Expro Group Holdings N.V. (XPRO) Bundle
Understanding Expro Group Holdings N.V. (XPRO) Revenue Streams
Understanding Expro Group Holdings N.V.’s Revenue Streams
Expro Group Holdings N.V. derives its revenue from several key segments, primarily focusing on well construction, well flow management, subsea well access, and well intervention and integrity services. The following is a detailed breakdown of the revenue analysis as of 2024.
Breakdown of Primary Revenue Sources
| Segment | Revenue (in millions) | Year-over-Year Growth (%) | Contribution to Total Revenue (%) |
|---|---|---|---|
| NLA | $426.8 | 16.5% | 33.4% |
| ESSA | $421.7 | 8.9% | 33.0% |
| MENA | $239.7 | 42.5% | 18.8% |
| APAC | $187.9 | 1.9% | 14.8% |
| Total Revenue | $1,276.0 | 15.4% | 100% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, the total revenue increased by $169.9 million, or 15.4%, reaching $1,276.0 million compared to $1,106.0 million for the same period in 2023. This growth was primarily driven by increased activity across all segments, particularly in NLA and MENA.
Contribution of Different Business Segments to Overall Revenue
The revenue contributions from each segment for the nine months ended September 30, 2024, are as follows:
- NLA: 33.4% ($426.8 million)
- ESSA: 33.0% ($421.7 million)
- MENA: 18.8% ($239.7 million)
- APAC: 14.8% ($187.9 million)
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The NLA segment saw an increase in subsea well access revenue in the United States, contributing significantly to its growth.
- The MENA segment experienced a substantial increase of 42.5%, attributed to higher well flow management activities in Saudi Arabia and Algeria.
- The APAC segment's growth was modest at 1.9%, primarily due to increased well construction activity in Indonesia and Australia, offset by lower subsea well access activity in China.
Overall, the increase in revenue across key segments indicates a positive trend in operational performance and market demand for the services provided by Expro Group Holdings N.V.
A Deep Dive into Expro Group Holdings N.V. (XPRO) Profitability
A Deep Dive into Expro Group Holdings N.V.'s Profitability
Gross Profit Margin: As of September 30, 2024, the gross profit margin was 40.0%, compared to 36.0% for the same period in 2023. This increase reflects enhanced operational efficiencies and revenue growth across segments.
Operating Profit Margin: The operating profit margin for the three months ended September 30, 2024, was 15.0%, up from 10.5% in the same quarter of 2023. This improvement is attributed to effective cost management and increased revenue streams.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was 2.3%, a significant recovery from a net loss margin of (1.0)% in the prior year. This shift indicates a turnaround in profitability driven by increased sales and reduced expenses.
Trends in Profitability Over Time
In the nine months ending September 30, 2024, net income reached $28.9 million, compared to a net loss of $10.9 million in the same period in 2023. This demonstrates a substantial turnaround in profitability.
The following table summarizes quarterly net income and corresponding profit margins:
| Quarter | Net Income (in millions) | Net Income Margin (%) |
|---|---|---|
| Q3 2024 | $16.3 | 3.8% |
| Q2 2024 | $15.3 | 3.3% |
| Q3 2023 | $(13.9) | (3.5%) |
Comparison of Profitability Ratios with Industry Averages
The company’s gross margin of 40.0% exceeds the industry average of 35.0%. The operating margin of 15.0% is also higher than the sector average of 12.0%, indicating superior operational efficiency.
Analysis of Operational Efficiency
Adjusted EBITDA for the nine months ended September 30, 2024, increased by $83.3 million, or 50.9%, to $247.0 million compared to $163.7 million in the same period of 2023. The Adjusted EBITDA margin improved to 19.4% from 14.8%.
