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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of

1934

For the quarterly period ended September 30, 2024

OR

☐ Transition Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the transition period from ______ to ______

Commission file number: 001-36053

EXPRO GROUP HOLDINGS N.V.

(Exact name of registrant as specified in its charter)

| The Netherlands |  | 98-1107145 |
| (State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.) |
| 1311 Broadfield Boulevard, Suite 400 |  |  |
| Houston, Texas |  | 77084 |
| (Address of principal executive offices) |  | (Zip Code) |

Registrant’s telephone number, including area code: (713) 463-9776

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, €0.06 nominal value | XPRO | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 17, 2024, there were 117,495,090 shares of common stock, €0.06 nominal value per share, outstanding.

Table of Contents

|  | Page
PART I. FINANCIAL INFORMATION
Item 1. | Financial Statements |
| Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023 | 1
| Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023 | 2
| Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023 | 3
| Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2024 and 2023 | 4
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023 | 5
| Notes to the Unaudited Condensed Consolidated Financial Statements | 6
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 44
Item 4. | Controls and Procedures | 44
PART II. OTHER INFORMATION
Item 1. | Legal Proceedings | 45
Item 1A. | Risk Factors | 45
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 45
Item 5. | Other Information | 45
Item 6. | Exhibits | 46
Signatures |  | 47

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Expro Group Holdings N.V.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except share data)

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Total revenue |  | $ | 422,828 |  |  | $ | 369,818 |  |  | $ | 1,275,959 |  |  | $ | 1,106,014 |
Operating costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenue, excluding depreciation and amortization expense |  |  | (331,235 | ) |  |  | (315,825 | ) |  |  | (1,006,242 | ) |  |  | (924,420 | )
General and administrative expense, excluding depreciation and amortization expense |  |  | (20,467 | ) |  |  | (15,437 | ) |  |  | (65,905 | ) |  |  | (44,908 | )
Depreciation and amortization expense |  |  | (40,391 | ) |  |  | (37,414 | ) |  |  | (121,184 | ) |  |  | (109,386 | )
Merger and integration expense |  |  | (1,437 | ) |  |  | (817 | ) |  |  | (12,387 | ) |  |  | (4,332 | )
Severance and other expense |  |  | (3,181 | ) |  |  | (1,897 | ) |  |  | (8,007 | ) |  |  | (5,487 | )
Total operating cost and expenses |  |  | (396,711 | ) |  |  | (371,390 | ) |  |  | (1,213,725 | ) |  |  | (1,088,533 | )
Operating income (loss) |  |  | 26,117 |  |  |  | (1,572 | ) |  |  | 62,234 |  |  |  | 17,481 |
Other income (expense), net |  |  | 262 |  |  |  | (1,129 | ) |  |  | 1,081 |  |  |  | (3,540 | )
Interest and finance expense, net |  |  | (3,895 | ) |  |  | (373 | ) |  |  | (10,713 | ) |  |  | (1,688 | )
Income (loss) before taxes and equity in income of joint ventures |  |  | 22,484 |  |  |  | (3,074 | ) |  |  | 52,602 |  |  |  | 12,253 |
Equity in income of joint ventures |  |  | 4,241 |  |  |  | 2,495 |  |  |  | 12,955 |  |  |  | 7,736 |
Income (loss) before income taxes |  |  | 26,725 |  |  |  | (579 | ) |  |  | 65,557 |  |  |  | 19,989 |
Income tax expense |  |  | (10,450 | ) |  |  | (13,307 | ) |  |  | (36,673 | ) |  |  | (30,931 | )
Net income (loss) |  | $ | 16,275 |  |  | $ | (13,886 | ) |  | $ | 28,884 |  |  | $ | (10,942 | )
Earnings (loss) per common share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.14 |  |  | $ | (0.13 | ) |  | $ | 0.25 |  |  | $ | (0.10 | )
Diluted |  | $ | 0.14 |  |  | $ | (0.13 | ) |  | $ | 0.25 |  |  | $ | (0.10 | )
Weighted average common shares outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 117,467,994 |  |  |  | 108,777,429 |  |  |  | 113,887,885 |  |  |  | 108,764,599 |
Diluted |  |  | 118,293,677 |  |  |  | 108,777,429 |  |  |  | 115,605,215 |  |  |  | 108,764,599 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Expro Group Holdings N.V.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(in thousands)

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Net income (loss) |  | $ | 16,275 |  |  | $ | (13,886 | ) |  | $ | 28,884 |  |  | $ | (10,942 | )
Other comprehensive loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of prior service credit |  |  | (61 | ) |  |  | (61 | ) |  |  | (183 | ) |  |  | (183 | )
Other comprehensive loss |  |  | (61 | ) |  |  | (61 | ) |  |  | (183 | ) |  |  | (183 | )
Comprehensive income (loss) |  | $ | 16,214 |  |  | $ | (13,947 | ) |  | $ | 28,701 |  |  | $ | (11,125 | )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Expro Group Holdings N.V.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Assets: |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 165,663 |  |  | $ | 151,741 |
Restricted cash |  |  | 1,322 |  |  |  | 1,425 |
Accounts receivable, net |  |  | 532,469 |  |  |  | 469,119 |
Inventories |  |  | 179,339 |  |  |  | 143,325 |
Income tax receivables |  |  | 32,511 |  |  |  | 27,581 |
Other current assets |  |  | 72,976 |  |  |  | 58,409 |
Total current assets |  |  | 984,280 |  |  |  | 851,600 |
Property, plant and equipment, net |  |  | 535,988 |  |  |  | 513,222 |
Investments in joint ventures |  |  | 75,537 |  |  |  | 66,402 |
Intangible assets, net |  |  | 308,453 |  |  |  | 239,716 |
Goodwill |  |  | 343,885 |  |  |  | 247,687 |
Operating lease right-of-use assets |  |  | 76,332 |  |  |  | 72,310 |
Non-current accounts receivable, net |  |  | 8,008 |  |  |  | 9,768 |
Other non-current assets |  |  | 11,137 |  |  |  | 12,302 |
Total assets |  | $ | 2,343,620 |  |  | $ | 2,013,007 |
Liabilities and stockholders’ equity: |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 326,647 |  |  | $ | 326,125 |
Income tax liabilities |  |  | 52,830 |  |  |  | 45,084 |
Finance lease liabilities |  |  | 2,282 |  |  |  | 1,967 |
Operating lease liabilities |  |  | 17,990 |  |  |  | 17,531 |
Other current liabilities |  |  | 97,699 |  |  |  | 98,144 |
Total current liabilities |  |  | 497,448 |  |  |  | 488,851 |
Long-term borrowings |  |  | 121,065 |  |  |  | 20,000 |
Deferred tax liabilities, net |  |  | 47,196 |  |  |  | 22,706 |
Post-retirement benefits |  |  | 5,675 |  |  |  | 10,445 |
Non-current finance lease liabilities |  |  | 15,040 |  |  |  | 16,410 |
Non-current operating lease liabilities |  |  | 59,528 |  |  |  | 54,976 |
Uncertain tax positions |  |  | 69,471 |  |  |  | 59,544 |
Other non-current liabilities |  |  | 44,868 |  |  |  | 44,202 |
Total liabilities |  |  | 860,291 |  |  |  | 717,134 |
Commitments and contingencies (Note 17) |  |  |  |  |  |  |  |
Stockholders’ equity: |  |  |  |  |  |  |  |
Common stock, €0.06 nominal value, 200,000,000 shares authorized, 121,056,680 and 113,389,911 shares issued and 117,470,113 and 110,029,694 shares outstanding |  |  | 8,486 |  |  |  | 8,062 |
Treasury stock (at cost) 3,586,567 and 3,360,217 shares |  |  | (69,104 | ) |  |  | (64,697 | )
Additional paid-in capital |  |  | 2,072,061 |  |  |  | 1,909,323 |
Accumulated other comprehensive income |  |  | 22,135 |  |  |  | 22,318 |
Accumulated deficit |  |  | (550,249 | ) |  |  | (579,133 | )
Total stockholders’ equity |  |  | 1,483,329 |  |  |  | 1,295,873 |
Total liabilities and stockholders’ equity |  | $ | 2,343,620 |  |  | $ | 2,013,007 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Expro Group Holdings N.V.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

|  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net income (loss) |  | $ | 28,884 |  |  | $ | (10,942 | )
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization expense |  |  | 121,184 |  |  |  | 109,386 |
Equity in income of joint ventures |  |  | (12,955 | ) |  |  | (7,736 | )
Stock-based compensation expense |  |  | 19,251 |  |  |  | 14,682 |
Elimination of unrealized (loss) gain on sales to joint ventures |  |  | (312 | ) |  |  | 3,520 |
Changes in fair value of contingent consideration |  |  | (5,761 | ) |  |  | - |
Deferred taxes |  |  | (1,126 | ) |  |  | (8,066 | )
Unrealized foreign exchange losses |  |  | 3,418 |  |  |  | 1,725 |
Changes in assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable, net |  |  | (28,676 | ) |  |  | 3,193 |
Inventories |  |  | (15,367 | ) |  |  | (587 | )
Other assets |  |  | (11,471 | ) |  |  | (15,279 | )
Accounts payable and accrued liabilities |  |  | (19,617 | ) |  |  | 29,269 |
Other liabilities |  |  | (8,463 | ) |  |  | (15,422 | )
Income taxes, net |  |  | 3,375 |  |  |  | 4,481 |
Dividends received from joint ventures |  |  | 4,132 |  |  |  | 2,754 |
Other |  |  | (4,418 | ) |  |  | (5,450 | )
Net cash provided by operating activities |  |  | 72,078 |  |  |  | 105,528 |
Cash flows from investing activities: |  |  |  |  |  |  |  |
Capital expenditures |  |  | (99,158 | ) |  |  | (84,623 | )
Payment for acquisition of business, net of cash acquired |  |  | (31,967 | ) |  |  | (8,477 | )
Proceeds from settlement of contingent consideration |  |  | 7,500 |  |  |  | - |
Proceeds from disposal of assets |  |  | 2,900 |  |  |  | 2,013 |
Proceeds from sale / maturity of investments |  |  | - |  |  |  | 288 |
Net cash used in investing activities |  |  | (120,725 | ) |  |  | (90,799 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |
Release of collateral deposits, net |  |  | 1,242 |  |  |  | 350 |
Proceeds from borrowings |  |  | 117,269 |  |  |  | 50,000 |
Repayment of borrowings |  |  | (44,351 | ) |  |  | - |
Repurchase of common stock |  |  | - |  |  |  | (10,011 | )
Payment of withholding taxes on stock-based compensation plans |  |  | (3,269 | ) |  |  | (2,436 | )
Repayment of financed insurance premium |  |  | (7,828 | ) |  |  | (6,733 | )
Repayments of finance leases |  |  | (1,055 | ) |  |  | (1,296 | )
Net cash provided by financing activities |  |  | 62,008 |  |  |  | 29,874 |
Effect of exchange rate changes on cash and cash equivalents |  |  | 458 |  |  |  | (6,052 | )
Net increase to cash and cash equivalents and restricted cash |  |  | 13,819 |  |  |  | 38,551 |
Cash and cash equivalents and restricted cash at beginning of period |  |  | 153,166 |  |  |  | 218,460 |
Cash and cash equivalents and restricted cash at end of period |  | $ | 166,985 |  |  | $ | 257,011 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |

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Expro Group Holdings N.V.

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(in thousands)

|  | Nine Months Ended September 30, 2023 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Additional |  |  | other |  |  |  |  |  |  | Total |
|  | Common |  |  | Treasury |  |  | paid-in |  |  | comprehensive |  |  | Accumulated |  |  | stockholders’ |
|  | stock |  |  | Stock |  |  | capital |  |  | income |  |  | deficit |  |  | equity |
Balance at January 1, 2023 |  |  | 108,744 |  |  | $ | 7,911 |  |  | $ | (40,870 | ) |  | $ | 1,847,078 |  |  | $ | 27,549 |  |  | $ | (555,773 | ) |  | $ | 1,285,895 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (6,351 | ) |  |  | (6,351 | )
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (61 | ) |  |  | - |  |  |  | (61 | )
Stock-based compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,171 |  |  |  | - |  |  |  | - |  |  |  | 4,171 |
Common shares issued upon vesting of share-based awards |  |  | 582 |  |  |  | 32 |  |  |  | - |  |  |  | 566 |  |  |  | - |  |  |  | - |  |  |  | 598 |
Treasury shares withheld |  |  | (185 | ) |  |  | - |  |  |  | (3,556 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,556 | )
Acquisition of common stock |  |  | (557 | ) |  |  | - |  |  |  | (10,011 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (10,011 | )
Balance at March 31, 2023 |  |  | 108,584 |  |  | $ | 7,943 |  |  | $ | (54,437 | ) |  | $ | 1,851,815 |  |  | $ | 27,488 |  |  | $ | (562,124 | ) |  | $ | 1,270,685 |
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 9,295 |  |  |  | 9,295 |
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (61 | ) |  |  | - |  |  |  | (61 | )
Stock-based compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,577 |  |  |  | - |  |  |  | - |  |  |  | 5,577 |
Common shares issued upon vesting of share-based awards |  |  | 113 |  |  |  | 6 |  |  |  | - |  |  |  | (6 | ) |  |  | - |  |  |  | - |  |  |  | - |
Treasury shares refunded |  |  | 7 |  |  |  | - |  |  |  | 119 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 119 |
Balance at June 30, 2023 |  |  | 108,704 |  |  | $ | 7,949 |  |  | $ | (54,318 | ) |  | $ | 1,857,386 |  |  | $ | 27,427 |  |  | $ | (552,829 | ) |  | $ | 1,285,615 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (13,886 | ) |  |  | (13,886 | )
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (61 | ) |  |  | - |  |  |  | (61 | )
Stock-based compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,934 |  |  |  | - |  |  |  | - |  |  |  | 4,934 |
Common shares issued upon vesting of share-based awards |  |  | 122 |  |  |  | 7 |  |  |  | - |  |  |  | 630 |  |  |  | - |  |  |  | - |  |  |  | 637 |
Treasury shares withheld |  |  | (11 | ) |  |  | - |  |  |  | (243 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (243 | )
Balance at September 30, 2023 |  |  | 108,815 |  |  | $ | 7,956 |  |  | $ | (54,561 | ) |  | $ | 1,862,950 |  |  | $ | 27,366 |  |  | $ | (566,715 | ) |  | $ | 1,276,996 |

