UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
1934
For the quarterly period ended
OR
the Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission file number:
EXPRO GROUP HOLDINGS N.V.
(Exact name of registrant as specified in its charter)
| The | | |||
| (State or other jurisdiction of | (IRS Employer | |||
| | ||||
| | | |||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | |
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.
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).
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.
| | ☑ | 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
As of May 1, 2023, there were
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| Item 1. |
Financial Statements |
|
| Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2023 and 2022 |
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| Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the Three Months Ended March 31, 2023 and 2022 |
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| Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022 |
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| Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2023 and 2022 | ||
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2023 and 2022 |
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| Notes to the Unaudited Condensed Consolidated Financial Statements |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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| Item 4. |
Controls and Procedures |
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| PART II. OTHER INFORMATION |
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| Item 1. |
Legal Proceedings |
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| Item 1A. |
Risk Factors |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 |
| Item 6. |
Exhibits |
|
| Signatures |
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Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except share data)
| Three Months Ended March 31, |
|||||||
| 2023 |
2022 |
||||||
| Total revenue |
$ | $ | |||||
| Operating costs and expenses: |
|||||||
| Cost of revenue, excluding depreciation and amortization expense |
( |
) | ( |
) | |||
| General and administrative expense, excluding depreciation and amortization expense |
( |
) | ( |
) | |||
| Depreciation and amortization expense |
( |
) | ( |
) | |||
| Merger and integration expense |
( |
) | ( |
) | |||
| Severance and other expense |
( |
) | ( |
) | |||
| Total operating cost and expenses |
( |
) | ( |
) | |||
| Operating loss |
( |
) | ( |
) | |||
| Other (expense) income, net |
( |
) | |||||
| Interest and finance (expense) income , net |
( |
) | |||||
| Loss before taxes and equity in income of joint ventures |
( |
) | ( |
) | |||
| Equity in income of joint ventures |
|||||||
| Loss before income taxes |
( |
) | ( |
) | |||
| Income tax expense |
( |
) | ( |
) | |||
| Net loss |
$ | ( |
) | $ | ( |
) | |
| Loss per common share: |
|||||||
| Basic and diluted |
$ | ( |
) | $ | ( |
) | |
| Weighted average common shares outstanding: |
|||||||
| Basic and diluted |
|||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(in thousands)
| Three Months Ended March 31, |
||||||||
| 2023 |
2022 |
|||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Other comprehensive loss: |
||||||||
| Amortization of prior service credit |
( |
) | ( |
) | ||||
| Other comprehensive loss |
( |
) | ( |
) | ||||
| Comprehensive loss |
$ | ( |
) | $ | ( |
) | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Assets held for sale | ||||||||
| Income tax receivables | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Investments in joint ventures | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets | ||||||||
| Non-current accounts receivable, net | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Income tax liabilities | ||||||||
| Finance lease liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Deferred tax liabilities, net | ||||||||
| Post-retirement benefits | ||||||||
| Non-current finance lease liabilities | ||||||||
| Non-current operating lease liabilities | ||||||||
| Other non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 17) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, € nominal value, shares authorized, and shares issued and and shares outstanding | ||||||||
| Treasury stock (at cost) and shares | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| Three Months Ended March 31, |
||||||||
| 2023 |
2022 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||
| Depreciation and amortization expense |
||||||||
| Equity in income of joint ventures |
( |
) | ( |
) | ||||
| Stock-based compensation expense |
||||||||
| Change in fair value of investments |
||||||||
| Elimination of unrealized profit on sales to joint ventures |
||||||||
| Deferred taxes |
( |
) | ( |
) | ||||
| Unrealized foreign exchange |
( |
) | ( |
) | ||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable, net |
( |
) | ||||||
| Inventories |
( |
) | ( |
) | ||||
| Other assets |
( |
) | ( |
) | ||||
| Accounts payable and accrued liabilities |
( |
) | ||||||
| Other liabilities |
( |
) | ||||||
| Income taxes, net |
( |
) | ||||||
| Other |
( |
) | ( |
) | ||||
| Net cash provided by (used in) operating activities |
( |
) | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
( |
) | ( |
) | ||||
| Payment for acquisition of business, net of cash acquired |
( |
) | ||||||
| Acquisition of technology |
( |
) | ||||||
| Proceeds from disposal of assets |
||||||||
| Proceeds from sale / maturity of investments |
||||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
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| Cash pledged for collateral deposits |
( |
) | ( |
) | ||||
| Payments of loan issuance and other transaction costs |
( |
) | ||||||
| Acquisition of common stock |
( |
) | ||||||
| Payment of withholding taxes on stock-based compensation plans |
( |
) | ( |
) | ||||
| Repayment of financed insurance premium |
( |
) | ( |
) | ||||
| Repayments of finance leases |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Effect of exchange rate changes on cash and cash equivalents |
( |
) | ||||||
| Net decrease to cash and cash equivalents and restricted cash |
( |
) | ( |
) | ||||
| Cash and cash equivalents and restricted cash at beginning of period |
||||||||
| Cash and cash equivalents and restricted cash at end of period |
$ | $ | ||||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
||||||
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands)
| Three Months Ended March 31, 2022 |
||||||||||||||||||||||||||||
| Accumulated |
||||||||||||||||||||||||||||
| Additional |
other |
Total |
||||||||||||||||||||||||||
| Common |
Treasury |
paid-in |
comprehensive |
Accumulated |
stockholders’ |
|||||||||||||||||||||||
| stock |
Stock |
capital |
loss |
deficit |
equity |
|||||||||||||||||||||||
| Balance at January 1, 2022 |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||
| Net loss |
- | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive loss |
- | ( |
) | ( |
) | |||||||||||||||||||||||
| Stock-based compensation expense |
- | |||||||||||||||||||||||||||
| Common shares issued upon vesting of share-based awards |
||||||||||||||||||||||||||||
| Treasury shares withheld |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Balance at March 31, 2022 |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||
| Three Months Ended March 31, 2023 |
||||||||||||||||||||||||||||
| Accumulated |
||||||||||||||||||||||||||||
| Additional |
other |
Total |
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| Common |
Treasury |
paid-in |
comprehensive |
Accumulated |
stockholders’ |
|||||||||||||||||||||||
| stock |
Stock |
capital |
income |
deficit |
equity |
|||||||||||||||||||||||
| Balance at January 1, 2023 |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||
| Net loss |
- | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive loss |
- | ( |
) | ( |
) | |||||||||||||||||||||||
| Stock-based compensation expense |
- | |||||||||||||||||||||||||||
| Common stock issued upon vesting of share-based awards |
||||||||||||||||||||||||||||
| Treasury shares withheld |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Acquisition of common stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Balance at March 31, 2023 |
$ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
| 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
On March 10, 2021, the Company and New Eagle Holdings Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of the Company (“Merger Sub”), entered into an Agreement and Plan of Merger with Expro Group Holdings International Limited (“Legacy Expro”) providing for the merger of Legacy Expro with and into Merger Sub in an all-stock transaction, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of the Company (the “Merger”). The Merger closed on October 1, 2021, and the Company, previously known as Frank’s International N.V. (“Frank’s”), was renamed Expro Group Holdings N.V.
On June 16, 2022, the Company’s Board of Directors (the “Board”) approved a new stock repurchase program, under which the Company is authorized to acquire up to $
| 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, 2022, included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023.
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 March 31, 2023, the results of our operations for the three months ended March 31, 2023 and 2022 and our cash flows for the three months ended March 31, 2023 and 2022.
Such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, 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, 2022, which are included in our most recent Annual Report on Form 10-K filed with the SEC on February 23, 2023, 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, 2022.
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.
We consider the applicability and impact of all accounting pronouncements. 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.
| 3. | Business combinations and dispositions |
DeltaTek Oil Tools Limited
On February 8, 2023 (“Closing Date”), DeltaTek Oil Tools Limited, a limited liability company registered in the United Kingdom, and its subsidiary (“DeltaTek”), was acquired (“the 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. We estimated the fair value of consideration for the Acquisition to be $
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 $
The 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 preliminary allocation of the Acquisition consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed as of the 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):
| Amount | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivables, net | ||||
| Inventories | ||||
| Property, plant and equipment | ||||
| Goodwill | ||||
| Intangible assets | ||||
| Other assets | ||||
| Total assets | ||||
| Accounts payable and accrued liabilities | ||||
| Deferred tax liabilities | ||||
| Other liabilities | ||||
| Total Liabilities | ||||
| Fair value of net assets acquired | $ | |||
Due to the recency of the 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 intangible assets will be amortized on a straight-line basis over an estimated
The goodwill 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 Acquisition is not expected to be deductible for tax purposes.
The Company has determined the estimated unaudited pro forma information to be insignificant for the three months ended March 31, 2023, and 2022, assuming the Acquisition were to have been completed as of January 1, 2023 and 2022, respectively. This is not necessarily indicative of the results that would have occurred had the Acquisition been completed on either date indicated or of future operating results.
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 March 31, 2023 and December 31, 2022, were as follows (in thousands):
| March 31, 2023 |
||||||||||||||||
| Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
| Assets: |
||||||||||||||||
| Non-current accounts receivable, net |
$ | $ | $ | $ | ||||||||||||
| Liabilities: |
||||||||||||||||
| Finance lease liabilities |
||||||||||||||||
| December 31, 2022 |
||||||||||||||||
| Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
| Assets: |
||||||||||||||||
| Non-current accounts receivable, net |
$ | $ | $ | $ | ||||||||||||
| Liabilities: |
||||||||||||||||
| Finance lease liabilities |
||||||||||||||||
| 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 March 31, |
||||||||
| 2023 |
2022 |
|||||||
| NLA |
$ | $ | ||||||
| ESSA |
||||||||
| MENA |
||||||||
| APAC |
||||||||
| Total |
$ | $ | ||||||
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 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 loss before income taxes (in thousands):
| Three Months Ended March 31, |
||||||||
| 2023 |
2022 |
|||||||
| NLA |
$ | $ | ||||||
| ESSA |
||||||||
| MENA |
||||||||
| APAC |
( |
) | ||||||
| Total Segment EBITDA |
||||||||
| Corporate costs |
( |
) | ( |
) | ||||
| Equity in income of joint ventures |
||||||||
| Depreciation and amortization expense |
( |
) | ( |
) | ||||
| Merger and integration expense |
( |
) | ( |
) | ||||
| Severance and other expense |
( |
) | ( |
) | ||||
| Stock-based compensation expense |
( |
) | ( |
) | ||||
| Foreign exchange gain |
||||||||
| Other (expense) income, net |
( |
) | ||||||
| Interest and finance (expense) income, net |
( |
) | ||||||
| Loss before income taxes |
$ | ( |
) | $ | ( |
) | ||
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.
| 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 March 31, |
||||||||
| 2023 |
2022 |
|||||||
| Well construction |
$ | $ | ||||||
| Well management |
||||||||
| Total |
$ | $ | ||||||
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 March 31, 2023, and December 31, 2022 (in thousands):
| March 31, |
December 31, |
|||||||
| 2023 |
2022 |
|||||||
| Trade receivable, net |
$ | $ | ||||||
| Unbilled receivables (included within accounts receivable, net) |
$ | $ | ||||||
| Deferred revenue (included within other liabilities) |
$ | $ | ||||||
The Company recognized revenue of $
As of March 31, 2023, $
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 construction contracts, revenue allocated to remaining performance obligations is $
| 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 three months ended March 31, 2023, we determined 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 three months ended March 31, 2023.
Our effective tax rates were (
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 Europe and Sub-Saharan Africa and the Middle East.
| 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
The carrying value of our investment in joint ventures as of March 31, 2023, and December 31, 2022, was as follows (in thousands):
| March 31, |
December 31, |
|||||||
| 2023 |
2022 |
|||||||
| CETS |
$ | $ | ||||||
| PVD-Expro |
||||||||
| Total |
$ | $ | ||||||
| 9. |
Accounts receivable, net |
Accounts receivable, net consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
| March 31, |
December 31, |
|||||||
| 2023 |
2022 |
|||||||
| Accounts receivable |
$ | $ | ||||||
| Less: Expected credit losses |
( |
) | ( |
) | ||||
| Total |
$ | $ | ||||||
| Current |
||||||||
| Non – current |
||||||||
| Total |
$ | $ | ||||||
| 10. |
Inventories |
Inventories consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
| March 31, |
December 31, |
|||||||
| 2023 |
2022 |
|||||||
| Finished goods |
$ | $ | ||||||
| Raw materials, equipment spares and consumables |
||||||||
| Work-in-progress |
||||||||
| Total |
$ | $ | ||||||
| 11. |
Other assets and liabilities |
Other assets consisted of the following as of March 31, 2023,and December 31, 2022 (in thousands):
| March 31, |
December 31, |
|||||||
| 2023 |
2022 |
|||||||
| Prepayments |
$ | |||||||
| Value-added tax receivables |
||||||||
| Collateral deposits |
||||||||
| Deposits |
||||||||
| Other |
||||||||
| Total |
$ | $ | ||||||
| Current |
||||||||
| Non – current |
||||||||
| Total |
$ | $ | ||||||
Other liabilities consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
| March 31, |
December 31, |
|||||||
| 2023 |
2022 |
|||||||
| Deferred revenue |
$ | $ | ||||||
| Other tax and social security |
||||||||
| Income tax liabilities – non-current portion |
||||||||
| Provisions |
||||||||
| Contingent consideration liabilities |
||||||||
| Other |
||||||||
| Total |
$ | $ | ||||||
| Current |
||||||||
| Non – current |
||||||||
| Total |
$ | $ | ||||||
| 12. |
Accounts payable and accrued liabilities |
Accounts payable and accrued liabilities consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
| March 31, |
December 31, |
|||||||
| 2023 |
2022 |
|||||||
| Accounts payable – trade |
$ | $ | ||||||
| Payroll, vacation and other employee benefits |
||||||||
| Accruals for goods received not invoiced |
||||||||
| Other accrued liabilities |
||||||||
| Total |
$ | $ | ||||||
| 13. | Property, plant and equipment, net |
Property, plant and equipment, net consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Cost: | ||||||||
| Land | $ | $ | ||||||
| Land improvements | ||||||||
| Buildings and lease hold improvements | ||||||||
| Plant and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The carrying amount of our property, plant and equipment recognized in respect of assets held under finance leases as of March 31, 2023 and December 31, 2022 and included in amounts above is as follows (in thousands):
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Cost: | ||||||||
| Buildings | $ | $ | ||||||
| Plant and equipment | ||||||||
| Total | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Depreciation expense relating to property, plant and equipment, including assets under finance leases, was million and million for the three months ended March 31, 2023 and 2022, respectively.
| 14. |
Intangible assets, net |
The following table summarizes our intangible assets comprising of Customer Relationships & Contracts (“CR&C”), Trademarks, Technology and Software as of March 31, 2023 and December 31, 2022 (in thousands):
| March 31, 2023 |
December 31, 2022 |
March 31, 2023 |
||||||||||||||||||||||||||
| 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 |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||
| Trademarks |
( |
) | ( |
) | ||||||||||||||||||||||||
| Technology |
( |
) | ( |
) | ||||||||||||||||||||||||
| Software |
( |
) | ( |
) | ||||||||||||||||||||||||
| Total |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||||||
Amortization expense for intangible assets was $
The following table summarizes the intangible assets which were acquired pursuant to the Acquisition (in thousands):
| Acquired Fair Value |
Weighted average life (years) |
|||||||
| CR&C |
||||||||
| Trademarks |
||||||||
| Technology |
||||||||
| Total |
$ | |||||||
| 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 March 31, 2023 and December 31, 2022 is as follows (in thousands):
| March 31, |
December 31, |
|||||||
| 2023 |
2022 |
|||||||
| NLA |
$ | $ | ||||||
| ESSA |
||||||||
| MENA |
||||||||
| APAC |
||||||||
| Total |
$ | $ | ||||||
The following table summarizes the goodwill by operating segment which were acquired pursuant to the Acquisition (in thousands):
| March 31, |
|||
| 2023 |
|||
| NLA |
$ | ||
| ESSA |
|||
| MENA |
|||
| APAC |
|||
| Total |
$ | ||
As of March 31, 2023, we did not identify any triggering events that would represent an indicator of impairment of our goodwill. Accordingly,
| 16. | Interest bearing loans |
On October 1, 2021, we entered into a new revolving credit facility (the “New Facility”) with DNB Bank ASA, London Branch, as agent (the “Agent”), with total commitments of $
All obligations under the New Facility are guaranteed jointly and severally by the Company and certain of the Company’s subsidiaries incorporated in the U.S., the U.K., the Netherlands, Norway, Hungary, Australia, Cyprus, the Cayman Islands and Guernsey. Going forward, the guarantors must comprise at least
Borrowings under the New Facility bear interest at a rate per annum of LIBOR, subject to a
The New Facility contains various undertakings and affirmative and negative covenants 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 New Facility also requires the Company to maintain (i) a minimum cash flow cover ratio of
On March 31, 2022, the Agent, on behalf of the consenting lenders, countersigned a Consent Request Letter dated March 10, 2022, to the New Facility (the “Consent”). Pursuant to the Consent, the lenders consented to, among other things, an amendment to the New Facility permitting dividends or distributions by the Company, or the repurchase or redemption of the Company’s shares in an aggregate amount of $
The New Facility remained undrawn on a cash basis (i.e.,
| 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 $
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 March 31, 2023 and December 31, 2022. 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 $
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 addition, the Company agreed to pay $
Other than discussed above, we had no other material legal accruals for loss contingencies, individually or in the aggregate, as of March 31, 2023 and December 31, 2022.
| 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 March 31, |
||||||||
| 2023 |
2022 |
|||||||
| Amortization of prior service credit |
$ | $ | ||||||
| Interest cost |
( |
) | ( |
) | ||||
| Expected return on plan assets |
||||||||
| Total |
$ | ( |
) | $ | ||||
The Company contributed $
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. | Loss per share |
Basic loss per share attributable to Company stockholders is calculated by dividing net loss attributable to the Company by the weighted-average number of common shares outstanding for the period. When there is net income for the period. diluted earnings per share attributable to Company stockholders is computed giving effect to all potential dilutive common stock. 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 loss per share attributable to Company stockholders for the three months ended March 31, 2023 and 2022, respectively, are as follows (in thousands, except shares outstanding and per share amounts):
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted weighted average number of shares outstanding | ||||||||
| Total basic and diluted loss per share | $ | ( | ) | $ | ( | ) | ||
Approximately
| 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, a company that is owned by various members of the Mosing family, including Erich Mosing, a member of our board of directors, and affiliates. During the three months ended March 31, 2023 and 2022, we provided goods and services to related parties totaling $
Additionally, we entered into various operating lease agreements to lease facilities with affiliated companies. Rent expense associated with our related party leases was $
As of March 31, 2023 and December 31, 2022 amounts receivable from related parties were $
As of March 31, 2023, $
Tax Receivable Agreement
Mosing Holdings, LLC, a Delaware limited liability company (“Mosing Holdings”), converted all of its shares of 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 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 of these cash savings, if any.