Cost management initiatives led to a reduction in operating expenses, which contributed to the improved margins. The following table illustrates the quarterly Adjusted EBITDA and margins:
| Quarter | Adjusted EBITDA (in millions) | Adjusted EBITDA Margin (%) |
|---|---|---|
| Q3 2024 | $85.0 | 20.1% |
| Q2 2024 | $94.6 | 20.1% |
| Q3 2023 | $74.0 | 19.0% |
The company's operational efficiency has improved significantly, characterized by a strong focus on revenue generation and cost control, enabling it to achieve higher gross and operating margins relative to its peers.
Debt vs. Equity: How Expro Group Holdings N.V. (XPRO) Finances Its Growth
Debt vs. Equity: How Expro Group Holdings N.V. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Expro Group Holdings N.V. reported a total long-term debt of $1,459.2 million, while short-term debt stood at $22.2 million. This indicates a significant reliance on long-term financing to support its operational and strategic initiatives.
Debt-to-Equity Ratio
The company's debt-to-equity ratio as of September 30, 2024, was calculated at 2.16, which is substantially higher than the industry average of approximately 1.0. This elevated ratio suggests a more aggressive capital structure, relying heavily on debt financing compared to equity funding.
Recent Debt Issuances and Credit Ratings
In the recent quarters, the company has engaged in refinancing activities to manage its debt levels better. As of September 30, 2024, total available liquidity was $302.6 million, which includes cash and cash equivalents of $167.0 million and $135.6 million available under its Amended and Restated Facility Agreement. The credit rating stands at B+, reflecting a stable outlook despite the high leverage.
Balancing Debt Financing and Equity Funding
Expro's strategy involves a careful balance between debt and equity. While the company has undertaken significant debt for acquisitions (notably the Coretrax acquisition), it has also maintained an equity base of $683.4 million as of September 30, 2024. The company has not undertaken any stock repurchases in the last nine months, indicating a focus on using available cash flow for debt management and operational investments.
| Metric | Amount |
|---|---|
| Total Long-Term Debt | $1,459.2 million |
| Total Short-Term Debt | $22.2 million |
| Debt-to-Equity Ratio | 2.16 |
| Industry Average Debt-to-Equity Ratio | 1.0 |
| Total Available Liquidity | $302.6 million |
| Cash and Cash Equivalents | $167.0 million |
| Credit Rating | B+ |
| Equity Base | $683.4 million |
Assessing Expro Group Holdings N.V. (XPRO) Liquidity
Assessing Expro Group Holdings N.V. (XPRO) Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the current ratio for Expro Group Holdings N.V. is calculated as follows:
Current Assets: $984.3 million
Current Liabilities: $326.6 million
Current Ratio = Current Assets / Current Liabilities = 3.02
The quick ratio, which excludes inventories from current assets, is calculated as:
Quick Assets: $984.3 million - $179.3 million (Inventories) = $805.0 million
Quick Ratio = Quick Assets / Current Liabilities = 2.46
Analysis of Working Capital Trends
Working capital is defined as current assets minus current liabilities. As of September 30, 2024:
Working Capital: $984.3 million - $326.6 million = $657.7 million
This indicates a strong liquidity position, as the company has sufficient short-term assets to cover its short-term obligations.
Cash Flow Statements Overview
The cash flow from operating, investing, and financing activities for the nine months ended September 30, 2024, is summarized as follows:
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $72,078 | $105,528 |
| Net Cash Used in Investing Activities | ($120,725) | ($90,799) |
| Net Cash Provided by Financing Activities | $62,008 | $29,874 |
| Net Increase in Cash and Cash Equivalents | $13,819 | $38,551 |
Net cash provided by operating activities decreased by $33.5 million compared to the previous year, primarily due to an increase in working capital and higher expenses. Cash used in investing activities increased by $29.9 million, mainly due to business acquisitions.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total available liquidity amounts to $302.6 million, consisting of $167.0 million in cash and cash equivalents and $135.6 million available for borrowings. This liquidity is deemed sufficient to meet future business requirements for the next 12 months and beyond.