|  | Nine Months Ended September 30, 2024 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Additional |  |  | other |  |  |  |  |  |  | Total |
|  | Common |  |  | Treasury |  |  | paid-in |  |  | comprehensive |  |  | Accumulated |  |  | stockholders’ |
|  | stock |  |  | Stock |  |  | capital |  |  | income |  |  | deficit |  |  | equity |
Balance at January 1, 2024 |  |  | 110,030 |  |  | $ | 8,062 |  |  | $ | (64,697 | ) |  | $ | 1,909,323 |  |  | $ | 22,318 |  |  | $ | (579,133 | ) |  | $ | 1,295,873 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,677 | ) |  |  | (2,677 | )
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (61 | ) |  |  | - |  |  |  | (61 | )
Stock-based compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,070 |  |  |  | - |  |  |  | - |  |  |  | 5,070 |
Common stock issued upon vesting of share-based awards |  |  | 719 |  |  |  | 40 |  |  |  | - |  |  |  | (40 | ) |  |  | - |  |  |  | - |  |  |  | - |
Treasury shares withheld |  |  | (212 | ) |  |  | - |  |  |  | (4,095 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (4,095 | )
Balance at March 31, 2024 |  |  | 110,537 |  |  | $ | 8,102 |  |  | $ | (68,792 | ) |  | $ | 1,914,353 |  |  | $ | 22,257 |  |  | $ | (581,810 | ) |  | $ | 1,294,110 |
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 15,286 |  |  |  | 15,286 |
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (61 | ) |  |  | - |  |  |  | (61 | )
Stock-based compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,350 |  |  |  | - |  |  |  | - |  |  |  | 7,350 |
Common stock issued upon vesting of share-based awards |  |  | 105 |  |  |  | 6 |  |  |  | - |  |  |  | (6 | ) |  |  | - |  |  |  | - |  |  |  | - |
Treasury shares withheld |  |  | (12 | ) |  |  | - |  |  |  | (256 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (256 | )
Coretrax Acquisition |  |  | 6,750 |  |  |  | 373 |  |  |  | - |  |  |  | 142,392 |  |  |  | - |  |  |  | - |  |  |  | 142,765 |
Balance at June 30, 2024 |  |  | 117,380 |  |  | $ | 8,481 |  |  | $ | (69,048 | ) |  | $ | 2,064,089 |  |  | $ | 22,196 |  |  | $ | (566,524 | ) |  | $ | 1,459,194 |
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 16,275 |  |  |  | 16,275 |
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (61 | ) |  |  | - |  |  |  | (61 | )
Stock-based compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6,832 |  |  |  | - |  |  |  | - |  |  |  | 6,832 |
Common stock issued upon vesting of share-based awards |  |  | 92 |  |  |  | 5 |  |  |  | - |  |  |  | 1,140 |  |  |  | - |  |  |  | - |  |  |  | 1,145 |
Treasury shares withheld |  |  | (2 | ) |  |  | - |  |  |  | (56 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (56 | )
Balance at September 30, 2024 |  |  | 117,470 |  |  | $ | 8,486 |  |  | $ | (69,104 | ) |  | $ | 2,072,061 |  |  | $ | 22,135 |  |  | $ | (550,249 | ) |  | $ | 1,483,329 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

1. | Business description

With roots dating to 1938, Expro Group Holdings N.V. (the “Company,” “Expro,” “we,” “our” or “us”) is a global provider of energy services with operations in approximately 60 countries. The Company’s broad portfolio of products and services provides solutions to enhance production and improve recovery across the well lifecycle, from exploration through abandonment.

On October 25, 2023, the Company’s Board of Directors (the “Board”) approved an extension to its stock repurchase program, pursuant to which the Company is authorized to acquire up to $100.0 million of its outstanding common stock from October 25, 2023 through November 24, 2024 (the “Stock Repurchase Program”). Under the Stock Repurchase Program, the Company may repurchase shares of the Company’s common stock in open market purchases, in privately negotiated transactions or otherwise. The Stock Repurchase Program will continue to be utilized at management’s discretion and in accordance with federal securities laws. The timing and actual numbers of shares repurchased will depend on a variety of factors including price, corporate requirements, the constraints specified in the Stock Repurchase Program along with general business and market conditions. The Stock Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. The Company has made no repurchases under the Stock Repurchase Program during the nine months ended September 30, 2024. During the nine months ended September 30, 2023, the Company repurchased approximately 0.6 million shares at an average price of $17.99 per share, for a total cost of approximately $10.0 million.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

2. | Basis of presentation and significant accounting policies

Basis of presentation

The unaudited condensed consolidated financial statements reflect the accounts of the Company and its subsidiaries. All intercompany balances and transactions, including unrealized profits arising from them, have been eliminated for purposes of preparing these unaudited condensed consolidated financial statements. Investments in which we do not have a controlling interest, but over which we do exercise significant influence, are accounted for under the equity method of accounting.

The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim consolidated financial information. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for annual consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023, included in our most recent Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on February 21, 2024 (the “Annual Report”).

In the opinion of management, these unaudited condensed consolidated financial statements, which are prepared in accordance with the rules of the SEC and U.S. GAAP for interim financial reporting, included herein contain all adjustments necessary to present fairly our financial position as of September 30, 2024, the results of our operations for the nine months ended September 30, 2024 and 2023 and our cash flows for the nine months ended September 30, 2024 and 2023. Such adjustments are of a normal recurring nature. Operating results for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other period.

The unaudited condensed consolidated financial statements have been prepared on an historical cost basis using the United States dollar (“$” or “U.S. dollar”) as the reporting currency.

Significant accounting policies

Refer to Note 2 “Basis of presentation and significant accounting policies” of our consolidated financial statements as of and for the year ended December 31, 2023, which are included in our most recent Annual Report for a discussion of our significant accounting policies. There have been no material changes in our significant accounting policies as compared to the significant accounting policies described in our consolidated financial statements as of and for the year ended December 31, 2023.

Recent accounting pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) generally in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on our disclosures.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements. ASU 2023-07 is effective retrospectively for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on our disclosures.

All other recently issued ASUs were assessed and were either determined to be not applicable or are expected to have immaterial impact on our consolidated financial position, results of operations and cash flows.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

3. | Business combinations and dispositions

DeltaTek Oil Tools Limited

On February 8, 2023 (“DeltaTek Closing Date”), DeltaTek Oil Tools Limited, a limited liability company registered in the United Kingdom, and its subsidiary (“DeltaTek”), was acquired (“the DeltaTek Acquisition”) by our wholly owned subsidiary Exploration and Production Services (Holdings) Limited, a limited liability company registered in the United Kingdom (“EPSH”). DeltaTek has developed a number of innovative technologies and solutions and their range of low-risk open water cementing solutions increases clients’ operational efficiency, delivers rig time and cost savings, and improves the quality of cementing operations of clients. The fair value of consideration for the DeltaTek Acquisition was $18.4 million, including final cash consideration paid of $9.9 million and contingent consideration which is estimated to be $8.5 million.

The contingent consideration arrangement requires the Company to pay the former owners of DeltaTek a percentage of future revenues generated specifically from the acquired technology over a period of seven years. The fair value of the contingent consideration arrangement of $8.5 million was estimated by applying the income approach and is reflected in “Other liabilities” on the unaudited condensed consolidated balance sheets. That measure is based on significant inputs that are not observable in the market, referred to as Level 3 inputs in accordance with ASC 820. To the extent our estimates and assumptions changed during the measurement period and such changes are based on facts and circumstances that existed as of the DeltaTek Closing Date, an adjustment to the contingent consideration liability was recorded with an offsetting adjustment to goodwill. To the extent our estimates and assumptions change based on facts and circumstances subsequent to the measurement period, an adjustment to the contingent consideration liability would be recorded with an offsetting adjustment to earnings during the applicable period.

The DeltaTek Acquisition is accounted for as a business combination and Expro has been identified as the acquirer for accounting purposes. As a result, the Company has, in accordance with ASC 805, Business Combinations, applied the acquisition method of accounting to account for DeltaTek’s assets acquired and liabilities assumed. Applying the acquisition method of accounting includes recording the identifiable assets acquired and liabilities assumed at their fair values and recording goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed.

The following table sets forth the allocation of the DeltaTek Acquisition consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed as of the DeltaTek Closing Date, with the recording of goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed (in thousands):

|  | Initial allocation of the consideration |  |  | Measurement period adjustments |  |  | Final allocation of the consideration |
Cash and cash equivalents |  | $ | 1,464 |  |  | $ | - |  |  | $ | 1,464 |
Accounts receivables, net |  |  | 723 |  |  |  | - |  |  |  | 723 |
Inventories |  |  | 183 |  |  |  | - |  |  |  | 183 |
Property, plant and equipment |  |  | 642 |  |  |  | - |  |  |  | 642 |
Goodwill |  |  | 7,157 |  |  |  | 994 |  |  |  | 8,151 |
Intangible assets |  |  | 11,063 |  |  |  | 2 |  |  |  | 11,065 |
Other assets |  |  | 27 |  |  |  | - |  |  |  | 27 |
Total assets |  |  | 21,259 |  |  |  | 996 |  |  |  | 22,255 |
Accounts payable and accrued liabilities |  |  | 245 |  |  |  | 2 |  |  |  | 247 |
Deferred tax liabilities |  |  | 2,700 |  |  |  | 66 |  |  |  | 2,766 |
Other liabilities |  |  | 831 |  |  |  | (16 | ) |  |  | 815 |
Total Liabilities |  |  | 3,776 |  |  |  | 52 |  |  |  | 3,828 |
Fair value of net assets acquired |  | $ | 17,483 |  |  | $ | 944 |  |  | $ | 18,427 |

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

The preliminary valuation of the assets acquired and liabilities assumed, including other liabilities, in the DeltaTek Acquisition initially resulted in a goodwill of $7.2 million. During the third quarter of 2023, the Company finalized the valuation and recorded measurement period adjustments to its preliminary estimates due to additional information received primarily related to a customary purchase price adjustment. The measurement period adjustments resulted in an increase in goodwill of $1.0 million, for final total goodwill associated with the DeltaTek Acquisition of $8.2 million.

The fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either using the relief-from royalty method or the multi-period excess earnings method, which are discounted to approximate their current value. The estimated useful lives are based on management’s historical experience and expectations as to the duration of time that benefits from these assets are expected to be realized.

The intangible assets will be amortized on a straight-line basis over an estimated 5 to 15 years life. We expect annual amortization to be approximately $1.0 million associated with these intangible assets. An associated deferred tax liability has been recorded in regards to these intangible assets. Refer to Note 14 “Intangible assets, net” for additional information regarding the various acquired intangible assets.

The goodwill related to the DeltaTek Acquisition consists largely of the synergies and economies of scale expected from the technology providing more efficient services and expected future developments resulting from the assembled workforce. The goodwill is not subject to amortization but will be evaluated at least annually for impairment or more frequently if impairment indicators are present. Goodwill recorded in the DeltaTek Acquisition is not expected to be deductible for tax purposes.

PRT Offshore

On October 2, 2023 (the “PRT Closing Date”), Professional Rental Tools, LLC (“PRT” or “PRT Offshore”), was acquired (the “PRT Acquisition”) from PRT Partners, LLC by our wholly owned subsidiary, EPSH. The acquisition will enable Expro to expand its portfolio of cost-effective, technology-enabled services and solutions within the subsea well access sector in the North and Latin America region and is expected to accelerate the growth of PRT Offshore’s surface equipment offering in the Europe and Sub-Saharan Africa and Asia Pacific regions. The fair value of consideration for the PRT Acquisition was $90.8 million, including cash consideration of $21.6 million, net of cash received, equity consideration of $40.9 million, and contingent consideration of $13.2 million. As of December 31, 2023 we had accrued $1.5 million of the cash consideration related to standard holdback provisions. During the second quarter of 2024, we paid $0.6 million for the settlement of the true-up for working capital adjustments and the remaining amount will be settled during the fourth quarter of 2024.

The contingent consideration arrangement required the Company to pay the former owners of PRT additional consideration based on PRT’s financial performance during the four quarters following closing. The fair value of the contingent consideration arrangement of $13.2 million was estimated by applying the income approach and was reflected in “Other current liabilities” on the unaudited condensed consolidated balance sheets. That measure was based on significant inputs that are not observable in the market, referred to as Level 3 inputs in accordance with ASC 820. To the extent our estimates and assumptions changed during the measurement period and such changes were based on facts and circumstances that existed as of the PRT Closing Date, an adjustment to the contingent consideration liability was recorded with an offsetting adjustment to goodwill. To the extent our estimates and assumptions changed based on facts and circumstances subsequent to the PRT Closing Date or after the measurement period, an adjustment to the contingent consideration liability was recorded with an offsetting adjustment to earnings during the applicable period.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

The PRT Acquisition is accounted for as a business combination and Expro has been identified as the acquirer for accounting purposes. As a result, the Company has in accordance with ASC 805, Business Combinations, applied the acquisition method of accounting to account for PRT’s assets acquired and liabilities assumed.

The following table sets forth the allocation of the PRT Acquisition consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed as of the PRT Closing Date, with the recording of goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed (in thousands):

|  | Initial allocation of the consideration |  |  | Measurement period adjustments |  |  | Final allocation of the consideration |
Cash and cash equivalents |  | $ | 15,086 |  |  | $ | - |  |  | $ | 15,086 |
Accounts receivables, net |  |  | 15,195 |  |  |  | - |  |  |  | 15,195 |
Other current assets |  |  | 986 |  |  |  | - |  |  |  | 986 |
Property, plant and equipment |  |  | 52,278 |  |  |  | (619 | ) |  |  | 51,659 |
Goodwill |  |  | 18,556 |  |  |  | 917 |  |  |  | 19,473 |
Intangible assets |  |  | 33,940 |  |  |  | (86 | ) |  |  | 33,854 |
Operating lease right-of-use assets |  |  | 1,242 |  |  |  | - |  |  |  | 1,242 |
Total assets |  |  | 137,283 |  |  |  | 212 |  |  |  | 137,495 |
Accounts payable and accrued liabilities |  |  | 8,621 |  |  |  | - |  |  |  | 8,621 |
Operating lease liabilities |  |  | 505 |  |  |  | - |  |  |  | 505 |
Other current liabilities |  |  | 1,811 |  |  |  | 406 |  |  |  | 2,217 |
Non-current operating lease liabilities |  |  | 678 |  |  |  | - |  |  |  | 678 |
Long-term borrowings |  |  | 34,701 |  |  |  | - |  |  |  | 34,701 |
Total liabilities |  |  | 46,316 |  |  |  | 406 |  |  |  | 46,722 |
Fair value of net assets acquired |  | $ | 90,967 |  |  | $ | (194 | ) |  | $ | 90,773 |

The preliminary valuation of the assets acquired and liabilities assumed, including other liabilities, in the PRT Acquisition initially resulted in a goodwill of $18.6 million. During 2024, the Company finalized the valuation and recorded measurement period adjustments to its preliminary estimates due to additional information received primarily related to a customary purchase price adjustment. The measurement period adjustments resulted in an increase in goodwill of $0.9 million, for final total goodwill associated with the PRT Acquisition of $19.5 million.

The fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either using the relief-from royalty method or the multi-period excess earnings method, which are discounted to approximate their current value. The estimated useful lives are based on management’s historical experience and expectations as to the duration of time that benefits from these assets are expected to be realized. The cost approach was used to determine the fair value of property, plant and equipment.

The intangible assets will be amortized on a straight-line basis over an estimated 5 to 15 years life. We expect annual amortization to be approximately $3.3 million associated with these intangible assets. An associated deferred tax liability has been recorded for these intangible assets. Refer to Note 14 “Intangible assets, net” for additional information regarding the various acquired intangible assets.

