10q10k10q10k.net

What changed in EXPRO GROUP HOLDINGS N.V.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of EXPRO GROUP HOLDINGS N.V.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+254 added−265 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-23)

Top changes in EXPRO GROUP HOLDINGS N.V.'s 2023 10-K

254 paragraphs added · 265 removed · 185 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

28 edited+3 added−5 removed78 unchanged
Biggest changeThe table below presents the worldwide LTIF and TRCF for the Company for the year ended December 31, 2022 and on a combined basis for Legacy Expro and Frank’s for the years ended December 31, 2021 and 2020: Year Ended December 31, 2022 2021 2020 LTIF 0.36 0.46 0.34 TRCF 1.07 1.31 1.34 We have comprehensive compliance policies, programs and training that are applied globally to our entire workforce.
Biggest changeThe table below presents the worldwide LTIF and TRCF for the Company for the years ended December 31, 2023 and 2022 and on a combined basis for Legacy Expro and Frank’s for the year ended December 31, 2021.
The EAP covers a wide range of subjects for employees and their families, delivered across multiple channels and languages. Corporate Social Responsibility / Community Involvement Across our global operations, we encourage and celebrate participation in diverse community activities which align with our values of People, Partnerships, Performance and Planet.
The EAP covers a wide range of subjects for employees and their families, delivered across multiple channels and languages. Corporate Social Responsibility / Community Involvement Across our global operations, we encourage and celebrate participation in diverse community activities which align with our values of People, Performance, Partnerships and Planet.
The primary measures for our safety performance are the tracking of the Lost Time Injury Frequency rate (“LTIF”) and the Total Recordable Case Frequency rate (“TRCF”). LTIF is a measure of the frequency of injuries that result in lost work time, normalized on the basis of per million man-hours worked.
The primary measures for our safety performance are the tracking of the Lost Time Injury Frequency (“LTIF”) rate and the Total Recordable Case Frequency (“TRCF”) rate. LTIF is a measure of the frequency of injuries that result in lost work time, normalized on the basis of per million man-hours worked.
In an inclusive work environment, people with different backgrounds, religious beliefs, sexual orientations, ethnicity and other differences feel like they belong. We are committed to ensure the equal treatment of all employees, job applicants and associated personnel regardless of race, color, nationality, ethnic or nation originals, sex, disability, age, religion or belief, or any other factors prohibited by law.
In an inclusive work environment, people with different backgrounds, religious beliefs, sexual orientations, ethnicity and other differences feel like they belong. We are committed to the equal treatment of all employees, job applicants and associated personnel regardless of race, color, nationality, ethnic or nation originals, sex, disability, age, religion or belief, or any other factors prohibited by law.
Information on our website or any other website is not incorporated by reference herein and does not constitute a part of this report. 10 Table of Contents Information about Our Executive Officers and Other Key Employees The following table sets forth, as of February 21, 2023, the names, ages and experience of our executive officers and other key employees, including all offices and positions held by each for the past five years.
Information on our website or any other website is not incorporated by reference herein and does not constitute a part of this report. 10 Table of Contents Information about Our Executive Officers and Other Key Employees The following table sets forth, as of February 21, 2024, the names, ages and experience of our executive officers and other key employees, including all offices and positions held by each for the past five years.
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 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 (“IRS”) and a vessel-deployed, wire through water Riserless Well Intervention System (“RWIS”).
In the United States of America ("U.S."), where approximately 17% of our employees are located, most employees are at-will employees and, therefore, not subject to any type of employment contract or agreement. Outside the U.S., we enter into employment contracts and agreements in those countries in which such relationships are mandatory or customary.
In the United States of America (“U.S.”), where approximately 17% of our employees are located, most employees are at-will employees and, therefore, not subject to any type of employment contract or agreement. Outside the U.S., we enter into employment contracts and agreements in those countries in which such relationships are mandatory or customary.
We also actively solicit employee feedback and constantly strive to make the Company an employer of choice, one such program being the 2022 Global Employee Survey which was carried out to understand and act upon areas where we can positively influence and develop Expro’s culture.
We also actively solicit employee feedback and constantly strive to make the Company an employer of choice, one such program being the 2023 Global Employee Survey which was carried out to understand and act upon areas where we can positively influence and develop Expro’s culture.
Steven Russell 55 Chief Technology Officer, since October 2021; Senior Vice President, Operations, Frank’s, from November 2019 to October 2021; President, Tubular Running Services, Frank’s, from June 2018 to November 2019; Senior Vice President, Human Resources, Frank’s, May 2017 to June 2018; Vice President, Human Resources, Archer Ltd., from January 2011 to May 2017; various technical and executive roles, Schlumberger Limited, from 1990 to 2011.
Steven Russell 56 Chief Technology Officer, since October 2021; Senior Vice President, Operations, Frank’s, from November 2019 to October 2021; President, Tubular Running Services, Frank’s, from June 2018 to November 2019; Senior Vice President, Human Resources, Frank’s, May 2017 to June 2018; Vice President, Human Resources, Archer Ltd., from January 2011 to May 2017; various technical and executive roles, Schlumberger Limited, from 1990 to 2011.
Alistair Geddes 60 Chief Operating Officer, since October 2021; Chief Operating Officer, Legacy Expro, from 2019 to October 2021; Executive Vice President, Product Lines, Technology and Business Development, Legacy Expro, from 2014 to 2019; various technical and executive roles, Expro, ExxonMobil, BG Group and Weatherford International plc from 1984 to 2014.
Alistair Geddes 61 Chief Operating Officer, since October 2021; Chief Operating Officer, Legacy Expro, from 2019 to October 2021; Executive Vice President, Product Lines, Technology and Business Development, Legacy Expro, from 2014 to 2019; various technical and executive roles, Expro, ExxonMobil, BG Group and Weatherford International plc from 1984 to 2014.
