expro Group Holdings N.V. successfully supported a major operator in delivering one of the region's largest offshore campaigns, completing multiple subsea wells with zero QHSE incidents. The campaign involved integrating subsea well testing and sampling capabilities, resulting in over 2,200 man-days of activity, in which we received job performance review scores of 100%. In Indonesia, our CATS ATX system enabled real-time wireless downhole data and remote valve control during drill stem testing. This product offering again demonstrates Expro Group Holdings N.V.'s commitment to innovation and risk reduction in well operations. Before moving on, I would like to address another geography that has been topical as of late. That is Venezuela.
Having lived and worked earlier in my career in Venezuela, I am intimately aware of the geological reservoir and production challenges in the country. These high-technology and challenging conditions are where the Expro Group Holdings N.V. solutions approach really shines. While we do not currently see any near-term opportunities in the country, we do believe we are well positioned should opportunities arise in the future. Expro Group Holdings N.V. has operated in Venezuela for many years previously, still having a facility and some stranded equipment in the country related to both our tubular running services as well as our well flow management product lines.
For now, we will stay engaged with our customers who may have opportunities there to develop, but also realize that this will take time and a significant amount of industry investment in order to mature these opportunities. Before turning over to Sergio, I would like to remind everyone of Expro Group Holdings N.V.'s long-term strategic pillars, things that we adhere to drive value for our shareholders, as we see on slide number eight. Expro Group Holdings N.V.'s long-term strategy is to build a large diversified company with a compelling business and product mix and market leadership positions.
We are striving to build a company that is able to generate healthy levels of free cash flow which will be used to achieve our various capital allocation goals, which Sergio will expand on in his comments later on. One of these strategic pillars is our commitment to continually improving the company's financial profile. The avenues used to achieve this goal are our relentless focus on margin expansion and free cash flow generation, our ability to drive cost efficiencies and reduce capital intensity, and our ability to return cash to shareholders, all backed by a strong balance sheet. Another pillar is our technical leadership and innovation. We continually develop and deploy new technologies into the market across our global footprint.
This footprint also enables us to globalize technologies that we have acquired through acquisitions, and then implement those technologies from one geographic location to another. Finally, Expro Group Holdings N.V. looks to grow through inorganic scalable acquisitions. We seek opportunities to target international and offshore opportunities that have adjacent product offerings and are accretive to the company's financial position. We have made several successful and accretive acquisitions and have developed a proven blueprint for integrating acquired businesses in an efficient and cost-effective manner. With that, I will turn the call over to Sergio to review our financial results in detail. Thank you, Michael, and good morning to everyone on the call.
As Michael noted, Expro Group Holdings N.V. executed well on its financial results for both the quarter and full year. While annual revenue was at the lower end of guidance, the free cash flow generated surpassed expectations and exceeded the high end. Specifically to Q4, our adjusted EBITDA was $88,000,000 with a margin of 23.1%, up about 30 basis points from last quarter and 10 basis points year over year. For the year 2025, adjusted EBITDA was $303,000,000 with a margin of 22%, up 170 basis points year over year. Slide nine illustrates our annual margin growth for the past few years.
We remain confident that we will experience further margin expansion in 2026 driven by a full-year impact of our Drive 25 cost efficiency initiative, increased customer wallet share at higher margins, and continued international growth resulting from previous acquisitions like Coretrax. Moving to slide 10, longer term, EBITDA margin expansion is not the goal in and of itself, but rather a means of increasing free cash flow generation. And in Q4, Expro Group Holdings N.V. posted its quarterly free cash flow generation of $28,000,000 on an adjusted basis, bringing full year 2025 free cash flow generated to $127,000,000 which again was above the high end of the $110,000,000–$120,000,000 guidance and more than double the amount generated in the prior year.
Along those lines, we expect even stronger free cash flow in 2026, both as a percentage of revenue and in absolute terms, as we plan to further reduce the capital intensity of the business, holding 2026 projected CapEx relatively flat. Turning to liquidity.
Sergio L. Maiworm: The company closed the quarter with $551,000,000 in total liquidity. That includes $198,000,000 in cash on the balance sheet after accounting for the voluntary prepayment on the revolving credit facility which totaled $20,000,000 during the quarter. This voluntary repayment reduced the outstanding drawn balance on the revolving credit facility from $99,000,000 to $79,000,000 as of 12/31/2025, further enhancing the company's net cash position. Before turning to our segment performance, I do want to reiterate and summarize our financial outlook for 2026 as Michael previously addressed on slide five.