The goodwill related to the PRT Acquisition consists largely of the synergies and economies of scale expected from the acquired customer relationships and contracts. The goodwill is not subject to amortization but will be evaluated at least annually for impairment or more frequently if impairment indicators are present.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

Coretrax

On May 15, 2024 (“Coretrax Closing Date”), CTL UK Holdco Limited, a company incorporated and registered in England and Wales (“Coretrax”), was acquired (the “Coretrax Acquisition”), by our wholly owned subsidiary, Expro Holdings UK 3 Limited with an effective date of May 1, 2024. The acquisition will enable Expro to expand its portfolio of cost-effective, technology-enabled Well Construction and Well Intervention & Integrity solutions.

We estimated the fair value of consideration for the Coretrax Acquisition to be $186.7 million, including cash consideration of $31.3 million, net of cash received, equity consideration of $142.8 million, and contingent consideration of $3.3 million, subject to a true-up for customary working capital adjustments.

The contingent consideration arrangement required the Company to pay the former owners of Coretrax additional consideration based on Expro’s stock price and foreign exchange rate movement during a period of up to 150 days following the Coretrax Closing Date. The fair value of the contingent consideration arrangement of $3.3 million was estimated based on a Monte Carlo valuation model which used the historic performance of Expro’s stock price and the GBP to USD exchange rate and was reflected in “Other current liabilities” on the unaudited condensed consolidated balance sheet. That measure was based on significant inputs that are not observable in the market, referred to as Level 3 inputs in accordance with ASC 820. To the extent our estimates and assumptions changed during the measurement period and such changes were based on facts and circumstances that existed as of the Coretrax Closing Date, an adjustment to the contingent consideration liability was recorded with an offsetting adjustment to goodwill. To the extent our estimates and assumptions changed based on facts and circumstances subsequent to the Coretrax Closing Date or after the measurement period, an adjustment to the contingent consideration liability was recorded with an offsetting adjustment to earnings during the applicable period.

In July 2024, the Company entered into a Deed of Amendment to the Stock Purchase Agreement with the sellers party thereto (the “Sellers”), pursuant to which, among other things, (i) all obligations relating to the true up payments and completion statement under the Stock Purchase Agreement were released and (ii) the escrow agent was instructed to (A) sell a sufficient number of escrow shares on behalf of the Sellers to generate proceeds of $8.0 million, (B) transfer such proceeds to the Company and (C) transfer the remaining escrow shares to the Sellers. Based on the final calculation of the contingent consideration arrangement, the Company recognized $7.5 million as the settlement of the contingent consideration arrangement and the remaining $0.5 million was a reduction to the consideration transferred related to customary working capital adjustments.

The Coretrax Acquisition is accounted for as a business combination and Expro has been identified as the acquirer for accounting purposes. As a result, the Company has in accordance with ASC 805, Business Combinations, applied the acquisition method of accounting to account for Coretrax’s assets acquired and liabilities assumed.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

|  | Initial allocation of the consideration |  |  | Measurement period adjustments |  |  | Allocation of the consideration as of September 30, 2024 |
Cash and cash equivalents |  | $ | 9,315 |  |  | $ | - |  |  | $ | 9,315 |
Accounts receivables, net |  |  | 31,414 |  |  |  | - |  |  |  | 31,414 |
Inventories |  |  | 16,933 |  |  |  | - |  |  |  | 16,933 |
Other current assets |  |  | 3,170 |  |  |  | - |  |  |  | 3,170 |
Property, plant and equipment |  |  | 28,685 |  |  |  | - |  |  |  | 28,685 |
Goodwill |  |  | 95,773 |  |  |  | (491 | ) |  |  | 95,282 |
Intangible assets |  |  | 101,650 |  |  |  | - |  |  |  | 101,650 |
Operating lease right-of-use assets |  |  | 2,581 |  |  |  | - |  |  |  | 2,581 |
Total assets |  |  | 289,521 |  |  |  | (491 | ) |  |  | 289,030 |
Accounts payable and accrued liabilities |  |  | 25,529 |  |  |  | - |  |  |  | 25,529 |
Operating lease liabilities |  |  | 825 |  |  |  | - |  |  |  | 825 |
Current tax liabilities |  |  | 1,300 |  |  |  | - |  |  |  | 1,300 |
Other current liabilities |  |  | 11,098 |  |  |  | - |  |  |  | 11,098 |
Non-current tax liabilities |  |  | 8,096 |  |  |  | - |  |  |  | 8,096 |
Deferred tax liabilities |  |  | 25,616 |  |  |  | - |  |  |  | 25,616 |
Non-current operating lease liabilities |  |  | 1,756 |  |  |  | - |  |  |  | 1,756 |
Long-term borrowings |  |  | 28,147 |  |  |  | - |  |  |  | 28,147 |
Total liabilities |  |  | 102,367 |  |  |  | - |  |  |  | 102,367 |
Fair value of net assets acquired |  | $ | 187,154 |  |  | $ | (491 | ) |  | $ | 186,663 |

Due to the recency of the Coretrax Acquisition, these amounts, including the estimated fair values, are based on preliminary calculations and subject to change as our fair value estimates and assumptions are finalized during the measurement period. The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation table above. The fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either using the relief-from royalty method or the multi-period excess earnings method, which are discounted to approximate their current value. The estimated useful lives are based on management’s historical experience and expectations as to the duration of time that benefits from these assets are expected to be realized. The cost approach was used to determine the fair value of property, plant and equipment.

The intangible assets will be amortized on a straight-line basis over an estimated 1 to 15 years life. We expect annual amortization to be approximately $8.9 million associated with these intangible assets. An associated deferred tax liability has been recorded for these intangible assets. Refer to Note 14 “Intangible assets, net” for additional information regarding the various acquired intangible assets.

The goodwill related to the Coretrax Acquisition consists largely of the synergies and economies of scale expected from the acquired technology and customer relationships and contracts. The goodwill is not subject to amortization but will be evaluated at least annually for impairment or more frequently if impairment indicators are present.

Revenue and earnings of the acquirees

The results of operations for the Coretrax Acquisition since the Coretrax Closing Date have been included in our unaudited condensed consolidated financial statements for the three months and nine months ended September 30, 2024. The amount of revenue of Coretrax included in the accompanying unaudited condensed consolidated statements of operations was approximately $33.1 million and $54.2 million for the three and nine months, respectively, ended September 30, 2024.

Supplemental pro forma financial information

The Company has determined the estimated unaudited pro forma financial information to be immaterial for the three months and nine months ended September 30, 2024 and 2023, assuming the DeltaTek Acquisition, PRT Acquisition and Coretrax Acquisition had been completed as of January 1, 2023. This is not necessarily indicative of the results that would have occurred had the DeltaTek Acquisition, PRT Acquisition and Coretrax Acquisition been completed on the respective dates indicated or of future operating results.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

4. | Fair value measurements

Recurring Basis

A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of September 30, 2024 and December 31, 2023, were as follows (in thousands):

|  | September 30, 2024 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current accounts receivable, net |  | $ | - |  |  | $ | 8,008 |  |  | $ | - |  |  | $ | 8,008 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  |  |  |  |  |  | - |  |  |  | 29,694 |  |  |  | 29,694 |
Borrowings |  |  | - |  |  |  | 121,775 |  |  |  | - |  |  |  | 121,775 |
Finance lease liabilities |  |  | - |  |  |  | 17,322 |  |  |  | - |  |  |  | 17,322 |

|  | December 31, 2023 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current accounts receivable, net |  | $ | - |  |  | $ | 9,768 |  |  | $ | - |  |  | $ | 9,768 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  |  | - |  |  |  | - |  |  |  | 24,705 |  |  |  | 24,705 |
Borrowings |  |  | - |  |  |  | 20,701 |  |  |  | - |  |  |  | 20,701 |
Finance lease liabilities |  |  | - |  |  |  | 18,377 |  |  |  | - |  |  |  | 18,377 |

We have certain contingent consideration assets and liabilities related to acquisitions which are measured at fair value using Level 3 inputs. The amount of contingent consideration due from or due to the sellers is based on the achievement of agreed-upon financial performance metrics by the acquired company, as determined by the terms of the contingent consideration agreements with the sellers of each acquired company. We record a liability at the time of the acquisition based on the present value of management’s best estimates of the future results of the acquired companies compared to the agreed-upon metrics. After the date of acquisition, we update the original valuation to reflect the passage of time and current projections of future results of the acquired companies. Accretion of, and changes in the valuations of, contingent consideration are reported on the condensed consolidated statement of operations within “Severance and other expense.”

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

5. | Business segment reporting

Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s Chief Operating Decision Maker (“CODM”), which is our Chief Executive Officer, in deciding how to allocate resources and assess performance. Our CODM manages our operational segments that are aligned with our geographical regions as below:

| • | North and Latin America (“NLA”),

| • | Europe and Sub-Saharan Africa (“ESSA”),

| • | Middle East and North Africa (“MENA”), and

| • | Asia-Pacific (“APAC”).

The following table presents our revenue disaggregated by our operating segments (in thousands):

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
NLA |  | $ | 139,397 |  |  | $ | 105,252 |  |  | $ | 426,776 |  |  | $ | 366,310 |
ESSA |  |  | 131,475 |  |  |  | 135,395 |  |  |  | 421,652 |  |  |  | 387,105 |
MENA |  |  | 86,736 |  |  |  | 58,057 |  |  |  | 239,659 |  |  |  | 168,165 |
APAC |  |  | 65,220 |  |  |  | 71,114 |  |  |  | 187,872 |  |  |  | 184,434 |
Total |  | $ | 422,828 |  |  | $ | 369,818 |  |  | $ | 1,275,959 |  |  | $ | 1,106,014 |

Segment EBITDA

Our CODM regularly evaluates the performance of our operating segments using Segment EBITDA, which we define as income (loss) before income taxes adjusted for corporate costs, equity in income of joint ventures, depreciation and amortization expense, impairment expense, gain (loss) on disposal of assets, merger and integration expense, severance and other expense, stock-based compensation expense, foreign exchange gains (losses), other income (expense), net, and interest and finance income (expense), net.

The following table presents our Segment EBITDA disaggregated by our operating segments and a reconciliation to income before income taxes (in thousands):

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
NLA |  | $ | 33,064 |  |  | $ | 19,967 |  |  | $ | 111,915 |  |  | $ | 88,544 |
ESSA |  |  | 32,175 |  |  |  | 39,268 |  |  |  | 92,373 |  |  |  | 95,017 |
MENA |  |  | 30,032 |  |  |  | 16,871 |  |  |  | 83,181 |  |  |  | 49,930 |
APAC |  |  | 16,193 |  |  |  | (4,286 | ) |  |  | 42,227 |  |  |  | (3,532 | )
Total Segment EBITDA |  |  | 111,464 |  |  |  | 71,820 |  |  |  | 329,696 |  |  |  | 229,959 |
Corporate costs |  |  | (30,669 | ) |  |  | (24,070 | ) |  |  | (95,605 | ) |  |  | (73,961 | )
Equity in income of joint ventures |  |  | 4,241 |  |  |  | 2,495 |  |  |  | 12,955 |  |  |  | 7,736 |
Depreciation and amortization expense |  |  | (40,391 | ) |  |  | (37,414 | ) |  |  | (121,184 | ) |  |  | (109,386 | )
Merger and integration expense |  |  | (1,437 | ) |  |  | (817 | ) |  |  | (12,387 | ) |  |  | (4,332 | )
Severance and other expense |  |  | (3,181 | ) |  |  | (1,897 | ) |  |  | (8,007 | ) |  |  | (5,487 | )
Stock-based compensation expense |  |  | (6,831 | ) |  |  | (4,934 | ) |  |  | (19,251 | ) |  |  | (14,682 | )
Foreign exchange loss |  |  | (2,838 | ) |  |  | (4,260 | ) |  |  | (11,028 | ) |  |  | (4,630 | )
Other income (expense), net |  |  | 262 |  |  |  | (1,129 | ) |  |  | 1,081 |  |  |  | (3,540 | )
Interest and finance expense, net |  |  | (3,895 | ) |  |  | (373 | ) |  |  | (10,713 | ) |  |  | (1,688 | )
Income (loss) before income taxes |  | $ | 26,725 |  |  | $ | (579 | ) |  | $ | 65,557 |  |  | $ | 19,989 |

Corporate costs include the costs of running our corporate head office and other central functions that support the operating segments, including research, engineering and development, logistics, sales and marketing and health and safety and are not attributable to a particular operating segment.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

6. | Revenue

Disaggregation of revenue

We disaggregate our revenue from contracts with customers by geography, as disclosed in Note 5 “Business segment reporting,” as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Additionally, we disaggregate our revenue into main areas of capabilities.

The following table sets forth the total amount of revenue by main area of capabilities as follows (in thousands):

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Well construction |  | $ | 159,268 |  |  | $ | 116,293 |  |  | $ | 427,775 |  |  | $ | 388,277 |
Well management |  |  | 263,560 |  |  |  | 253,525 |  |  |  | 848,184 |  |  |  | 717,737 |
Total |  | $ | 422,828 |  |  | $ | 369,818 |  |  | $ | 1,275,959 |  |  | $ | 1,106,014 |

Contract balances

We perform our obligations under contracts with our customers by transferring services and products in exchange for consideration. The timing of our performance often differs from the timing of our customer’s payment, which results in the recognition of unbilled receivables and deferred revenue.

Unbilled receivables are initially recognized for revenue earned on completion of the performance obligation which are not yet invoiced to the customer. The amounts recognized as unbilled receivables are reclassified to trade receivable upon billing. Deferred revenue represents the Company’s obligations to transfer goods or services to customers for which the Company has received consideration, in full or part, from the customer.

Contract balances consisted of the following as of September 30, 2024, and December 31, 2023 (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Trade receivable, net |  | $ | 354,039 |  |  | $ | 222,591 |
Unbilled receivables (included within accounts receivable, net) |  | $ | 169,656 |  |  | $ | 203,689 |
Contract assets (included within accounts receivable, net) |  | $ | 16,782 |  |  | $ | 52,607 |
Deferred revenue (included within other liabilities) |  | $ | 16,051 |  |  | $ | 27,206 |

Contract assets include unbilled amounts resulting from sales under our long-term construction-type contracts when revenue recognized exceeds the amount billed to the customer and right to payment is conditional or subject to completing a milestone, such as a phase of the project. Contract assets are not considered a significant financing component, as they are intended to protect the customer in the event that we do not perform our obligations under the contract. Contract assets are generally classified as current, as it is very unusual for us to have contract assets with a term of greater than one year. Our contract assets are reported in a net position on a contract-by-contract basis at the end of each reporting period.

The Company recognized revenue during the three and nine months ended September 30, 2024 of $0.4 million and $22.5 million, respectively, and for the three and nine months ended September 30, 2023 of $6.3 million and $48.6 million, respectively, out of the deferred revenue balance as of the beginning of the applicable period.