In connection with the Merger Agreement, 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 $
| 21. |
Stock-based compensation |
The Company recognized $
During the three months ended March 31, 2023,
During the three months ended March 31, 2023 and 2022, we recognized $
| 22. |
Supplemental cash flow |
| Three Months Ended March 31, |
||||||||
| 2023 |
2022 |
|||||||
| Supplemental disclosure of cash flow information: |
||||||||
| Cash paid for income taxes, net of refunds |
$ | $ | ||||||
| Cash paid for interest, net |
$ | $ | ||||||
| Change in accounts payable and accrued expenses related to capital expenditures |
$ | $ | ||||||
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.
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. The Company’s extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity solutions.
With roots dating to 1938, we have approximately 7,600 employees and provide services and solutions to leading exploration and production companies in both onshore and offshore environments in approximately 60 countries.
Our broad portfolio of products and services are designed to enhance production and improve recovery across the well lifecycle from exploration through abandonment, including:
| 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 drilling, tubular running services, cementing and tubulars. 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. |
| 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 35 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to ensure 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, a rig-deployed Intervention Riser System and a vessel-deployed, wire through water Riserless Well Intervention System. We also provide systems integration and project management services. |
| • |
Well intervention and integrity: We provide well intervention solutions to acquire and interpret well data, ensure well bore integrity and improve production. In addition to our extensive fleet of mechanical and cased hole wireline units, we have recently introduced 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; and Galea™, an autonomous well intervention solution. We also possess several other distinct technical capabilities, including non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring. |
We operate a global business and have a diverse and 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 services 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.
Market Conditions and Price of Oil and Gas
The first quarter of 2023 has seen continued recovery and increased activity in the market following the impact of the pandemic and the Russian war in Ukraine, although the market continues to be impacted by general economic conditions, such as inflationary pressures and instability in certain financial institutions. 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. |
| • |
Oil demand in the first quarter of 2023 exceeded 2022 with liquids demand in 2023 estimated to exceed annualized 2019 levels. Brent crude oil prices remained broadly flat with fluctuations around the $82/bbl price during the first quarter of 2023, as a result of a post-pandemic increase in demand, continued geopolitical tensions, and supply discipline from OPEC+ members, counter-balanced by macro-economic constraints, including historically high global inflation, concerns about a weakening outlook for the U.S. and European economies, and a milder winter than initially expected. |
| • |
Activity related to gas and liquified natural gas (“LNG”) production and associated asset development is continuing to accelerate in North Africa, Sub-Saharan Africa and MENA as a result of Europe’s effort to diversify away from its reliance on Russian pipeline gas supplies and energy security and energy transition initiatives globally. |
| • |
International, offshore and deepwater activity continues to improve in 2023 as operator upstream investments increase to pre-pandemic levels. We are also experiencing increased demand for services related to brownfield and production enhancement and infield development programs as operators strive to maximize their previous investments and maintain production with a lower carbon footprint. In addition, we expect an increase in demand for early production facilities, especially in support of gas and LNG developments. |
| • |
The clean energy transition continues to gain momentum. Hydrocarbons, however, are expected to continue to play a vital role in the transition towards more sustainable energy resources, and the 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 adapt and help our customers address the critical energy transition. |
Outlook
Demand continues to improve in the face of near-term fluctuations in oil prices, with oil demand returning to pre-pandemic levels during the first quarter in 2023, with expectations of continued growth throughout the following quarters.
The U.S. Energy Information Administration (“EIA”) predicts that global liquid fuels consumption will grow to 100.9 million b/d in 2023, up from 99.4 million b/d in 2022, and rising to 102.7 million b/d in 2024 (surpassing pre-pandemic consumption levels of 100.8 million b/d). The EIA expects a slight decline in crude oil production by Organization of Petroleum Exporting Countries and certain other oil producing nations (“OPEC+”) in 2023, as a result of a 2 million b/d supply target cut in the fourth quarter of 2022 and a further 1.2 million b/d cut at the start of the second quarter of 2023, with production averaging 28.3 million b/d (down 0.4 million b/d from 2022). OPEC+ production is then set to increase to average 29.2 million b/d in 2024. Despite the decline in OPEC+ supply, global liquid fuels production is anticipated to increase by 1.5 million b/d in 2023 to 101.3 million b/d due to strong growth from non-OPEC countries, driven largely by countries in North and South America. Global liquids production is then expected to increase a further 2.0 million b/d in 2024 to 103.4 million b/d driven by non-OPEC production and the expiration of the current OPEC+ cuts. As a result, the EIA expects global oil markets will be in relative balance over 2023, and has increased its latest price forecast slightly to $85 per barrel for 2023 and $81 per barrel for 2024, compared to an average of $101 per barrel in 2022. The EIA is increasingly forecasting an oil price that remains above $75/bbl through 2024.
In addition to the positive oil market outlook, global natural gas prices are also stabilizing due to a combination of sustained economic activity and energy security concerns in Europe driving continued strong demand for LNG to replace Russian pipeline gas.
The EIA expects Henry Hub spot prices to decrease to an average of $2.95 per million British thermal unit (“MMBtu”) in 2023, a more than 50% decrease from the $6.42/MMBtu average in 2022 as lower-than average storage withdrawals through the winter have led to high inventories compared to recent history. The Henry Hub spot price is then expected to increase in 2024 to average $3.71/MMBtu. Rystad forecasts the European and Asian LNG spot price to trade at approximately $14.8/MMBtu and $14.3/MMBtu respectively in 2023, a reduction from previous forecasts as record-strong LNG supplies have driven a storage build, suggesting a comparably softer market for 2023. The gas market is expected to remain tight for 2023, with lower European and Asian price levels stimulating demand in the power, industrial and agricultural sectors. In January 2023, gas was price competitive with coal in the power mix and fertilizer margins were positive for the first time since the first half of 2022. A further reduction in Russian gas and LNG exports, colder weather in the northern hemisphere, and a recovery in Chinese and Indian demand could increase gas market tightness and prices through 2023.
The outlook for 2023 also indicates a continuing recovery in exploration and production expenditures, with upstream investments forecast to exceed pre-pandemic levels and growth maintained in offshore shelf and deepwater activity driven by Latin America and Sub-Saharan Africa, shale / tight oil led by the U.S. land markets, and significant investments in incremental capacity in the Middle East, including Saudi Arabia, the United Arab Emirates and Qatar.
As a result, we expect demand for our services and solutions to continue trending positively through 2023.
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, Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion.
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 Cash Flow from Operations: We regularly evaluate our operating cash flow performance using Adjusted Cash Flow from Operations. Our management believes Adjusted Cash Flow from Operations is a useful tool to measure the operating cash performance of the Company as it excludes exceptional payments, interest payments and non-cash charges not related to our core operating activities and allows more meaningful analysis of the trends and performance of our core operations.
Cash Conversion: We regularly evaluate our efficiency of generating cash from operations using Cash Conversion which provides a useful tool to measure Adjusted Cash Flow from Operations as a percentage of Adjusted EBITDA.
Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion are non-GAAP financial measures. Please refer to the section titled “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable financial performance measure calculated and presented in accordance with GAAP and a reconciliation of Adjusted Cash Flow from Operations to net cash provided by (used in) operating activities, the most directly comparable liquidity measure calculated and presented in accordance with GAAP.
Executive Overview
Three months ended March 31, 2023, compared to three months ended December 31, 2022
Certain highlights of our financial results and other key developments include:
|
|
||
| • |
Revenue for the three months ended March 31, 2023, decreased by $11.7 million, or 3.3%, to $339.3 million, compared to $351.0 million for the three months ended December 31, 2022. The decrease in revenue was driven by lower activity across NLA, ESSA and MENA, partially offset by increase in activity in APAC. Consistent with historical patterns, revenue and profitability for the three months ended March 31, 2023, was negatively impacted by the winter season in the Northern Hemisphere and the budget cycles of our national oil company customers. Revenue for our segments is discussed separately below under the heading “Operating Segment Results.” |
|
|
|
||
| • |
We reported a net loss for the three months ended March 31, 2023, of $6.4 million, compared to a net profit of $12.9 million for the three months ended December 31, 2022, primarily reflecting lower Adjusted EBITDA (which was down $28.2 million sequentially), partially offset by lower income tax expense (down $6.6 million sequentially), lower merger and integration expense (down $2.9 million sequentially) and lower severance and other expenses (down $1.5 million sequentially). | |
|
|
||
| • |
Adjusted EBITDA for the three months ended March 31, 2023, decreased by $28.2 million, or 40.2%, to $41.9 million from $70.1 million for the three months ended December 31, 2022. Adjusted EBITDA margin decreased to 12.3% during the three months ended March 31, 2023, as compared to 20.0% during the three months ended December 31, 2022. The decrease in Adjusted EBITDA and Adjusted EBITDA margin is primarily attributable to unrecoverable mobilization costs, and higher start-up and commissioning costs on subsea projects in APAC as well as a combination of the decrease in revenues (as discussed above) and a less favorable activity mix. Excluding $10.6 million and $4.8 million of such mobilization, start-up and commissioning costs during the three months ended March 31, 2023, and December 31, 2022, respectively, Adjusted EBITDA would have been $52.5 million and $74.9 million and Adjusted EBITDA margin would have been 15.5% and 21.3%, respectively. Start-up and commissioning costs relate to the Company’s vessel-deployed, light well intervention ("LWI") system which commenced operations during the first quarter of 2023. | |
|
|
||
| • |
Net cash provided by operating activities for the three months ended March 31, 2023, was $21.3 million, compared to net cash provided by operating activities of $92.9 million for the three months ended December 31, 2022, with the change primarily driven by decrease in Adjusted EBITDA of $28.2 million in the current quarter and a decrease in working capital of $46.0 million in the fourth quarter of 2022 which was not repeated in the first quarter of 2023. Adjusted Cash Flow from Operations and Cash Conversion for the three months ended March 31, 2023, were $27.2 million and 65%, respectively, compared to $98.9 million and 141%, respectively, for the three months ended December 31, 2022. |
Non-GAAP Financial Measures
We include in this Form 10-Q the non-GAAP financial measures Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion. We provide reconciliations of net loss, the most directly comparable financial performance measure calculated and presented in accordance with GAAP, to Adjusted EBITDA. We also provide a reconciliation of Adjusted Cash Flow from Operations to net cash provided by (used in) operating activities, the most directly comparable liquidity measure calculated and presented in accordance with GAAP.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion 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 (loss) income 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.
We define Adjusted Cash Flow from Operations as net cash (used in) provided by operating activities adjusted for cash paid during the period for interest, net, severance and other expense and merger and integration expense. We define Cash Conversion as Adjusted Cash Flow from Operations divided by Adjusted EBITDA.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion 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, Adjusted Cash Flow from Operations and Cash Conversion may be defined differently by other companies in our industry, our presentation of Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the three months presented (in thousands):
| Three Months Ended |
||||||||||||
| March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
||||||||||
| Net (loss) income |
$ | (6,351 | ) | $ | 12,931 | $ | (11,132 | ) | ||||
| Income tax expense |
$ | 5,085 | $ | 11,697 | $ | 4,549 | ||||||
| Depreciation and amortization expense |
34,737 | 34,538 | 35,012 | |||||||||
| Severance and other expense |
927 | 2,411 | 1,494 | |||||||||
| Merger and integration expense |
2,138 | 4,996 | 4,725 | |||||||||
| Other expense (income), net (1) |
949 | (1,477 | ) | (996 | ) | |||||||
| Stock-based compensation expense |
4,171 | 3,554 | 6,018 | |||||||||
| Foreign exchange gain |
(1,070 | ) | (2,044 | ) | (2,816 | ) | ||||||
| Interest and finance expense (income), net |
1,298 | 3,468 | (13 | ) | ||||||||
| Adjusted EBITDA (2) |
$ | 41,884 | $ | 70,074 | $ | 36,841 | ||||||
| Adjusted EBITDA Margin |
12.3 | % | 20.0 | % | 13.1 | % | ||||||
| (1) |
Other expense (income), 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. |
| (2) |
Excluding $10.6 million, $4.8 million and $2.1 million of mobilization, start-up and commissioning costs during the three months ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively, Adjusted EBITDA would have been $52.5 million, $74.9 million and $38.9 million and Adjusted EBITDA margin would have been 15.5%, 21.3% and 13.9%, respectively. |
The following table provides a reconciliation of net cash (used in) provided by operating activities to Adjusted Cash Flow from Operations for each of the three months presented (in thousands):
| Three Months Ended |
||||||||||||
| March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
||||||||||
| Net cash provided by (used in) operating activities |
$ | 21,323 | $ | 92,943 | $ | (14,162 | ) | |||||
| Cash paid for interest, net |
966 | 961 | 903 | |||||||||
| Cash paid for merger and integration expense |
2,324 | 4,350 | 11,632 | |||||||||
| Cash paid for severance and other expense |
2,572 | 697 | 207 | |||||||||
| Adjusted Cash Flow from Operations |
$ | 27,185 | $ | 98,951 | $ | (1,420 | ) | |||||
| Adjusted EBITDA |
$ | 41,884 | $ | 70,074 | $ | 36,841 | ||||||
| Cash Conversion |
65 | % | 141 | % | (4 | )% | ||||||
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 March 31, 2023, December 31, 2022 and March 31, 2022:
| Three months ended |
Percentage |
||||||||||||||||||||
| (in thousands) |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
|||||||||||||||
| NLA |
$ | 126,228 | $ | 131,684 | $ | 103,861 | 37.2% |
37.5 | % | 37.0 | % | ||||||||||
| ESSA |
113,648 | 117,344 | 82,071 | 33.5% |
33.4 | % | 29.3 | % | |||||||||||||
| MENA |
50,945 | 55,387 | 50,715 | 15.0% |
15.8 | % | 18.1 | % | |||||||||||||
| APAC |
48,458 | 46,551 | 43,830 | 14.3% |
13.3 | % | 15.6 | % | |||||||||||||
| Total Revenue |
$ | 339,279 | $ | 350,966 | $ | 280,477 | 100.0% |
100.0 | % | 100.0 | % | ||||||||||
The following table shows Segment EBITDA and Segment EBITDA margin by segment and a reconciliation to income (loss) before income taxes for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022:
| Three months ended |
Segment EBITDA Margin |
|||||||||||||||||||||||
| (in thousands) |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
||||||||||||||||||
| NLA |
$ | 31,874 | $ | 35,153 | $ | 21,827 | 25.3 | % | 26.7 | % | 21.0 | % | ||||||||||||
| ESSA |
20,785 | 30,179 | 11,874 | 18.3 | % | 25.7 | % | 14.5 | % | |||||||||||||||
| MENA |
14,568 | 19,433 | 15,465 | 28.6 | % | 35.1 | % | 30.5 | % | |||||||||||||||
| APAC (1) |
(2,698 | ) | 3,673 | 5,438 | (5.6 | )% | 7.9 | % | 12.4 | % | ||||||||||||||
| Total Segment EBITDA |
64,529 | 88,438 | 54,604 | |||||||||||||||||||||
| Corporate costs (2) |
(25,081 | ) | (23,954 | ) | (21,965 | ) | ||||||||||||||||||
| Equity in income of joint ventures |
2,436 | 5,590 | 4,202 | |||||||||||||||||||||
| Depreciation and amortization expense |
(34,737 | ) | (34,538 | ) | (35,012 | ) | ||||||||||||||||||
| Merger and integration expense |
(2,138 | ) | (4,996 | ) | (4,725 | ) | ||||||||||||||||||
| Severance and other expense |
(927 | ) | (2,411 | ) | (1,494 | ) | ||||||||||||||||||
| Stock-based compensation expense |
(4,171 | ) | (3,554 | ) | (6,018 | ) | ||||||||||||||||||
| Foreign exchange gain |
1,070 | 2,044 | 2,816 | |||||||||||||||||||||
| Other (expenses) income, net |
(949 | ) | 1,477 | 996 | ||||||||||||||||||||
| Interest and finance (expense) income, net |
(1,298 | ) | (3,468 | ) | 13 | |||||||||||||||||||
| (Loss) income before income taxes |
$ | (1,266 | ) | $ | 24,628 | $ | (6,583 | ) | ||||||||||||||||
| (1) |
Excluding $10.6 million, $4.8 million and $2.1 million of mobilization, start-up and commissioning costs during the three months ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively, Segment EBITDA would have been $7.9 million, $8.5 million and $7.5 million and Segment EBITDA margin would have been 16.4%, 18.2% and 17.2%, respectively. |
| (2) |
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. |
Three months ended March 31, 2023 compared to three months ended December 31, 2022
NLA
Revenue for the NLA segment was $126.2 million for the three months ended March 31, 2023, a decrease of $5.5 million, or 4.1%, compared to $131.7 million for the three months ended December 31, 2022. The decrease was primarily due to non-repeat of well construction product sales in the current quarter and lower well construction services revenue in the U.S. from decreased customer activities, partially offset by higher well construction revenue in Guyana.
Segment EBITDA for the NLA segment was $31.9 million, or 25.3% of revenues, during the three months ended March 31, 2023, compared to $35.2 million or 26.7% of revenues during the three months ended December 31, 2022. The decrease in Segment EBITDA and Segment EBITDA margin was attributable to lower activity and less favorable product mix during the three months ended March 31, 2023.
ESSA
Revenue for the ESSA segment was $113.7 million for the three months ended March 31, 2023, a decrease of $3.6 million, or 3.1%, compared to $117.3 million for the three months ended December 31, 2022. The decrease in revenues was primarily driven by lower well flow management revenue in United Kingdom, Norway and Nigeria and non-repeat of equipment sales revenue in Central Europe. The decrease in revenues was partially offset by higher well flow management revenue in Congo.