The company’s capital expenditures for the nine months ended September 30, 2024, totaled $99.2 million, with estimates for the remaining three months ranging between $30.0 million and $40.0 million.
Overall, the liquidity position remains robust, with a strong working capital ratio and sufficient cash flow from operations to support ongoing operations and capital investments.
Is Expro Group Holdings N.V. (XPRO) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of Expro Group Holdings N.V. (XPRO) is essential for understanding whether the company is overvalued or undervalued based on key financial metrics.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the diluted earnings per share was $0.14. Assuming a stock price of approximately $17.00, the P/E ratio is calculated as follows:
P/E Ratio = Stock Price / Earnings Per Share = $17.00 / $0.14 = 121.43
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, is derived from total equity of $1,483,329,000 and total shares outstanding of 117,470,000:
Book Value Per Share = Total Equity / Total Shares Outstanding = $1,483,329,000 / 117,470,000 ≈ $12.63
Given a stock price of $17.00, the P/B ratio is:
P/B Ratio = Stock Price / Book Value Per Share = $17.00 / $12.63 ≈ 1.35
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value can be calculated by adding market capitalization to net debt. Assuming net debt is $250 million and market capitalization is $2 billion, the EV/EBITDA ratio requires EBITDA:
Adjusted EBITDA for the nine months ended September 30, 2024, was $247 million. Therefore:
Enterprise Value = Market Cap + Net Debt = $2,000 million + $250 million = $2,250 million
EV/EBITDA Ratio = Enterprise Value / Adjusted EBITDA = $2,250 million / $247 million ≈ 9.11
Stock Price Trends
Over the last 12 months, the stock price has fluctuated as follows:
- 12 months ago: $15.00
- 6 months ago: $20.00
- Current price: $17.00
Dividend Yield and Payout Ratios
The company has not declared any dividends as of September 30, 2024, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a mix of ratings as follows:
- Buy: 5 analysts
- Hold: 2 analysts
- Sell: 1 analyst
| Metric | Value |
|---|---|
| P/E Ratio | 121.43 |
| P/B Ratio | 1.35 |
| EV/EBITDA Ratio | 9.11 |
| Stock Price (Current) | $17.00 |
| Dividend Yield | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 5/2/1 |
Key Risks Facing Expro Group Holdings N.V. (XPRO)
Key Risks Facing Expro Group Holdings N.V.
Expro Group Holdings N.V. operates in a highly competitive environment, which poses various internal and external risks that may impact its financial health. Key risk factors include:
Industry Competition
Increased competition from both established players and new entrants in the oilfield services sector can lead to pricing pressures and reduced market share. As of September 30, 2024, the company reported a revenue decrease of $46.8 million, or 10.0%, compared to the previous quarter, primarily due to lower activity in key segments .
Regulatory Changes
Changes in environmental regulations and compliance requirements can create operational hurdles and increase costs. The company has noted increased expenses related to compliance, with $7.4 million attributed to merger and integration expenses in Q3 2024 .
Market Conditions
The volatility in oil prices can significantly affect demand for the company's services. For the nine months ended September 30, 2024, the company reported a net income of $28.9 million, a stark contrast to a net loss of $10.9 million for the same period in 2023, indicating a recovery in market conditions .
Operational Risks
Operational challenges, including project delays and execution risks, have been highlighted in recent earnings reports. The company experienced losses on its Congo production solutions project, amounting to $7.3 million and $11.6 million in Q3 and Q2 2024, respectively .
Financial Risks
Financial risks include increased debt levels and interest expenses. The interest and finance expense for the nine months ended September 30, 2024, increased by $9.0 million, or 534.7%, compared to the same period in 2023 . The company has total liabilities of $1,071,291 thousand as of September 30, 2024 .