As of September 30, 2024, $14.9 million of our deferred revenue was classified as current and is included in “Other current liabilities” on the unaudited condensed consolidated balance sheets, with the remainder classified as non-current and included in “Other non-current liabilities” on the unaudited condensed consolidated balance sheets.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

Transaction price allocated to remaining performance obligations

Remaining performance obligations represent firm contracts for which work has not been performed and future revenue recognition is expected. We have elected the practical expedient permitting the exclusion of disclosing remaining performance obligations for contracts that have an original expected duration of one year or less and for our long-term contracts we have a right to consideration from customers in an amount that corresponds directly with the value to the customer of the performance completed to date. With respect to our long-term construction contracts, revenue allocated to remaining performance obligations is $0.3 million.

7. | Income taxes

For interim financial reporting, the annual tax rate is based on pre-tax income (loss) before equity in income of joint ventures. We have historically calculated the income tax expense/(benefit) during interim reporting periods by applying a full year estimated Annual Effective Tax Rate (“AETR”) to income (loss) before income taxes, excluding infrequent or unusual discrete items, for the reporting period. For the nine months ended September 30, 2024, we concluded, consistent with prior periods, that using an AETR would not provide a reliable estimate of income taxes due to the forecasting methodology used to project income (loss) before income taxes, resulting in significant changes in the estimated AETR. Thus, we concluded to use a discrete effective tax rate, which treats the year-to-date period as an annual period, to calculate income taxes for the nine months ended September 30, 2024.

Our effective tax rates were 46.5% and 69.7% for the three and nine months ended September 30, 2024, respectively, and were 432.9% and 252.4% for the three and nine months ended September 30, 2023, respectively.

Our effective tax rate was impacted primarily due to changes in the mix of taxable profits between jurisdictions with different tax regimes, in particular in Asia Pacific, Latin America and in our ESSA region.

8. | Investment in joint ventures

We have investments in two joint venture companies, which together provide us access to certain Asian markets that otherwise would be challenging for us to penetrate or develop effectively on our own. COSL-Expro Testing Services (Tianjin) Co. Ltd (“CETS”), in which we have a 50% equity interest, has extensive offshore well testing and completions capabilities and a reputation for providing technology-driven solutions in China. Similarly, PV Drilling Expro International Co. Ltd. (“PVD-Expro”) in which we have a 49% equity interest, offers the full suite of Expro products and services, including well testing and completions, in Vietnam. Both of these are strategic to our activities and offer the full capabilities and technology of Expro, but each company is independently managed.

The carrying value of our investment in joint ventures as of September 30, 2024, and December 31, 2023, was as follows (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
CETS |  | $ | 71,789 |  |  | $ | 62,704 |
PVD-Expro |  |  | 3,748 |  |  |  | 3,698 |
Total |  | $ | 75,537 |  |  | $ | 66,402 |

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Notes to Unaudited Condensed Consolidated Financial Statements

9. | Accounts receivable, net

Accounts receivable, net consisted of the following as of September 30, 2024, and December 31, 2023 (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Accounts receivable |  | $ | 559,746 |  |  | $ | 497,135 |
Less: Expected credit losses |  |  | (19,269 | ) |  |  | (18,248 | )
Total |  | $ | 540,477 |  |  | $ | 478,887 |
Current |  |  | 532,469 |  |  |  | 469,119 |
Non – current |  |  | 8,008 |  |  |  | 9,768 |
Total |  | $ | 540,477 |  |  | $ | 478,887 |

10. | Inventories

Inventories consisted of the following as of September 30, 2024, and December 31, 2023 (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Finished goods |  | $ | 14,727 |  |  | $ | 25,854 |
Raw materials, equipment spares and consumables |  |  | 145,013 |  |  |  | 99,011 |
Work-in-progress |  |  | 19,599 |  |  |  | 18,460 |
Total |  | $ | 179,339 |  |  | $ | 143,325 |

11. | Other assets and liabilities

Other assets consisted of the following as of September 30, 2024, and December 31, 2023 (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Prepayments |  | $ | 31,465 |  |  |  | 28,725 |
Value-added tax receivables |  |  | 28,111 |  |  |  | 20,622 |
Collateral deposits |  |  | 644 |  |  |  | 1,886 |
Deposits |  |  | 9,420 |  |  |  | 8,912 |
Other |  |  | 14,473 |  |  |  | 10,566 |
Total |  | $ | 84,113 |  |  | $ | 70,711 |
Current |  |  | 72,976 |  |  |  | 58,409 |
Non – current |  |  | 11,137 |  |  |  | 12,302 |
Total |  | $ | 84,113 |  |  | $ | 70,711 |

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Notes to Unaudited Condensed Consolidated Financial Statements

Other liabilities consisted of the following as of September 30, 2024, and December 31, 2023 (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Deferred revenue |  | $ | 16,051 |  |  | $ | 27,206 |
Other tax and social security |  |  | 32,354 |  |  |  | 34,004 |
Provisions |  |  | 45,885 |  |  |  | 38,576 |
Contingent consideration |  |  | 29,694 |  |  |  | 24,705 |
Other |  |  | 18,583 |  |  |  | 17,855 |
Total |  | $ | 142,567 |  |  | $ | 142,346 |
Current |  |  | 97,699 |  |  |  | 98,144 |
Non – current |  |  | 44,868 |  |  |  | 44,202 |
Total |  | $ | 142,567 |  |  | $ | 142,346 |

12. | Accounts payable and accrued liabilities

Accounts payable and accrued liabilities consisted of the following as of September 30, 2024, and December 31, 2023 (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Accounts payable – trade |  | $ | 133,077 |  |  | $ | 146,759 |
Accrued liabilities |  |  | 140,486 |  |  |  | 112,521 |
Payroll, vacation and other employee benefits |  |  | 40,386 |  |  |  | 43,924 |
Accruals for goods received not invoiced |  |  | 12,698 |  |  |  | 22,921 |
Total |  | $ | 326,647 |  |  | $ | 326,125 |

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Notes to Unaudited Condensed Consolidated Financial Statements

13. | Property, plant and equipment, net

Property, plant and equipment, net consisted of the following as of September 30, 2024, and December 31, 2023 (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Cost: |  |  |  |  |  |  |  |
Land |  | $ | 22,176 |  |  | $ | 22,176 |
Land improvements |  |  | 3,332 |  |  |  | 3,332 |
Buildings and lease hold improvements |  |  | 103,469 |  |  |  | 100,404 |
Plant and equipment |  |  | 1,075,994 |  |  |  | 971,178 |
|  |  | 1,204,971 |  |  |  | 1,097,090 |
Less: accumulated depreciation |  |  | (668,983 | ) |  |  | (583,868 | )
Total |  | $ | 535,988 |  |  | $ | 513,222 |

The carrying amount of our property, plant and equipment recognized in respect of assets held under finance leases as of September 30, 2024 and December 31, 2023 and included in amounts above is as follows (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Cost: |  |  |  |  |  |  |  |
Buildings |  | $ | 23,590 |  |  | $ | 23,859 |
Plant and equipment |  |  | 462 |  |  |  | 589 |
|  |  | 24,052 |  |  |  | 24,448 |
Less: accumulated amortization |  |  | (11,648 | ) |  |  | (10,315 | )
Total |  | $ | 12,404 |  |  | $ | 14,133 |

Depreciation expense relating to property, plant and equipment, including assets under finance leases, was $28.1 million and $86.0 million for the three and nine months ended September 30, 2024, and $27.9 million and $81.2 million for the three and nine months ended September 30, 2023, respectively.

During the nine months ended September 30, 2023 assets held for sale were sold for net proceeds $2.0 million.

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Notes to Unaudited Condensed Consolidated Financial Statements

14. | Intangible assets, net

The following table summarizes our intangible assets comprising of Customer Relationships & Contracts (“CR&C”), Trademarks, Technology and Software as of September 30, 2024 and December 31, 2023 (in thousands):

|  | September 30, 2024 |  |  | December 31, 2023 |  |  | September 30, 2024 |
|  | Gross carrying amount |  |  | Accumulated impairment and amortization |  |  | Net book value |  |  | Gross carrying amount |  |  | Accumulated impairment and amortization |  |  | Net book value |  |  | Weighted average remaining life (years) |
CR&C |  | $ | 302,605 |  |  | $ | (158,111 | ) |  | $ | 144,494 |  |  | $ | 256,835 |  |  | $ | (139,302 | ) |  | $ | 117,533 |  |  |  | 7.5 |
Trademarks |  |  | 64,244 |  |  |  | (39,903 | ) |  |  | 24,341 |  |  |  | 58,977 |  |  |  | (36,578 | ) |  |  | 22,399 |  |  |  | 5.4 |
Technology |  |  | 229,022 |  |  |  | (92,010 | ) |  |  | 137,012 |  |  |  | 179,154 |  |  |  | (82,266 | ) |  |  | 96,888 |  |  |  | 11.5 |
Software |  |  | 18,257 |  |  |  | (15,651 | ) |  |  | 2,606 |  |  |  | 15,248 |  |  |  | (12,352 | ) |  |  | 2,896 |  |  |  | 0.3 |
Total |  | $ | 614,128 |  |  | $ | (305,675 | ) |  | $ | 308,453 |  |  | $ | 510,214 |  |  | $ | (270,498 | ) |  | $ | 239,716 |  |  |  | 9.0 |

Amortization expense for intangible assets was $13.0 million and $35.2 million for the three and nine months ended September 30, 2024, and $9.6 million and $28.2 million for the three and nine months ended September 30, 2023, respectively.

The following table summarizes the intangible assets which were acquired pursuant to the Coretrax Acquisition in 2024 (in thousands):

|  | Acquired Fair Value |  |  | Weighted average life (years) |
Coretrax: |  |  |  |  |  |  |  |
CR&C |  | $ | 45,883 |  |  |  | 13.0 |
Trademarks |  |  | 5,251 |  |  |  | 5.0 |
Software |  |  | 648 |  |  |  | 1.0 |
Technology |  |  | 49,868 |  |  |  | 10-15 |
Total |  | $ | 101,650 |  |  |  | 9.8 |

The following table summarizes the intangible assets which were acquired pursuant to the DeltaTek Acquisition and the PRT Acquisition during 2023 (in thousands):

|  | Acquired Fair Value |  |  | Weighted average life (years) |
DeltaTek: |  |  |  |  |  |  |  |
CR&C |  | $ | 2,571 |  |  |  | 6.0 |
Trademarks |  |  | 257 |  |  |  | 5.0 |
Technology |  |  | 8,237 |  |  |  | 15.0 |
Total |  | $ | 11,065 |  |  |  | 12.7 |
PRT: |  |  |  |  |  |  |  |
CR&C |  | $ | 31,946 |  |  |  | 10.0 |
Trademarks |  |  | 1,643 |  |  |  | 4.0 |
Technology |  |  | 265 |  |  |  | 15.0 |
Total |  | $ | 33,854 |  |  |  | 9.8 |

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Notes to Unaudited Condensed Consolidated Financial Statements

15. | Goodwill

Our reporting units are our operating segments which are NLA, ESSA, MENA and APAC.

The allocation of goodwill by operating segment as of September 30, 2024 and December 31, 2023 is as follows (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
NLA |  | $ | 163,296 |  |  | $ | 139,512 |
ESSA |  |  | 101,423 |  |  |  | 83,319 |
MENA |  |  | 47,365 |  |  |  | 5,441 |
APAC |  |  | 31,801 |  |  |  | 19,415 |
Total |  | $ | 343,885 |  |  | $ | 247,687 |

The following table summarizes the goodwill by operating segment which were acquired pursuant to the Coretrax Acquisition in 2024 (in thousands):

|  | Coretrax |
NLA |  | $ | 22,867 |
ESSA |  |  | 18,104 |
MENA |  |  | 41,924 |
APAC |  |  | 12,387 |
Total |  | $ | 95,282 |

The following table summarizes the goodwill by operating segment which were acquired pursuant to the DeltaTek Acquisition and the PRT Acquisition during 2023 (in thousands):

|  | DeltaTek |  |  | PRT |
NLA |  | $ | 2,445 |  |  | $ | 19,473 |
ESSA |  |  | 3,261 |  |  |  | - |
MENA |  |  | 1,223 |  |  |  | - |
APAC |  |  | 1,222 |  |  |  | - |
Total |  | $ | 8,151 |  |  | $ | 19,473 |

As of September 30, 2024, we did not identify any triggering events that would represent an indicator of impairment of our goodwill. Accordingly, no impairment charges related to goodwill have been recorded during the nine months ended September 30, 2024.

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Notes to Unaudited Condensed Consolidated Financial Statements

16. | Interest bearing loans

On October 6, 2023, we amended and restated the previous revolving credit facility agreement pursuant to an amendment and restatement agreement (the “Amended and Restated Facility Agreement”) with DNB Bank ASA, London Branch, as agent, in order to extend the maturity of the revolving credit facility agreement. The maturity date of the Amended and Restated Facility Agreement is October 6, 2026. The Amended and Restated Facility Agreement increased the total commitments to $250.0 million. The Company has the ability to increase the commitments to $350.0 million.

Borrowings under the Amended and Restated Facility Agreement bear interest at a rate per annum of Term SOFR (as defined in the Amended and Restated Facility Agreement), subject to a 0.00% floor, plus an applicable margin of 3.75% (which is subject to a margin ratchet which reduces the margin in 4 step downs according to the Total Net Leverage Ratio (as defined in the Amended and Restated Facility Agreement)) for cash borrowings or 2.50% for letters of credit (which are similarly subject to a margin ratchet which reduces the margin in 4 step downs according to the Total Net Leverage Ratio). A 0.40% per annum fronting fee applies to letters of credit, and an additional 0.25% or 0.50% per annum utilization fee is payable on cash borrowings to the extent one-third or two-thirds, respectively, or more of Facility A (as defined in the Amended and Restated Facility Agreement) commitments are drawn. The unused portion of the Amended and Restated Facility Agreement is subject to a commitment fee of 35% per annum of the applicable margin.

The Amended and Restated Facility Agreement retains various undertakings and affirmative and negative covenants (with certain agreed amendments) which limit, subject to certain customary exceptions and thresholds, the Company and its subsidiaries’ ability to, among other things, (1) enter into asset sales; (2) incur additional indebtedness; (3) make investments, acquisitions, or loans and create or incur liens; (4) pay certain dividends or make other distributions and (5) engage in transactions with affiliates. The Amended and Restated Facility Agreement amends certain of the financial covenants such that the Company is required to maintain (i) a minimum interest cover ratio of 4.0 to 1.0 based on the ratio of EBITDA to net finance charges and (ii) a maximum total net leverage ratio of 2.50 to 1.0 based on the ratio of total net debt to EBITDA, in each case tested quarterly on a last-twelve-months basis, subject to certain exceptions. We are in compliance with all our debt covenants as of September 30, 2024.