Segment EBITDA for the ESSA segment was $20.8 million, or 18.3% of revenues, for the three months ended March 31, 2023, a decrease of $9.4 million, or 31.1%, compared to $30.2 million, or 25.7% of revenues, for the three months ended December 31, 2022. The decrease of $9.4 million was primarily attributable to lower activity levels, a less favorable activity mix reflecting lower well flow management revenues and a non-repeat of higher margin equipment sales during the three months ended March 31, 2023.
MENA
Revenue for the MENA segment was $50.9 million for the three months ended March 31, 2023, a decrease of $4.5 million, or 8.0%, compared to $55.4 million for the three months ended December 31, 2022. The decrease in revenue was driven by a decrease in well flow management revenue in Saudi Arabia and Algeria, partially offset by increased well flow management revenue in the United Arab Emirates.
Segment EBITDA for the MENA segment was $14.6 million, or 28.6% of revenues, for the three months ended March 31, 2023, a decrease of $4.8 million, or 25.0%, compared to $19.4 million, or 35.1% of revenues, for the three months ended December 31, 2022. The decrease in Segment EBITDA and Segment EBITDA margin was primarily due to lower activity and a less favorable activity mix during the three months ended March 31, 2023.
APAC
Revenue for the APAC segment was $48.5 million for the three months ended March 31, 2023, an increase of $1.9 million, or 4.1%, compared to $46.6 million for the three months ended December 31, 2022. The increase in revenue was primarily due to higher subsea well access revenue and well intervention and integrity services revenue in Australia as well as higher well construction services revenue in Malaysia. The increase in revenue was partially offset by lower well flow management revenue in Malaysia.
Segment EBITDA for the APAC segment was $(2.7) million, or (5.6)% of revenues, for the three months ended March 31, 2023, a decrease of $6.4 million compared to $3.7 million, or 7.9% of revenues, for the three months ended December 31, 2022. The reduction in Segment EBITDA despite the increase in revenues was primarily due to $10.6 million of unrecoverable subsea mobilization costs, and higher start-up and commissioning costs incurred during the three months ended March 31, 2023, on subsea projects in APAC, as compared to $4.8 million for the three months ended December 31, 2022. Excluding $10.6 million and $4.8 million, respectively, of such mobilization, start-up and commissioning costs during the three months ended March 31, 2023, and December 31, 2022, Segment EBITDA would have been $7.9 million and $8.5 million, respectively, and Segment EBITDA margin would have been 16.4% and 18.2%, respectively. Start-up and commissioning costs relate to the Company’s vessel-deployed, light well intervention ("LWI") system which commenced operations during the first quarter of 2023.
Equity in income of joint ventures
Equity in income of joint ventures for the three months ended March 31, 2023, decreased by $3.2 million, or 56.4%, to $2.4 million as compared to $5.6 million for the three months ended December 31, 2022. The decrease reflects lower income from our joint venture in China during the three months ended March 31, 2023.
Merger and integration expense
Merger and integration expense for the three months ended March 31, 2023, decreased by $2.9 million, to $2.1 million as compared to $5.0 million for the three months ended December 31, 2022. The decrease was primarily attributable to lower integration related expenses incurred during the three months ended March 31, 2023, as compared to the three months ended December 31, 2022.
Income tax expense
Income tax expense for the three months ended March 31, 2023, decreased by $6.6 million to $5.1 million from $11.7 million for the three months ended December 31, 2022, primarily due to changes in the mix of taxable profits between jurisdictions, and non-recurring discrete items in the three months ended December 31, 2022, partially offset by discrete tax credits in the three months ended March 31, 2023, arising from the Acquisition.
Three months ended March 31, 2023 compared to three months ended March 31, 2022
NLA
Revenue for the NLA segment was $126.2 million for the three months ended March 31, 2023, an increase of $22.3 million, or 21.5%, compared to $103.9 million for the three months ended March 31, 2022. The increase was primarily due to higher well construction services revenue in the U.S. and higher well intervention and integrity services revenue in Argentina due to increased customer activities.
Segment EBITDA for the NLA segment was $31.9 million, or 25.3% of revenues, during the three months ended March 31, 2023, compared to $21.8 million or 21.0% of revenues during the three months ended March 31, 2022. The increase of $10.1 million in Segment EBITDA was attributable to higher activity and favorable product mix during the three months ended March 31, 2023.
ESSA
Revenue for the ESSA segment was $113.7 million for the three months ended March 31, 2023, an increase of $31.6 million, or 38.5%, compared to $82.1 million for the three months ended March 31, 2022. The increase in revenues was primarily driven by higher well flow management revenue in Congo from a new contract, from increased customer activities in the U.K. and higher subsea well access revenue in Angola.
Segment EBITDA for the ESSA segment was $20.8 million, or 18.3% of revenues, for the three months ended March 31, 2023, an increase of $8.9 million, or 75.0%, compared to $11.9 million, or 14.5% of revenues, for the three months ended March 31, 2022. The increase of $8.9 million was primarily attributable to higher activity levels and a more favorable activity mix during the three months ended March 31, 2023.
MENA
Revenue for the MENA segment was $50.9 million for the three months ended March 31, 2023, an increase of $0.2 million, or 0.5%, compared to $50.7 million for the three months ended March 31, 2022. The increase in revenue was driven by increased well flow management revenue in Algeria, partially offset by a decrease in well flow management revenue in Saudi Arabia.
Segment EBITDA for the MENA segment was $14.6 million, or 28.6% of revenues, for the three months ended March 31, 2023, a decrease of $0.9 million, or 5.8%, compared to $15.5 million, or 30.5% of revenues, for the three months ended March 31, 2022. The decrease in Segment EBITDA was primarily due to a less favorable activity mix.
APAC
Revenue for the APAC segment was $48.5 million for the three months ended March 31, 2023, an increase of $4.7 million, or 10.6%, compared to $43.8 million for the three months ended March 31, 2022. The increase in revenue was primarily due to higher subsea well access revenue in Australia and China and higher well construction revenue in Malaysia. The increase in revenue was partially offset by lower well flow management services in Thailand.
Segment EBITDA for the APAC segment was $(2.7) million, or (5.6)% of revenues, for the three months ended March 31, 2023, a decrease of $8.1 million compared to $5.4 million, or 12.4% of revenues, for the three months ended March 31, 2022. The reduction in Segment EBITDA despite the increase in revenues was primarily due to $10.6 million of unrecoverable subsea mobilization costs, and higher start-up and commissioning costs subsea projects in APAC, as compared to $2.1 million for the three months ended March 31, 2022. Excluding $10.6 million and $2.1 million, respectively, of such mobilization, start-up and commissioning costs during the three months ended March 31, 2023, and March 31, 2022, Segment EBITDA would have been $7.9 million and $7.5 million, respectively, and Segment EBITDA margin would have been 16.4% and 17.2%, respectively. Start-up and commissioning costs relate to the Company’s vessel-deployed, light well intervention ("LWI") system which commenced operations during the first quarter of 2023.
Equity in income of joint ventures
Equity in income of joint ventures for the three months ended March 31, 2023, decreased by $1.8 million, or 42.0%, to $2.4 million as compared to $4.2 million for the three months ended March 31, 2022. The decrease reflects lower income from our joint venture in China during the three months ended March 31, 2023.
Merger and integration expense
Merger and integration expense for the three months ended March 31, 2023, decreased by $2.6 million, to $2.1 million as compared to $4.7 million for the three months ended March 31, 2022. The decrease was primarily attributable to lower integration related expenses incurred during the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.
Income tax expense
Income tax expense for the three months ended March 31, 2023, increased by $0.5 million to $5.1 million from $4.6 million for the three months ended March 31, 2022, primarily due to changes in the mix of taxable profits between jurisdictions with different tax regimes, in particular in Europe and Sub-Saharan Africa and the Middle East.
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 March 31, 2023, total available liquidity was $316.3 million, including cash and cash equivalents and restricted cash of $186.3 million and $130.0 million available for borrowings under our New Facility. 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 and acquisitions. 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 $90 million and $100 million for the last three quarters of 2023. Our total capital expenditures were $28.8 million for the three months ended March 31, 2023, 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. In addition, we used net cash of $7.5 million during the three months ended March 31, 2023, for the acquisition of DeltaTek. 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 June 16, 2022, the Company’s Board of Directors (the “Board”) approved a new stock repurchase program, under which the Company is authorized to acquire up to $50.0 million of its outstanding common stock through November 24, 2023. 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 is being utilized at management’s discretion and in accordance with U.S. federal securities laws. The timing and actual numbers of shares repurchased, if any, 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 amount of common stock, and it could be modified, suspended or discontinued at any time. Under the stock repurchase plan, the Company has repurchased approximately 0.6 million shares at an average price of $17.99 per share, for a total cost of approximately $10.0 million during the three months ended March 31, 2023. Since the inception of the stock repurchase program, the Company has repurchased total of approximately 1.7 million shares at an average price of $13.89 per share, for a total cost of $23.0 million through March 31, 2023.
Credit Facility
Revolving Credit Facility
On October 1, 2021, we entered into a new revolving credit facility (the “New Facility”) with DNB Bank ASA, London Branch, as agent (the “Agent”), with total commitments of $200.0 million, of which $130.0 million was available for drawdowns as loans and $70.0 million was available for letters of credit. Proceeds of the New Facility may be used for general corporate and working capital purposes.
On March 31, 2022, the Agent, on behalf of the consenting lenders, countersigned a Consent Request Letter dated March 10, 2022, to the New Facility (the “Consent”). Pursuant to the Consent, the lenders consented to, among other things, an amendment to the New Facility permitting dividends or distributions by the Company, or the repurchase or redemption of the Company’s shares in an aggregate amount of $50.0 million over the life of the New Facility, subject to pro forma compliance with the 2.25 to 1.0 maximum senior leverage ratio financial covenant.
On July 21, 2022, the Company increased the facility available for letters of credit to $92.5 million and total commitments to $222.5 million.
Please see Note 16 “Interest bearing loans” in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.
Cash flow from operating, investing and financing activities
Cash flows provided by (used in) our operations, investing and financing activities are summarized below (in thousands):
| Three Months Ended |
||||||||
| March 31, 2023 |
March 31, 2022 |
|||||||
| Net cash provided by (used in) operating activities |
$ | 21,323 | $ | (14,162 | ) | |||
| Net cash used in investing activities |
(36,312 | ) | (5,008 | ) | ||||
| Net cash used in financing activities |
(16,373 | ) | (2,394 | ) | ||||
| Effect of exchange rate changes on cash activities |
(800 | ) | 133 | |||||
| Net decrease to cash and cash equivalents and restricted cash |
$ | (32,162 | ) | $ | (21,431 | ) | ||
Analysis of cash flow changes between the three months ended March 31, 2023 and March 31, 2022
Net cash provided by (used in) operating activities
Net cash provided by operating activities was $21.3 million during the three months ended March 31, 2023 as compared to net cash used in operating activities of $14.2 million during the three months ended March 31, 2022. The increase in net cash provided by operating activities of $35.5 million for the three months ended March 31, 2023, was primarily due to a favorable movement in net working capital of $23.7 million, lower payments for merger and integration expenses of $9.3 million and an increase in Adjusted EBITDA of $5.0 million, partially offset by higher payments for severance expense of $2.5 million for the three months ended March 31, 2023.
Adjusted Cash Flows from Operations during the three months ended March 31, 2023, was $27.2 million as compared to Adjusted Cash Flows from Operations of ($1.4) million during the three months ended March 31, 2022. Our primary uses of cash from operating activities were capital expenditures and funding obligations related to our financing arrangements.
Net cash used in investing activities
Net cash used in investing activities was $36.3 million during the three months ended March 31, 2023, as compared to $5.0 million during the three months ended March 31, 2022, an increase of $31.3 million. Our principal recurring investing activity is our capital expenditures. The increase in net cash used in investing activities was primarily due to an increase in capital expenditures of $18.2 million and payment of net cash of $7.5 million for the acquisition of DeltaTek during the three months ended March 31, 2023.
Net cash used in financing activities
Net cash used in financing activities was $16.4 million during the three months ended March 31, 2023, as compared to $2.4 million during the three months ended March 31, 2022. The increase of $14.0 million in net cash used in financing activities is primarily due to the acquisition of common stock of $10.0 million, higher payment of withholding taxes on stock-based compensation plans of $1.9 million and higher repayment of financed insurance premium of $1.9 million during the three months ended March 31, 2023.
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.
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; |
| ● |
post-Merger integration; |
| ● |
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; |
| ● |
general economic conditions (such as recent instability in certain financial institutions); and | |
| ● | general political conditions, including political tensions, conflicts and war (such as the ongoing conflict in Ukraine). |
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 extent and duration of the remaining restrictions in the U.S. and globally on various commercial and economic activities due to global pandemics and epidemics (including COVID-19), including uncertainty regarding the re-imposition of restrictions due to resurgences in infection rates; | |
| ● |
the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations; |
| ● | unique risks associated with our offshore operations; | |
| ● |
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; |
| ● |
perception related to our environmental, social and governance (“ESG”) performance as well as current and future ESG reporting requirements; and |
| ● |
uncertainty with respect to integration and realization of expected synergies following completion of the Merger. |
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 on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023 (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, 2022.
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 March 31, 2023 at the reasonable assurance level.
| b) |
Change in Internal Control Over Financial Reporting |
As of March 31, 2023, management has concluded that there have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Please see Note 17 “Commitments and contingencies” in the Notes to the Unaudited Condensed Consolidated Financial Statements.
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 March 31, 2023.
| Period |
Total Number of Shares Purchased (1) |
Average Price Paid per Share |
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) |
||||||||||||
| January 1 - January 31 |
-- | $ | -- | -- | $ | 37,004,400 | ||||||||||
| February 1 - February 28 |
-- | $ | -- | -- | $ | 37,004,400 | ||||||||||
| March 1 - March 31 |
556,603 | $ | 17.99 | 556,603 | $ | 26,996,269 | ||||||||||
| 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 $27.0 million remained authorized for repurchases as of March 31, 2023, subject to the limitation set in our shareholder authorization for repurchases of our common stock, which is approximately 10% of the common stock issued as of March 21, 2022. |
The exhibits required to be filed by Item 6 are set forth in the Exhibit Index included below.
EXHIBIT INDEX
| † | Represents management contract or compensatory plan or arrangement. |
| * | Filed herewith. |
| ** | Furnished herewith. |
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: |
May 4, 2023 |
By: |
/s/ Quinn P. Fanning |
| Quinn P. Fanning |
|||
| Chief Financial Officer |
|||
| (Principal Financial Officer) |
Exhibit 10.1
EXPRO GROUP HOLDINGS N.V.
RESTRICTED STOCK UNIT (RSU) AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT including Exhibit A (this “Agreement”) evidences an award made as of the _____ day of _____________________ 20__, (the “Date of Grant”), between EXPRO GROUP HOLDINGS N.V., a limited liability company organized in the Netherlands (the “Company”), and __________________ (the “Employee”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.”
1. The Grant. Pursuant to the EXPRO GROUP HOLDINGS N.V. 2022 LONG-TERM INCENTIVE PLAN, as the same may be amended from time to time (the “Plan”), and subject to the conditions set forth below, the Company hereby awards to Employee, effective as of the Date of Grant, an award consisting of an aggregate number of ________ restricted stock units (the “Restricted Stock Units” or “RSUs”), whereby each Restricted Stock Unit represents the right to receive one share of the Company’s common stock, nominal value €0.06 per share (“Common Stock”), plus the potential rights to Dividend Equivalents set forth in Section 3(e) hereof, in accordance with the terms and conditions set forth herein and in the Plan (the “Award”). To the extent any provision of this Agreement conflicts with the expressly applicable terms of the Plan, those terms of the Plan shall control, and if necessary, the applicable terms of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan.
2. Definitions. Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:
(a)“ Disability” shall have the meaning set forth in any written employment or consulting agreement between the Employer and Employee. If Employee is not party to such an agreement that defines these terms, then for purposes of this Agreement, “Disability” shall mean Employee being unable to perform Employee’s duties or fulfill Employee’s obligations under the terms of his or her employment by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months as determined by the Employer and certified in writing by a competent medical physician selected by the Employer.
(b)“ Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.
(c)“ Involuntary Termination” shall mean a termination of Employee’s employment by the Company or an affiliate for a reason other than for Cause.
(d)“ Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended.
(e)“ CIC Severance Plan” shall mean the Company’s U.S. Executive Change-In-Control Severance Plan adopted on January 21, 2019, and any amendments or restatements of this plan.
(f)“ Special Vesting Agreement” means an agreement in which the Company, in its sole discretion, elects to permit some or all of Employee’s RSUs to continue vesting following Employee’s employment with the Company or with an affiliate, as applicable, in exchange for Employee’s strict compliance with designated post-termination conditions, as determined by the Company pursuant to a written agreement executed at the time the Participant’s termination of employment occurs.
3. Restricted Stock Units. By acceptance of this Restricted Stock Unit award, Employee agrees with respect thereto as follows:
(a) Forfeiture Restrictions. The Restricted Stock Units are restricted in that they may not be sold, assigned, pledged, exchanged, hypothecated, or otherwise alienated or transferred, encumbered, or disposed of, and in the event of termination of Employee’s employment or service with the Company for any reason other than death or Disability, or, to the extent provided in Section 3(c) below, on account of an Involuntary Termination, Employee shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock Units to the Company upon termination of employment or services as provided in this Section 3(a) are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock Units.
(b) Lapse of Forfeiture Restrictions (Vesting). Provided that Employee has been continuously employed by the Company from the Date of Grant through the scheduled “Lapse (Vesting) Date” set forth in the following schedule, and in compliance with Exhibit A and all other agreements or obligations to the Company, the Forfeiture Restrictions shall lapse, and the Restricted Stock Units will vest, with respect to a percentage of the Restricted Stock Units determined in accordance with the following schedule:
Percentage of Total Number
of RSUs as to Which
Lapse (Vesting) Date Forfeiture Restrictions Lapse
[TBD] [TBD]
Except as provided in Subsection 3(c) below, the Company will issue one share of Common Stock to Employee on the date each RSU is scheduled to become vested under this Section 3(b). Any Restricted Stock Units with respect to which the Forfeiture Restrictions do not lapse in accordance with the preceding provisions of this Section 3(b) (and any associated unvested dividend equivalents) shall be forfeited to the Company for no consideration as of the date of the termination of Employee’s employment with the Company.