Overall, we are cautiously optimistic with our 2026 outlook, recognizing the seasonal impacts on our projected first quarter results with noticeable improvement in the subsequent quarters, with a stronger back half leading to a good start for 2027. Any anxiety over the flattish revenue guidance should be viewed in conjunction with projected sequential increases in adjusted EBITDA, EBITDA margins, and free cash flow generation. These achievements will continue us on the path of one of the strategic pillars that Michael just mentioned, that of continued financial improvements, which we believe will ultimately translate into increased shareholder value. Now, I would like to quickly address our segment performance this quarter before finally addressing our capital allocation framework.
A reminder that details around our segment performances can also be found in the appendix of this presentation. Turning to regional results. For North and Latin America, or NLA, fourth quarter revenue was $130,000,000, down $21,000,000 quarter over quarter reflecting lower subsea well access and well construction revenue in the U.S. where projects have shifted into 2026, offset by higher well intervention and integrity revenue in Argentina. Segment EBITDA margin at 24% was flat as compared to prior quarter.
For Europe and Sub-Saharan Africa, or ESSA, fourth quarter revenue decreased $10,000,000 to $116,000,000 sequentially, primarily driven by lower subsea well access and well construction revenue in Angola and Central and West Africa, partially offset by higher well flow management revenues in Bulgaria. Segment EBITDA margin at 34% was up approximately 120 basis points sequentially reflecting a favorable product mix. The Middle East and North Africa, or MENA, delivered another solid quarter sequentially higher as compared to Q3 with revenues at $93,000,000 driven by an increase in well management revenue in Algeria and Saudi Arabia.
MENA segment EBITDA was 39% of revenues, an increase of 400 basis points from the prior quarter reflecting the higher well management activity and more favorable activity mix. Finally, in Asia Pacific, or APAC, fourth quarter revenue was $43,000,000, a decrease of $6,000,000 relative to the third quarter, primarily reflecting the lower well management activity in Indonesia and India, lower well construction revenue in Australia, and offset by higher subsea well access activity also in Australia. Asia Pacific segment EBITDA margin at 16% of revenues decreased approximately 400 basis points from the prior quarter reflecting decreased activity and mix. Now, I would like to briefly revisit Expro Group Holdings N.V.'s capital allocation framework on slide 11.
Expro Group Holdings N.V.'s capital allocation framework is designed to drive long-term value creation by maintaining a disciplined and balanced approach across four equally important capital deployment priorities. Our philosophy is that every dollar of capital must be deployed where it can generate the highest risk-adjusted returns. As such, each of these four areas continuously competes for capital on an ongoing basis. As a consequence, it may appear that priorities shift, and they are, but only to those that we believe will generate the highest risk-adjusted return. One of our capital priorities is to continue to invest in our business to drive organic growth with superior return profiles.
This includes funding projects and initiatives through CapEx deployments that enhance our core capabilities, improve efficiency, and support technology innovation across our service lines. Every organic investment is rigorously evaluated to ensure it meets our standards for superior returns throughout the business cycle. As a reminder, the vast majority of our capital expenditures are geared towards specific projects with known return profiles that meet our standards. I would reiterate these are not speculative investments. Another area where we can deploy capital is inorganic growth opportunities. We pursue selective, highly accretive mergers and acquisitions that complement our existing capabilities and customer relationships.
Our M&A strategy is focused on opportunities that offer clear industrial logic, scalable technologies and synergies, and the potential to expand our presence in attractive markets. We apply the same disciplined capital allocation criteria to acquisitions as we do to organic investments, ensuring that only the most compelling opportunities receive funding. The company has a successful track record of executing on this strategy. We are also committed to returning capital to shareholders. Our framework targets the return of at least one-third of free cash flow to shareholders annually, primarily through share repurchases.
This commitment reflects our confidence in the company's ability to generate sustainable free cash flow and our focus on delivering direct value to our investors, particularly over the long term. During the fourth quarter, we were unable to repurchase as many shares as we intended, causing the total percentage of free cash flow returned to shareholders for the year to come just short of 32%.
Dave Wilson: Finally,
Sergio L. Maiworm: maintaining a strong fortress balance sheet ensures that we have the financial flexibility and resilience to act on our other capital allocation priorities. Additionally, preserving a strong balance sheet enables us to navigate market cycles, invest in growth opportunities as they arise, and protect the company's long-term stability. Importantly, these four priorities constitute our capital allocation framework: organic investments, M&A, shareholder returns, and balance sheet strength,
Dave Wilson: and again,
Sergio L. Maiworm: are not ranked in a set order of priority. Instead, they are managed dynamically with each area continuously competing for capital based on the quality of the opportunities available. This disciplined, balanced approach ensures that Expro Group Holdings N.V. remains agile, resilient, and focused on maximizing value for all shareholders. And with that, I will turn the call back to Michael for a few closing comments.
Dave Wilson: You, Sergio. As we conclude our prepared remarks, and before opening for questions, I would like to conclude with the following comments. I am excited about what was achieved by Expro Group Holdings N.V.'s employees in 2025. I will reiterate, we collectively implemented cost efficiencies as part of our Drive 25 initiative, increased our EBITDA margins moving closer to our long-term goal, successfully deployed new and innovative technologies, generated a high level of free cash flow and returned cash to shareholders, and improved the company's net cash position. We executed on multiple priorities that Sergio just referred to in our capital allocation framework.
Looking ahead, I am also excited about what the company plans to achieve in 2026, even in a macro environment where we are cautiously optimistic. We acknowledge a somewhat softer start to the year related to the normal seasonal factors that impact both the industry and Expro Group Holdings N.V. But we expect sequential improvements in the latter quarters, especially as we head into 2027 and beyond. We do expect to generate improved EBITDA margins and free cash flow in 2026, and anticipate executing again across our strategic pillars. I remain confident in Expro Group Holdings N.V.'s resilience and ability to continue to deliver on operational and financial performance.
Finally, we thank our employees, our customers, and our shareholders for their continued support and look forward to building on our momentum in the quarters and years ahead. With that, we can open up the call for questions.
Operator: Thank you very much. We will now open the lines for the Q&A. Our first question comes from Adi Modak from Goldman Sachs. Adi, your line is now open.
Sergio L. Maiworm: Hey, good morning, guys. Michael, can you talk more about the increase in wallet share comment? It sounded
Adi Modak: like there are some inherent cross-selling opportunities. What exactly are those opportunities? And is this a little bit more geographical expansion? Any color you can provide around it.
Dave Wilson: No. Adi, thanks for joining us, and appreciate the question. This really is, especially in some of our well construction operations where we are providing TRS services and we are also providing cementation services, we are adding additional services in there. Some of our CURE technologies is a great example where we are already on the rig. We are already running TRS operations. We run our cementation operations. It significantly reduces the waiting on cement cure time. And we use the same personnel that are out there running our TRS services. So when I say expanding the wallet, it is we are already on the rig. We are already providing services.
We provide some incremental services or products to our customers that help drive efficiency for them, and we are utilizing the same what we call installed base, but really the same personnel on the ground. So it is something that we can do across geographies. We are doing similar things in well construction. We are also doing that across our well flow product lines as well.
Adi Modak: That is very helpful. And then as you think about the EBITDA range you provided for 2026, what are the puts and takes that you are focused on whether it is activity-wise or idiosyncratic for you? As you think about the bottom and the high end of the range?
Dave Wilson: Yes. I mean, I guess how I would frame it, Adi, is the market is going to do what the market is going to do this year. We are going to maintain our market share. We are going to expand our customer wallet. Exactly how many offshore floating assets are going to be operational in Q3 and Q4 can always ebb and flow. We are just really focused, laser focused, on making sure that even if we are in a flattish climate, we can still expand our margins. That is really kind of what our guidance is framed up to give.
It is not that we look at a massive step up in activity in the second half of the year. It is more around the visibility we see today, and that is why we have given the guidance range that we have in there.
Adi Modak: Got it. Appreciate that.
Operator: Great. Thank you very much. Our next question comes from Edward Kim from Barclays. Edward, your line is now open.
Dave Wilson: Hi, good morning. Just staying on the full year 2026 guidance, EBITDA of $365,000,000 at the midpoint, which reflects a modest improvement year on year. I just wanted to better understand the market assumptions behind that guide. Is the guidance sort of, I guess, valid at Brent in this kind of $60 to $70 range for the year? And could there even be further upside if commodity prices firm up from here? And on the flip side, if market conditions were to deteriorate, is there an oil price at which you expect operators might maybe push back or delay some programs? I know there was a lot in there, but any color that would be appreciated. Sure. Yes.
Edward, thanks for joining us, and really, really good question, one that we talk a lot about internally. I guess how I would try to frame it up for you is our activity set is really based on what we are seeing with current commodity prices. I still think we have a range here where even if commodity prices were to be compressed a little bit more, I do not know that, we are so active in offshore deepwater projects that have a long investment cycle, and our customers are not going to throttle that down significantly in the short term. I do think that we are cautious on how we are viewing the total activity set this year.
I do, quite frankly, think that there could be some potential things that are going to ramp up more. We have heard some positive commentary from the drilling guys and those kind of things. It really depends on how some of that activity translates into turning to the right, so to speak. So I think there could be some upside in the back end of the year
Sergio L. Maiworm: we are not going to rely on that. We are going to get our fair share. We are going to
Dave Wilson: stay focused on technology rollouts and those kind of things. We will look at that as upside potentially, I guess, is how I would frame it up. But we are laser focused on even if we are in a situation in 2026, and I hope I am wrong, even if we are in a situation in 2026 where we are in a flattish revenue climate to even slightly down, meaning the market is flat to slightly down, we are still going to be able to expand our margins modestly, and we are going to expand our cash generation as well. That is what we are really focused on.
Sergio L. Maiworm: Got it.
Dave Wilson: Got it. That is very helpful color. Thank you. And just wanted to touch on the offshore activity inflection. As you mentioned, there is kind of growing maybe consensus or optimism about inactivity inflection back half of this year into 2027. Just from a regional perspective, could you talk about which regions you expect will sort of drive the recovery and which you expect will remain flattish or maybe take longer to ramp up? Sure. No. So I think one of the, and this is something we have been consistent about talking about for a number of quarters, I think the subsea tree outlook has continued to be very positive and very strong and very robust.
You look at the order backlog that some of our peers are adding in, that has been quite positive. That is a good leading indicator of what is to come. But those are things when they add backlog today, those are not trees that are going to be installed tomorrow. Those are trees that are going to be installed nine, twelve, eighteen months down the road. So I think that has been a good set of breadcrumbs that has been laid out there. And that is one of the reasons why we have been consistent. We think the second half of this year is more robust, especially going into 2027.
And I think you are going to see this, the U.S. Gulf is probably going to be flattish here in 2026. I think there is good potential as we go into 2027 for some expanded investment. South America is going to be strong. West Africa is always the one that is going to take a little bit more time to ramp up. But that is the one that will really kind of help start to move the needle when that happens. So I think West Africa, in particular, is why we are going to start to see the 2027 and beyond. That is where we are going to start to see more of that real inflection point.
And those are bigger projects. Those are multi-rig campaigns. Those are significant drilling and completion, drilling and completion operations.
Sergio L. Maiworm: Right. Right.
Dave Wilson: Got it. Great. Thanks for all that color. I will turn it back. Thanks, Edward. Appreciate it.
Operator: Thank you very much. Our next question comes from Blake McLean from Daniel Energy Partners. Blake, your line is now open.
Adi Modak: Hi. Hello.
Dave Wilson: I just wanted to ask, given the current administration has been favorable pushing deals through, we have had other meaningful deals announced in the offshore space a few weeks ago. I am curious, seeing the increased transactions go through, has that changed your strategy at all? Or maybe could you update on the surrounding thoughts given M&A that you have done and that you have not done anything in a
Operator: while.
Dave Wilson: Sure. No, Blake. It is a great question. I think the current administration is probably more amenable to M&A and those types of things. Quite frankly,
Sergio L. Maiworm: our
Dave Wilson: the things that we have an appetite in and we have an interest in are going to have a global nature. They are going to have a global presence. And we do not have a significant concern around our ability to have those go through antitrust or those kind of things. So for us as a company, the types of things we are interested in looking at are not really being influenced heavily by whether the administration is more or less amenable. I think there continues to be, over the last five, six years, there still have only been a handful of consolidations of size in the services space.
Whether that was ours back in 2021 or what Patterson has done. It was nice to see the rig and the Valaris transaction here. I think that is a good move for the industry. I think we will continue to see those types of things happen. And we are working on those kinds of things every day of the week. It really is about helping us become more relevant to our customers, helping them with more solutions and more efficiencies and those types of things. And we are absolutely convinced if we are more relevant to our customers, we are going to become more relevant to our shareholders as well.
So it fits in, but it is something we continue to work really, really hard on
Sergio L. Maiworm: because we have a great platform.
Dave Wilson: We are offshore. We are international. We have touch points with our customers all the way from exploration, through appraisal, through development, through production, all through P&A. So we have a lot of flexibility and latitude on the types of things that would fit in our portfolio and that we could help drive value with. Thanks for the color. And just another follow-up. One of the themes over the last two quarters of large operator calls has been increased need for exploration offshore.
Operator: Any thoughts on what you are seeing in the areas geographically that could surprise over the next couple of years? How do you see yourself taking advantage of what you are seeing and hearing?
Dave Wilson: No. Blake, it is a great question. It is a really perceptive question, so kudos to you for picking up on that. Our customers, yes, we are having more and more exploration project discussions. Part of that is because they need to add more and more into their portfolio for future production and future reserves. We provide a lot of services in the exploration activity set. So whether it is well construction or it is well flow management when we start flowing these wells back to evaluate the reservoirs, or it is being able to help provide the connectivity in a subsea application from the rig to the seafloor. It is a great opportunity for us.
We play a lot of those kinds of services. And I think as we see more and more of that translate into activity, I think we will continue to see more exploration opportunities, and that means more exploration revenue and dollars for us. Over the course of the last, really since 2012, there has not been a lot of meaningful exploration activity going on globally. So I am excited to see that potential. We will see how much of it translates into 2026. I think more of it we are going to see in 2027. Thank you so much for the color. I will turn it back.
Operator: Thanks, Blake. Thank you very much. Our next question comes from Derek John Podhaizer from Piper Sandler. Derek, your line is now open.
Adi Modak: Hey. Good morning, guys.
Operator: To go back to conversations around the 2026 guidance. So
Dave Wilson: just going up to the top line revenue here. I know the prior guide was for 2026 to be flat to down. Now the new guidance is flat to up. So I was hoping you could help us understand some of the puts and takes there, why your outlook has improved, maybe from a regional standpoint. And then just thinking about how the guidance ties to the implied sequential growth on the top line second, third, fourth quarter because it looks pretty meaningful. Yes. And Derek, thanks for joining.
I guess what I would, we are more, and I kind of alluded to it in one of your earlier questions, we are laser focused on if the market grows 2% or 5% or 10%, we will absolutely get our fair share of projects. We have a very high bid win rate. We have great customer relationships. So what the market does, we are going to benefit from that as well as anybody else. And I do not want to say we do not have any control over that, but the timing of somebody adding a rig in Angola or the timing of additional rigs and activity in the U.S.
Gulf, we are not going to have an influence over that, but we are going to be able to provide those services. So it is not so much that our view has become more positive or more negative. What I have the organization focused on is execution, service delivery, HSE performance, continue to win our fair share of activity, and fundamentally driving more efficient operations. We expanded margins in 2025, and we expanded cash flow generation significantly in 2025 because we were focused on the things we could control. And we are going to do that again in 2026.
And even if the market is flat to slightly down, that is not to say I think it is going to be slightly down. My message is even if the market is under a little bit more pressure,
Sergio L. Maiworm: we will still
Dave Wilson: expand our margins and expand our cash flow generation. So that is, it is a little bit of a subtle difference, but it is much more around I want my team and myself to focus on what we can control. And if the market grows, that is fantastic. We will have some upside potential to what our forecast looks like going forward. Yes. No. That makes sense. And I appreciate the color. Maybe just to follow up there, could you maybe break down the geographies? Where do you see maybe the points of strength as we work second, third, fourth quarter? Maybe you can rank order them, just your geographic regions. Sure.
So I do think that for us, the Middle East and North Africa is going to be solid this year. We are going to have some projects that will deliver in the fourth quarter that we are already actively engaged in. So I think that is going to give us some, that is part of the reason why we see and anticipate a
Adi Modak: you know, South America, we have got some similar,
Dave Wilson: solid Q4 projects and activity that is going to happen there as well. I suspect that when we do a look back on 2026, I would be very surprised if there is not some surprise to the upside in the U.S. Gulf. I think for operators, access to those reservoirs, the carbon advantage nature of it, the ability to get access to rigs that are working for an operator today and they come to another operator tomorrow. So I think that is going to be another one. It could be strong, strong potential.
I would probably put Asia Pacific as continuing to be, just because of the cycle time and where they are at in the sequence of activity in places like Australia, I think that is going to be more of a 2027 phenomenon. I kind of view Asia Pacific in that same kind of context. It is going to be a little bit more, a little bit more of a laggard than the others. And then West Africa is one in which I think by the time we are talking in 2027, it is going to be quite robust.
And it is really for me the transition of does that start to happen in 2026 or the middle of the fourth quarter or the end of the fourth quarter? I think that is just a little bit more of a timing for when they take delivery of rigs and when they really kind of start solid drilling and completions activity.
Operator: Got it. Very helpful. I will turn it back.
Dave Wilson: Thanks, Derek. Appreciate you participating.
Operator: Thank you very much. As a reminder, if you would like, our next question comes from Joshua W. Jayne from Daniel Energy Partners. Joshua, your line is now open.
Dave Wilson: Thanks. Good morning. I apologize if you covered this earlier. I just wanted to hit on pricing quickly. We have been in this period, over the last 24 months, where we saw a pretty sharp acceleration in rig rates. And then things have come off, but I would say stabilized over the last six months. How does potentially a tightening rig rate environment frame your pricing conversations, and allow customers to see some more value in a lot of the things that you offer? Maybe you could just elaborate on that a little bit. Sure. No, Joshua. Thanks and appreciate that.
I guess how I would frame it up is I think the pricing climate we have had, although we are not getting, we do not have a lot of ability to raise prices right now, I think there has not been downward pressure on pricing. And I think a lot of it has been the rig guys and the rig rates and those kind of things, they really kind of set the tone, so to speak. They set expectations for customers.
And so the fact that those guys have been extremely disciplined, they have demonstrated willingness, they are going to stack rigs or they are going to retire rigs or those kind of things before they are going to move rates down materially, I think that has been helpful and constructive. Our prices are not indexed or directly correlated to the rigs, but I think it sets an expectation or a tone within the space among the sector. So I think as we are seeing consolidation with those guys or we are seeing more demand for those rigs, hopefully we go back to a climate in which there are actually some discussions around rising rig rates.
And I think that kind of conversely starts to set some of the opportunities there as well. I think the other flip side for us is really around, as we expand and roll out new technology, our new technology, especially the ones that help us expand our wallet share, those typically come at more of a premium because we are generally out there servicing it with the same crew as we have who are already running services. So when you add incremental services, that is what helps us expand the wallet share, and also really kind of helps us expand the margins.
So at the same time, we are very disciplined on, we are going to roll out technology at the right rate. We have pricing expectations. We have value creation expectations. When you run CURE technologies in an offshore application, you save almost 24 hours of rig time not waiting on cement. We have a value expectation of the time savings, and we are not going to try to increase the technology adoption rate by lowering our prices. We are going to stay disciplined. We will take a longer period of time because over the course of the next couple of years, rig rates will rise, things will tighten, and you get an opportunity to price things only once.
So we are going to be disciplined about that. Thanks for that. And then just one, if I may. And again, if you covered this already, apologies. Understanding that offshore Venezuela is projected to be something massive. I am just curious, as things calm down geopolitically within that country, how does that potentially open up areas like Colombia or Trinidad or Guyana just given the geographic proximity to those areas? Any thoughts there? No. And, Joshua, thanks for bringing it up. I commented in the prepared remarks earlier that for myself having lived and worked in Venezuela, my kids spent a number of years growing up and going to school in Venezuela.
I am really, really excited to see the opportunities that are going to happen in-country. It is going to be interesting. It is going to be unique because you are going to have land opportunities, you are going to have shallow water, Lake Maracaibo opportunities, you are going to have potentially deepwater offshore. There are FPSOs. There is infrastructure that already exists with Guyana and what is going to happen in Suriname. I think it is tremendously positive. I am really excited about it. And especially for us as a company because we are really, really good at the high-technology component. The things that are difficult producing environments or difficult drilling, that is where we really can shine.
So I am super excited about it for us. The question is when is that going to happen? It is not the question of if there is an opportunity. It is when is it going to materialize? So no, I think it is fantastic. I think it will really provide a real growth engine for the industry because of the close linkage between Guyana, Suriname, Trinidad, even into French Guiana. I think it is a great opportunity. So I am super excited about it as you can probably pick up. Understood. Thanks for taking the questions. I appreciate it.
Sergio L. Maiworm: Alright. Sounds good. Thanks.
Operator: Thank you very much. We currently have no further questions, so I would like to hand back to the management team for any closing remarks.
Dave Wilson: Hey, everybody. Thanks for joining us today. This is Dave Wilson. If you have any follow-up calls, please reach out to me. Again, appreciate your participation. Thank you.
Operator: As we conclude today's call, we would like to thank everyone for joining. You may disconnect your lines.
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Expro Group (XPRO) Q4 2025 Earnings Transcript was originally published by The Motley Fool
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