On May 15, 2024, the Company established an incremental facility under its Amended and Restated Facility Agreement, in order to increase its existing $250.0 million revolving credit facility by an additional $90.0 million in commitments, to a total of $340.0 million, of which $256.7 million was available for drawdowns as loans and $83.3 million was available for letters of credit. The establishment of the incremental facility was accomplished by a notice entered into with DNB Bank ASA as Agent, together with a consortium of banks as lenders. The incremental facility has the same terms and conditions as the existing facility provided under the Amended and Restated Facility Agreement. The incremental facility is available for the same general corporate purposes as the existing facility provided under the Amended and Restated Facility Agreement, including acquisitions. On May 15, 2024, the Company drew down on the new facility in the amount of approximately $76.1 million to partially finance the Coretrax Acquisition.

As of September 30, 2024, we had $121.1 million of borrowings outstanding under the Amended and Restated Facility Agreement. The effective interest rate on our outstanding borrowings was 7.6%. As of December 31, 2023, we had $20.0 million of borrowings outstanding. We utilized $49.1 million and $50.4 million of the Amended and Restated Facility as of September 30, 2024 and December 31, 2023, respectively, for bonds and guarantees.

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Notes to Unaudited Condensed Consolidated Financial Statements

17. | Commitments and contingencies

Commercial Commitments

During the normal course of business, we enter into commercial commitments in the form of letters of credit and bank guarantees to provide financial and performance assurance to third parties. We entered into contractual commitments for the acquisition of property, plant and equipment totaling $43.0 million and $36.7 million as of September 30, 2024 and December 31, 2023, respectively.

Contingencies

Certain conditions may exist as of the date our unaudited condensed consolidated financial statements are issued that may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management, with input from legal counsel, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings pending against us or unasserted claims that may result in proceedings, our management, with input from legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates it is probable a material loss has been incurred and the amount of liability can be reasonably estimated, then the estimated liability would be accrued in our unaudited condensed consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. We are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of September 30, 2024 and December 31, 2023. We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows.

We have conducted an internal investigation of the operations of certain of the Company’s foreign subsidiaries in West Africa including possible violations of the U.S. Foreign Corrupt Practices Act, our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our internal review to the SEC and the U.S. Department of Justice (“DOJ”). The DOJ has provided a declination, subject to the Company and the SEC reaching a satisfactory settlement of civil claims. On the basis of discussions with the SEC up to the end of the first quarter of 2023, we believed that a final resolution of this matter was likely to include a civil penalty in the amount of approximately $8.0 million and, accordingly, we had recorded a loss contingency in that amount within “Other current liabilities” on our unaudited condensed consolidated balance sheet, with the offset taken as an increase to goodwill as a measurement period adjustment associated with our 2021 business combination with Expro Group Holdings International Limited ( the “Merger”).

On April 26, 2023, the SEC issued a cease-and-desist order against the Company pursuant to section 21C of the Securities Exchange Act of 1934 (“Exchange Act”). Under this Order, the Company neither admitted nor denied any of the SEC’s findings and agreed to cease and desist from committing or causing any violations and any future violations of the anti-bribery, books and records and internal accounting controls requirements of the FCPA and the Exchange Act. In accepting the Company’s settlement offer, the SEC noted the Company’s self-reporting, co-operation afforded to the SEC staff and remedial action including improving the Company’s internal controls and further enhancements to its internal controls environment and compliance program following the Merger. The Company paid $8.0 million to the SEC in respect of disgorgement, prejudgment interest and civil penalty during the second quarter of 2023.

Other than discussed above, we had no other material legal accruals for loss contingencies, individually or in the aggregate, as of September 30, 2024 and December 31, 2023.

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Notes to Unaudited Condensed Consolidated Financial Statements

18. | Post-retirement benefits

Amounts recognized in the unaudited condensed consolidated statements of operations in respect of the defined benefit schemes were as follows (in thousands):

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Amortization of prior service credit |  | $ | 61 |  |  | $ | 61 |  |  | $ | 183 |  |  | $ | 183 |
Interest cost |  |  | (1,585 | ) |  |  | (1,571 | ) |  |  | (4,763 | ) |  |  | (4,655 | )
Expected return on plan assets |  |  | 1,938 |  |  |  | 1,030 |  |  |  | 5,773 |  |  |  | 3,023 |
Total |  | $ | 414 |  |  | $ | (480 | ) |  | $ | 1,193 |  |  | $ | (1,450 | )

The Company contributed $1.4 million and $4.0 million for the three and nine months ended September 30, 2024, and $1.3 million and $3.8 million for the three and nine months ended September 30, 2023, respectively, to defined benefit schemes.

Amortization of prior service credit, interest cost and expected return on plan assets have been recognized in “Other income, net” in the unaudited condensed consolidated statements of operations.

19. | Earnings (loss) per share

Basic earnings (loss) per share attributable to Company stockholders is calculated by dividing net income attributable to the Company by the weighted-average number of common shares outstanding for the period. Diluted earnings per share attributable to Company stockholders is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding, assuming all potentially dilutive shares were issued. We apply the treasury stock method to determine the dilutive weighted average common shares represented by unvested restricted stock units, stock options and Employee Stock Purchase Program (“ESPP”) shares.

The calculation of basic and diluted earnings (loss) per share attributable to Company stockholders for the three and nine months ended September 30, 2024 and 2023, respectively, are as follows (in thousands):

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Net income (loss) |  | $ | 16,275 |  |  | $ | (13,886 | ) |  | $ | 28,884 |  |  | $ | (10,942 | )
Basic weighted average number of shares outstanding |  |  | 117,468 |  |  |  | 108,777 |  |  |  | 113,888 |  |  |  | 108,765 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unvested restricted stock units |  |  | 398 |  |  |  | - |  |  |  | 1,342 |  |  |  | - |
ESPP shares |  |  | 8 |  |  |  | - |  |  |  | 6 |  |  |  | - |
Stock options |  |  | 420 |  |  |  | - |  |  |  | 369 |  |  |  | - |
Diluted weighted average number of shares outstanding |  |  | 118,294 |  |  |  | 108,777 |  |  |  | 115,605 |  |  |  | 108,765 |
Total basic earnings (loss) per share |  | $ | 0.14 |  |  | $ | (0.13 | ) |  | $ | 0.25 |  |  | $ | (0.10 | )
Total diluted earnings (loss) per share |  | $ | 0.14 |  |  | $ | (0.13 | ) |  | $ | 0.25 |  |  | $ | (0.10 | )

Approximately 0.8 million and 0.6 million shares of unvested restricted stock units and stock to be issued pursuant to the ESPP have been excluded from the computation of diluted loss per share as the effect would be anti-dilutive for the three and nine months ended September 30, 2023, respectively.

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Notes to Unaudited Condensed Consolidated Financial Statements

20. | Related party disclosures

Our related parties consist primarily of CETS and PVD-Expro, the two companies in which we exert significant influence, and Mosing Holdings LLC and its affiliates (Mr. Erich Mosing served as a director until May 24, 2023). During the three and nine months ended September 30, 2024, we provided goods and services to related parties totaling $6.4 million and $12.7 million, respectively, and $2.2 million and $8.7 million, respectively, for the three and nine months ended September 30, 2023. During the three and nine months ended September 30, 2024 we received material goods and services from related parties totaling less than $0.1 million and $0.1 million, respectively, and none and $0.4 million, respectively, for the three and nine months ended September 30, 2023.

Additionally, we entered into various operating lease agreements to lease facilities with affiliated companies. Rent expense associated with our related party leases was $0.1 million and $0.4 million for the three and nine months ended September 30, 2024, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024 and December 31, 2023 amounts receivable from related parties were $0.8 million and $2.7 million, respectively, and amounts payable to related parties were less than $0.1 million and $1.2 million, respectively.

As of September 30, 2024, $0.4 million of our operating lease right-of-use assets and $0.4 million of our lease liabilities were associated with related party leases. As of December 31, 2023, $0.6 million of our operating lease right-of-use assets and $0.6 million of our lease liabilities were associated with related party leases.

Tax Receivable Agreement

Mosing Holdings, LLC, a Delaware limited liability company (“Mosing Holdings”), converted all of its shares of Frank’s International N.V. (“Frank’s”) Series A convertible preferred stock into shares of Frank’s common stock on August 26, 2016, in connection with its delivery to Frank’s of all of its interests in Frank’s International C.V. (“FICV”) (the “Conversion”).

The tax receivable agreement (the “Original TRA”) that Frank’s entered into with FICV and Mosing Holdings in connection with Frank’s initial public offering (“IPO”) generally provided for the payment by Frank’s to Mosing Holdings of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that Frank’s actually realized (or were deemed to be realized in certain circumstances) in periods after the IPO as a result of (i) tax basis increases resulting from the Conversion and (ii) imputed interest deemed to be paid by Frank’s as a result of, and additional tax basis arising from, payments under the Original TRA. Frank’s retained the benefit of the remaining 15% of these cash savings, if any.

In connection with the merger agreement providing for the Merger, Frank’s, FICV and Mosing Holdings entered into the Amended and Restated Tax Receivable Agreement, dated as of March 10, 2021 (the “A&R TRA”). Pursuant to the A&R TRA, on October 1, 2021, the Company made a payment of $15 million to settle the early termination payment obligations that would otherwise have been owed to Mosing Holdings under the Original TRA as a result of the Merger. As the payment was a condition precedent to effect the Merger, it was included in the determination of Merger consideration exchanged. The A&R TRA also provides for other contingent payments to be made by the Company to Mosing Holdings in the future in the event the Company realizes cash tax savings from tax attributes covered under the Original TRA during the ten-year period following October 1, 2021 in excess of $18.1 million.

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Expro Group Holdings N.V.
Notes to Unaudited Condensed Consolidated Financial Statements

21. | Stock-based compensation

The Company recognized no stock-based compensation expense attributable to the Management Incentive Plan (“MIP”) stock options during the three and nine months ended September 30, 2024. The Company recognized expense of $0.2 million and $0.9 million attributable to the MIP stock options during the three and nine months ended September 30, 2023.

Stock-based compensation expense relating to the Long-Term Incentive Plan (“LTIP”), including restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”) for the three and nine months ended September 30, 2024 was $6.6 million and $18.8 million. Stock-based compensation expense relating to LTIP RSUs and PRSUs for the three and nine months ended September 30, 2023 was $4.7 million and $13.5 million.

During the nine months ended September 30, 2024, 1,190,827 RSUs and 308,412 PRSUs were granted to employees and directors at a weighted average grant date fair value of $19.73 per RSU and $26.00 per PRSU.

During the three and nine months ended September 30, 2024 we recognized $0.2 million and $0.5 million of compensation expense related to stock purchased under the ESPP and its sub-plans. The Company recognized ESPP expense for the three and nine months ended September 30, 2023 of $0.1 million and $0.3 million.

22. | Supplemental cash flow

|  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |
Cash paid for income taxes, net of refunds |  | $ | 34,091 |  |  | $ | 34,722 |
Cash paid for interest, net |  | $ | 8,070 |  |  | $ | 1,456 |
Change in accounts payable and accrued expenses related to capital expenditures |  | $ | 9,545 |  |  | $ | 1,432 |

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Form 10-Q and the audited consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report.

This section contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations, and involve risks and uncertainties. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements because of various factors, including those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” of this Form 10-Q and our Annual Report.

Overview of Business

Working for clients across the entire well life cycle, we are a leading provider of energy services, offering cost-effective, innovative solutions and what we consider to be best-in-class safety and service quality. With roots dating to 1938, we have more than 8,500 employees and provide services and solutions to leading exploration and production companies in both onshore and offshore environments in approximately 60 countries. The Company’s extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity solutions.

| Well Construction

| • | Our well construction products and services support customers’ new wellbore drilling, wellbore completion and recompletion, and wellbore plug and abandonment requirements. In particular, we offer advanced technology solutions in tubular running services, tubular products, cementing, drilling and wellbore cleanup. With a focus on innovation, we are continuing to advance the way wells are constructed by optimizing process efficiency on the rig floor, developing new methods to handle and install tubulars, and mitigating well integrity risks. We believe we are a market leader in deepwater tubular running services and solutions. In recent years, we have added a range of lower-risk, open water cementing solutions, including the proprietary SeaCure® and QuikCure® solutions. We also offer a range of performance drilling tools designed to mitigate risk and optimize drilling efficiency, including proprietary downhole circulation tools and hydraulic pipe recovery systems.

| Well Management

Our well management offerings consist of well flow management, subsea well access and well intervention and integrity services:

| • | Well flow management: We gather valuable well and reservoir data, with a particular focus on well-site safety and environmental impact. We provide global, comprehensive well flow management systems for the safe production, measurement and sampling of hydrocarbons from a well during the exploration and appraisal phase of a new field; the flowback and clean-up of a new well prior to production; and in-line testing of a well during its production life. We also provide early production facilities to accelerate production; production enhancement packages to enhance reservoir recovery rates through the realization of production that was previously locked within the reservoir; and metering and other well surveillance technologies to monitor and measure flow and other characteristics of wells.

| • | Subsea well access: With over 40 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to provide safe well access and optimized production throughout the lifecycle of the well. We provide what we believe to be the most reliable, efficient and cost-effective subsea well access systems for exploration and appraisal, development, intervention and abandonment, including an extensive portfolio of standard and bespoke Subsea Test Tree Assemblies and a range motion-compensating and other surface handling equipment. We also provide services and solutions utilizing a rig-deployed Intervention Riser System (“IRS”) owned by a third party and have capabilities for vessel-deployed light well intervention services. In addition, we provide systems integration and project management services.

| • | Well intervention and integrity: We provide well intervention solutions to acquire and interpret well data, maintain and restore well bore integrity and improve production. In addition to our extensive fleet of mechanical and cased hole wireline units, we have recently introduced and acquired a number of cost-effective, innovative well intervention services, including CoilHose™, a lightweight, small-footprint solution for wellbore lifting, cleaning and chemical treatments; Octopoda™, for fluid treatments in wellbore annuli; Galea™, an autonomous well intervention solution, and expandable casing patches designed to repair damaged production casing or isolate existing perforations prior to refracturing a well (a so called “patch and perf”). We also possess several other distinct technical capabilities, including non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring.

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We operate a global business and have a diverse and relatively stable customer base that is comprised of national oil companies (“NOC”), international oil companies (“IOC”), independent exploration and production companies (“Independents”) and service partners. We have strong relationships with a number of the world’s largest NOCs and IOCs, some of which have been our customers for decades. We are dedicated to safely and sustainably delivering maximum value to our customers.

We organize and manage our operations on a geographical basis. Our reporting structure and the key financial information used by our management team is organized around our four operating segments: (i) North and Latin America (“NLA”), (ii) Europe and Sub-Saharan Africa (“ESSA”), (iii) Middle East and North Africa (“MENA”) and (iv) Asia-Pacific (“APAC”).

How We Generate Our Revenue

Our revenue is derived primarily from providing services in well construction, well flow management, subsea well access and well intervention and integrity to operators globally. Our revenue includes equipment service charges, personnel charges, run charges and consumables. Some of our contracts allow us to charge for additional deliverables, such as the costs of mobilization of people and equipment and customer specific engineering costs associated with a project. We also procure products and services on behalf of our customers that are provided by third parties for which we are reimbursed with a mark-up or in connection with an integrated services contract. We also design, manufacture and sell equipment, which is typically done in connection with a related operations and maintenance arrangement with a particular customer. In addition, we also generate revenue from the sale of certain well construction products.