(c) Accelerated Vesting.
(1) Death. If Employee’s employment with the Company is terminated by reason of death, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units effective on the date such death occurs and Employee’s RSUs shall be settled in the manner provided under Section 3(d) below.
(2) Disability. If Employee’s employment with the Company is terminated by reason of Disability, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) and Employee’s RSU’s shall be settled in the manner provided under Section 3(d) below on the dates such awards were scheduled to become vested under Section 3(b) above.
(3) Change in Control. If a Change in Control occurs and Employee is a participant in the CIC Severance Plan, then the terms of Section 3 of such plan are hereby incorporated by reference into this Agreement. If Employee is not a participant in the CIC Severance Plan and his or her employment with the Company is terminated during the twenty-four (24) month period immediately following the date the Change in Control occurs due to an Involuntary Termination, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) and Employee’s RSUs shall be settled in the manner provided under Section 3(d) below.
(4) Involuntary Termination. If Employee’s employment with the Company is terminated due to an Involuntary Termination, then Company may, in its complete discretion, elect to enter into a Special Vesting Agreement with Employee pursuant to which the Forfeiture Restrictions shall not lapse upon such termination of employment, but instead this Award shall continue to remain outstanding and Employee will be treated, solely for purposes of satisfying the requirements for a lapse of Forfeiture Restrictions under Section 3(b), as continuing in the employment of the Company throughout the period during which he or she continuously satisfies the obligations set forth in Exhibit A attached hereto and incorporated herein by reference as part of this Agreement. As further condition to receiving any Special Vesting Agreement, Employee shall provide a release of all claims against the Company in a form acceptable to the Company, upon entering the Special Vesting Agreement, as well as upon the last date on which the Forfeiture Restrictions lapse, and also Employee must continuously comply with any other obligations to, or agreements with, the Company.
(d) Payments. Subject to compliance with all terms of this Agreement and Exhibit A, as soon as reasonably practicable after (i) each scheduled Lapse (Vesting) Date with respect to the specified number of Restricted Stock Units as provided in Section 3(b) hereof (but in no event later than the end of the calendar year in which the Forfeiture Restrictions so lapse), (ii) the date of Employee’s death, or (iii) to the extent provided in Section 3(c)(4), the date Employee is Involuntarily Terminated, the Company shall cause to be issued to Employee with respect to each share of Common Stock covered by each such Restricted Stock Unit one share of Common Stock registered in Employee’s name. The Company shall deliver the shares of Common Stock in book-entry form, with such legends or restrictions thereon as the Administrator may determine to be necessary or advisable in order to comply with applicable securities laws. Employee shall complete and sign any documents and take any additional action that the Company may request to enable it to deliver shares of Common Stock on Employee’s behalf. In the event that all or part of the Restricted Stock Units granted pursuant to this Agreement provides for a deferral of compensation within the meaning of the Section 409A, it is the general intention, but not the obligation, of the Company to design this Award to comply with the Section 409A and such Award should be interpreted accordingly. Notwithstanding anything to the contrary contained herein, in the event that Employee is a “specified employee” (as defined under the Section 409A) when Employee becomes entitled to a payment or settlement under the Award which is subject to the Section 409A on account of a “separation from service” (as defined under the Section 409A), to the extent required by the Code, such payment shall not occur until the date that is six (6) months plus one (1) day from the date of such separation from service. Any amount that is otherwise payable within the six (6) month period described herein will be aggregated and paid in a lump sum without interest. Further, for purposes of the Section 409A, each payment or settlement of any portion of the Restricted Stock Units under this Agreement shall be treated as a separate payment of compensation.
(e) Dividend Equivalents. In the event the Company declares and pays a dividend in respect of its outstanding shares of Common Stock and, on the record date for such dividend, Employee holds Restricted Stock Units granted pursuant to this Agreement that have become vested pursuant to Section 3(c) hereof and have not been settled in accordance with Section 3(d) hereof, Employee shall be entitled to receive a payment, subject to compliance with all terms of this Agreement as well as Section 4 hereof, in respect of the number of shares of Common Stock relating to such vested Restricted Stock Units, with such Dividend Equivalent payment being made in the amount and form that such payment would have been made if, as of such record date, Employee actually held the underlying shares of Common Stock related to the portion of the vested Restricted Stock Units that have not been settled or forfeited as of such record date. Such Dividend Equivalent payment shall be made commensurate with the date the Company pays such dividend in respect of its outstanding shares of Common Stock (however, in no event shall the Dividend Equivalents be paid later than the earlier of thirty (30) days following, or the end of the calendar year that includes, the date on which the Company pays such dividends to its shareholders generally).
(f) Restrictive Covenants. Employee acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees, in his or her capacity as an employee and equity holder in the Company, to the provisions of Exhibit A to this Agreement. Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Exhibit A or any other similar obligations Employee has towards the Company under applicable law or other agreements (which includes any attempt to have any provision in Exhibit A or other similar obligations of Employee declared overbroad or unenforceable) (a “Restrictive Covenant Violation”) would be available but inadequate and the Company would suffer irreparable damages as a result of such a Restrictive Covenant Violation. In recognition of this fact, Employee agrees that, in the event of a Restrictive Covenant Violation, in addition to any remedies available to the Company under law, including damages and attorneys’ fees, remedies available the Company, without posting any bond, shall be to (i) cease making any dividend or other payments or providing any benefit otherwise required by this Agreement; (ii) terminate future vesting and cause forfeiture of all vested and unvested RSUs and common stock issued or issuable under this Agreement without consideration, (iii) cause forfeiture of the gross value of the common stock issued to Employee in the one (1) year period prior to the Restrictive Covenant Violation (determined as of the date such stock was issued to Employee and using the Fair Market Value (as defined in the Plan) of the Company’s common stock on that date), (iv) receive repayment of any cash payments made to Employee with respect to the RSUs during the prior twelve (12) month period, (v) obtain a temporary restraining order, temporary or permanent injunction or (vi) specific performance or any other equitable remedy which may then be available.
(g) Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding.
4. Withholding of Tax. To the extent that the receipt of the Restricted Stock Units (or any Common Stock or dividend equivalents related thereto) or the lapse of any Forfeiture Restrictions results in compensation, income or wages to Employee for federal, state, or local tax purposes, Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if Employee fails to do so (or if Employee instructs the Company to withhold cash or stock to meet such obligation), the Company shall withhold from any cash or stock remuneration (including withholding any shares of the Common Stock distributable to Employee under this Agreement) then or thereafter payable to Employee, any tax required to be withheld by reason of such resulting compensation income or wages. The Company is making no representation or warranty as to the tax consequences to Employee as a result of the receipt of the Restricted Stock Units, the treatment of dividend equivalents, the lapse of any Forfeiture Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Forfeiture Restrictions.
5. No Shareholder Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle Employee to any rights of a holder of Common Stock prior to the date that shares of Common Stock are issued to Employee in settlement of the Award. Employee’s rights with respect to the Restricted Stock Units shall remain forfeitable as stated in this Agreement.
6. Clawback. Notwithstanding any provisions in the Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Common Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback (i) to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations promulgated thereunder; (ii) to the extent provided by any policy or procedure adopted by the Company or any individual agreement between Employee and the Company; or (iii) pursuant to the terms of this Agreement in the event of a Restrictive Covenant Violation.
7. Employment Relationship. For purposes of this Agreement (except as otherwise provided in Section 3(c)(4) hereof), Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of either the Company or a Subsidiary. Without limiting the scope of the preceding sentence, it is specifically provided that Employee shall be considered to have terminated employment or service with the Company at the time of the termination of the “Subsidiary” status of the entity or other organization that employs or engages Employee. Nothing in the adoption of the Plan, nor the award of the Restricted Stock Units thereunder pursuant to this Agreement, shall confer upon Employee the right to continued employment by or service with the Company or affect in any way the right of the Company to terminate such employment or service at any time. Unless otherwise provided in a written employment or consulting agreement or by applicable law, Employee’s employment by or service with the Company shall be on an at-will basis, and the employment or service relationship may be terminated at any time by either Employee or the Company for any reason whatsoever, with or without cause or notice. Any question as to whether and when there has been a termination of such employment or service, and the cause of such termination, shall be determined by the Committee or its delegate, in its sole discretion, and its determination shall be final.
8. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered if hand delivered to Employee at Employee’s principal place of employment or if sent by registered or certified mail or other mail delivery method that provides a receipt, to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail or other mail delivery service that provides a receipt, to the General Counsel of Company at its principal executive offices.
9. Entire Agreement; Amendment. This Agreement (including Exhibit A) and the documents incorporated by reference herein replace and merge all previous agreements and discussions relating to the same or similar subject matters between Employee and the Company and constitute the entire agreement between Employee and the Company with respect to the subject matter of this Agreement, except as otherwise provided herein. This Agreement, including Exhibit A, may not be modified in any respect by any verbal statement, representation, or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. The foregoing notwithstanding, this Agreement does not modify or replace in any way any obligations Employee has to the Company or its related entities, under any agreement or applicable law, for non-disclosure, non-competition, non-solicitation, or non-interference.
10. Severability. If any part of this Agreement, including Exhibit A, is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of this Agreement and Exhibit A which shall remain in full force and effect.
11. No Waiver. No failure by either Party at any time to give notice of any breach by the other Party of, or to require compliance with, any condition or provision of this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time or (ii) preclude insistence upon strict compliance in the future.
12. Binding Effect; Survival. The provisions of Sections 3(f) and 6, and Exhibit A shall survive the lapse of the Forfeiture Restrictions without forfeiture. This Agreement and Exhibit A shall be binding upon and shall inure to the benefit of the Company, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement and Exhibit A are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
13. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement and Exhibit A shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles; provided, however, that if the Employee provides services to the Company outside of the United States, then the terms of Exhibit B also shall apply to this Award. With respect to any claim or dispute arising out of or related to this Agreement or Exhibit A, the Parties hereby consent to the exclusive jurisdiction, forum, and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement or Exhibit A, and consent to trial by the judge.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written.
EXPRO GROUP HOLDINGS N.V.
By: ____________________________________
Name:
Title:
EMPLOYEE:
By: ____________________________________
Print Name: _____________________________
EXHIBIT A
EMPLOYEE CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT
This Employee Confidentiality and Restrictive Covenant Agreement (“Agreement”) is made and entered as of the _____ day of _______________ 20__, between ______________ (“Employee”) and Expro Group Holdings N.V. and its subsidiaries and affiliated companies (collectively referred to as the “Company” or the “Company Group”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.” The Parties agree as follows:
1. Company Promise to Provide Access to Company Group Confidential Information and Goodwill. Employee recognizes that the Company Group has made significant investments of time and resources in establishing substantial relationships with the Company Group’s employees and Company Relationships (defined below) including existing and prospective customers, suppliers, contractors, sub- contractors, and other business relationships and developing the Company Group’s reputation and goodwill. Employee further recognizes that the Company Group has further invested valuable time and resources to obtain and develop and protect the Company Group’s proprietary business information, trade secrets, know- how, and other Confidential Information (defined below). The protection of Confidential Information and Company Relationships is vital to the interests of the Company Group.
(a) In exchange for Employee’s promises made in this Agreement, the Company promises to provide to Employee, consistent with Employee’s position, access to certain information regarding the business and activities of the Company Group. Employee acknowledges that he/she will have access to confidential information, training and related goodwill (“Confidential Information,” defined more fully below) as well as Company Relationships (defined below) while employed by the Company, including without limitation, any information and goodwill obtained by Employee during the course of Employee’s employment with the Company, concerning the business or affairs of the Company Group or that of its customers, suppliers, employees, contractors, subcontractors, agents, representatives or other third parties.
(b) Confidential Information includes any information about the Company Group that has not been intentionally and with authority publicly disclosed by the Company Group. Confidential Information likewise includes all information provided to the Company Group by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives which has not been intentionally and with authority publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company Group’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company Group or Employee receives from or has access to regarding these third parties, regardless of whether the Company Group is contractually obligated to a third party to keep such information confidential. Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company Group, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, technology, know-how, secret or intellectual property right by any Company Group employee, Company Group customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company Group, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes.
2. Employee Promise Not to Disclose Confidential Information. Employee acknowledges that this Confidential Information is confidential, proprietary, not known outside of the Company Group’s business, valuable, special and/or a unique asset of the Company Group, which belongs to the Company Group and gives the Company Group a competitive advantage. If this Confidential Information were disclosed without authority to third parties or accessed or used by third parties and/or Employee for the benefit of anyone other than the Company Group, such disclosure, access, or use would seriously and irreparably damage the Company Group and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose, provide access, or use for Employee’s own benefit or for the benefit of anyone besides the Company Group, the Confidential Information described above and learned or obtained by Employee as part of his/her employment with the Company. Employee acknowledges that this promise of non-disclosure, non-access, and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company. This Section does not apply to, or in any way restrict or impede Employee from, any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
3. Non-Disparagement. Employee agrees that he/she shall not at any time make, publish, or communicate to any person or entity or in any public forum, any defamatory or disparaging remarks, comments, or statements concerning the Company Group or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section does not apply to, or in any way restrict, or impede Employee from, any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
4. Non-Competition/Non-Solicitation/Non-Interference. Employee acknowledges that the highly competitive nature of the Company’s business, Employee’s position with the Company, and the Confidential Information, Company Relationships, training, and goodwill provided to Employee during his/her employment with the Company, support Employee’s promises not to compete with the Company, and not to solicit or interfere with the Company’s relationships with its customers and employees as stated below in the rest of this Section 4, during his/her employment with the Company and for twelve (12) months following Employee’s separation from the Company (“the Restricted Period”) regardless of the reason for the separation, within the Restricted Area.
For the purposes of this Agreement, “Restricted Area” is defined as follows:
For residents of all states except Louisiana: The Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, where the Company does business. Restricted Area also includes any county/parish in which the Employee directed or conducted efforts to further the Company Business during the last twelve (12) months of Employee’s employment with the Company. The Restricted Area as defined above shall be reduced to exclude any county/parish in which Employee did not conduct or direct efforts to further the Company Business and about which Employee had no responsibility and no involvement, during Employee’s last twelve (12) months of employment with the Company.
For Louisiana residents: The Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, where the Company does business. Employee agrees that if the Company’s Business and Employee’s duties for the Company expand to other parishes or counties, the Company may give Employee written notice of expansion to this Restricted Area definition which will have the same force and effect of the original Restricted Area definition, unless Employee disputes in writing this expansion within seven (7) days. The Restricted Area as defined above shall be reduced to exclude any county/parish in which Employee did not conduct or direct efforts to further the Company Business and about which Employee had no responsibility and no involvement, during Employee’s last twelve (12) months of employment with the Company.
(a) Non-Competition. During the Restricted Period and in the Restricted Area, Employee will not engage in or carry on, directly or indirectly, a business similar to and competitive with the Company Business (“Competing Business”). “Company Business” specifically includes, but is not limited to, the business involved with well construction, well intervention integrity, subsea well access, and well flow management and production solutions divisions of the Company’s business as well as any divisions in operation during Employee’s last twelve (12) months of employment with the Company, and includes the Company’s current and planned (future) business, bids, projects, contracts, and Company Relationships (defined below). Accordingly, during the Restricted Period and in the Restricted Area, Employee will not, directly or indirectly, own, manage, operate, join, become employed or engaged by, partner in, control, participate in, be connected with, loan money or sell or lease equipment or property to, or otherwise be affiliated with any Competing Business. For further clarity, Competing Business shall include the design, sales, marketing, fabrication, installation, provision, rental, repair, or manufacturing of products or services similar to or functionally equivalent to those designed, sold, installed, repaired, fabricated, manufactured, produced, provided, rented, marketed or licensed by the Company. The foregoing notwithstanding, Employee may own less than two percent (2%) of the outstanding stock of any class for a Competing Business which sells its stock on a national securities exchange and if Employee is not involved in the management of such Competing Business. Further, Competing Business and Restricted Area, as defined above, shall not include any geographic areas, services, business segment, or products of the Company for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information or Company Relationships during the last twelve (12) months of Employee’s employment with the Company. For Oklahoma residents, this non-competition obligation ends upon Employee’s last day of employment with the Company.
(b) Non-Solicitation/Non-Interference of Employees/Contractors. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, interfere with the Company’s relationship with, solicit or hire or otherwise encourage to change or leave their employment or contractor position with the Company, any person currently employed by or engaged as a contractor to the Company, and who was employed by or engaged by the Company during Employee’s last twelve (12) months of employment with the Company. This restriction shall not include any current or potential employee or contractor of the Company for whom Employee had no responsibility, no involvement, and about whom he/she had no access to Confidential Information during his/her employment with the Company. This restriction does not apply to postings and advertisements regarding job opportunities which are made available to the public and are not directed specifically toward Company employees or contractors.
(c) Non-Solicitation/Non-Interference of Customers, Vendors, Suppliers. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, solicit business of a similar nature to that provided by the Company from any customer of the Company, nor encourage or otherwise cause any current or potential customer, vendor or supplier of the Company, including those for the Company’s current or planned (future) projects, bids, or contracts, to cease or materially change their current or potential business relationship with the Company or otherwise attempt to interfere with these current or potential Company Relationships. For purposes of this Section, “current and potential customer, vendor or supplier” shall mean any entity or person with whom the Company has been engaged in a business relationship during the last twelve (12) months of Employee’s employment with the Company, and any “potential business relationship” shall mean any relationship pursued by the Company during the last twelve (12) months of Employee’s employment with the Company, including any current or planned (future) bids, projects or contracts. All of these relationships in the aggregate are defined as “Company Relationships.” This restriction shall not include any Company Relationship for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information during his/her last twelve (12) months of employment with the Company. For residents of Oklahoma, during the post-employment portion of the Restricted Period, these non-solicitation obligations are limited to directly soliciting any of the Company’s Established Customers relating to any Competing Business. “Established Customers” shall mean the current clients and/or customers of the Company, determined as of the last day of Employee’s employment with the Company, and as allowed by applicable law.