Name Age Current Position and Five-Year Business Experience Michael Jardon 53 President and Chief Executive Officer and Director, since October 2021; Chief Executive Officer, Legacy Expro, from April 2016 to October 2021; various technical and executive roles, Legacy Expro, Vallourec and Schlumberger Limited, from 1992 to 2016.
Name Age Current Position and Five-Year Business Experience Michael Jardon 54 President and Chief Executive Officer and Director, since October 2021; Chief Executive Officer, Legacy Expro, from April 2016 to October 2021; various technical and executive roles, Legacy Expro, Vallourec and Schlumberger Limited, from 1992 to 2016.
Quinn Fanning 59 Chief Financial Officer, since October 2021; Chief Financial Officer, Legacy Expro, from October 2019 to October 2021; Executive Vice President, Tidewater Inc., from July 2008 to March 2019, Chief Financial Officer, Tidewater Inc., from September 2008 to November 2018; investment banker with Citigroup Global Markets, Inc., from 1996 to 2008.
Quinn Fanning 60 Chief Financial Officer, since October 2021; Chief Financial Officer, Legacy Expro, from October 2019 to October 2021; Executive Vice President, Tidewater Inc., from July 2008 to March 2019, Chief Financial Officer, Tidewater Inc., from September 2008 to November 2018; investment banker with Citigroup Global Markets, Inc., from 1996 to 2008.
John McAlister 56 General Counsel and Secretary, since October 2021; Group General Counsel, Legacy Expro, from June 2006 to October 2021; solicitor, Clifford Chance, and various executive roles, BG Group, Lattice Group plc and National Grid plc, from 1991 to 2006.
John McAlister 57 General Counsel and Secretary, since October 2021; Group General Counsel, Legacy Expro, from June 2006 to October 2021; solicitor, Clifford Chance, and various executive roles, BG Group, Lattice Group plc and National Grid plc, from 1991 to 2006.
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 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 40 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to provide safe well access and optimized production throughout the lifecycle of the well.
Natalie Questell 49 Senior Vice President, Human Resources, since October 2021; Vice President of Human Resources, Frank’s, from June 2018 to October 2021; Director of Global Total Rewards and HRIS, Frank’s, from 2015 to June 2018.
Natalie Questell 50 Senior Vice President, Human Resources, since October 2021; Vice President of Human Resources, Frank’s, from June 2018 to October 2021; Director of Global Total Rewards and HRIS, Frank’s, from 2015 to June 2018.
In particular, our objectives for 2023, which we expect will drive our performance in the year ahead, include: (i) exceeding industry expectations in regard to safety and operational performance; (ii) advancing our products and services portfolio to provide customers with cost-effective, innovative solutions to produce oil, gas and geothermal resources more efficiently and with a lower carbon footprint; (iii) improving financial performance by continuing to realize Merger-related synergies, sustaining our relentless drive for efficiency and better utilizing existing assets; (iv) nurturing our culture based on core values and agreed behaviors, empowering our people to be innovative, to be agile and responsive, and to embrace diversity; and (v) leveraging the power of data to improve our own business practices and to deliver more value to our customers. 4 Table of Contents Human Capital At Expro, people are at the heart of our success and we are united by our Code of Conduct (“Code of Conduct”) and our core values; People, Performance, Partnerships, and Planet.
In particular, our objectives for 2024, which we expect will drive our performance in the year ahead, include: (i) exceeding industry expectations in regard to safety and operational performance; (ii) advancing our products and services portfolio to provide customers with cost-effective, innovative solutions to produce oil, gas and geothermal resources more efficiently and with a lower carbon footprint; (iii) sustaining our relentless drive for efficiency and better utilizing existing assets; (iv) nurturing our culture based on core values and agreed behaviors, empowering our people to be innovative, to be agile and responsive, and to embrace diversity; and (v) leveraging the power of data to improve our own business practices and to deliver more value to our customers. 4 Table of Contents Human Capital At Expro, people are at the heart of our success and we are united by our Code of Conduct (“Code of Conduct”) and our core values; People, Performance, Partnerships and Planet.
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.
We also provide systems integration and project management services. • Well intervention and integrity: We provide well intervention solutions to acquire and interpret well data, maintain well bore integrity and improve production.
We are a party to collective bargaining agreements or other similar arrangements in certain international areas in which we operate. As of December 31, 2022, approximately 17% of our employees were subject to collective bargaining agreements, with 8% being under agreements that expire within one year. We consider our relations with our employees to be positive.
We are a party to collective bargaining agreements or other similar arrangements in certain international areas in which we operate. As of December 31, 2023, approximately 19% of our employees were subject to collective bargaining agreements, with 15% being under agreements that expire within one year. We consider our relations with our employees to be positive.
Michael Bentham 60 Principal Accounting Officer, since October 2021; Principal Accounting Officer and Vice President, Legacy Expro, from October 2019 to October 2021; Chief Financial Officer, Legacy Expro, from July 2017 to October 2019; IDS Product Line Controller, Schlumberger Limited, from July 2016 to July 2017; Vice President Finance MI Swaco, Schlumberger Limited, from August 2012 to June 2016.
Michael Bentham 61 Principal Accounting Officer, since October 2021; Principal Accounting Officer and Vice President, Legacy Expro, from October 2019 to October 2021; Chief Financial Officer, Legacy Expro, from July 2017 to October 2019; IDS Product Line Controller, Schlumberger Limited, from July 2016 to July 2017; Vice President Finance MI Swaco, Schlumberger Limited, from August 2012 to June 2016. 11 Table of Contents
We strive to consistently improve the ways in which we work to keep our employees safe, minimize our impact on the environment and to provide for robust and transparent governance. As of December 31, 2022, we had approximately 7,600 employees worldwide.