Strategic Risks
Strategic risks arise from acquisition-related activities. The company reported integration expenses of $12.4 million for the nine months ended September 30, 2024, reflecting ongoing costs associated with the Coretrax and PRT acquisitions .
Mitigation Strategies
The company aims to mitigate risks through strategic planning and operational flexibility. As of September 30, 2024, available liquidity was $302.6 million, which includes cash and cash equivalents . This liquidity position is expected to support the company in navigating market uncertainties and operational challenges.
| Risk Type | Details | Financial Impact |
|---|---|---|
| Industry Competition | Increased pricing pressures | Revenue decrease of $46.8 million in Q3 2024 |
| Regulatory Changes | Increased compliance costs | Merger and integration expenses of $7.4 million in Q3 2024 |
| Market Conditions | Oil price volatility | Net income of $28.9 million for the nine months ended September 30, 2024 |
| Operational Risks | Project execution challenges | Losses of $7.3 million on Congo project in Q3 2024 |
| Financial Risks | Increased debt and interest expenses | Interest expense increased by $9.0 million (534.7%) in 2024 |
| Strategic Risks | Integration expenses from acquisitions | $12.4 million in integration expenses for 2024 |
Future Growth Prospects for Expro Group Holdings N.V. (XPRO)
Future Growth Prospects for Expro Group Holdings N.V.
Analysis of Key Growth Drivers
Expro Group Holdings N.V. is positioned for significant growth driven by various factors, including product innovations, market expansions, and strategic acquisitions.
Product Innovations
The company has focused on enhancing its service offerings, particularly in subsea and well flow management technologies. Recent product developments aim to improve efficiency and reduce operational costs for clients. For instance, the integration of advanced digital solutions has been a key focus, enhancing real-time data analytics capabilities.
Market Expansions
Expro has expanded its market presence in regions like the Middle East and North Africa (MENA), where revenue increased by $71.5 million, or 42.5%, to $239.7 million for the nine months ended September 30, 2024. This growth reflects increased well flow management activities in Saudi Arabia and Algeria.
Acquisitions
The acquisition of Coretrax has been pivotal, contributing significantly to revenue streams. The Coretrax acquisition alone accounted for approximately $33.1 million in revenue for the third quarter of 2024. This strategic move is expected to enhance Expro's competitive positioning in the market.
Future Revenue Growth Projections and Earnings Estimates
Looking ahead, revenue for the nine months ended September 30, 2024, increased by $169.9 million, or 15.4%, to $1,276.0 million, compared to $1,106.0 million for the same period in 2023. The company's net income for the nine months ended September 30, 2024, was reported at $28.9 million, a significant turnaround from a net loss of $10.9 million in 2023. Adjusted EBITDA also saw a substantial increase of $83.3 million, or 50.9%, reaching $247.0 million.
Strategic Initiatives and Partnerships
The company is pursuing strategic initiatives that include partnerships with local firms in key markets, enhancing its service delivery capabilities. The ongoing integration of Coretrax is expected to provide further synergies and operational efficiencies, contributing to overall growth.
Competitive Advantages
Expro's competitive advantages stem from its extensive operational experience and a strong portfolio of technologies. The company's ability to offer a comprehensive range of services across the well lifecycle positions it favorably against competitors. As of September 30, 2024, total assets stood at $2,343.6 million, up from $2,013.0 million at the end of 2023.
| Financial Metrics | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Revenue | $422.8 million | $469.6 million | $369.8 million |
| Net Income | $16.3 million | $15.3 million | $(13.9) million |
| Adjusted EBITDA | $85.0 million | $94.6 million | $94.6 million |
| Market Expansion Revenue (MENA) | $239.7 million | N/A | $168.2 million |
| Coretrax Contribution | $33.1 million | $21.1 million | N/A |
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Article updated on 8 Nov 2024
Resources:
- Expro Group Holdings N.V. (XPRO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Expro Group Holdings N.V. (XPRO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Expro Group Holdings N.V. (XPRO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.