5. Intellectual Property. Employee assigns to the Company all right, title and interest Employee has or may acquire in and to any Intellectual Property that results from Employee’s efforts, either alone or jointly with others, during the period of Employee’s employment with the Company. “Intellectual Property” means any and all inventions, discoveries, developments, innovations, processes, designs, methods, technologies, formulae, models, research and development, patents, patent applications, trade secrets and other Confidential Information and works of authorship (including copyrightable works, copyrights and copyright applications), and improvements to any of the foregoing that, either alone or jointly with others: (a) result from any work performed on behalf of the Company, or from a research project suggested by the Company; (b) relate in any way to the existing or contemplated business of the Company; or (c) result from the use of the Company’s time, material, employees or facilities. Employee acknowledges and agrees that any work Employee performs for the Company during employment that constitutes copyrightable subject matter shall be considered a “work made for hire” as that term is defined in the United States Copyright Act (17 U.S.C. Section 101). Employee hereby ratifies and otherwise transfers and assigns to the Company, and waives and agrees never to assert, any and all rights to claim authorship, rights to object to any modification or other moral rights that Employee may have in or with respect to any Intellectual Property and/or works made for hire, even after termination of Employee’s employment. Employee further agrees that if, in the course of providing services to the Company, Employee incorporates any intellectual property owned by Employee, the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide right and license to make, have made, copy, modify, use, distribute and sell such intellectual property or products incorporating such intellectual property of Employee. During and after Employee’s employment, Employee will assist and cooperate with the Company for no additional compensation, but with the Company reimbursing any of Employee’s necessary out of pocket expenses. Employee will complete and sign documents requested by the Company to acquire, transfer, maintain, perfect and enforce the Company’s rights to the Intellectual Property, including patent, copyright, trade secret and other protections for the Company’s Intellectual Property.
6. Employee Acknowledgement of Need for Protections and Restrictions Promised; Modifications of Restrictions. Employee acknowledges and understands that his/her promises in this Agreement restrict some of his/her actions during and after employment with the Company. However, Employee acknowledges and agrees that he/she has or will receive sufficient consideration from the Company under this Agreement to justify such restrictions and that such restrictions are reasonable and necessary to protect the Company’s legitimate business interests. Employee understands and agrees that the restrictions in this Agreement shall continue beyond the termination of Employee’s employment, regardless of the reason for such termination.
7. Remedies. Employee acknowledges that money damages would not be a sufficient remedy for any breach of this Agreement by Employee, and that the Company shall be entitled to enforce this Agreement by specific performance and immediate injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Agreement, but shall be in addition to all remedies available to the Company at law, under common and statutory law, the Texas Uniform Trade Secrets Act, Louisiana Uniform Trade Secrets Act, the Defend Trade Secrets Act, under other agreements, or in equity, including, without limitation, the recovery of attorneys’ fees incurred by the Company in enforcing this Agreement or otherwise protecting its rights, as well as damages caused by Employee and his/her agents involved in such breach.
8. Notification to Subsequent Employers. Employee further acknowledges that in order to enforce his/her obligations under this Agreement, the Company may need to notify subsequent actual or potential employers of Employee’s obligations under this Agreement. Employee agrees to notify the Company of the identity of his/her employers for the Restricted Period before accepting a position with such employers, and Employee consents to the Company providing notification to these employers of Employee’s ongoing obligations to the Company under this Agreement or under other applicable law. Notices to the Company should be made in a manner that provides a receipt of delivery and addressed to: Senior Vice-President Human Resources, 1311 Broadfield Blvd., Suite 400, Houston, Texas 77084.
9. Tolling of Restricted Period. The duration of the Restricted Period shall be tolled and suspended for any period that Employee is in violation of these covenants up to a period of one (1) year, unless such tolling is disallowed under applicable law.
10. Return of Confidential Information and Company Property. All written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee which contain or disclose Confidential Information shall be and remain the property of the Company. Upon request and upon notice of termination/resignation of Employee’s employment with the Company for any reason, Employee shall, unless directed otherwise by the Company, cease accessing and promptly return, without deletion, copying or alteration, all written or electronic materials, data, information, records and any other property in Employee’s possession or control or to which Employee has access, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature.
11. At-Will Employment. Employee acknowledges and agrees that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, Employee understands that he/she is an at-will employee and that either Employee or the Company may terminate this at-will employment relationship at any time for any reason or no reason.
12. No Interference with Rights. Employee acknowledges and agrees that nothing in this Agreement is intended to, nor does it, interfere with or restrain any employee’s right to share or discuss information regarding his/her wages, hours, or other terms and conditions of employment in the exercise of any rights provided by the National Labor Relations Act or other applicable laws. Further, Employee acknowledges and agrees that this Agreement is not intended to, nor does it, interfere with or restrain Employee’s right to report unlawful actions to the Securities and Exchange Commission or any other law enforcement or administrative agency, or to participate in any such agency’s investigation, or to engage in any whistleblower or other activity protected or required by law. Further, neither this Agreement nor any other agreement or policy of the Company shall impose civil or criminal liability under any trade secret law or otherwise prohibit Employee from the following disclosures: (a) disclosures of trade secrets made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) disclosures of trade secrets made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal or per court order, or (c) disclosures of trade secrets by a plaintiff to his/her attorney in a lawsuit for retaliation for reporting a suspected violation of law and use of the trade secret information in the court proceeding, if any document containing the trade secrets is filed under seal and does not disclose the trade secrets, except pursuant to court order. Employee is not required to notify Company of these allowed reports or disclosures.
13. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. The Parties agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
14. No Duties to Other Employers. Employee represents that he/she is not bound by the terms of any agreement with any previous employer or other party other than the Company to: (a) refrain from using or disclosing any information that would be necessary to and/or reasonably expected to be utilized by Employee in the course of the performance of his/her duties in the employ of the Company or (b) refrain from engaging in any business activity that would otherwise preclude Employee from performance of his/her duties in the employ of the Company. Employee further represents that Employee’s performance of his/her duties does not and will not violate any agreement with any prior employer or third party. Employee agrees not to use or disclose during his/her employment with the Company any information which belongs to another entity or person.
15. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company Group, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company Group by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
16. Representations; Modifications; Other Agreements; Severability. Employee acknowledges that he/she has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties. This Agreement supplements and does not limit or restrict or alter in any way any non-disclosure, non-use, non-access, non-interference, non-solicitation, non-competition, non-disparagement or other similar obligations that the Employee may have undertaken in other agreements with the Company Group or which apply to Employee under any applicable law, including but not limited to any law regarding trade secrets, fiduciary duties, confidentiality, the Texas Uniform Trade Secrets Act, the Louisiana Uniform Trade Secrets Act, and the Defend Trade Secrets Act. If any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
Executed the day of electronic acceptance within the Merrill Lynch Benefits OnLine website.
EMPLOYEE:
By: ____________________________________
Printed Name: ___________________________
COMPANY:
COMPANY REPRESENTATIVE SIGNATURE
Name: ____________________________________
Title: ____________________________________
Exhibit 10.2
EXPRO GROUP HOLDINGS N.V.
RESTRICTED STOCK UNIT (RSU) AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT including Exhibits A and B (this “Agreement”) evidences an award made as of the _____ day of ____________________ 20__ (the “Date of Grant”), between EXPRO GROUP HOLDINGS N.V., a limited liability company organized in the Netherlands (the “Company”), and __________________ (the “Employee”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.”
1. The Grant.
(a) Pursuant to the EXPRO GROUP HOLDINGS N.V. 2022 LONG-TERM INCENTIVE PLAN, as the same may be amended from time to time (the “Plan”), and subject to the conditions set forth below, the Company hereby awards to Employee, effective as of the Date of Grant, an award consisting of an aggregate number of __________ restricted stock units (the “Restricted Stock Units” or “RSUs”), whereby each Restricted Stock Unit represents the right to receive one share of the Company’s common stock, nominal value €0.06 per share (“Common Stock”), in accordance with the terms and conditions set forth herein and in the Plan (the “Award”). The Restricted Stock Units subject to this Agreement are hereby designated as Performance Awards for purposes of Section 8 of the Plan. The number of Restricted Stock Units subject to this Award, as described in this Section 1(a), is the “target” number of shares that may become vested and shall be adjusted based on the attainment of the Performance Criteria described in Section 1(b) below and on Exhibit A.
(b) The Award’s performance period (“Performance Period”) and Performance Criteria (the “Performance Criteria”) are set forth in Exhibit A to this Agreement. The Performance Criteria has been established by the Compensation Committee of the Supervisory Board, which shall determine and certify whether such criteria have been satisfied.
(c) To the extent any provision of this Agreement conflicts with the expressly applicable terms of the Plan, those terms of the Plan shall control, and if necessary, the applicable terms of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan.
2. Definitions. Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:
(a)“ Disability” shall have the meaning set forth in any written employment or consulting agreement between the Employer and Employee. If Employee is not party to such an agreement that defines these terms, then for purposes of this Agreement, “Disability” shall mean Employee being unable to perform Employee’s duties or fulfill Employee’s obligations under the terms of his or her employment by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months as determined by the Employer and certified in writing by a competent medical physician selected by the Employer.
(b)“ Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.
(c)“ Involuntary Termination” shall mean a termination of Employee’s employment by the Company or an affiliate for a reason other than for Cause.
(d)“ Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended.
(e)“ CIC Severance Plan” shall mean the Company’s Amended and Restated U.S. Executive Change-In-Control Severance Plan adopted on January 21, 2019, and any amendments or restatements of this plan.
(f)“ Special Vesting Agreement” means an agreement which permits Employee’s RSUs to continue vesting following termination of Employee’s employment or service with the Company or with an affiliate, as applicable, in exchange for Employee’s strict compliance with designated post-termination conditions, as determined by the Committee pursuant to a written agreement executed at the time Employee’s termination of employment occurs. The Compensation Committee may, in is sole discretion, elect to limit coverage of a Special Vesting Agreement to only a portion of Employee’s RSUs.
3. Restricted Stock Units. By acceptance of this Restricted Stock Unit award, Employee agrees with respect thereto as follows:
(a) Forfeiture Restrictions. The Restricted Stock Units are restricted in that they may not be sold, assigned, pledged, exchanged, hypothecated, or otherwise alienated or transferred, encumbered, or disposed of, and in the event of termination of Employee’s employment or service with the Company for any reason other than death or Disability, or, to the extent provided in Section 3(c)(4) below, on account of an Involuntary Termination, Employee shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock Units to the Company upon termination of employment or services as provided in this Section 3(a) are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock Units.
(b) Lapse of Forfeiture Restrictions (Vesting). Provided that: (i) Employee has been continuously employed by the Company from the Date of Grant through the _____ of ____________________ 20__ (the scheduled “Lapse (Vesting) Date”), (ii) the Company attains the Performance Criteria as described on Exhibit A, and (iii) Employee is in compliance with Exhibit B and all other agreements or obligations to the Company, the Forfeiture Restrictions shall lapse, and the number of Restricted Stock Units as determined on Exhibit A shall become vested. Except as provided in Subsection (c) below, the Company will issue one share of Common Stock to Employee for each vested Restricted Stock Unit as soon as practicable after the Lapse (Vesting) Date but in no event later than seventy-five (75) days after the end of the Performance Period. Any Restricted Stock Units with respect to which the Forfeiture Restrictions do not lapse in accordance with this Section 3(b) (and any associated unvested dividend equivalents) shall be forfeited to the Company for no consideration as of the date of the termination of Employee’s employment with the Company.
(c) Accelerated Vesting.
(1) Death. If Employee’s employment with the Company is terminated by reason of death, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target” level effective on the date such death occurs and Employee’s vested RSUs shall be settled in the manner provided under Section 3(d) below.
(2) Disability. If Employee’s employment with the Company is terminated by reason of Disability, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target level” effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) due to the Employee’s Disability and Employee’s vested RSUs shall be settled in the manner provided under Section 3(d) below.
(3) Change in Control. If a Change in Control occurs and Employee is a participant in the CIC Severance Plan, then the terms of Section 3 of such plan are hereby incorporated by reference into this Agreement.
(4) Involuntary Termination. If Employee’s employment with the Company is terminated due to an Involuntary Termination then, the Company may, in its complete discretion, elect to enter into a Special Vesting Agreement with Employee pursuant to which the Forfeiture Restrictions shall not lapse upon such termination of employment, but instead this Award shall continue to remain outstanding and Employee will be treated, solely for purposes of satisfying the requirements for a lapse of Forfeiture Restrictions under Section 3(b), as continuing in the employment of the Company throughout the period during which he/she continuously satisfies the obligations set forth in Exhibit B attached hereto and incorporated herein by reference as part of this Agreement. If the provisions of this Section 3(c)(4) apply with respect to Employee, the number of Restricted Stock Units that vest under this Agreement shall be determined based on the Company’s attainment of the Performance Criteria described on Exhibit A and such vested Restricted Stock Units shall be settled in the manner provided under Section 3(d) below. As further condition to receiving any Special Vesting Agreement, Employee shall provide a release of all claims against the Company in a form acceptable to the Company upon entering the Special Vesting Agreement and also Employee must continuously comply with any other obligations to, or agreements with, the Company.
(d) Payments. Subject to compliance with all terms of this Agreement and Exhibit B, the Company will issue one share of Common Stock for each vested Restricted Stock Unit to Employee as soon as practicable after (i) the scheduled Lapse (Vesting) Date with respect to the number of Restricted Stock Units as determined pursuant to Exhibit A (but in no event later than seventy-five (75) days after the end of the Performance Period), (ii) the date of Employee’s death or (iii) the date of the Employee’s separation from service due to the Employee’s Disability. The Company shall deliver the shares of Common Stock in book-entry form, with such legends or restrictions thereon as the Committee may determine to be necessary or advisable in order to comply with applicable securities laws. Employee shall complete and sign any documents and take any additional action that the Company may request to enable it to deliver shares of Common Stock on Employee’s behalf. In the event that all or part of the Restricted Stock Units granted pursuant to this Agreement provides for a deferral of compensation within the meaning of the Section 409A, it is the general intention, but not the obligation, of the Company to design this Award to comply with the Section 409A and such Award should be interpreted accordingly. Notwithstanding anything to the contrary contained herein, in the event that Employee is a “specified employee” (as defined under the Section 409A) when Employee becomes entitled to a payment or settlement under the Award which is subject to the Section 409A on account of a “separation from service” (as defined under the Section 409A), to the extent required by the Code, such payment shall not occur until the date that is six months plus one day from the date of such separation from service. Any amount that is otherwise payable within the six-month period described herein will be aggregated and paid in a lump sum without interest. Further, for purposes of the Section 409A, each payment or settlement of any portion of the Restricted Stock Units under this Agreement shall be treated as a separate payment of compensation.
(e) Restrictive Covenants. Employee acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees, in his/her capacity as an employee and equity holder in the Company, to the provisions of Exhibit B to this Agreement. Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Exhibit B or any other similar obligations Employee has towards the Company under applicable law or other agreements (which includes any attempt to have any provision in Exhibit B or other similar obligations of Employee declared overbroad or unenforceable) (a “Restrictive Covenant Violation”) would be available but inadequate and the Company would suffer irreparable damages as a result of such a Restrictive Covenant Violation. In recognition of this fact, Employee agrees that, in the event of a Restrictive Covenant Violation, in addition to any remedies available to the Company under law, including damages and attorneys’ fees, remedies available the Company, without posting any bond, shall be to (i) cease making any dividend or other payments or providing any benefit otherwise required by this Agreement; (ii) terminate future vesting and cause forfeiture of all vested and unvested RSUs and common stock issued or issuable under this Agreement without consideration; (iii) cause forfeiture of the gross value of the common stock issued to Employee in the one year period prior to the Restrictive Covenant Violation (determined as of the date such stock was issued to Employee and using the Fair Market Value (as defined in the Plan) of the Company’s common stock on that date); (iv) receive repayment of any cash payments made to Employee with respect to the RSUs during the prior twelve month period; (v) obtain a temporary restraining order, temporary or permanent injunction; or (vi) specific performance or any other equitable remedy which may then be available.
(f) Corporate Acts. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding.
4. Withholding of Tax. To the extent that the receipt of the Restricted Stock Units (or any Common Stock or dividend equivalents related thereto) or the lapse of any Forfeiture Restrictions results in compensation, income or wages to Employee for federal, state, or local tax purposes, Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if Employee fails to do so (or if Employee instructs the Company to withhold cash or stock to meet such obligation), the Company shall withhold from any cash or stock remuneration (including withholding any shares of the Common Stock distributable to Employee under this Agreement) then or thereafter payable to Employee, any tax required to be withheld by reason of such resulting compensation income or wages. The Company is making no representation or warranty as to the tax consequences to Employee as a result of the receipt of the Restricted Stock Units, the treatment of dividend equivalents, the lapse of any Forfeiture Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Forfeiture Restrictions.
5. No Shareholder Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle Employee to any rights of a holder of Common Stock prior to the date that shares of Common Stock are issued to Employee in settlement of the Award. Employee’s rights with respect to the Restricted Stock Units shall remain forfeitable as stated in this Agreement.
6. Clawback. Notwithstanding any provisions in the Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Common Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback (i) to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations promulgated thereunder; (ii) to the extent provided by any policy or procedure adopted by the Company or any individual agreement between Employee and the Company; or (iii) pursuant to the terms of this Agreement in the event of a Restrictive Covenant Violation.
7. Employment Relationship. For purposes of this Agreement (except as otherwise provided in Section 3(c)(4) hereof), Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of either the Company or a Subsidiary. Without limiting the scope of the preceding sentence, it is specifically provided that Employee shall be considered to have terminated employment or service with the Company at the time of the termination of the “Subsidiary” status of the entity or other organization that employs or engages Employee. Nothing in the adoption of the Plan, nor the award of the Restricted Stock Units thereunder pursuant to this Agreement, shall confer upon Employee the right to continued employment by or service with the Company or affect in any way the right of the Company to terminate such employment or service at any time. Unless otherwise provided in a written employment or consulting agreement or by applicable law, Employee’s employment by or service with the Company shall be on an at-will basis, and the employment or service relationship may be terminated at any time by either Employee or the Company for any reason whatsoever, with or without cause or notice. Any question as to whether and when there has been a termination of such employment or service, and the cause of such termination, shall be determined by the Committee or its delegate, in its sole discretion, and its determination shall be final.
8. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered if hand delivered to Employee at Employee’s principal place of employment or if sent by registered or certified mail or other mail delivery method that provides a receipt, to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail or other mail delivery service that provides a receipt, to the General Counsel of Company at its principal executive offices.