We strive to consistently improve the ways in which we work to keep our employees safe, minimize our impact on the environment and to provide for robust and transparent governance. As of December 31, 2023, we had approximately 8,000 employees worldwide.
Customers We derive our revenue from services and product sales to customers primarily in the oil and gas industry. No single customer accounted for more than 10% of our revenue for the years ended December 31, 2022 and 2021. One customer in our MENA segment accounted for 16% of our consolidated revenue for the year ended December 31, 2020.
Customers We derive our revenue from services and product sales to customers primarily in the oil and gas industry. One customer accounted for approximately 12.5% of our revenue in the year ended December 31, 2023. No single customer accounted for more than 10% of our revenue for the years ended December 31, 2022 and 2021.
Within the U.S., President Biden signed into law the Inflation Reduction Act in August 2022, which contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies, which could increase operating costs within the oil and gas industry and accelerate the transition away from fossil fuels. 8 Table of Contents There are also increasing risks of litigation related to climate change effects.
Within the U.S., President Biden signed into law the Inflation Reduction Act in August 2022, which contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies, which could increase operating costs within the oil and gas industry and accelerate the transition away from fossil fuels.
We have comprehensive compliance programs and policies that are applied globally to our entire workforce. Our ethical foundation is our Code of Conduct, the provisions of which all employees are expected to understand and comply with. Our compliance and ethics policies undergo regular review.
Our ethical foundation is our Code of Conduct, the provisions of which all employees are expected to understand and comply with. Our compliance and ethics policies undergo regular review.
With the U.S. recommitting to the Paris Agreement, executive orders may be issued or federal legislation or regulatory initiatives may be adopted to achieve the agreement’s goals.
Executive orders may be issued or federal legislation or regulatory initiatives may be adopted to achieve the agreement’s goals.
The table below shows our consolidated revenue and each segment’s revenue and percentage of consolidated revenue for the periods indicated (revenue in thousands): Year Ended Percentage (in thousands) December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2022 December 31, 2021 December 31, 2020 NLA $ 499,813 $ 193,156 $ 115,738 39.1 % 23.4 % 17.2 % ESSA 389,342 300,557 219,534 30.4 % 36.4 % 32.5 % MENA 201,495 171,136 194,033 15.7 % 20.7 % 28.7 % APAC 188,768 160,913 145,721 14.8 % 19.5 % 21.6 % Total Revenue $ 1,279,418 $ 825,762 $ 675,026 100.0 % 100.0 % 100.0 % 3 Table of Contents Our broad portfolio of products and services includes: Well Construction • Our well construction products and services support customers’ new wellbore drilling, wellbore completion and recompletion, and wellbore plug and abandonment requirements.
The table below shows our consolidated revenue and each segment’s revenue and percentage of consolidated revenue for the periods indicated (revenue in thousands): Year Ended Percentage (in thousands) December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2023 December 31, 2022 December 31, 2021 NLA $ 511,800 $ 499,813 $ 193,156 33.8 % 39.1 % 23.4 % ESSA 520,951 389,342 300,557 34.4 % 30.4 % 36.4 % MENA 233,528 201,495 171,136 15.4 % 15.7 % 20.7 % APAC 246,485 188,768 160,913 16.3 % 14.8 % 19.5 % Total Revenue $ 1,512,764 $ 1,279,418 $ 825,762 100.0 % 100.0 % 100.0 % 3 Table of Contents Our broad portfolio of products and services includes: Well Construction • Our well construction products and services support customers’ new wellbore drilling, wellbore completion and recompletion, and wellbore plug and abandonment requirements.
At the international level, there is a non-binding agreement, the United Nations-sponsored “Paris Agreement,” for nations to limit their GHG emissions through individually-determined reduction goals every five years after 2020.
At the international level, there is a non-binding agreement, the United Nations-sponsored “Paris Agreement,” for nations to limit their GHG emissions through individually-determined reduction goals every five years after 2020. Under the Paris Agreement, the Biden Administration has committed the United States to reducing its greenhouse gas emissions by 50 - 52% from 2005 levels by 2030.
We also standardize our global training processes to ensure all jobs are executed to high standards of safety and quality. Code of Business Conduct and Ethics We pledge to be forthright in all our business interactions and conduct our business to the highest ethical standards. That commitment extends to strict compliance with all relevant laws, regulations and business standards.
Code of Business Conduct and Ethics We pledge to be forthright in all our business interactions and conduct our business to the highest ethical standards. That commitment extends to strict compliance with all relevant laws, regulations and business standards. We have comprehensive compliance programs and policies that are applied globally to our entire workforce.
Our corporate strategy is designed to leverage existing capabilities and position Expro as a solutions provider with a technologically differentiated offering.
We also possess several other distinct technical capabilities, including non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring. Corporate Strategy Our corporate strategy is designed to leverage existing capabilities and position Expro as a solutions provider with a technologically differentiated offering.
Removed
We also possess several other distinct technical capabilities, including non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring. Corporate Strategy The combination of Legacy Expro and Frank’s brought together two companies with decades of market leadership to create a leading energy services provider with an extensive portfolio of capabilities across the well lifecycle.
Added
We believe we are a market leader in deepwater tubular running services and solutions. In recent years, we have added a range of lower-risk, open water cementing solutions, including the proprietary SeaCure® and QuikCure® solutions. We also offer a range of performance drilling tools designed to mitigate risk and optimize drilling efficiency.
Removed
As a result of the Merger and the progress that we have made in integrating the business and operations of Legacy Expro and Frank’s, we believe we are well positioned to support our customers around the world, improve profitability and invest in emerging growth opportunities.
Added
Year Ended December 31, 2023 2022 2021 LTIF 0.06 0.36 0.46 TRCF 0.61 1.07 1.31 We have comprehensive compliance policies, programs and training that are applied globally to our entire workforce. We also standardize our global training processes to provide that all jobs are executed to high standards of safety and quality.
Removed
While the U.S. withdrew from the Paris Agreement under the Trump Administration, effective November 4, 2020, President Biden issued an executive order on January 20, 2021 recommitting the U.S. to the Paris Agreement. Under the Paris Agreement, the Biden Administration has committed the United States to reducing its greenhouse gas emissions by 50 - 52% from 2005 levels by 2030.
Added
Within the Netherlands, in April 2023, the Dutch government introduced a package of 120 measures worth €28 billion that is intended to reduce carbon emissions and promote clean energy to meet the EU’s target of reducing net emissions by 55% by 2030 from 1990 levels. 8 Table of Contents There are also increasing risks of litigation related to climate change effects.
Removed
Keith Palmer 63 Primary Integration Lead, since October 2021; Primary Integration Lead, Legacy Expro, from September 2021 to October 2021; Executive Vice President – Product Lines, Legacy Expro, from May 2019 to September 2021; Vice President Asia Pacific, Legacy Expro, from May 2016 to May 2019; President Expro PTI, Legacy Expro, from January 2015 to May 2016.
Removed
Karen David-Green 54 Chief Communications, Stakeholder, and Sustainability Officer, since October 2021; Chief Communications, Stakeholder, and Sustainability Officer, Legacy Expro, from June 2021 to October 2021; previously Senior Vice President, Stakeholder Engagement & Chief Marketing Officer, Weatherford International plc. 11 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

29 edited+6 added−18 removed134 unchanged
Biggest changeIn the event a settlement is not reached, litigation may ensue and, accordingly, the actual loss incurred in connection with this matter could exceed the expected amount and may have a material adverse effect on our financial position, results of operations or cash flows. 19 Table of Contents Compliance with laws and regulations on trade sanctions and embargoes including those administered by the United States Department of the Treasury’s Office of Foreign Assets Control also poses a risk to us.
Biggest changeCompliance with laws and regulations on trade sanctions and embargoes including those administered by the United States Department of the Treasury’s Office of Foreign Assets Control also poses a risk to us. We cannot provide products or services to or in certain countries subject to U.S. or other international trade sanctions or to certain individuals and entities subject to sanctions.
Finally, if these shareholders were in the future to sell all or a material number of shares of Company Common Stock, the market price of Company’s Common Stock could be negatively impacted. Risks Related to Tax Matters Changes in tax laws, treaties or regulations or adverse outcomes resulting from examination of our tax returns could adversely affect our financial results.
Finally, if these shareholders were in the future to sell all or a material number of shares of common stock, the market price of Company’s common stock could be negatively impacted. Risks Related to Tax Matters Changes in tax laws, treaties or regulations or adverse outcomes resulting from examination of our tax returns could adversely affect our financial results.
Restrictions in the agreement governing our Revolving Credit Facility ("RCF") could adversely affect our business, financial condition, results of operations and stock price. The operating and financial restrictions in our RCF and any future financing agreements could restrict our ability to finance future operations or capital needs, or otherwise pursue our business activities.
Restrictions in the agreement governing our Revolving Credit Facility ( “ RCF ” ) could adversely affect our business, financial condition, results of operations and stock price. The operating and financial restrictions in our RCF and any future financing agreements could restrict our ability to finance future operations or capital needs, or otherwise pursue our business activities.
In addition, based on Dutch corporate law and our articles of association, the 2022 annual general meeting of shareholders has authorized our Board, for a period of eighteen months as of the date of the 2022 annual meeting, to issue common stock, up to 20% of the issued share capital, for any legal purpose, which could include defensive purposes, without further shareholder approval being needed.
In addition, based on Dutch corporate law and our articles of association, the 2023 annual general meeting of shareholders has authorized our Board, for a period of eighteen months as of the date of the 2023 annual meeting, to issue common stock, up to 20% of the issued share capital, for any legal purpose, which could include defensive purposes, without further shareholder approval being needed.
We are exposed to risks inherent in doing business in each of the countries in which we operate, including, but not limited to, the following: • political, social and economic instability; • potential expropriation, seizure or nationalization of assets, and trapped assets; • deprivation of contract rights; • inflationary pressures; • increased operating costs; • inability to collect revenue due to shortages of convertible currency; • unwillingness of foreign governments to make new onshore and offshore areas available for drilling; • civil unrest and protests, strikes, acts of terrorism, war or other armed conflict; • import/export quotas; • confiscatory taxation or other adverse tax policies; • continued application of foreign tax treaties; • currency exchange controls; • currency exchange rate fluctuations and devaluations; • restrictions on the repatriation of funds; and • other forms of government regulation which are beyond our control. 13 Table of Contents Instability and disruptions in the political, regulatory, economic and social conditions of the countries in which we conduct business, including economically and politically volatile areas such as Eastern Europe, Africa and the Middle East, could cause or contribute to factors that could have an adverse effect on the demand for the products and services we provide.
We are exposed to risks inherent in doing business in each of the countries in which we operate, including, but not limited to, the following: • political, social and economic instability; • potential expropriation, seizure or nationalization of assets, and trapped assets; • deprivation of contract rights; • inflationary pressures; • increased operating costs; • inability to collect revenue due to shortages of convertible currency; • unwillingness of foreign governments to make new onshore and offshore areas available for drilling; • civil unrest and protests, strikes, acts of terrorism, war or other armed conflict; • import/export quotas; • confiscatory taxation or other adverse tax policies; • continued application of foreign tax treaties; • currency exchange controls; • currency exchange rate fluctuations and devaluations; • restrictions on the repatriation of funds; • pandemics, epidemics and other public health events; and • other forms of government regulation which are beyond our control. 13 Table of Contents Instability and disruptions in the political, regulatory, economic and social conditions of the countries in which we conduct business, including economically and politically volatile areas such as Eastern Europe, Africa and the Middle East, could cause or contribute to factors that could have an adverse effect on the demand for the products and services we provide.
Other factors that influence the demand for offshore services can include: • hurricanes, ocean currents and other adverse weather conditions; • terrorist attacks and piracy; • failure of offshore equipment and facilities; • local and international political and economic conditions and policies and regulations related to offshore drilling; • territorial disputes involving sovereignty over offshore oil and gas fields; • unavailability of offshore drilling rigs in the markets that we operate; • the cost of offshore exploration for, and production and transportation of, oil and gas; • successful exploration for, and production and transportation of, oil and gas from onshore sources; • the technical specifications of wells including depth of wells and complexity of well design; • demand for, availability of and technological viability of alternative sources of energy; • technological advances affecting energy exploration, production, transportation and consumption; • the availability and rate of discovery of new oil and gas reserves in offshore areas; • the availability of infrastructure to support oil and gas operations; and • the ability of oil and gas companies to generate or otherwise obtain funds for exploration and production.
Other factors that influence the demand for offshore services can include: • hurricanes, ocean currents and other adverse weather conditions; • terrorist attacks and piracy; • failure of offshore equipment and facilities; • local and international political and economic conditions and policies and regulations related to offshore drilling; • territorial disputes involving sovereignty over offshore oil and gas fields; • unavailability of offshore drilling rigs in the markets that we operate; • the cost of offshore exploration for, and production and transportation of, oil and gas; • successful exploration for, and production and transportation of, oil and gas from onshore sources; • the technical specifications of wells including depth of wells and complexity of well design; • demand for, availability of and technological viability of alternative sources of energy; • technological advances affecting energy exploration, production, transportation and consumption; • the availability and rate of discovery of new oil and gas reserves in offshore areas; • the availability of infrastructure to support oil and gas operations; and • the ability of oil and gas companies to generate or otherwise obtain funds on economically advantageous terms for exploration and production.
In addition, some non-U.S. countries may adopt regulations or practices that give advantage to indigenous oil companies in bidding for oil leases or require indigenous companies to perform oilfield services currently supplied by the Company and other international service companies.
In addition, some non-U.S. countries have adopted and may continue to adopt regulations or practices that give advantage to indigenous oil companies in bidding for oil leases or require indigenous companies to perform oilfield services currently supplied by the Company and other international service companies.
These limit our and our subsidiaries' ability to, among other things, prepay certain indebtness and pay dividends or buyback shares.
These limit our and our subsidiaries’ ability to, among other things, prepay certain indebtedness and pay dividends or buyback shares.
Additional regulation is pending in other states and federally, including the recent release of proposed rules by the SEC that would require companies to enhance and standardize disclosures related to climate change, specifically those associated with physical risks and transitional risks. We expect regulatory requirements related to ESG matters to continue to expand globally.
Additional regulation is pending in other states and federally, including rules proposed by the SEC in March 2022 that would require companies to enhance and standardize disclosures related to climate change, specifically those associated with physical risks and transitional risks. We expect regulatory requirements related to ESG matters to continue to expand globally.
Entities affiliated with Oak Hill Advisors, L.P. and members of the Mosing family and entities they control could have significant influence over the outcome of matters requiring a shareholder vote, including the election of directors, the adoption of any amendment to the articles of association of the Company and the approval of mergers and other significant corporate transactions.
Entities affiliated with Oak Hill Advisors, L.P. could have significant influence over the outcome of matters requiring a shareholder vote, including the election of directors, the adoption of any amendment to the articles of association of the Company and the approval of mergers and other significant corporate transactions.
Given the rapidly evolving nature of cyber threats, there can be no assurance that the systems we have designed and implemented to prevent or limit the effects of cyber incidents or attacks will be sufficient in preventing all such incidents or attacks or avoiding a material impact to our systems when such incidents or attacks do occur.
There can be no assurance that the systems we have designed and implemented to prevent or limit the effects of cyber incidents or attacks will be sufficient in preventing all such incidents or attacks or avoiding a material impact to our systems when such incidents or attacks do occur.
Regulatory requirements related to ESG or sustainability reporting have been issued in the European Union (“EU”) that apply to financial market participants, with implementation and enforcement starting in 2021. In the U.S., such regulations have been issued related to pension investments in California, and for the responsible investment of public funds in Illinois.
Regulatory requirements related to ESG or sustainability reporting have been issued in the European Union (“EU”) that apply to financial market participants, with implementation and enforcement starting in 2021. In the U.S., several states have enacted or proposed such regulations related to pension investments or for the responsible investment of public funds.
Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such future emissions.
The threat of climate change continues to attract considerable attention. Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such future emissions.
These information systems are increasingly subject to sophisticated cybersecurity threats such as unauthorized access to data and systems, loss or destruction of data (including confidential customer information), computer viruses, ransomware, or other malicious code, phishing and cyberattacks, and other similar events.
We rely heavily on information systems to conduct and protect our business. These information systems are increasingly subject to sophisticated cybersecurity threats such as unauthorized access to data and systems, loss or destruction of data (including confidential customer information), computer viruses, ransomware, or other malicious code, phishing and cyberattacks, and other similar events.
In addition, the effects of world events, such as the COVID-19 pandemic, the Russian war in Ukraine and an economic slowdown or recession in the U.S. and other countries, have and may continue to materially impact the demand for crude oil and natural gas, which has contributed further to price volatility.
In addition, the effects of world events, such as the Russian war in Ukraine, heightened tensions resulting from ongoing conflicts in the Middle East and an economic slowdown or recession in the U.S. and other countries, have and may continue to materially impact the demand for crude oil and natural gas, which has contributed further to price volatility.
Upon the Oak Hill Group ceasing to collectively own shares of Common Stock equal to at least 10% of the total shares outstanding, Oak Hill Advisors will not have a right to designate a director to the Board.
The Oak Hill Group currently has the right to designate one person as its nominee for election to the Board. Upon the Oak Hill Group ceasing to collectively own shares of common stock equal to at least 10% of the total shares outstanding, Oak Hill Advisors will not have a right to designate a director to the Board.
The partial or complete loss of any one of our key suppliers, or a significant adverse change in the relationship with any of these suppliers, through consolidation or otherwise, would limit our ability to manufacture or sell certain of our products.
The partial or complete loss of any one of our key suppliers, or a significant adverse change in the relationship with any of these suppliers, through consolidation or otherwise, would limit our ability to manufacture or sell certain of our products and could have a material adverse effect on our business, financial condition and results of operations.
In addition, we may become involved in legal proceedings from time to time to protect and enforce our intellectual property rights. Third parties from time to time may initiate litigation against us by asserting that the conduct of our business infringes, misappropriates or otherwise violates intellectual property rights.
Third parties from time to time may initiate litigation against us by asserting that the conduct of our business infringes, misappropriates or otherwise violates intellectual property rights.
Worldwide political, economic, and military events have contributed to oil and gas price volatility and are likely to continue to do so in the future. In particular, heightened levels of uncertainty related to the ongoing Russian war in Ukraine, may lead to additional economic sanctions by the U.S. and the international community and could further disrupt financial and commodities markets.
Worldwide political, economic, and military events have contributed to oil and gas price volatility and are likely to continue to do so in the future. In particular, heightened levels of uncertainty related to the ongoing Russian war in Ukraine and heightened tensions resulting from the ongoing conflicts in Middle East could further disrupt financial and commodities markets.
In addition, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors, banks or institutional lenders shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted. 16 Table of Contents The failure to integrate successfully the businesses of Frank ’ s and Legacy Expro could adversely affect the Company ’ s future results.
In addition, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors, banks or institutional lenders shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted. 16 Table of Contents Risks Related to Accounting and Financial Matters Customer credit risks could result in losses.
In addition, as cybersecurity threats continue to evolve, we may be required to devote additional resources to continue to enhance our protective measures or to investigate or remediate any cybersecurity vulnerabilities. Our executive officers and certain key personnel are critical to our business, and these officers and key personnel may not remain with us in the future.
In addition, as cybersecurity threats continue to evolve, we may be required to devote additional resources to continue to enhance our protective measures or to investigate or remediate any cybersecurity vulnerabilities.
We may not be able to enforce our patents against infringement occurring in international waters and other “non-covered” territories.
It may also be possible for a third party to design around our patents. Patent rights have territorial limits. We may not be able to enforce our patents against infringement occurring in international waters and other “non-covered” territories.
We are unable to predict what effect consolidations in our industry may have on prices, capital spending by customers, selling strategies, competitive position, ability to retain customers or ability to negotiate favorable agreements with customers. We are subject to the risk of supplier concentration. Certain of our product lines depend on a limited number of third party suppliers.
We are unable to predict what effect consolidations in our industry may have on prices, capital spending by customers, selling strategies, competitive position, ability to retain customers or ability to negotiate favorable agreements with customers. The loss of one or more of our larger customers could have a material adverse effect on our business, financial condition and results of operations.
Investor and public perception related to the Company ’ s ESG performance as well as current and future ESG reporting requirements may affect our business and our operating results. Increasing focus on ESG factors has led to enhanced interest in, and review of performance results by investors, banks, institutional lenders and other stakeholders, and the potential for reputational risk.
Increasing focus on Environmental, Social and Governance (“ESG”) factors has led to enhanced interest in, and review of performance results by investors, banks, institutional lenders and other stakeholders, and the potential for reputational risk.
We may also be held responsible for any violations by an acquired company that occur prior to an acquisition, or subsequent to the acquisition but before we are able to institute our compliance procedures.
We may also be held responsible for any violations by an acquired company that occur prior to an acquisition, or subsequent to the acquisition but before we are able to institute our compliance procedures. 19 Table of Contents There are various risks associated with greenhouse gases and climate change legislation or regulations that could result in increased operating costs and reduced demand for our services.
If we are not able to meet future sustainability reporting requirements of regulators or current and future expectations of investors, customers or other stakeholders, our business and ability to raise capital may be adversely affected. 15 Table of Contents Events outside of our control, including the ongoing COVID-19 pandemic, have and may further materially adversely affect our business.
The Company is committed to transparent and comprehensive reporting of our sustainability performance. If we are not able to meet future sustainability reporting requirements of regulators or current and future expectations of investors, customers or other stakeholders, our business and ability to raise capital may be adversely affected. Our business could be negatively affected by cybersecurity incidents and other disruptions.
Our competitors may introduce new products or obtain patents before we do and achieve a competitive advantage. Additionally, the time and expense invested in product development may not result in commercial applications. It may also be possible for a third party to design around our patents. Patent rights have territorial limits.
Our competitors may introduce new products or obtain patents before we do and achieve a competitive advantage. Additionally, the time and expense invested in product development may not result in commercial applications. If we are not able to keep pace with technological advances in a timely and cost-effective manner, demand for our services and products may decline.
We cannot provide products or services to or in certain countries subject to U.S. or other international trade sanctions or to certain individuals and entities subject to sanctions. Furthermore, the laws and regulations concerning import activity, export recordkeeping and reporting, export control and economic sanctions are complex and constantly changing.
Furthermore, the laws and regulations concerning import activity, export recordkeeping and reporting, export control and economic sanctions are complex and constantly changing.
Geopolitical tensions or conflicts, such as the Russian war in Ukraine, may further heighten the risk of cyberattacks.
Geopolitical tensions or conflicts, such as the Russian war in Ukraine and ongoing conflicts in the Middle East, may further heighten the risk of cyberattacks. Although we utilize various procedures and controls to mitigate our exposure to such risk, cybersecurity attacks and other cyber incidents are evolving and unpredictable.
Removed
The Company is committed to transparent and comprehensive reporting of our sustainability performance.
Added
The weakening of protection of our trademarks, patents, trade secrets and other intellectual property rights could also adversely affect our business. In addition, we may become involved in legal proceedings from time to time to protect and enforce our intellectual property rights.
Removed
We face risks related to pandemics, epidemics, outbreaks or other public health events that are outside of our control and could significantly disrupt our operations and adversely affect our financial condition, including the ongoing COVID-19 pandemic which continues to cause significant global economic disruption.
Added
In addition, if a significant customer experiences liquidity constraints or other financial difficulties, it may be unable to make required payments to us or may seek to renegotiate contracts, which could adversely affect our liquidity and profitability. We are subject to the risk of supplier concentration. Certain of our product lines depend on a limited number of third party suppliers.
Removed
Any prolonged period of economic slowdown or recession in the U.S. and other countries or similar other events outside our control may negatively impact crude oil prices and the demand for our products and services and could have significant adverse consequences on our financial condition and the financial condition of our customers, suppliers and other counterparties, the ultimate impact of which is difficult to predict.
Added
Lastly, some scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects on weather conditions, such as increased frequency and severity of storms, droughts, floods and other climatic events.
Removed
Our business could be negatively affected by cybersecurity threats and other disruptions. We rely heavily on information systems to conduct and protect our business.
Added
If such climatic events were to occur more frequently or with greater intensity, they could adversely affect or delay demand for the oil or natural gas produced or cause us to incur significant costs in preparing for or responding to the effects of climatic events themselves.
Removed
We depend on the efforts of our executive officers and other key employees to manage our operations. The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business.
Added
If any such events were to occur, they could have an adverse effect on the demand for our services and our financial condition, results of operations and cash flows. 15 Table of Contents Investor and public perception related to the Company ’ s ESG performance as well as current and future ESG reporting requirements may affect our business and our operating results.
Removed
Prior to the Merger, Frank’s and Legacy Expro operated independently. During 2022, we substantially completed the integration of Frank's and Legacy Expro into the combined Company. The success of the Merger, including anticipated benefits and cost savings, depends, in part, on our ability to successfully integrate the legacy companies.
Added
The issuance, or availability for issuance, of substantial amounts of our common stock in the public market could adversely affect the prevailing market price of our common stock and could impair our ability to raise additional capital through the sale of equity securities.
Removed
The integration of our operations following the Merger is a complex, and time-consuming process which began in October 2021 upon the closing of the Merger and remains ongoing.
Removed
If we experience difficulties in this process, the anticipated benefits of the Merger may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on us for an undetermined period.
Removed
There can be no assurances that we will be successful or that we will realize the expected operational and financial scale, increased free cash flow, or enhanced corporate returns on invested capital currently anticipated from the Merger.
Removed
We are also incurring substantial integration-related costs related to the large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including accounting and finance, asset management, benefits, billing, health, safety and environmental, human resources, maintenance, marketing, payroll and purchasing.
Removed
We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the integration of our operations. Risks Related to Accounting and Financial Matters Customer credit risks could result in losses.
Removed
We have conducted an internal investigation of the operations of certain of Frank’s foreign subsidiaries in West Africa including possible violations of the FCPA, 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”).
Removed
The DOJ has provided a declination, subject to the Company and the SEC reaching a satisfactory settlement of civil claims.
Removed
We are discussing a possible resolution with the SEC and, based on the course of these discussions to date, we believe that a final resolution of this matter is likely to include a civil penalty in the amount of approximately $8 million.
Removed
While we believe the final resolution of this matter is nearing a conclusion, there can be no assurance as to the timing or the terms of any final resolution, including the amount of any civil penalty, or that a settlement will be reached at all.
Removed
There are various risks associated with greenhouse gases and climate change legislation or regulations that could result in increased operating costs and reduced demand for our services. The threat of climate change continues to attract considerable attention.
Removed
Further, members of the Mosing family have the right to designate one person as their nominee for election to the Board as a non-executive director.
Removed
Upon the Mosing Family Members (as defined in the Director Nomination Agreement) ceasing to collectively own shares of Common Stock equal to at least 10% of the total shares outstanding, the members of the Mosing family will not have a right to designate a director to the Board.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeLeased or Location Owned Principal/Most Significant Use All Segments Houston, Texas Leased Corporate office Reading, United Kingdom Leased Corporate office Aberdeen, Scotland Owned/Leased Regional operations, manufacturing, engineering and administration Lafayette, Louisiana Owned Regional operations, manufacturing, engineering and administration NLA Georgetown, Guyana Leased Regional operations Macaé, Brazil Owned Regional operations and administration Neuquen, Argentina Leased Regional operations New Iberia, Louisiana Leased Regional operations Villahermosa, Mexico Leased Regional operations ESSA Den Helder, the Netherlands Owned/Leased Regional operations and administration Stavanger, Norway Leased Regional operations MENA Al Khobar, Saudi Arabia Leased Regional operations Dubai, United Arab Emirates Owned/Leased Regional operations and administration Hassi Messaoud, Algeria Leased Regional operations APAC Kuala Lumpur, Malaysia Leased Regional operations and administration Labuan, Malaysia Leased Regional operations Perth, Australia Leased Regional operations Our largest manufacturing facilities are located in Aberdeen, Scotland and Lafayette, Louisiana, where we design and manufacture a substantial portion of our service equipment.
Biggest changeLeased or Location Owned Principal/Most Significant Use All Segments Houston, Texas Leased Corporate office Reading, United Kingdom Leased Corporate office Aberdeen, Scotland Owned/Leased Regional operations, manufacturing, engineering and administration Lafayette, Louisiana Owned Regional operations, manufacturing, engineering and administration NLA Georgetown, Guyana Leased Regional operations Macaé, Brazil Owned Regional operations and administration Neuquen, Argentina Leased Regional operations New Iberia, Louisiana Leased Regional operations Broussard, Louisiana Leased Regional operations Villahermosa, Mexico Leased Regional operations ESSA Den Helder, the Netherlands Owned/Leased Regional operations and administration Stavanger, Norway Leased Regional operations MENA Al Khobar, Saudi Arabia Leased Corporate office and regional operations Dubai, United Arab Emirates Owned/Leased Regional operations and administration Hassi Messaoud, Algeria Leased Regional operations APAC Kuala Lumpur, Malaysia Leased Regional operations and administration Labuan, Malaysia Leased Regional operations Perth, Australia Leased Regional operations Our largest manufacturing facilities are located in Aberdeen, Scotland and Lafayette, Louisiana, where we design, manufacture and/or assemble a substantial portion of our service equipment.
The following table details our material facilities by segment, owned or leased by us as of December 31, 2022.
The following table details our material facilities by segment, owned or leased by us as of December 31, 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

12 edited+2 added−1 removed2 unchanged
Biggest changeIssuer Purchases of Equity Securities On June 16, 2022, the Board approved a new stock repurchase program, under which we are authorized to acquire up to $50.0 million of our outstanding common stock through November 24, 2023 (the “Stock Repurchase Program”).
Biggest changeIssuer Purchases of Equity Securities On October 25, 2023, the Board approved an extension to the stock repurchase program first approved on June 16, 2022. Pursuant to the extended stock repurchase program, the Company is authorized to acquire up to $100.0 million of its outstanding common stock from October 25, 2023 through November 24, 2024 (the “Stock Repurchase Program”).
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 timing and actual numbers of shares repurchased will depend on a variety of factors including price, corporate requirements, the constraints specified in the Stock Repurchase Program along with general business and market conditions.
The graph assumes that the value of the investment in our common stock was $100 at December 31, 2017 and for each index (including reinvestment of dividends) and tracks the return on the investment through December 31, 2022. The shareholder return set forth herein is not necessarily indicative of future performance.
The graph assumes that the value of the investment in our common stock was $100 at December 31, 2018 and for each index (including reinvestment of dividends) and tracks the return on the investment through December 31, 2023. The shareholder return set forth herein is not necessarily indicative of future performance.
Following is a summary of repurchases of our common stock during the three months ended December 31, 2022: 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) October 1 - October 31 -- $ -- -- $ 37,004,400 November 1 - November 30 -- $ -- -- $ 37,004,400 December 1 - December 31 -- $ -- -- $ 37,004,400 Total -- $ -- -- 1) This table excludes shares withheld from employees to satisfy tax withholding requirements on equity-based transactions.
Following is a summary of repurchases of our common stock during the three months ended December 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) October 1 - October 31 -- $ -- -- $ 100,000,000 November 1 - November 30 642,334 $ 15.59 642,334 $ 89,987,162 December 1 - December 31 -- $ -- -- $ 89,987,162 Total 642,334 $ 15.59 642,334 1) This table excludes shares withheld from employees to satisfy tax withholding requirements on equity-based transactions.
The peer group consists of the following companies: Baker Hughes Company, ChampionX Corporation, Core Laboratories N.V., Dril-Quip, Inc., TechnipFMC plc, Halliburton Company, Helix Energy Solutions Group Inc., National Energy Services Reunited Corp., NexTier Oilfield Solutions Inc., Oceaneering International, Inc., NOV Inc. and Schlumberger Limited.
The peer group consists of the following companies: Baker Hughes Company, ChampionX Corporation, Core Laboratories N.V., Dril-Quip, Inc., TechnipFMC plc, Halliburton Company, Helix Energy Solutions Group Inc., National Energy Services Reunited Corp., Patterson-UTI Energy, Inc. (which acquired NexTier Oilfield Solutions Inc., a member of our peer group for 2022), Oceaneering International, Inc., NOV Inc. and Schlumberger Limited.
Unregistered Sales of Equity Securities We did not have any sales of unregistered equity securities during the year ended December 31, 2022, that we have not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Accordingly, there can be no assurance that we will pay dividends. Unregistered Sales of Equity Securities We did not have any sales of unregistered equity securities during the year ended December 31, 2023, that we have not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Approximately $37 million remained authorized for repurchases as of December 31, 2022, 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. 25 Table of Contents Performance Graph The following performance graph compares the performance of our common stock to the Russell 2000 Index, the PHLX Oil Service Sector Index (“OSX”), the SPDR S&P Oil & Gas Equipment & Services ETF (“XES”) and to a peer group established by management.
Approximately $90.0 million remained authorized for repurchases as of December 31, 2023, subject to the limitation set in our shareholder authorization for repurchases of our common stock. 26 Table of Contents Performance Graph The following performance graph compares the performance of our common stock to the Russell 2000 Index, the SPDR S&P Oil & Gas Equipment & Services ETF (“XES”) and to a peer group established by management.
Under the Stock Repurchase Program, we may repurchase shares of our 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.
Under the Stock Repurchase Program, the Company may repurchase shares of the Company’s common stock in open market purchases, in privately negotiated transactions or otherwise. The Stock Repurchase Program will continue to be utilized at management’s discretion and in accordance with federal securities laws.
Dividend Policy The declaration and payment of future dividends will be at the discretion of our Board and will depend upon, among other things, future earnings, general financial condition, liquidity, capital requirements, restrictions contained in our financing agreements and general business conditions. Accordingly, there can be no assurance that we will pay dividends.
The actual number of shareholders is greater than the number of holders of record. