Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Based on our strong performance in Q4 2023 and a positive activity outlook, we currently anticipate generating revenues of between $1.6 billion and $1.7 billion in 2024 |
| Beyond 2024, with a constructive fundamental backdrop and good business momentum, we see a clear path to $2 billion of revenue, mid-20s adjusted EBITDA margin and a free cash flow margin of 10% |
| I will then discuss the macro environment, which we believe supports a favorable multiyear outlook for energy services companies, levered to international and offshore markets and presents a compelling growth opportunity for Expro |
| As you can see on slide 3, Expro begins 2024 in a strong position for growth having delivered a solid fourth quarter with actual results at/or above the high end of the revenue and adjusted EBITDA guidance ranges that we provided on our third quarter earnings call |
| Our reputation for safety, service delivery, and cost-effective innovative solutions enables us to collaborate effectively with other service partners |
| This momentum will be driven by continued recovery in Asia, improving macroeconomic data for the US and Europe and an increase in global travel with subsequent increase in jet fuel demand |
| Constructive pricing levels should allow our oil company customers to make final investment decisions on new projects including FIDs on the long-cycle development projects that characterize the international in offshore markets and to which Expro is most levered |
| NLA revenue at $145 million was up sequentially by $40 million primarily reflect the increased well construction activity in the US Gulf of Mexico and Guyana and a rebound in well testing activity in Mexico |
| NLA segment EBITDA at 30%, reflects the significant step up in revenue and a good mix of higher-margin activity |
| While the Q3 results reflected a confluence of factors, the NLA team has delivered very solid results, since we completed the merger back in October of 2021 with approximately $1.1 billion of aggregate revenue over the last nine quarters |
| Operationally, noteworthy NLA, our Tubular Running Services or TRS business achieved an Industry-First, in the Gulf of Mexico, by successfully completing an operator's well using a fully non-marking completion running package |
| So if you think about same-store sales the actual underlying growth of the business is substantially better than the implied top line in our guidance albeit with a little bit of help from Coretrax |
| So as we start to convert more into that type of mix in 2024 and going to 2025 that's why we'll continue to see some margin expansion and I think we'll also be able to really start to see the impact of some net pricing improvements here in 2024 |
| This is a great example of our ability to provide solutions and positive results for the industry's most complex wells |
| ESA segment EBITDA margin at 31% has been strong over the last several quarters |
| I think we're really going to set up well for strong growth in 2024 and then even into 2025 as well |
| And I think we're going to continue to see those FIDs approved here in 2024 which tells me we're going to continue to have a really strong backlog of subsea projects and well construction projects |
| We're also going to see a step up in well construction and in particular, very strong growth in West Africa |
| The Middle East and North Africa team also delivered an excellent quarter with revenue up 13% sequentially to $65 million and good fall-through on incremental revenue |
| As activity continues to ramp up, we are well positioned to support our customers across the well life cycle and to deliver on the financial and other objectives that we have outlined |
| Noteworthy in MENA, Expro's Automated Bucking and Catwalk system delivered improved safety and record efficiency on one of our clients' challenging wells |
| This underpins the increased activity in the decommissioning market and a growing requirement for cost-effective plug and abandonment solutions, which will also be bolstered by the proposed Coretrax acquisition |
| At Expro, we are starting to see better financial results across our businesses, and over the medium term the company should be able to deliver on our medium-term targets, which include annual revenue of $2 billion and adjusted EBITDA margins of plus 25% |
| Expro was built to ride the industry tailwinds that we expect to persist for the next several years with good leverage to the international offshore Middle East, North Africa capacity expansion and global gas themes that we believe will characterize energy markets for the balance of the decade |
| As you heard from Quinn, our initial guidance for 2024 reflects a positive outlook for the year ahead with a midpoint expectation for about 9% revenue growth and adjusted EBITDA margin of 21% likewise at the midpoint of guidance |
| In terms of commercial activity, we built a healthy order book for the first three quarters of 2023 and I'm pleased that we have continued to build on this momentum |
| I am proud of what we've accomplished since the merger of the Expro on Frank's businesses two years ago, and I'm excited to lead this team as we grow into the future |
| In the fourth quarter of 2023, we captured strategically important contract wins, closed on a meaningful acquisition and continue to build on strong business momentum |
| For both Coretrax and PRT offshore, we think the valuation was attractive with potential cost and revenue synergies providing additional upside |
| We do believe however, that additional consolidation is good for the long-term health of the energy services sector and that we can utilize smart synergies focused M&A to accelerate growth and create shareholder value for Expro |
| Statement |
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| Finally, in Asia Pacific, fourth quarter revenue was $62 million, down 13% relative to the September quarter primarily reflecting lower Subsea Well Access revenue, following our suspension of vessel deployed Light Well Intervention operations in September |
| I will caution that geopolitical turmoil including ongoing conflicts in the Middle East could result in upward pricing pressure as we progress throughout the year |
| In the gas markets, we observed high inventories in storage due to a warmer than normal winter in the Northern Hemisphere and a persistent lack of sustained cold weather in the first part of the US winter |
| These trends have loosened market conditions resulting in slightly lower forward gas price forecasts |
| With revenue expected to be in a range of $365 million to $375 million, are down about 10% sequentially from a very strong Q4 and up about 9% year-over-year, in both cases based on midpoint of guidance |
| Furthermore, guidance assumes no revenue and no additional unrecoverable LWI related costs in 2024 and a step down in revenue that we recognize in our LNG capacity expansion project in Congo beginning in Q2 |
| Regarding our LWI business as previously disclosed, the well control package and lubricator components of our vessel deployed LWI system were recovered in November we have determined not to participate in the recovery of the subsea module for the seabed where it has remained since September of last year when the vessel providers crane wire failed during operations offshore Australia |
| Based on recent comments from a Saudi Aramco official that they expect to be very, very busy rather than very, very, very busy over the next several years, we also agree with several of the sell-side market analyst comments that the market reaction to Aramco's capacity growth curtailment announcement was a little bit overblown |
| So it's not that we couldn't recover it |
| Despite robust commodity pricing and production optimization efforts, the number of mature assets reaching the end of their economic and environmentally sustainable life continues to increase, particularly in Europe and in the US |
| So by no means are we abandoning the light well intervention concept because there's very much a market need |
| And I think that's important to -- it's not that we couldn't recover the subsea module is that we chose not to participate in the recovery operations |
| Obviously, you mentioned that you weren't able to recover the subsea module |
| But if I heard you correctly, it sounds like that might not have come through as you had expected |
| Given that 2024 is probably not going to be much better US land |
| Quinn Fanning If I could -- I think -- one thing that I think is important to note is that, the decision to not participate in the recovery of the subsea module |
| And ultimately, our weighting of the balance of risks and our desire to limit incremental out-of-pocket expenses brought us to a conclusion not to participate in the recovery |
| Support costs for 2023 at $294 million totaled 19% of revenue, which was up about 6% year-over-year and down as a percentage of revenue by 230 basis points year-over-year and down by 650 basis points from 2021 |
| So, it's not so much that that segment underperformed |
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