9. Entire Agreement; Amendment. This Agreement (including Exhibit B) and the documents incorporated by reference herein replace and merge all previous agreements and discussions relating to the same or similar subject matters between Employee and the Company and constitute the entire agreement between Employee and the Company with respect to the subject matter of this Agreement, except as otherwise provided herein. This Agreement including Exhibit B may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. The foregoing notwithstanding, this Agreement does not modify or replace in any way any obligations Employee has to the Company or its related entities, under any agreement or applicable law, for non-disclosure, non-competition, non-solicitation, or non-interference.
10. Protection of Benefits. Without the consent of an affected Participant, no such Board or Committee action (including but not limited to any amendment, alteration, suspension, discontinuance or termination of the Plan or this Agreement) may materially and adversely affect the rights of Employee under this Award Agreement, subject to section 10(c) of the Plan.
11. Severability. If any part of this Agreement including Exhibit B is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of this Agreement and Exhibit B which shall remain in full force and effect.
12. No Waiver. No failure by either Party at any time to give notice of any breach by the other Party of, or to require compliance with, any condition or provision of this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time or (ii) preclude insistence upon strict compliance in the future.
13. Binding Effect; Survival. The provisions of Sections 3(e) and 6 and Exhibit B shall survive the lapse of the Forfeiture Restrictions without forfeiture. This Agreement and Exhibit B shall be binding upon and shall inure to the benefit of the Company, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement and Exhibit B are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
14. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement and Exhibit B shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles; provided, however, that if the Employee provides services to the Company outside of the United States, then the terms of Exhibit C also shall apply to this Award. With respect to any claim or dispute arising out of or related to this Agreement or Exhibit B, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement or Exhibit B, and consent to trial by the judge.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written.
EXPRO GROUP HOLDINGS N.V.
By: ____________________________________
Name:
Title:
EMPLOYEE:
By: ____________________________________
Print Name: _____________________________
Exhibit A
Performance Period and Criteria
Performance Period: January 1, 20__ to December 31, 20__
Performance Criteria:
Payment under this Award is determined based on relative performance using Total Stockholder Return (“TSR”). No portion of this Award will be earned if the Company’s performance during the Performance Period is below the threshold level of the Performance Criteria as described below. Any determination of performance under this Agreement shall be determined by the Committee in accordance with the Plan’s terms. If the Company’s TSR for the Performance Period is negative, the Payout Percentage used to calculate the payment under this Award shall not exceed 100% of the Target Level.
The Company’s TSR shall be as measured against the TSR of the Comparator Group during the Performance Period. For this purpose, the companies included in the SPDR® S&P® Oil & Gas Equipment and Services ETF (XES) on the Date of Grant will be the “Comparator Group”. Such comparison will be based on a percentile approach as detailed below with any payment based on linear interpolation if performance is between threshold and maximum levels. TSR for the Company and the Comparator Group shall be calculated using a 30-day averaging period for the 30 calendar days prior to the start of the Performance Period and the last 30 calendar days of the Performance Period to mitigate the effect of stock price volatility. TSR calculation to assume reinvestment of dividends.
|
Level |
Percentile Rank vs. Comparator Group |
Payout Percentage* |
|
Maximum |
90th Percentile and above |
200% of Target Level |
|
Target |
75th percentile |
150% of Target Level |
|
Target |
50th percentile |
100% of Target Level |
|
Threshold |
25th percentile |
50% of Target Level |
|
Below 25th percentile |
0% |
* Based on the Target Level for the TSR Based Award set forth on the first page of this Agreement.
SPDR® S&P® Oil & Gas Equipment and Services ETF (XES) Listing
The companies that comprise the index at the 1st day of the Performance Period (January 1, 20__) are listed below:
|
Company Name |
Ticker |
Adjustments to Comparator Group. The Comparator Group may be adjusted or changed by the Committee as circumstances warrant, including the following:
(1) If a Comparator Group company becomes bankrupt, the bankrupt company will remain in the Comparator Group positioned at one level below the lowest performing non-bankrupt Comparator Group. In the case of multiple bankruptcies, the bankrupt Comparator Group companies will be positioned below the non-bankrupt companies in chronological order by bankruptcy date with the first to go bankrupt at the bottom.
(2) If a Comparator Group company is acquired by another company, including through a management buy-out or going-private transaction, the acquired Comparator Group company will be removed from the Comparator Group for the entire Performance Period; provided that if the acquired Comparator Group company became bankrupt prior to its acquisition it shall be treated as provided in paragraph (1), above, or if it shall become delisted according to paragraph (5) below prior to its acquisition it shall be treated as provided in paragraph (5).
(3) If a Comparator Group company spins-off a portion of its business in a manner which results in the Comparator Group company and the spin-off company both being publicly traded, the Comparator Group company will be removed from the Comparator Group for the entire Performance Period and the spin-off company will not be added to the Comparator Group.
(4) If a Comparator Group company acquires another company, the acquiring Comparator Group company will remain in the Comparator Group for the Performance Period and the acquired Comparator Group Company will be removed from the Comparator Group for the entire Performance Period
(5) If a Comparator Group company is delisted from either the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ) such that it is no longer listed on either exchange, such delisted Comparator Group company will remain in the Comparator Group positioned at one level below the lowest performing listed company and above the highest ranked bankrupt Comparator Group company (see paragraph (1) above). In the case of multiple delistings, the delisted Comparator Group companies will be positioned below the listed and above the bankrupt Comparator Group companies in chronological order by delisting date with the first to be delisted at the bottom of the delisted companies. If a delisted company shall become bankrupt, it shall be treated as provided in paragraph (1) above. If a delisted company shall be later acquired, it shall be treated as a delisted company under this paragraph. If a delisted company shall relist during the Performance Period, it shall remain in its relative delisted position determined under this paragraph.
(6) If the Company’s or any Comparator Group company’s stock splits (or if there are other similar subdivisions, consolidations or changes in such company’s stock or capitalization), such company’s TSR performance will be adjusted for the stock split so as not to give an advantage or disadvantage to such company by comparison to the other Comparator Group companies.
EXHIBIT B
EMPLOYEE CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT
This Employee Confidentiality and Restrictive Covenant Agreement (“Agreement”) is made and entered as of the _____ day of _______________ 20__, between ____________________ (“Employee”) and Expro Group Holdings N.V. and its subsidiaries and affiliated companies (collectively referred to as the “Company” or the “Company Group”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.” The Parties agree as follows:
1. Company Promise to Provide Access to Company Group Confidential Information and Goodwill. Employee recognizes that the Company Group has made significant investments of time and resources in establishing substantial relationships with the Company Group’s employees and Company Relationships (defined below) including existing and prospective customers, suppliers, contractors, sub- contractors, and other business relationships and developing the Company Group’s reputation and goodwill. Employee further recognizes that the Company Group has further invested valuable time and resources to obtain and develop and protect the Company Group’s proprietary business information, trade secrets, know- how, and other Confidential Information (defined below). The protection of Confidential Information and Company Relationships is vital to the interests of the Company Group.
(a) In exchange for Employee’s promises made in this Agreement, the Company promises to provide to Employee, consistent with Employee’s position, access to certain information regarding the business and activities of the Company Group. Employee acknowledges that he/she will have access to confidential information, training and related goodwill (“Confidential Information,” defined more fully below) as well as Company Relationships (defined below) while employed by the Company, including without limitation, any information and goodwill obtained by Employee during the course of Employee’s employment with the Company, concerning the business or affairs of the Company Group or that of its customers, suppliers, employees, contractors, subcontractors, agents, representatives or other third parties.
(b) Confidential Information includes any information about the Company Group that has not been intentionally and with authority publicly disclosed by the Company Group. Confidential Information likewise includes all information provided to the Company Group by its customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives which has not been intentionally and with authority publicly disclosed by these persons or entities. While Employee is obligated to comply with all non-disclosure requirements in place with the Company Group’s customers, suppliers, contractors, subcontractors, business partners, joint venturers, agents or representatives, the obligations under this Agreement are broader and apply to any non-public information the Company Group or Employee receives from or has access to regarding these third parties, regardless of whether the Company Group is contractually obligated to a third party to keep such information confidential. Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company Group, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, technology, know-how, secret or intellectual property right by any Company Group employee, Company Group customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, project reports, handling documentation, machinery and compositions, all financial data relating to the Company Group, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, renting, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronic or hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes.
2. Employee Promise Not to Disclose Confidential Information. Employee acknowledges that this Confidential Information is confidential, proprietary, not known outside of the Company Group’s business, valuable, special and/or a unique asset of the Company Group, which belongs to the Company Group and gives the Company Group a competitive advantage. If this Confidential Information were disclosed without authority to third parties or accessed or used by third parties and/or Employee for the benefit of anyone other than the Company Group, such disclosure, access, or use would seriously and irreparably damage the Company Group and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose, provide access, or use for Employee’s own benefit or for the benefit of anyone besides the Company Group, the Confidential Information described above and learned or obtained by Employee as part of his/her employment with the Company. Employee acknowledges that this promise of non-disclosure, non-access, and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company. This Section does not apply to, or in any way restrict or impede Employee from, any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
3. Non-Disparagement. Employee agrees that he/she shall not at any time make, publish, or communicate to any person or entity or in any public forum, any defamatory or disparaging remarks, comments, or statements concerning the Company Group or its businesses, business practices, or any of its employees or officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section does not apply to, or in any way restrict, or impede Employee from, any communications with government agencies as stated below, or complying with any applicable law or court order, or exercising whistleblower or other protected non-waivable legal rights.
4. Non-Competition/Non-Solicitation/Non-Interference. Employee acknowledges that the highly competitive nature of the Company’s business, Employee’s position with the Company, and the Confidential Information, Company Relationships, training, and goodwill provided to Employee during his/her employment with the Company, support Employee’s promises not to compete with the Company, and not to solicit or interfere with the Company’s relationships with its customers and employees as stated below in the rest of this Section 4, during his/her employment with the Company and for twelve (12) months following Employee’s separation from the Company (“the Restricted Period”) regardless of the reason for the separation, within the Restricted Area.
For the purposes of this Agreement, “Restricted Area” is defined as follows:
For residents of all states except Louisiana: The Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, where the Company does business. Restricted Area also includes any county/parish in which the Employee directed or conducted efforts to further the Company Business during the last twelve (12) months of Employee’s employment with the Company. The Restricted Area as defined above shall be reduced to exclude any county/parish in which Employee did not conduct or direct efforts to further the Company Business and about which Employee had no responsibility and no involvement, during Employee’s last twelve (12) months of employment with the Company.
For Louisiana residents: The Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, where the Company does business. Employee agrees that if the Company’s Business and Employee’s duties for the Company expand to other parishes or counties, the Company may give Employee written notice of expansion to this Restricted Area definition which will have the same force and effect of the original Restricted Area definition, unless Employee disputes in writing this expansion within seven (7) days. The Restricted Area as defined above shall be reduced to exclude any county/parish in which Employee did not conduct or direct efforts to further the Company Business and about which Employee had no responsibility and no involvement, during Employee’s last twelve (12) months of employment with the Company.
(a) Non-Competition. During the Restricted Period and in the Restricted Area, Employee will not engage in or carry on, directly or indirectly, a business similar to and competitive with the Company Business (“Competing Business”). “Company Business” specifically includes, but is not limited to, the business involved with well construction, well intervention integrity, subsea well access, and well flow management and production solutions divisions of the Company’s business as well as any divisions in operation during Employee’s last twelve (12) months of employment with the Company, and includes the Company’s current and planned (future) business, bids, projects, contracts, and Company Relationships (defined below). Accordingly, during the Restricted Period and in the Restricted Area, Employee will not, directly or indirectly, own, manage, operate, join, become employed or engaged by, partner in, control, participate in, be connected with, loan money or sell or lease equipment or property to, or otherwise be affiliated with any Competing Business. For further clarity, Competing Business shall include the design, sales, marketing, fabrication, installation, provision, rental, repair, or manufacturing of products or services similar to or functionally equivalent to those designed, sold, installed, repaired, fabricated, manufactured, produced, provided, rented, marketed or licensed by the Company. The foregoing notwithstanding, Employee may own less than two percent (2%) of the outstanding stock of any class for a Competing Business which sells its stock on a national securities exchange and if Employee is not involved in the management of such Competing Business. Further, Competing Business and Restricted Area, as defined above, shall not include any geographic areas, services, business segment, or products of the Company for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information or Company Relationships during the last twelve (12) months of Employee’s employment with the Company. For Oklahoma residents, this non-competition obligation ends upon Employee’s last day of employment with the Company.
(b) Non-Solicitation/Non-Interference of Employees/Contractors. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, interfere with the Company’s relationship with, solicit or hire or otherwise encourage to change or leave their employment or contractor position with the Company, any person currently employed by or engaged as a contractor to the Company, and who was employed by or engaged by the Company during Employee’s last twelve (12) months of employment with the Company. This restriction shall not include any current or potential employee or contractor of the Company for whom Employee had no responsibility, no involvement, and about whom he/she had no access to Confidential Information during his/her employment with the Company. This restriction does not apply to postings and advertisements regarding job opportunities which are made available to the public and are not directed specifically toward Company employees or contractors.
(c) Non-Solicitation/Non-Interference of Customers, Vendors, Suppliers. During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not, directly or indirectly, solicit business of a similar nature to that provided by the Company from any customer of the Company, nor encourage or otherwise cause any current or potential customer, vendor or supplier of the Company, including those for the Company’s current or planned (future) projects, bids, or contracts, to cease or materially change their current or potential business relationship with the Company or otherwise attempt to interfere with these current or potential Company Relationships. For purposes of this Section, “current and potential customer, vendor or supplier” shall mean any entity or person with whom the Company has been engaged in a business relationship during the last twelve (12) months of Employee’s employment with the Company, and any “potential business relationship” shall mean any relationship pursued by the Company during the last twelve (12) months of Employee’s employment with the Company, including any current or planned (future) bids, projects or contracts. All of these relationships in the aggregate are defined as “Company Relationships.” This restriction shall not include any Company Relationship for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information during his/her last twelve (12) months of employment with the Company. For residents of Oklahoma, during the post-employment portion of the Restricted Period, these non-solicitation obligations are limited to directly soliciting any of the Company’s Established Customers relating to any Competing Business. “Established Customers” shall mean the current clients and/or customers of the Company, determined as of the last day of Employee’s employment with the Company, and as allowed by applicable law.
5. Intellectual Property. Employee assigns to the Company all right, title and interest Employee has or may acquire in and to any Intellectual Property that results from Employee’s efforts, either alone or jointly with others, during the period of Employee’s employment with the Company. “Intellectual Property” means any and all inventions, discoveries, developments, innovations, processes, designs, methods, technologies, formulae, models, research and development, patents, patent applications, trade secrets and other Confidential Information and works of authorship (including copyrightable works, copyrights and copyright applications), and improvements to any of the foregoing that, either alone or jointly with others: (a) result from any work performed on behalf of the Company, or from a research project suggested by the Company; (b) relate in any way to the existing or contemplated business of the Company; or (c) result from the use of the Company’s time, material, employees or facilities. Employee acknowledges and agrees that any work Employee performs for the Company during employment that constitutes copyrightable subject matter shall be considered a “work made for hire” as that term is defined in the United States Copyright Act (17 U.S.C. Section 101). Employee hereby ratifies and otherwise transfers and assigns to the Company, and waives and agrees never to assert, any and all rights to claim authorship, rights to object to any modification or other moral rights that Employee may have in or with respect to any Intellectual Property and/or works made for hire, even after termination of Employee’s employment. Employee further agrees that if, in the course of providing services to the Company, Employee incorporates any intellectual property owned by Employee, the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide right and license to make, have made, copy, modify, use, distribute and sell such intellectual property or products incorporating such intellectual property of Employee. During and after Employee’s employment, Employee will assist and cooperate with the Company for no additional compensation, but with the Company reimbursing any of Employee’s necessary out of pocket expenses. Employee will complete and sign documents requested by the Company to acquire, transfer, maintain, perfect and enforce the Company’s rights to the Intellectual Property, including patent, copyright, trade secret and other protections for the Company’s Intellectual Property.
6. Employee Acknowledgement of Need for Protections and Restrictions Promised; Modifications of Restrictions. Employee acknowledges and understands that his/her promises in this Agreement restrict some of his/her actions during and after employment with the Company. However, Employee acknowledges and agrees that he/she has or will receive sufficient consideration from the Company under this Agreement to justify such restrictions and that such restrictions are reasonable and necessary to protect the Company’s legitimate business interests. Employee understands and agrees that the restrictions in this Agreement shall continue beyond the termination of Employee’s employment, regardless of the reason for such termination.
7. Remedies. Employee acknowledges that money damages would not be a sufficient remedy for any breach of this Agreement by Employee, and that the Company shall be entitled to enforce this Agreement by specific performance and immediate injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Agreement, but shall be in addition to all remedies available to the Company at law, under common and statutory law, the Texas Uniform Trade Secrets Act, Louisiana Uniform Trade Secrets Act, the Defend Trade Secrets Act, under other agreements, or in equity, including, without limitation, the recovery of attorneys’ fees incurred by the Company in enforcing this Agreement or otherwise protecting its rights, as well as damages caused by Employee and his/her agents involved in such breach.
8. Notification to Subsequent Employers. Employee further acknowledges that in order to enforce his/her obligations under this Agreement, the Company may need to notify subsequent actual or potential employers of Employee’s obligations under this Agreement. Employee agrees to notify the Company of the identity of his/her employers for the Restricted Period before accepting a position with such employers, and Employee consents to the Company providing notification to these employers of Employee’s ongoing obligations to the Company under this Agreement or under other applicable law. Notices to the Company should be made in a manner that provides a receipt of delivery and addressed to: Senior Vice-President Human Resources, 1311 Broadfield, Suite 400, Houston, Texas 77084.
9. Tolling of Restricted Period. The duration of the Restricted Period shall be tolled and suspended for any period that Employee is in violation of these covenants up to a period of one (1) year, unless such tolling is disallowed under applicable law.
10. Return of Confidential Information and Company Property. All written, electronic, or other data, materials, records and other documents made by, or coming into the possession or control of, Employee which contain or disclose Confidential Information shall be and remain the property of the Company. Upon request and upon notice of termination/resignation of Employee’s employment with the Company for any reason, Employee shall, unless directed otherwise by the Company, cease accessing and promptly return, without deletion, copying or alteration, all written or electronic materials, data, information, records and any other property in Employee’s possession or control or to which Employee has access, whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not confidential or proprietary in nature.