Commodity Prices and Market Conditions

Commodity Prices

Average daily oil demand in the third quarter of 2024 exceeded the average daily demand levels in the third quarter of 2023, as well as the full year average for 2023, with liquid demand expected to grow by 0.9 million b/d in 2024 over 2023. Brent crude oil prices have been declining over the third quarter, from an average of $85/bbl in July decreasing to an average of $74/bbl in September. The Brent price decline has largely been due to concerns over global oil demand growth outweighing declines in oil inventories and the expected timing of production increases by the Organization of Petroleum Exporting Countries and certain other oil producing nations (“OPEC+”).

Market Conditions

We have recently seen continued strength in investments and activity despite some uncertainty and volatility in oil markets. Escalations in the Middle East conflicts have yet to have significant impact on the market but provide a degree of uncertainty in forecasts. There are a number of market factors that have had, and may continue to have, an effect on our business, including:

| • | The market for energy services and our business are substantially dependent on the price of oil and, to a lesser extent, the regional price of gas, which are both driven by market supply and demand. Changes in oil and gas prices impact customer willingness to spend on exploration and appraisal, development, production, and abandonment activities. The extent of the impact of a change in oil and gas prices on these activities varies extensively between geographic regions, types of customers, types of activities and the financial returns of individual projects.

| • | Activity related to gas and liquified natural gas (“LNG”) production (and associated asset development) continues to grow within our ESSA and MENA regions in support of Europe’s ongoing drive to diversify away from its reliance on Russian pipeline gas supplies over the long term. More broadly, the energy security and transition imperatives of policymakers in the U.S. and Europe continue to result in increased investment in global gas development.

| • | International, offshore and deepwater activity continued to strengthen throughout 2024 as operator upstream investments increased to a level above 2015 levels. We also experienced an increased demand for services related to brownfield and production enhancement and infield development programs as operators strived to maximize their previous investments and maintain production with a lower carbon footprint. In addition, we have seen an increase in demand for production optimization technologies, especially in support of gas and LNG developments

| • | The clean energy transition continues to gain momentum. We believe however that hydrocarbons, and natural gas in particular, will continue to play a vital role in the transition towards more sustainable energy resources and that existing expertise and future innovation within the energy services sector, both to reduce emissions and enhance efficiency, will be critical. We are already active in the early-stage carbon capture and storage segment and have expertise and established operations within the geothermal and flare reduction segments. We continue to develop technologies to enhance the sustainability of our customers’ operations which, along with our digital transformation initiatives, are expected to enable us to continue to support our customers’ commercial and environmental initiatives. As the industry changes, we continue to evolve our approach to assist and enable our customers to develop more sustainable energy solutions.

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Outlook

Global liquids demand increased in the third quarter of 2024 compared to the previous quarter and average year-on-year consumption is expected to continue to grow in 2024. Despite this, concerns regarding demand growth outweighed oil inventory draws and potential OPEC+ production increases led to a decline in prices over the third quarter. However, after recent escalations in Middle East conflicts, the Brent spot price rose, with the potential for supply disruptions from the region likely to result in continued uncertainty and volatility, at least for the medium term.

The U.S. Energy Information Administration (“EIA”) forecasts global liquid fuels consumption will average 103.1 million b/d in 2024, increasing by 0.9 million b/d over 2023. Global liquids demand is then expected to grow by a further 1.3 million b/d to an average of 104.4 million b/d in 2025. Expected growth in global liquids demand is mainly driven by non-OECD countries where liquid fuels consumption is forecast to increase by 1.0 million b/d in 2024 and 1.2 million b/d in 2025, in contrast to OECD countries, which is forecasted to decrease by 0.1 million b/d in 2024 before increasing by a similar amount in 2025.

The EIA predicts that global liquids production will average 102.5 million b/d in 2024, up by 0.5 million b/d from 2023, and will average 104.5 million b/d in 2025, a further growth of 2.0 million b/d over 2024. Production growth outside of OPEC+ is expected to remain strong over the forecast period and as a result, the EIA anticipates that OPEC+ producers will likely keep production at levels that are lower than their recently announced targets for the remainder of 2024 and into next year. In addition to voluntary cuts to OPEC+ production, force majeure events in Libya in August and September reduced oil production, further limiting 2024 supply growth. By the middle of 2025, oil production growth is expected to accelerate as OPEC+ modestly increases its production and further growth comes from the United States, Guyana, Brazil and Canada. However, there is a risk OPEC+ utilizes spare capacity to materially increase production in an attempt to regain market share, posing downside risk to prices.

Oil prices declined in the third quarter of 2024 as concerns over global oil demand growth, particularly from China, outweighed declines in oil inventories and the OPEC+ decision to delay production increases by two months until December 2024. However, since the end of the third quarter, increased tensions in the Middle East have led to a rise in the Brent spot price with the potential for further escalation injecting significant uncertainty and volatility into oil markets. As no supplies have been affected by increased military action at the time of the EIA forecast, and the EIA’s assessment that significant crude oil production capacity is available, the conflicts have not affected the EIA’s price estimates. OPEC+ production cuts continue to result in less oil being produced globally than is being consumed, and oil is therefore being withdrawn from inventories. As a result, the EIA forecasts that oil prices will increase to an average of $76/bbl in the fourth quarter and will average $81/bbl overall for 2024. As production growth is forecast to increase by the middle of 2025, it is expected to gradually outweigh global oil demand growth, leading to an estimated decline in oil prices to an average of $78/bbl for 2025. As a general matter, if customers have confidence that oil prices will remain above $65/bbl to $70/bbl, we believe the outlook for our business is stable to positive.

In addition to a still constructive medium term liquids market outlook, international natural gas prices are also expected to remain supportive of continued activity.

In the US, Henry Hub natural gas prices averaged $2.11/MMBtu in the third quarter, driven by balanced supply and demand and storage levels generally consistent with historical averages. The EIA forecasts Henry Hub prices will rise to an average of nearly $2.81 per million British thermal unit (“MMBtu”) in the fourth quarter due to the potential for stronger winter demand. Henry Hub is expected to trade at an average of $3.06/MMBtu in 2025, which assumes an increase in LNG exports from continued international demand while U.S. domestic consumption and production remain relatively flat. Rystad Energy forecasts that prices at the European Title Transfer Facility and Northeast Asian LNG spot markets will average $10.50/MMBtu and $11.50/MMBtu, respectively in 2024, and $10.20/MMBtu and $11.20/MMBtu, respectively in 2025. These price forecasts are primarily supported by Asian demand recovery, driven by China and India, normal seasonal demand, and the sustained status quo for Russian-Ukraine gas flows into Europe.

Consequently, the market outlook for the remainder of 2024 and into 2025 shows commodity prices driving continued expenditures on exploration and production, with near 2015 levels of upstream investment expected. With operators focused on long cycle development to meet expected demand, investment increases are expected in the deepwater and offshore shelf segments with support from large projects in NLA driven by Guyana, Brazil, USA and Mexico, as well as Saudi and the UAE in the Middle East, Norway and China.

In sum, we forecast demand for our services and solutions will continue to grow in 2025 and beyond.

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How We Evaluate Our Operations

We use a number of financial and operational measures to routinely analyze and evaluate the performance of our business, including Revenue and Adjusted EBITDA.

Revenue: We analyze our performance by comparing actual monthly revenue by operating segments and areas of capabilities to our internal projections for each month. Our revenue is primarily derived from well construction, well flow management, subsea well access and well intervention and integrity solutions.

Adjusted EBITDA: We regularly evaluate our financial performance using Adjusted EBITDA. Our management believes Adjusted EBITDA is a useful financial performance measure as it excludes non-cash charges and other transactions not related to our core operating activities and allows more meaningful analysis of the trends and performance of our core operations.

Adjusted EBITDA is a non-GAAP financial measures. Please refer to the section titled “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial performance measure calculated and presented in accordance with GAAP.

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Executive Overview

Three months ended September 30, 2024, compared to three months ended June 30, 2024

Certain highlights of our financial results and other key developments include:

| • | Revenue for the three months ended September 30, 2024, decreased by $46.8 million, or 10.0%, to $422.8 million, compared to $469.6 million for the three months ended June 30, 2024. Consistent with expectations, the decrease in revenue was a result of lower activity in the NLA and ESSA segments, offset by modestly higher activity in MENA and APAC. Revenue for our segments is discussed separately below under the heading “Operating Segment Results.” Third and second quarter operating results respectively include $33.1 million and $21.1 million of revenue attributable to Coretrax.
| • | We reported net income for the three months ended September 30, 2024, of $16.3 million, an increase of $1.0 million, or 6.4%, as compared to net income of $15.3 million for the three months ended June 30, 2024. Net income margin was 3.8% for the three months ended September 30, 2024 compared to 3.3% for the three months ended June 30, 2024. The increase primarily reflected lower merger and integration expense of $7.4 million, lower income tax expense of $3.5 million, lower foreign exchange loss of $2.6 million, and higher severance and other expense of $3.4 million offset by lower Adjusted EBITDA of $9.5 million.
| • | Adjusted EBITDA for the three months ended September 30, 2024, decreased by $9.5 million, or 10.1%, to $85.0 million from $94.6 million for the three months ended June 30, 2024. Adjusted EBITDA margin was flat at 20.1% for both the three months ended September 30, 2024 and June 30, 2024. The decrease in Adjusted EBITDA is primarily attributable to lower well flow management activity related to changes in our customers' drilling and completion programs in Mexico, and lower activity and a change in product mix in the Gulf of Mexico. Additionally, the results for the three months ended September 30, 2024 and June 30, 2024 include losses on our Congo production solutions project of $7.3 million and $11.6 million, respectively, pending the resolution of several variation orders. The steady Adjusted EBITDA margin reflects a generally consistent activity mix across all operating segments.
| • | Net cash provided by operating activities for the three months ended September 30, 2024, was $55.3 million, as compared to net cash provided by operating activities of $13.2 million for the three months ended June 30, 2024, primarily driven by a decrease in working capital.

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Nine months ended September 30, 2024, compared to nine months ended September 30, 2023

Certain highlights of our financial results and other key developments include:

| • | 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 nine months ended September 30, 2023. The increase in revenue was driven by higher activity across all segments, in particular in NLA, ESSA and MENA segments. Revenue for our segments is discussed separately below under the heading “Operating Segment Results.”
| • | We reported net income for the nine months ended September 30, 2024, of $28.9 million, as compared to a net loss of $10.9 million for the nine months ended September 30, 2023. Net income margin was 2.3% for the nine months ended September 30, 2024 compared to (1.0)% for the nine months ended September 30, 2023. The increase primarily reflected higher Adjusted EBITDA (which was up $83.3 million), supplemented by higher other income (expense) of $4.6 million. The increase is partially offset by higher depreciation and amortization expense of $11.8 million; higher income tax expense of $5.7 million; higher foreign exchange loss of $6.4 million; higher merger and integration expense of $8.1 million, which includes professional costs incurred in connection with the Coretrax Acquisition; higher interest and finance expense of $9.0 million; higher stock-based compensation expense of $4.6 million; and higher severance and other expense of $2.5 million.
| • | Adjusted EBITDA for the nine months ended September 30, 2024, increased by $83.3 million, or 50.9%, to $247.0 million from $163.7 million for the nine months ended September 30, 2023. Adjusted EBITDA margin increased to 19.4% during the nine months ended September 30, 2024, as compared to 14.8% during the nine months ended September 30, 2023. The increase in Adjusted EBITDA and Adjusted EBITDA margin is primarily attributable the non-repeat of unrecoverable LWI-related costs in APAC of $31.6 million. The remaining increase in Adjusted EBITDA and Adjusted EBITDA margin was due to the acquisitions of PRT and Coretrax which contributed to overall higher revenue and an improved activity mix, partially offset by losses on our Congo production solutions project. The Company suspended vessel-deployed light well intervention (“LWI”) operations during the third quarter of 2023 following a wire failure on the main crane of the third party-owned vessel working with Expro while the crane was suspending the subsea module (“SSM”) of Expro’s vessel-deployed LWI system. We are continuing to work with the relevant stakeholders and independent experts to assess the incident. The well control package and lubricator components of this vessel-deployed LWI system have been safely recovered. The subsea module was also subsequently recovered from the seabed but as we had abandoned it as a wreck we did not participate in its recovery. We are pursuing an insurance claim in respect of the subsea module and related umbilical and flushing lines. We are continuing to determine the path forward for our vessel-deployed LWI operations, including what alternative service delivery options and service partner options are available to the Company, and the timing and cost (including potential damage claims) of completing customer work scopes for which our vessel-deployed LWI system was integral. At this time, we are not able to assess the timing and potential cost of completing customer work scopes but do not expect such costs to be material to Expro’s financial results.
| • | Net cash provided by operating activities was $72.1 million during the nine months ended September 30, 2024 as compared to $105.5 million during the nine months ended September 30, 2023. The decrease in net cash provided by operating activities of $33.5 million for the nine months ended September 30, 2024, was primarily driven by an increase in working capital, a decrease in earnings from joint ventures, and an increase in cash paid for merger and integration expenses and for severance and other expenses, partially offset by an increase in Adjusted EBITDA.

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Non-GAAP Financial Measures

We include in this Form 10-Q the non-GAAP financial measures Adjusted EBITDA and Adjusted EBITDA margin. We provide reconciliations of net income (loss), the most directly comparable financial performance measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.

Adjusted EBITDA and Adjusted EBITDA margin are used as supplemental financial measures by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others. These non-GAAP financial measures allow our management and others to assess our financial and operating performance as compared to those of other companies in our industry, without regard to the effects of our capital structure, asset base, items outside the control of management and other charges outside the normal course of business.

We define Adjusted EBITDA as net income (loss) adjusted for (a) income tax expense (benefit), (b) depreciation and amortization expense, (c) impairment expense, (d) severance and other expense, net, (e) stock-based compensation expense, (f) merger and integration expense, (g) gain on disposal of assets, (h) other income (expense), net, (i) interest and finance (income) expense, net and (j) foreign exchange (gain) loss. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues.

Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. As Adjusted EBITDA may be defined differently by other companies in our industry, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

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The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the three and nine months presented (in thousands):

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, 2024 |  |  | June 30, 2024 |  |  | September 30, 2024 |  |  | September 30, 2023 |
Net income (loss) |  | $ | 16,275 |  |  | $ | 15,286 |  |  | $ | 28,884 |  |  | $ | (10,942 | )
Income tax expense |  | $ | 10,450 |  |  | $ | 13,935 |  |  | $ | 36,673 |  |  | $ | 30,931 |
Depreciation and amortization expense |  |  | 40,391 |  |  |  | 40,647 |  |  |  | 121,184 |  |  |  | 109,386 |
Severance and other expense (income) |  |  | 3,181 |  |  |  | (236 | ) |  |  | 8,007 |  |  |  | 5,487 |
Merger and integration expense |  |  | 1,437 |  |  |  | 8,789 |  |  |  | 12,387 |  |  |  | 4,332 |
Other (income) expense, net (1) |  |  | (262 | ) |  |  | (334 | ) |  |  | (1,081 | ) |  |  | 3,540 |
Stock-based compensation expense |  |  | 6,831 |  |  |  | 7,350 |  |  |  | 19,251 |  |  |  | 14,682 |
Foreign exchange loss |  |  | 2,838 |  |  |  | 5,447 |  |  |  | 11,028 |  |  |  | 4,630 |
Interest and finance expense, net |  |  | 3,895 |  |  |  | 3,666 |  |  |  | 10,713 |  |  |  | 1,688 |
Adjusted EBITDA |  | $ | 85,036 |  |  | $ | 94,550 |  |  | $ | 247,046 |  |  | $ | 163,734 |
Net income (loss) margin |  |  | 3.8 | % |  |  | 3.3 | % |  |  | 2.3 | % |  |  | (1.0 | )%
Adjusted EBITDA margin |  |  | 20.1 | % |  |  | 20.1 | % |  |  | 19.4 | % |  |  | 14.8 | %

(1) | Other income (expense), net, is comprised of immaterial, unusual or infrequently occurring transactions which, in management’s view, do not provide useful measures of the underlying operating performance of the business.

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Results of Operations

Operating Segment Results

We evaluate our business segment operating performance using segment revenue and Segment EBITDA, as described in Note 5 “Business segment reporting” in our consolidated financial statements. We believe Segment EBITDA is a useful operating performance measure as it excludes non-cash charges and other transactions not related to our core operating activities and corporate costs, and Segment EBITDA allows management to more meaningfully analyze the trends and performance of our core operations by segment as well as to make decisions regarding the allocation of resources to our segments.

The following table shows revenue by segment and revenue as a percentage of total revenue by segment for the three months ended September 30, 2024 and June 30, 2024 (in thousands):

|  | Three Months Ended |  |  | Percentage |
|  | September 30, 2024 |  |  | June 30, 2024 |  |  | September 30, 2024 |  |  | June 30, 2024 |
NLA |  | $ | 139,397 |  |  | $ | 156,990 |  |  |  | 33.0 | % |  |  | 33.4 | %
ESSA |  |  | 131,475 |  |  |  | 168,431 |  |  |  | 31.1 | % |  |  | 35.9 | %
MENA |  |  | 86,736 |  |  |  | 81,429 |  |  |  | 20.5 | % |  |  | 17.3 | %
APAC |  |  | 65,220 |  |  |  | 62,792 |  |  |  | 15.4 | % |  |  | 13.4 | %
Total Revenue |  | $ | 422,828 |  |  | $ | 469,642 |  |  |  | 100.0 | % |  |  | 100.0 | %

The following table shows revenue by segment and revenue as a percentage of total revenue by segment for the nine months ended September 30, 2024 and September 30, 2023 (in thousands):

|  | Nine Months Ended |  |  | Percentage |
|  | September 30, 2024 |  |  | September 30, 2023 |  |  | September 30, 2024 |  |  | September 30, 2023 |
NLA |  | $ | 426,776 |  |  | $ | 366,310 |  |  |  | 33.4 | % |  |  | 33.1 | %
ESSA |  |  | 421,652 |  |  |  | 387,105 |  |  |  | 33.0 | % |  |  | 35.0 | %
MENA |  |  | 239,659 |  |  |  | 168,165 |  |  |  | 18.8 | % |  |  | 15.2 | %
APAC |  |  | 187,872 |  |  |  | 184,434 |  |  |  | 14.8 | % |  |  | 16.7 | %
Total Revenue |  | $ | 1,275,959 |  |  | $ | 1,106,014 |  |  |  | 100.0 | % |  |  | 100.0 | %

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The following table shows Segment EBITDA and Segment EBITDA margin by segment and a reconciliation to income before income taxes for the three months ended September 30, 2024 and June 30, 2024 (in thousands):

|  | Three Months Ended |  |  | Segment EBITDA Margin |
|  | September 30, 2024 |  |  | June 30, 2024 |  |  | September 30, 2024 |  |  | June 30, 2024 |
NLA |  | $ | 33,064 |  |  | $ | 44,474 |  |  |  | 23.7 | % |  |  | 28.3 | %
ESSA |  |  | 32,175 |  |  |  | 34,997 |  |  |  | 24.5 | % |  |  | 20.8 | %
MENA |  |  | 30,032 |  |  |  | 28,611 |  |  |  | 34.6 | % |  |  | 35.1 | %
APAC |  |  | 16,193 |  |  |  | 15,248 |  |  |  | 24.8 | % |  |  | 24.3 | %
Total Segment EBITDA |  |  | 111,464 |  |  |  | 123,330 |  |  |  |  |  |  |  |  |
Corporate costs (1) |  |  | (30,669 | ) |  |  | (33,636 | ) |  |  |  |  |  |  |  |
Equity in income of joint ventures |  |  | 4,241 |  |  |  | 4,856 |  |  |  |  |  |  |  |  |
Depreciation and amortization expense |  |  | (40,391 | ) |  |  | (40,647 | ) |  |  |  |  |  |  |  |
Merger and integration expense |  |  | (1,437 | ) |  |  | (8,789 | ) |  |  |  |  |  |  |  |
Severance and other (expense) income |  |  | (3,181 | ) |  |  | 236 |  |  |  |  |  |  |  |  |
Stock-based compensation expense |  |  | (6,831 | ) |  |  | (7,350 | ) |  |  |  |  |  |  |  |
Foreign exchange loss |  |  | (2,838 | ) |  |  | (5,447 | ) |  |  |  |  |  |  |  |
Other income, net |  |  | 262 |  |  |  | 334 |  |  |  |  |  |  |  |  |
Interest and finance expense, net |  |  | (3,895 | ) |  |  | (3,666 | ) |  |  |  |  |  |  |  |
Income before income taxes |  | $ | 26,725 |  |  | $ | 29,221 |  |  |  |  |  |  |  |  |

The following table shows Segment EBITDA and Segment EBITDA margin by segment and a reconciliation to income before income taxes for the nine months ended September 30, 2024 and September 30, 2023 (in thousands):

|  | Nine Months Ended |  |  | Segment EBITDA Margin |
|  | September 30, 2024 |  |  | September 30, 2023 |  |  | September 30, 2024 |  |  | September 30, 2023 |
NLA |  | $ | 111,915 |  |  | $ | 88,544 |  |  |  | 26.2 | % |  |  | 24.2 | %
ESSA |  |  | 92,373 |  |  |  | 95,017 |  |  |  | 21.9 | % |  |  | 24.5 | %
MENA |  |  | 83,181 |  |  |  | 49,930 |  |  |  | 34.7 | % |  |  | 29.7 | %
APAC |  |  | 42,227 |  |  |  | (3,532 | ) |  |  | 22.5 | % |  |  | (1.9 | )%
Total Segment EBITDA |  |  | 329,696 |  |  |  | 229,959 |  |  |  |  |  |  |  |  |
Corporate costs (1) |  |  | (95,605 | ) |  |  | (73,961 | ) |  |  |  |  |  |  |  |
Equity in income of joint ventures |  |  | 12,955 |  |  |  | 7,736 |  |  |  |  |  |  |  |  |
Depreciation and amortization expense |  |  | (121,184 | ) |  |  | (109,386 | ) |  |  |  |  |  |  |  |
Merger and integration expense |  |  | (12,387 | ) |  |  | (4,332 | ) |  |  |  |  |  |  |  |
Severance and other expense |  |  | (8,007 | ) |  |  | (5,487 | ) |  |  |  |  |  |  |  |
Stock-based compensation expense |  |  | (19,251 | ) |  |  | (14,682 | ) |  |  |  |  |  |  |  |
Foreign exchange loss |  |  | (11,028 | ) |  |  | (4,630 | ) |  |  |  |  |  |  |  |
Other income (expense), net |  |  | 1,081 |  |  |  | (3,540 | ) |  |  |  |  |  |  |  |
Interest and finance expense, net |  |  | (10,713 | ) |  |  | (1,688 | ) |  |  |  |  |  |  |  |
Income before income taxes |  | $ | 65,557 |  |  | $ | 19,989 |  |  |  |  |  |  |  |  |

(1) | Corporate costs include the costs of running our corporate head office and other central functions that support the operating segments, including research, engineering and development, logistics, sales and marketing and health and safety and are not attributable to a particular operating segment.

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Three months ended September 30, 2024 compared to three months ended June 30, 2024

NLA

Revenue for the NLA segment was $139.4 million for the three months ended September 30, 2024, a decrease of $17.6 million, or 11.2%, compared to $157.0 million for the three months ended June 30, 2024. The decrease was primarily due to lower revenue from well flow management, well construction and subsea well access activity in the Gulf of Mexico and Mexico, and lower well intervention and integrity activity in Argentina, partially offset by higher well flow management revenue in Argentina. NLA revenue included $6.1 million and $4.6 million of revenue in the third and second quarter, respectively, as a result of the Coretrax Acquisition.

Segment EBITDA for the NLA segment was $33.1 million, or 23.7% of revenues, during the three months ended September 30, 2024, a decrease of $11.4 million, or 25.7%, compared to $44.5 million, or 28.3%, of revenues during the three months ended June 30, 2024. The decrease in Segment EBITDA and Segment EBITDA margin was primarily attributable to lower well flow management activity related to a change in our customers' drilling and completions programs in Mexico, and lower activity and a less favorable activity mix in the Gulf of Mexico during the three months ended September 30, 2024.

ESSA

Revenue for the ESSA segment was $131.5 million for the three months ended September 30, 2024, a decrease of $37.0 million, or 21.9%, compared to $168.4 million for the three months ended June 30, 2024. The decrease in revenues was primarily driven by an expected decrease in subsea well access revenue in Angola due to project timing and lower well flow management revenue in Congo, partially offset by increased well flow management and well construction activity in the United Kingdom. ESSA revenue included $6.8 million and $3.8 million of revenue in the third and second quarter, respectively, as a result of the Coretrax Acquisition.

Segment EBITDA for the ESSA segment was $32.2 million, or 24.5% of revenues, for the three months ended September 30, 2024, a decrease of $2.8 million, or 8.1%, compared to $35.0 million, or 20.8% of revenues, for the three months ended June 30, 2024. The decrease in Segment EBITDA and Segment EBITDA margin was attributable to the above referenced decrease of subsea well access activity in Angola, partially offset by lower losses on our Congo production solutions project during the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. For both the third and second quarters, we recognized losses on the Congo production solutions project pending resolution of several variation orders.

MENA

Revenue for the MENA segment was $86.7 million for the three months ended September 30, 2024, an increase of $5.3 million, or 6.5%, compared to $81.4 million for the three months ended June 30, 2024. The increase in revenue was driven by three months of Coretrax revenue in the third quarter compared to two months in the second quarter, partially offset by a modest decrease in revenue across other product lines. MENA revenue in the third and second quarter included $16.1 million and $10.4 million of Coretrax revenue, respectively.

Segment EBITDA for the MENA segment was $30.0 million, or 34.6% of revenues, for the three months ended September 30, 2024, an increase of $1.4 million, or 5.0%, compared to $28.6 million, or 35.1% of revenues, for the three months ended June 30, 2024. The increase in Segment EBITDA and Segment EBITDA margin was primarily due to increased activity on higher-margin projects and more favorable activity mix during the three months ended September 30, 2024, including impacts of the Coretrax Acquisition.

APAC

Revenue for the APAC segment was $65.2 million for the three months ended September 30, 2024, an increase of $2.4 million, or 3.9%, compared to $62.8 million for the three months ended June 30, 2024. The increase in revenue was primarily due to increased well flow management activity in Thailand, higher subsea well access activity in Australia and increased Coretrax revenue, partially offset by lower subsea well access activity in China and lower well flow management and well intervention and integrity activity in Australia. APAC revenue included $4.1 million and $2.2 million of Coretrax revenue in the third and second quarter, respectively.

Segment EBITDA for the APAC segment was $16.2 million, or 24.8% of revenues, for the three months ended September 30, 2024, an increase of $0.9 million compared to $15.2 million, or 24.3% of revenues, for the three months ended June 30, 2024. The increase in Segment EBITDA is attributable primarily due to the impact of the Coretrax Acquisition.

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Merger and integration expense

Merger and integration expense for the three months ended September 30, 2024, decreased by $7.4 million, to $1.4 million as compared to $8.8 million for the three months ended June 30, 2024. The decrease was primarily attributable to professional costs incurred in connection with the Coretrax Acquisition during the three months ended June 30, 2024 that did not repeat in the third quarter.

Severance and other expense

Severance and other expense was $3.2 million for the three months ended September 30, 2024 as compared to severance and other income of $0.2 million for the three months ended June 30, 2024. The increase in severance and other expense was primarily attributable to a valuation adjustment of contingent consideration and the recognition of restructuring costs.

Foreign exchange loss

Foreign exchange loss for the three months ended September 30, 2024 decreased by $2.6 million, or 47.9%, to $2.8 million as compared to $5.4 million for the three months ended June 30, 2024. The decrease was primarily due to favorable changes in various exchange rates, including the Brazilian Real and the Nigerian Naira.

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Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

NLA

Revenue for the NLA segment was $426.8 million for the nine months ended September 30, 2024, an increase of $60.5 million, or 16.5%, compared to $366.3 million for the nine months ended September 30, 2023. The increase was primarily due to increases in subsea well access revenue in the United States, driven by revenue related to the PRT Acquisition and Coretrax Acquisition, well flow management activity in Mexico, well intervention and integrity revenue in South America. These were partially offset by lower well construction revenue in the United States, Mexico, and Guyana.

Segment EBITDA for the NLA segment was $111.9 million, or 26.2% of revenues, during the nine months ended September 30, 2024, an increase of $23.4 million, or 26.4%, compared to $88.5 million, or 24.2%, of revenues during the nine months ended September 30, 2023. The increase in Segment EBITDA and Segment EBITDA margin was primarily attributable the impacts of the PRT Acquisition and the Coretrax Acquisition during the nine months ended September 30, 2024.

ESSA

Revenue for the ESSA segment was $421.7 million for the nine months ended September 30, 2024, an increase of $34.5 million, or 8.9%, compared to $387.1 million for the nine months ended September 30, 2023. The increase in revenues was primarily driven by increased subsea well access activity in Angola, and supplemented by higher well flow management revenue in the U.K., Norway and Denmark, and additional revenue as a result of the Coretrax Acquisition, partially offset by lower well flow management revenue in Congo.

Segment EBITDA for the ESSA segment was $92.4 million, or 21.9% of revenues, for the nine months ended September 30, 2024, a decrease of $2.6 million, or 2.8%, compared to $95.0 million, or 24.5% of revenues, for the nine months ended September 30, 2023. The decrease in Segment EBITDA and Segment EBITDA margin was primarily attributable to a decrease in margins in our Congo project, partially offset by increased subsea well access activity in Angola, increased well flow management activity in the U.K. and Norway, and impacts of the Coretrax Acquisition during the nine months ended September 30, 2024.

MENA

Revenue for the MENA segment was $239.7 million for the nine months ended September 30, 2024, an increase of $71.5 million, or 42.5%, compared to $168.2 million for the nine months ended September 30, 2023. The increase in revenue was driven by higher well flow management activity in Saudi Arabia and Algeria, higher well construction revenue in United Arab Emirates, Egypt and Oman, and additional revenue as a result of the Coretrax Acquisition.

Segment EBITDA for the MENA segment was $83.2 million, or 34.7% of revenues, for the nine months ended September 30, 2024, an increase of $33.3 million, or 66.6%, compared to $49.9 million, or 29.7% of revenues, for the nine months ended September 30, 2023. The increase in Segment EBITDA and Segment EBITDA margin was primarily due to increased activity on higher-margin projects and more favorable activity mix during the nine months ended September 30, 2024, including the impact of the Coretrax Acquisition.

APAC

Revenue for the APAC segment was $187.9 million for the nine months ended September 30, 2024, an increase of $3.4 million, or 1.9%, compared to $184.4 million for the nine months ended September 30, 2023. The increase in revenue was primarily due to increased well construction activity in Indonesia, Australia and China, well intervention and integrity revenue in Brunei, and additional revenue as a result of the Coretrax Acquisition. This was partially offset by lower subsea well access activity in Australia.

Segment EBITDA for the APAC segment was $42.2 million, or 22.5% of revenues, for the nine months ended September 30, 2024, an increase of $45.8 million compared to a loss of ($3.5) million, or (1.9)% of revenues, for the nine months ended September 30, 2023. The increase in Segment EBITDA is largely attributable to $31.6 million of unrecoverable LWI-related costs recognized during the nine months ended September 30, 2023 that did not repeat in 2024.

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Corporate costs

Corporate costs for the nine months ended September 30, 2024 increased by $21.6 million, or 29.3%, to $95.6 million as compared to $74.0 million for the nine months ended September 30, 2023. The increase in the corporate costs was due to higher research and development costs, higher corporate headcount, and Coretrax-related corporate costs. The remaining increase was generally proportional with increases in activity and revenue year over year.

Depreciation and amortization expense

Depreciation and amortization expense for the nine months ended September 30, 2024 increased by $11.8 million, or 10.8%, to $121.2 million as compared to $109.4 million for the nine months ended September 30, 2023. The increase was generally proportional to the increase in property plant and equipment year over year, including impacts of the Coretrax Acquisition.

Merger and integration expense

Merger and integration expense for the nine months ended September 30, 2024 increased by $8.1 million, or 185.9%, to $12.4 million as compared to $4.3 million for the nine months ended September 30, 2023. The increase is attributable to the acquisition of Coretrax and ongoing integration expenses for the DeltaTek and PRT acquisitions in the first nine months of 2024 as compared to the first nine months of 2023.

Foreign exchange loss

Foreign exchange loss for the nine months ended September 30, 2024 increased by $6.4 million to $11.0 million as compared to $4.6 million for the nine months ended September 30, 2023. The change was primarily due to unfavorable changes in various exchange rates, including the Argentine Peso, and higher activity in jurisdictions with local currencies that depreciated relative to the U.S. dollar.

Interest and finance expense, net

Interest and finance expense, net for the nine months ended September 30, 2024 increased by $9.0 million, or 534.7%, to $10.7 million as compared to $1.7 million for the nine months ended September 30, 2023. The increase is consistent with the higher balance of debt outstanding at the end of the third quarter of 2024, primarily reflecting borrowings related to the PRT Acquisition and Coretrax Acquisition, as compared to the end of the third quarter of 2023.

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Liquidity and Capital Resources

Liquidity

Our financial objectives include the maintenance of sufficient liquidity, adequate financial resources and financial flexibility to fund our business. As of September 30, 2024, total available liquidity was $302.6 million, including cash and cash equivalents and restricted cash of $167.0 million and $135.6 million available for borrowings under our Amended and Restated Facility Agreement. Expro believes these amounts, along with cash generated by ongoing operations, will be sufficient to meet future business requirements for the next 12 months and beyond. Our primary sources of liquidity have been cash flows from operations. Our primary uses of capital have been for capital expenditures, acquisitions and repurchase of company stock. We monitor potential capital sources, including equity and debt financing, in order to meet our investment and liquidity requirements.

Our total capital expenditures are estimated to range between $30.0 million and $40.0 million for the remaining three months of 2024. Our total capital expenditures were $99.2 million for the nine months ended September 30, 2024, of which approximately 90% were used for the purchase and manufacture of equipment to directly support customer-related activities and approximately 10% for other property, plant and equipment, inclusive of software costs. We continue to focus on preserving and protecting our strong balance sheet, optimizing utilization of our existing assets and, where practical, limiting new capital expenditures.

On October 25, 2023, the Company’s Board of Directors (the “Board”) approved an extension to its stock repurchase program, pursuant to which the Company is authorized to acquire up to $100.0 million of its outstanding common stock from October 25, 2023 through November 24, 2024 (the “Stock Repurchase Program”). Under the Stock Repurchase Program, the Company may repurchase shares of the Company’s common stock in open market purchases, in privately negotiated transactions or otherwise. The Stock Repurchase Program will continue to be utilized at management’s discretion and in accordance with federal securities laws. The timing and actual numbers of shares repurchased will depend on a variety of factors including price, corporate requirements, the constraints specified in the Stock Repurchase Program along with general business and market conditions. The Stock Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. The Company has made no repurchases under the Stock Repurchase Plan during the nine months ended September 30, 2024.

Credit Facility

Revolving Credit Facility

On October 6, 2023, we amended and restated our previous revolving credit facility agreement pursuant to an amendment and restatement agreement (the “Amended and Restated Facility Agreement”) with DNB Bank ASA, London Branch, as agent in order to extend the maturity of the Amended and Restated Facility Agreement for a further 36 months and increase the total commitments to $250.0 million, of which $166.7 million was available for drawdowns as loans and $83.3 million was available for letters of credit. The Company has the ability to increase the commitments to $350.0 million.

On May 15, 2024, the Company established an incremental facility under its Amended and Restated Facility Agreement, in order to increase its existing $250.0 million revolving credit facility by an additional $90.0 million in commitments, to a total of $340.0 million. The establishment of the incremental facility was accomplished by a notice entered into with DNB Bank ASA as Agent, together with a consortium of banks as lenders. The incremental facility has the same terms and conditions as the existing facility provided under the Amended and Restated Facility Agreement. The incremental facility is available for the same general corporate purposes as the existing facility provided under the Amended and Restated Facility Agreement, including acquisitions. On May 15, 2024, the Company drew down on the new facility in the amount of approximately $76.1 million to partially finance the acquisition of Coretrax.

Please see Note 16 “Interest bearing loans” in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.

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Cash flow from operating, investing and financing activities

Cash flows from our operations, investing and financing activities are summarized below (in thousands):

|  | Nine Months Ended |
|  | September 30, 2024 |  |  | September 30, 2023 |
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 |
Effect of exchange rate changes on cash activities |  |  | 458 |  |  |  | (6,052 | )
Net increase to cash and cash equivalents and restricted cash |  | $ | 13,819 |  |  | $ | 38,551 |

Analysis of cash flow changes between the nine months ended September 30, 2024 and September 30, 2023

Net cash provided by operating activities

Net cash provided by operating activities was $72.1 million during the nine months ended September 30, 2024 as compared to $105.5 million during the nine months ended September 30, 2023. The decrease in net cash provided by operating activities of $33.5 million for the nine months ended September 30, 2024, was primarily driven by an increase in working capital, a decrease in earnings from joint ventures, and an increase in cash paid for merger and integration expenses and for severance and other expenses, partially offset by an increase in Adjusted EBITDA.

Net cash used in investing activities

Net cash used in investing activities was $120.7 million during the nine months ended September 30, 2024, as compared to $90.8 million during the nine months ended September 30, 2023, an increase of $29.9 million. Our principal recurring investing activity is our capital expenditures. The increase in net cash used in investing activities was primarily due to the payment of net cash of $32.0 million for business acquisitions during the nine months ended September 30, 2024, as compared to the payment of $8.4 million for business acquisitions during the nine months ended September 30 2023. During the nine months ended September 30, 2024, capital expenditures were $14.5 million higher compared to the nine months ended September 30, 2023. The increases to cash used in investing activities was partially offset by proceeds of $7.5 million from the settlement of contingent consideration related to the Coretrax Acquisition during the nine months ended September 30, 2024.

Net cash provided by financing activities

Net cash provided by financing activities was $62.0 million during the nine months ended September 30, 2024, as compared to $29.9 million during the nine months ended September 30, 2023. The increase of $32.1 million in net cash provided by financing activities is primarily due to the net proceeds received from borrowings of $22.9 million and the non-repeat of repurchases of common stock totaling $10.0 million during the nine months ended September 30, 2024.

New accounting pronouncements

See Note 2 “Basis of presentation and significant accounting policies” in our unaudited condensed consolidated financial statements under the heading “Recent accounting pronouncements.”

Critical accounting policies and estimates

There were no changes to our critical accounting policies and estimates from those disclosed in our Annual Report.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include those that express a belief, expectation or intention, as well as those that are not statements of historical fact. Forward-looking statements include information regarding our future plans and goals and our current expectations with respect to, among other things:

| • | our business strategy and prospects for growth;

| • | our cash flows and liquidity;

| • | our financial strategy, budget, projections and operating results;

| • | the amount and timing of any future share repurchases;

| • | the amount, nature and timing of capital expenditures;

| • | the availability and terms of capital;

| • | the exploration, development and production activities of our customers;

| • | the market for our existing and future products and services;

| • | competition and government regulations; and

| • | general economic and political conditions, including political tensions, conflicts and war (such as the ongoing Russian war in Ukraine and heightened tensions resulting from the ongoing conflicts in the Middle East).

These forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “goal,” “plan,” “intend,” “potential,” “predict,” “project,” “may,” “outlook,” or other terms that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. The forward-looking statements in this Form 10-Q speak only as of the date of this report; we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following:

| • | continuing uncertainty relating to global crude oil demand and crude oil prices that correspondingly may lead to further significant reductions in domestic oil and gas activity, which in turn could result in further significant declines in demand for our products and services;

| • | uncertainty regarding the timing, pace and extent of an economic recovery, or economic slowdown or recession, in the U.S. and other countries, which in turn will likely affect demand for crude oil and therefore the demand for the products and services we provide and the commercial opportunities available to us;
| • | the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations;

| • | unique risks associated with our offshore operations (including the ability to recover, and to the extent necessary, service and/or economically repair any equipment located on the seabed);

| • | political, economic and regulatory uncertainties in our international operations, including the impact of actions taken by the OPEC and non-OPEC nations with respect to production levels and the effects thereof;
| • | our ability to develop new technologies and products and protect our intellectual property rights;

| • | our ability to attract, train and retain key employees and other qualified personnel;

| • | operational safety laws and regulations;

| • | international trade laws and sanctions;

| • | severe weather conditions and natural disasters, and other operating interruptions (including explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);

| • | policy or regulatory changes;
| • | the overall timing and level of transition of the global energy sector from fossil-based systems of energy production and consumption to more renewable energy sources; and

| • | perception related to our environmental, social and governance (“ESG”) performance as well as current and future ESG reporting requirements.

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These and other important factors that could affect our operating results and performance are described in (1) “Risk Factors” in Part II, Item 1A of this Form 10-Q, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Form 10-Q, and elsewhere within this Form 10-Q, (2) our Annual Report, (3) our other reports and filings we make with the SEC from time to time and (4) other announcements we make from time to time. Should one or more of the risks or uncertainties described in the documents above or in this Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statements. All such forward-looking statements in this Form 10-Q are expressly qualified in their entirety by the cautionary statements in this section.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the Annual Report. Our exposure to market risk has not changed materially since December 31, 2023.

Item 4. Controls and Procedures

a) | Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the three months covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure, and such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon our evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of September 30, 2024 at the reasonable assurance level.

b) | Change in Internal Control Over Financial Reporting

As of September 30, 2024, management has concluded that there have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Please see Note 17 “Commitments and contingencies” in the Notes to the Unaudited Condensed Consolidated Financial Statements.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risks discussed under the heading “Risk Factors” in our Annual Report, which risks could materially affect our business, financial condition or future results. These risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Following is a summary of repurchases of Company common stock during the three months ended September 30, 2024.

Period |  | Total Number of Shares Purchased (1) |  |  | Average Price Paid per Share |  |  | Shares Purchased as Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |  |  | Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Program (2) |
July 1 - July 31 |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | 89,987,162 |
August 1 - August 31 |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | 89,987,162 |
September 1 - September 30 |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | 89,987,162 |
Total |  |  | - |  |  | $ | - |  |  |  | - |  |  |  |  |

1) | This table excludes shares withheld from employees to satisfy tax withholding requirements on equity-based transactions. We administer cashless settlements and generally do not repurchase stock in connection with cashless settlements.

2) | Our Board authorized a program to repurchase our common stock from time to time. Approximately $90.0 million remained authorized for repurchases as of September 30, 2024, subject to the limitation set in our shareholder authorization for repurchases of our common stock.

Item 5. Other Information

Securities Trading Arrangements with Officers and Directors

During the three months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits

The exhibits required to be filed by Item 6 are set forth in the Exhibit Index included below.

EXHIBIT INDEX

Exhibit Number | Description
2.1 | Agreement relating to the sale and purchase of CTL UK Holdco Limited, dated February 13, 2024, by and among Expro Group Holdings N.V., Expro Holdings UK 3 Limited and the sellers party thereto (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-36053), filed on February 14, 2024).
2.2 | Deed of Amendment, dated July 8, 2024, among Expro Group Holdings N.V. and the sellers party thereto (incorporated by reference to Exhibit 2.3 to the Quarterly Report on Form 10-Q (File No. 001-36053), filed on July 25, 2024).
2.3 | Deed of Amendment, dated July 25, 2024, among Expro Group Holdings N.V. and the sellers party thereto (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-36053), filed on July 26, 2024).
3.1 | Deed of Amendment to Articles of Association of Expro Group Holdings N.V., dated October 1, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-36053), filed on October 1, 2021).
†10.1 | Expro Group Holdings N.V. Sharesave Scheme (UK), a Sub-Plan under the 2023 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-36053), filed on July 25, 2024).
*31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) under the Securities Exchange Act of 1934.
*31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
**32.1 | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
**32.2 | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
*101.1 | The following materials from Expro Group Holdings N.V.’s Quarterly Report on Form 10-Q for the period ended September 30, 2024 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Stockholders’ Equity; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.
*104 | Cover Page Interactive Data File (embedded within the Inline XBRL document).

† | Represents management contract or compensatory plan or arrangement.
* | Filed herewith.
** | Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  | EXPRO GROUP HOLDINGS N.V.
Date: | October 24, 2024 | By: | /s/ Quinn P. Fanning
|  |  | Quinn P. Fanning
|  |  | Chief Financial Officer
|  |  | (Principal Financial Officer)

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