11. At-Will Employment. Employee acknowledges and agrees that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, Employee understands that he/she is an at-will employee and that either Employee or the Company may terminate this at-will employment relationship at any time for any reason or no reason.
12. No Interference with Rights. Employee acknowledges and agrees that nothing in this Agreement is intended to, nor does it, interfere with or restrain any employee’s right to share or discuss information regarding his/her wages, hours, or other terms and conditions of employment in the exercise of any rights provided by the National Labor Relations Act or other applicable laws. Further, Employee acknowledges and agrees that this Agreement is not intended to, nor does it, interfere with or restrain Employee’s right to report unlawful actions to the Securities and Exchange Commission or any other law enforcement or administrative agency, or to participate in any such agency’s investigation, or to engage in any whistleblower or other activity protected or required by law. Further, neither this Agreement nor any other agreement or policy of the Company shall impose civil or criminal liability under any trade secret law or otherwise prohibit Employee from the following disclosures: (a) disclosures of trade secrets made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) disclosures of trade secrets made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal or per court order, or (c) disclosures of trade secrets by a plaintiff to his/her attorney in a lawsuit for retaliation for reporting a suspected violation of law and use of the trade secret information in the court proceeding, if any document containing the trade secrets is filed under seal and does not disclose the trade secrets, except pursuant to court order. Employee is not required to notify Company of these allowed reports or disclosures.
13. Governing Law/Forum/Jury Waiver. The Parties agree and acknowledge that this Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. The Parties agree to waive a trial by jury of any or all issues arising under or connected with this Agreement, and consent to trial by the judge.
14. No Duties to Other Employers. Employee represents that he/she is not bound by the terms of any agreement with any previous employer or other party other than the Company to: (a) refrain from using or disclosing any information that would be necessary to and/or reasonably expected to be utilized by Employee in the course of the performance of his/her duties in the employ of the Company or (b) refrain from engaging in any business activity that would otherwise preclude Employee from performance of his/her duties in the employ of the Company. Employee further represents that Employee’s performance of his/her duties does not and will not violate any agreement with any prior employer or third party. Employee agrees not to use or disclose during his/her employment with the Company any information which belongs to another entity or person.
15. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company Group, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company Group by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
16. Representations; Modifications; Other Agreements; Severability. Employee acknowledges that he/she has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties. This Agreement supplements and does not limit or restrict or alter in any way any non-disclosure, non-use, non-access, non-interference, non-solicitation, non-competition, non-disparagement or other similar obligations that the Employee may have undertaken in other agreements with the Company Group or which apply to Employee under any applicable law, including but not limited to any law regarding trade secrets, fiduciary duties, confidentiality, the Texas Uniform Trade Secrets Act, the Louisiana Uniform Trade Secrets Act, and the Defend Trade Secrets Act. If any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of the Agreement which shall remain in full force and effect.
Executed the day of electronic acceptance within the Merrill Lynch Benefits OnLine website.
EMPLOYEE:
By: ____________________________________
Printed Name: ___________________________
COMPANY:
COMPANY REPRESENTATIVE SIGNATURE
Name: ____________________________________
Title: ____________________________________
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Michael Jardon, certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Expro Group Holdings N.V. (the “registrant”); |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the three months covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the three months presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the three months for which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the three months covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 4, 2023
/s/ Michael Jardon
Michael Jardon
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Quinn P. Fanning, certify that:
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1. |
I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Expro Group Holdings N.V. (the “registrant”); |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the three months covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the three months presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the three months for which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the three months covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 4, 2023
/s/ Quinn P. Fanning
Quinn P. Fanning
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350
In connection with the Quarterly Report of Expro Group Holdings N.V. (the “Company”) on Form 10-Q for the three months ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Jardon, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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May 4, 2023 |
/s/ Michael Jardon |
|
Michael Jardon |
|
|
President and Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350
In connection with the Quarterly Report of Expro Group Holdings N.V. (the “Company”) on Form 10-Q for the three months ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Quinn P. Fanning, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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May 4, 2023 |
/s/ Quinn P. Fanning |
|
Quinn P. Fanning |
|
|
Chief Financial Officer |
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Net loss | $ (6,351) | $ (11,132) |
| Other comprehensive loss: | ||
| Amortization of prior service credit | (61) | (61) |
| Other comprehensive loss | (61) | (61) |
| Comprehensive loss | $ (6,412) | $ (11,193) |
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - € / shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Common stock, par value (in EUR per share) | € 0.06 | € 0.06 |
| Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
| Common stock, shares issued (in shares) | 111,292,202 | 110,710,188 |
| Common stock, shares outstanding (in shares) | 108,583,946 | 108,743,761 |
| Treasury Stock, Common, Shares | 2,708,256 | 1,966,427 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
Common Stock Outstanding [Member] |
Treasury Stock, Common [Member] |
Additional Paid-in Capital [Member] |
AOCI Attributable to Parent [Member] |
Retained Earnings [Member] |
Total |
|---|---|---|---|---|---|---|
| Balance (in shares) at Dec. 31, 2021 | 109,143 | |||||
| Balance at Dec. 31, 2021 | $ 7,844 | $ (22,785) | $ 1,827,782 | $ 20,358 | $ (535,628) | $ 1,297,571 |
| Net loss | 0 | 0 | 0 | 0 | (11,132) | (11,132) |
| Other comprehensive loss | 0 | 0 | 0 | (61) | 0 | (61) |
| Stock-based compensation expense | $ 0 | 0 | 6,018 | 0 | 0 | 6,018 |
| Common shares issued upon vesting of share-based awards (in shares) | 336 | |||||
| Common shares issued upon vesting of share-based awards | $ 24 | 0 | 378 | 0 | 0 | 402 |
| Treasury shares withheld (in shares) | (100) | |||||
| Treasury shares withheld | $ 0 | (1,506) | 0 | 0 | 0 | (1,506) |
| Balance (in shares) at Mar. 31, 2022 | 109,379 | |||||
| Balance at Mar. 31, 2022 | $ 7,868 | (24,291) | 1,834,178 | 20,297 | (546,760) | 1,291,292 |
| Balance (in shares) at Dec. 31, 2022 | 108,744 | |||||
| Balance at Dec. 31, 2022 | $ 7,911 | (40,870) | 1,847,078 | 27,549 | (555,773) | 1,285,895 |
| Net loss | 0 | 0 | 0 | 0 | (6,351) | (6,351) |
| Other comprehensive loss | 0 | 0 | 0 | (61) | 0 | (61) |
| Stock-based compensation expense | $ 0 | 0 | 4,171 | 0 | 0 | 4,171 |
| Common shares issued upon vesting of share-based awards (in shares) | 582 | |||||
| Common shares issued upon vesting of share-based awards | $ 32 | 0 | 566 | 0 | 0 | 598 |
| Treasury shares withheld (in shares) | (185) | |||||
| Treasury shares withheld | $ 0 | (3,556) | 0 | 0 | 0 | (3,556) |
| Acquisition of common stock (in shares) | (557) | |||||
| Acquisition of common stock | $ 0 | (10,011) | 0 | 0 | 0 | (10,011) |
| Balance (in shares) at Mar. 31, 2023 | 108,584 | |||||
| Balance at Mar. 31, 2023 | $ 7,943 | $ (54,437) | $ 1,851,815 | $ 27,488 | $ (562,124) | $ 1,270,685 |
Note 1 - Business Description |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2023 | |||
| Notes to Financial Statements | |||
| Business Description and Basis of Presentation [Text Block] |
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 portfolio of capabilities includes products and services related to well construction, well flow management, subsea well access, and well intervention and integrity which enhance production and improve recovery across the well lifecycle, from exploration through abandonment.
On March 10, 2021, the Company and New Eagle Holdings Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of the Company (“Merger Sub”), entered into an Agreement and Plan of Merger with Expro Group Holdings International Limited (“Legacy Expro”) providing for the merger of Legacy Expro with and into Merger Sub in an all-stock transaction, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of the Company (the “Merger”). The Merger closed on October 1, 2021, and the Company, previously known as Frank’s International N.V. (“Frank’s”), was renamed Expro Group Holdings N.V.
On June 16, 2022, the Company’s Board of Directors (the “Board”) approved a new stock repurchase program, under which the Company is authorized to acquire up to $50.0 million of its outstanding common stock through November 24, 2023. 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 is being utilized at management’s discretion and in accordance with U.S. federal securities laws. The timing and actual numbers of shares repurchased, if any, 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. Under the stock repurchase plan, the Company has repurchased approximately 0.6 million shares at an average price of $17.99 per share, for a total cost of approximately $10.0 million during the three months ended March 31, 2023. Since the inception of the stock repurchase program, the Company has repurchased total of approximately 1.7 million shares at an average price of $13.89 per share, for a total cost of $23.0 million through March 31, 2023.
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Note 2 - Basis of Preparation and Significant Accounting Policies |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2023 | |||
| Notes to Financial Statements | |||
| Basis of Presentation and Significant Accounting Policies [Text Block] |
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, 2022, included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023.
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 March 31, 2023, the results of our operations for the three months ended March 31, 2023 and 2022 and our cash flows for the three months ended March 31, 2023 and 2022. Such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, 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, 2022, which are included in our most recent Annual Report on Form 10-K filed with the SEC on February 23, 2023, 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, 2022.
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.
We consider the applicability and impact of all accounting pronouncements. 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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Note 3 - Business Combinations and Dispositions |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mergers, Acquisitions and Dispositions Disclosures [Text Block] |
DeltaTek Oil Tools Limited
On February 8, 2023 (“Closing Date”), DeltaTek Oil Tools Limited, a limited liability company registered in the United Kingdom, and its subsidiary (“DeltaTek”), was acquired (“the 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. We estimated the fair value of consideration for the Acquisition to be $17.5 million, including cash consideration paid at closing of $9.0 million, subject to a true-up for net of customary working capital adjustments, 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 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 change during the measurement period and such changes are based on facts and circumstances that existed as of the Closing Date, an adjustment to the contingent consideration liability would be recorded with an offsetting adjustment to goodwill. To the extent our estimates and assumptions change based on facts and circumstances subsequent to the Closing Date or after the measurement period, an adjustment to the contingent consideration liability would be recorded with an offsetting adjustment to earnings during the applicable period.
The 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 preliminary allocation of the Acquisition consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed as of the 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):
Due to the recency of the 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 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 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 Acquisition is not expected to be deductible for tax purposes.
The Company has determined the estimated unaudited pro forma information to be insignificant for the three months ended March 31, 2023, and 2022, assuming the Acquisition were to have been completed as of January 1, 2023 and 2022, respectively. This is not necessarily indicative of the results that would have occurred had the Acquisition been completed on either date indicated or of future operating results.
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Note 4 - Fair Value Measurements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Text Block] |
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 March 31, 2023 and December 31, 2022, were as follows (in thousands):
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Note 5 - Business Segment Reporting |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting Disclosure [Text Block] |
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:
The following table presents our revenue disaggregated by our operating segments (in thousands):
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 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 loss before income taxes (in thousands):
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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Note 6 - Revenue |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Text Block] |
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):
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 March 31, 2023, and December 31, 2022 (in thousands):
The Company recognized revenue of $25.2 million and $7.9 million for the three months ended March 31, 2023 and 2022, respectively, out of the deferred revenue balance as of the beginning of the applicable year.
As of March 31, 2023, $62.6 million of our deferred revenue was classified as current and is included in “Other current liabilities” on the condensed consolidated balance sheets, with the remainder classified as non-current and included in “Other non-current liabilities” on the condensed consolidated balance sheets.
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 construction contracts, revenue allocated to remaining performance obligations is $116.1 million.
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Note 7 - Income Taxes |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2023 | |||
| Notes to Financial Statements | |||
| Income Tax Disclosure [Text Block] |
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 three months ended March 31, 2023, we determined 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 three months ended March 31, 2023.
Our effective tax rates were (137.4)% and (42.2)% for the three ended March 31, 2023, and 2022, 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 Europe and Sub-Saharan Africa and the Middle East.
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Note 8 - Investment in Joint Ventures |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Method Investments and Joint Ventures Disclosure [Text Block] |
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 March 31, 2023, and December 31, 2022, was as follows (in thousands):
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Note 9 - Accounts Receivable, Net |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
Accounts receivable, net consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
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Note 10 - Inventories |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Text Block] |
Inventories consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
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Note 11 - Other Assets and Liabilities |
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| Other Assets and Other Liabilities [Text Block] |
Other assets consisted of the following as of March 31, 2023,and December 31, 2022 (in thousands):
Other liabilities consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
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Note 12 - Accounts Payable and Accrued Liabilities |
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| Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] |
Accounts payable and accrued liabilities consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
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Note 13 - Property, Plant and Equipment, Net |
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| Property, Plant and Equipment Disclosure [Text Block] |
Property, plant and equipment, net consisted of the following as of March 31, 2023, and December 31, 2022 (in thousands):
The carrying amount of our property, plant and equipment recognized in respect of assets held under finance leases as of March 31, 2023 and December 31, 2022 and included in amounts above is as follows (in thousands):
Depreciation expense relating to property, plant and equipment, including assets under finance leases, was million and million for the three months ended March 31, 2023 and 2022, respectively.
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Note 14 - Intangible Assets, Net |
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| Intangible Assets Disclosure [Text Block] |
The following table summarizes our intangible assets comprising of Customer Relationships & Contracts (“CR&C”), Trademarks, Technology and Software as of March 31, 2023 and December 31, 2022 (in thousands):
Amortization expense for intangible assets was $9.2 million and $9.0 million for the three months ended March 31, 2023 and 2022, respectively.
The following table summarizes the intangible assets which were acquired pursuant to the Acquisition (in thousands):
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Note 15 - Goodwill |
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| Goodwill Disclosure [Text Block] |
Our reporting units are our operating segments which are NLA, ESSA, MENA and APAC.
The allocation of goodwill by operating segment as of March 31, 2023 and December 31, 2022 is as follows (in thousands):
The following table summarizes the goodwill by operating segment which were acquired pursuant to the Acquisition (in thousands):
As of March 31, 2023, 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 three months ended March 31, 2023.
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Note 16 - Interest Bearing Loans |
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Mar. 31, 2023 | |||
| Notes to Financial Statements | |||
| Debt Disclosure [Text Block] |
On October 1, 2021, we entered into a new revolving credit facility (the “New Facility”) with DNB Bank ASA, London Branch, as agent (the “Agent”), with total commitments of $200.0 million, of which $130.0 million was available for drawdowns as loans and $70.0 million was available for letters of credit. On July 21, 2022, the Company increased the facility available for letters of credit to $92.5 million and total commitments to $222.5 million. Proceeds of the New Facility may be used for general corporate and working capital purposes.
All obligations under the New Facility are guaranteed jointly and severally by the Company and certain of the Company’s subsidiaries incorporated in the U.S., the U.K., the Netherlands, Norway, Hungary, Australia, Cyprus, the Cayman Islands and Guernsey. Going forward, the guarantors must comprise at least 80% of the EBITDA (as defined in the New Facility) and 70% of the consolidated assets of the Company and its subsidiaries, as well as subsidiaries individually representing 5% or more of the EBITDA or assets of the group, subject to customary exceptions and exclusions. In addition, the obligations under the New Facility are secured by first priority liens on certain assets of the borrowers and guarantors, including pledges of equity interests in certain of the Company’s subsidiaries, including all of the borrowers and subsidiary guarantors, material operating bank accounts, intercompany loans receivable and, in jurisdictions where customary, including the U.S., the U.K., Australia and the Cayman Islands, substantially all of the assets and property of the borrowers and guarantors incorporated in such jurisdictions, in each case subject to customary exceptions and exclusions.
Borrowings under the New Facility bear interest at a rate per annum of LIBOR, subject to a 0.00% floor, plus an applicable margin of 3.75% for cash borrowings or 3.00% for letters of credit. A 0.75% per annum fronting fee applies to letters of credit, and an additional 0.25% or 0.50% per annum utilization fee is payable on drawdowns as loans to the extent one-third or two-thirds, respectively, or more of commitments are drawn. The unused portion of the New Facility is subject to a commitment fee of 30% per annum of the applicable margin. Interest on loans is payable at the end of the selected interest period, but no less frequently than semi-annually.
The New Facility contains various undertakings and affirmative and negative covenants 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 New Facility also requires the Company to maintain (i) a minimum cash flow cover ratio of 1.5 to 1.0 based on the ratio of cash flow to debt service; (ii) a minimum interest cover ratio of 4.0 to 1.0 based on the ratio of EBITDA to net finance charges; and (iii) a maximum senior leverage ratio of 2.25 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. In addition, the aggregate capital expenditure of the Company and its subsidiaries cannot exceed 110% of the forecasted amount in the relevant annual budget, subject to certain exceptions. If the Company fails to perform its obligations under the agreement that results in an event of default, the commitments under the New Facility could be terminated and any outstanding borrowings under the New Facility may be declared immediately due and payable. The New Facility also contains cross-default provisions that apply to the Company and its subsidiaries’ other indebtedness.
On March 31, 2022, the Agent, on behalf of the consenting lenders, countersigned a Consent Request Letter dated March 10, 2022, to the New Facility (the “Consent”). Pursuant to the Consent, the lenders consented to, among other things, an amendment to the New Facility permitting dividends or distributions by the Company, or the repurchase or redemption of the Company’s shares in an aggregate amount of $50.0 million over the life of the New Facility, subject to pro forma compliance with the 2.25 to 1.0 maximum senior leverage ratio financial covenant.
The New Facility remained undrawn on a cash basis (i.e., no loans were outstanding), as of March 31, 2023 and December 31, 2022. We utilized $51.0 million and $53.8 million as of March 31, 2023 and December 31, 2022, respectively, for bonds and guarantees.
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Note 17 - Commitments and Contingencies |
3 Months Ended | ||
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Mar. 31, 2023 | |||
| Notes to Financial Statements | |||
| Commitments and Contingencies Disclosure [Text Block] |
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 $49.5 million and $45.5 million as of March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022. 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 million and, accordingly, we had recorded a loss contingency in that amount within “Other current liabilities” on our condensed consolidated balance sheet as of March 31, 2023, with the offset taken as an increase to goodwill as a measurement period adjustment associated with 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 addition, the Company agreed to pay $8 million to the SEC in respect of disgorgement, prejudgment interest and civil penalty. 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.
Other than discussed above, we had no other material legal accruals for loss contingencies, individually or in the aggregate, as of March 31, 2023 and December 31, 2022.
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Note 18 - Post-retirement Benefits |
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| Retirement Benefits [Text Block] |
Amounts recognized in the unaudited condensed consolidated statements of operations in respect of the defined benefit schemes were as follows (in thousands):
The Company contributed $1.2 million and $1.3 million for the three months ended March 31, 2023 and 2022, 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.
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Note 19 - Loss Per Share |
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| Earnings Per Share [Text Block] |
Basic loss per share attributable to Company stockholders is calculated by dividing net loss attributable to the Company by the weighted-average number of common shares outstanding for the period. When there is net income for the period. diluted earnings per share attributable to Company stockholders is computed giving effect to all potential dilutive common stock. 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 loss per share attributable to Company stockholders for the three months ended March 31, 2023 and 2022, respectively, are as follows (in thousands, except shares outstanding and per share amounts):
Approximately 0.7 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 both the three months ended March 31, 2023 and 2022. |
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Note 20 - Related Party Disclosures |
3 Months Ended | ||
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Mar. 31, 2023 | |||
| Notes to Financial Statements | |||
| Related Party Transactions Disclosure [Text Block] |
Our related parties consist primarily of CETS and PVD-Expro, the two companies in which we exert significant influence, and Mosing Holdings LLC, a company that is owned by various members of the Mosing family, including Erich Mosing, a member of our board of directors, and affiliates. During the three months ended March 31, 2023 and 2022, we provided goods and services to related parties totaling $2.1 million and $0.9 million, respectively. During the three months ended March 31, 2023, we received services from related parties totaling $0.4 million.
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 $0.2 million, respectively, for the three months ended March 31, 2023 and 2022.
As of March 31, 2023 and December 31, 2022 amounts receivable from related parties were $2.1 million and $2.4 million, respectively, and amounts payable to related parties were $1.1 million and $0.8 million, respectively.
As of March 31, 2023, $0.5 million of our operating lease right-of-use assets and $0.5 million of our lease liabilities were associated with related party leases. As of December 31, 2022, $0.7 million of our operating lease right-of-use assets and $0.7 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 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 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 of these cash savings, if any.
In connection with the Merger Agreement, 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 -year period following October 1, 2021 in excess of $18.1 million. |
Note 21 - Stock-based Compensation |
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Mar. 31, 2023 | |||
| Notes to Financial Statements | |||
| Share-Based Payment Arrangement [Text Block] |
The Company recognized $0.5 million and $2.7 million of stock-based compensation expense attributable to the Management Incentive Plan (“MIP”) stock options during the three months ended March 31, 2023 and 2022, respectively. 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 months ended March 31, 2023 and 2022 was $3.6 million and $3.1 million, respectively.
During the three months ended March 31, 2023, 722,674 RSUs and 260,762 PRSUs were granted to employees and directors at a weighted average grant date fair value of $18.59 per RSU and per PRSU.
During the three months ended March 31, 2023 and 2022, we recognized $0.1 million and $0.2 million of compensation expense related to stock purchased under the Employee Stock Purchase Program (“ESPP”). |
Note 22 - Supplemental Cash Flow |
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| Cash Flow, Supplemental Disclosures [Text Block] |
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Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
| Accounting Policies [Abstract] | |
| Basis of Accounting, Policy [Policy Text Block] | 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, 2022, included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023.
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 March 31, 2023, the results of our operations for the three months ended March 31, 2023 and 2022 and our cash flows for the three months ended March 31, 2023 and 2022. Such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, 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.
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| Significant Accounting Policies [Policy Text Block] | 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, 2022, which are included in our most recent Annual Report on Form 10-K filed with the SEC on February 23, 2023, 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, 2022.
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| New Accounting Pronouncements, Policy [Policy Text Block] | 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.
We consider the applicability and impact of all accounting pronouncements. 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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Note 3 - Business Combinations and Dispositions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Business Acquisitions, by Acquisition [Table Text Block] |
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Note 4 - Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] |
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Note 5 - Business Segment Reporting (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Revenue from Segments to Consolidated [Table Text Block] |
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Note 6 - Revenue (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of Revenue [Table Text Block] |
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| Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block] |
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Note 8 - Investment in Joint Ventures (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||
| Equity Method Investments [Table Text Block] |
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Note 9 - Accounts Receivable, Net (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] |
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Note 10 - Inventories (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventory, Current [Table Text Block] |
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Note 11 - Other Assets and Liabilities (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Assets [Table Text Block] |
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| Other Liabilities [Table Text Block] |
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Note 12 - Accounts Payable and Accrued Liabilities (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] |
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Note 13 - Property, Plant and Equipment, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Table Text Block] |
Depreciation expense relating to property, plant and equipment, including assets under finance leases, was million and million for the three months ended March 31, 2023 and 2022, respectively. |
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Note 14 - Intangible Assets, Net (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Finite-Lived Intangible Assets [Table Text Block] |
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| Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] |
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Note 15 - Goodwill (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Goodwill [Table Text Block] |
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| Business Combination, Segment Allocation [Table Text Block] |
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Note 18 - Post-retirement Benefits (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Net Benefit Costs [Table Text Block] |
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Note 19 - Loss Per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Note 22 - Supplemental Cash Flow (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] |
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Note 1 - Business Description (Details Textual) $ / shares in Units, $ in Thousands, shares in Millions |
3 Months Ended | 10 Months Ended | ||
|---|---|---|---|---|
|
Mar. 31, 2023
USD ($)
$ / shares
shares
|
Mar. 31, 2023
USD ($)
$ / shares
shares
|
Sep. 30, 2022 |
Jun. 16, 2022
USD ($)
|
|
| Number of Countries in which Entity Operates | 60 | |||
| Treasury Stock, Value, Acquired, Cost Method | $ 10,011 | |||
| Stock Repurchase Program [Member] | ||||
| Stock Repurchase Program, Authorized Amount | $ 50,000 | |||
| Treasury Stock, Shares, Acquired (in shares) | shares | 0.6 | 1.7 | ||
| Shares Acquired, Average Cost Per Share (in dollars per share) | $ / shares | $ 17.99 | $ 13.89 | ||
| Treasury Stock, Value, Acquired, Cost Method | $ 10,000 | $ 23,000 |
Note 3 - Business Combinations and Dispositions - Consideration Exchanged and Preliminary Allocation (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Feb. 08, 2023 |
Dec. 31, 2022 |
|---|---|---|---|
| Goodwill | $ 228,137 | $ 220,980 | |
| DeltaTek Oil Tools Limited [Member] | |||
| Cash and cash equivalents | $ 1,464 | ||
| Accounts receivables, net | 723 | ||
| Inventories | 183 | ||
| Property, plant and equipment | 642 | ||
| Goodwill | $ 7,157 | 7,157 | |
| Intangible assets | 11,063 | ||
| Other assets | 27 | ||
| Total assets | 21,259 | ||
| Accounts payable and accrued liabilities | 245 | ||
| Deferred tax liabilities | 2,700 | ||
| Other liabilities | 831 | ||
| Total Liabilities | 3,776 | ||
| Fair value of net assets acquired | $ 17,483 |
Note 4 - Fair Value Measurements - Summary of Financial Assets and Liabilities Measured At Fair Value On a Recurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Non-current accounts receivable, net | $ 9,177 | $ 9,688 |
| Finance lease liabilities | 14,516 | 14,820 |
| Fair Value, Inputs, Level 1 [Member] | ||
| Non-current accounts receivable, net | 0 | 0 |
| Finance lease liabilities | 0 | 0 |
| Fair Value, Inputs, Level 2 [Member] | ||
| Non-current accounts receivable, net | 9,177 | 9,688 |
| Finance lease liabilities | 14,516 | 14,820 |
| Fair Value, Inputs, Level 3 [Member] | ||
| Non-current accounts receivable, net | 0 | 0 |
| Finance lease liabilities | $ 0 | $ 0 |
Note 5 - Business Segment Reporting - Revenue by Operating Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Total revenue | $ 339,279 | $ 280,477 |
| NLA [Member] | ||
| Total revenue | 126,228 | 103,861 |
| ESSA [Member] | ||
| Total revenue | 113,648 | 82,071 |
| MENA [Member] | ||
| Total revenue | 50,945 | 50,715 |
| APAC [Member] | ||
| Total revenue | $ 48,458 | $ 43,830 |
Note 5 - Business Segment Reporting - Reconciliation of Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization From Segments to Net Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Total Segment EBITDA | $ 64,529 | $ 54,604 |
| Corporate costs | (25,081) | (21,965) |
| Equity in income of joint ventures | 2,436 | 4,202 |
| Depreciation and amortization expense | (34,737) | (35,012) |
| Merger and integration expense | (2,138) | (4,725) |
| Severance and other expense | (927) | (1,494) |
| Stock-based compensation expense | (4,171) | (6,018) |
| Foreign exchange gain | 1,070 | 2,816 |
| Other (expense) income, net | (949) | 996 |
| Interest and finance (expense) income, net | (1,298) | 13 |
| Loss before income taxes | (1,266) | (6,583) |
| NLA [Member] | ||
| Total Segment EBITDA | 31,874 | 21,827 |
| ESSA [Member] | ||
| Total Segment EBITDA | 20,785 | 11,874 |
| MENA [Member] | ||
| Total Segment EBITDA | 14,568 | 15,465 |
| APAC [Member] | ||
| Total Segment EBITDA | $ (2,698) | $ 5,438 |
Note 6 - Revenue (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Contract with Customer, Liability, Revenue Recognized | $ 25.2 | $ 7.9 |
| Construction [Member] | ||
| Revenue, Remaining Performance Obligation, Amount | 116.1 | |
| Other Current Liabilities [Member] | ||
| Contract with Customer, Liability, Current | $ 62.6 | |
Note 6 - Revenue - Revenue by Areas of Capability (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Total revenue | $ 339,279 | $ 280,477 |
| Well Construction [Member] | ||
| Total revenue | 128,265 | 111,435 |
| Well Management [Member] | ||
| Total revenue | $ 211,014 | $ 169,042 |
Note 6 - Revenue - Contract Balances (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Trade receivable, net | $ 434,587 | $ 428,925 |
| Deferred revenue (included within other liabilities) | 63,598 | 51,192 |
| Billed Revenues [Member] | ||
| Trade receivable, net | 297,811 | 289,235 |
| Unbilled Revenues [Member] | ||
| Trade receivable, net | $ 136,776 | $ 139,690 |
Note 7 - Income Taxes (Details Textual) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Effective Income Tax Rate Reconciliation, Percent | (137.40%) | (42.20%) |
Note 8 - Investment in Joint Ventures (Details Textual) |
Mar. 31, 2023 |
|---|---|
| CETS [Member] | |
| Equity Method Investment, Ownership Percentage | 50.00% |
| PVD-Expro [Member] | |
| Equity Method Investment, Ownership Percentage | 49.00% |
Note 8 - Investment in Joint Ventures - Carrying Value (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Carrying value | $ 68,435 | $ 66,038 |
| CETS [Member] | ||
| Carrying value | 64,914 | 62,471 |
| PVD-Expro [Member] | ||
| Carrying value | $ 3,521 | $ 3,567 |
Note 9 - Accounts Receivable, Net - Summary of Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accounts receivable | $ 448,081 | $ 441,605 |
| Less: Expected credit losses | (13,494) | (12,680) |
| Trade receivable, net | 434,587 | 428,925 |
| Current | 425,410 | 419,237 |
| Non – current | $ 9,177 | $ 9,688 |
Note 10 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Finished goods | $ 30,784 | $ 26,810 |
| Raw materials, equipment spares and consumables | 100,092 | 102,395 |
| Work-in-progress | 25,404 | 24,513 |
| Total | $ 156,280 | $ 153,718 |
Note 11 - Other Assets and Other Liabilities - Summary of Other Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Prepayments | $ 24,438 | $ 18,084 |
| Value-added tax receivables | 23,167 | 20,727 |
| Collateral deposits | 1,679 | 1,669 |
| Deposits | 7,720 | 7,245 |
| Other | 7,593 | 5,513 |
| Total | 64,597 | 53,238 |
| Current | 56,552 | 44,975 |
| Non – current | $ 8,045 | $ 8,263 |
Note 11 - Other Assets and Other Liabilities - Summary of Other Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Deferred revenue | $ 63,598 | $ 51,192 |
| Other tax and social security | 29,267 | 28,557 |
| Income tax liabilities – non-current portion | 58,115 | 58,036 |
| Provisions | 44,266 | 45,248 |
| Contingent consideration liabilities | 11,655 | 3,227 |
| Other | 15,814 | 18,655 |
| Total | 222,715 | 204,915 |
| Current | 120,021 | 107,750 |
| Non – current | $ 102,694 | $ 97,165 |
Note 12 - Accounts Payable and Accrued Liabilities - Summary of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accounts payable – trade | $ 121,414 | $ 100,951 |
| Payroll, vacation and other employee benefits | 41,098 | 46,935 |
| Accruals for goods received not invoiced | 21,701 | 32,102 |
| Other accrued liabilities | 87,946 | 92,716 |
| Total | $ 272,159 | $ 272,704 |
Note 13 - Property, Plant and Equipment, Net (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Property, Plant and Equipment, Including Assets Under Finance Leases [Member] | ||
| Depreciation | $ 25.5 | $ 26.0 |
Note 13 - Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property, plant and equipment, gross | $ 939,062 | $ 913,715 |
| Less: accumulated depreciation | (476,652) | (451,399) |
| Property, plant and equipment, net | 462,410 | 462,316 |
| Property, Plant and Equipment, Net [Member] | ||
| Assets under finance lease, gross | 19,212 | 19,898 |
| Less: accumulated amortization, assets under finance lease | (8,737) | (9,085) |
| Total | 10,475 | 10,813 |
| Land [Member] | ||
| Property, plant and equipment, gross | 22,261 | 22,261 |
| Building [Member] | ||
| Assets under finance lease, gross | 18,623 | 18,623 |
| Land Improvements [Member] | ||
| Property, plant and equipment, gross | 3,054 | 3,054 |
| Plant and Equipment [Member] | ||
| Property, plant and equipment, gross | 815,291 | 789,910 |
| Assets under finance lease, gross | 589 | 1,275 |
| Buildings and Leasehold Improvement [Member] | ||
| Property, plant and equipment, gross | $ 98,456 | $ 98,490 |
Note 14 - Intangible Assets, Net (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Amortization of Intangible Assets | $ 9.2 | $ 9.0 |
Note 14 - Intangible Assets, Net - Summary of Acquired Intangible Assets (Details) $ in Thousands |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
USD ($)
| |
| Acquired fair value | $ 11,063 |
| Weighted average life (Year) | 12 years 8 months 12 days |
| Customer Relationships [Member] | |
| Acquired fair value | $ 2,576 |
| Weighted average life (Year) | 6 years |
| Trademarks [Member] | |
| Acquired fair value | $ 250 |
| Weighted average life (Year) | 5 years |
| Technology-Based Intangible Assets [Member] | |
| Acquired fair value | $ 8,237 |
| Weighted average life (Year) | 15 years |
Note 15 - Goodwill (Details Textual) $ in Thousands |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
USD ($)
| |
| Goodwill, Impairment Loss | $ 0 |
Note 15 - Goodwill - Summary of Goodwill (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Goodwill | $ 228,137 | $ 220,980 |
| NLA [Member] | ||
| Goodwill | 120,658 | 118,511 |
| ESSA [Member] | ||
| Goodwill | 82,921 | 80,058 |
| MENA [Member] | ||
| Goodwill | 5,292 | 4,218 |
| APAC [Member] | ||
| Goodwill | $ 19,266 | $ 18,193 |
Note 15 - Goodwill - Summary of Acquired Goodwill by Operating Segment (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Feb. 08, 2023 |
Dec. 31, 2022 |
|---|---|---|---|
| Goodwill | $ 228,137 | $ 220,980 | |
| NLA [Member] | |||
| Goodwill | 120,658 | 118,511 | |
| ESSA [Member] | |||
| Goodwill | 82,921 | 80,058 | |
| MENA [Member] | |||
| Goodwill | 5,292 | 4,218 | |
| APAC [Member] | |||
| Goodwill | 19,266 | $ 18,193 | |
| DeltaTek Oil Tools Limited [Member] | |||
| Goodwill | 7,157 | $ 7,157 | |
| DeltaTek Oil Tools Limited [Member] | NLA [Member] | |||
| Goodwill | 2,147 | ||
| DeltaTek Oil Tools Limited [Member] | ESSA [Member] | |||
| Goodwill | 2,863 | ||
| DeltaTek Oil Tools Limited [Member] | MENA [Member] | |||
| Goodwill | 1,074 | ||
| DeltaTek Oil Tools Limited [Member] | APAC [Member] | |||
| Goodwill | $ 1,073 |
Note 17 - Commitments and Contingencies (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Apr. 26, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
|
| Loss Contingency Accrual | $ 8.0 | ||
| Subsequent Event [Member] | |||
| Litigation Settlement, Expense | $ 8.0 | ||
| Capital Addition Purchase Commitments [Member] | |||
| Long-Term Purchase Commitment, Amount | $ 49.5 | $ 45.5 |
Note 18 - Post-retirement Benefits (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Defined Benefit Plan, Plan Assets, Contributions by Employer | $ 1.2 | $ 1.3 |
Note 18 - Post-retirement Benefits - Net Periodic Benefit Cost (Details) - UNITED KINGDOM - Pension Plan [Member] - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Amortization of prior service credit | $ 61 | $ 61 |
| Interest cost | (1,533) | (1,054) |
| Expected return on plan assets | 986 | 1,428 |
| Total | $ (486) | $ 435 |
Note 19 - Loss Per Share (Details Textual) - shares shares in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 0.7 | 0.7 |
Note 19 - Loss Per Share - Calculation of Basic and Diluted Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Net loss | $ (6,351) | $ (11,132) |
| Basic and diluted weighted average number of shares outstanding (in shares) | 108,854,709 | 109,266,988 |
| Total basic and diluted loss per share (in dollars per share) | $ (0.06) | $ (0.10) |
Note 22 - Supplemental Cash Flow - Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Supplemental disclosure of cash flow information: | ||
| Cash paid for income taxes, net of refunds | $ 6,381 | $ 7,716 |
| Cash paid for interest, net | 966 | 903 |
| Change in accounts payable and accrued expenses related to capital expenditures | $ 3,551 | $ 5,583 |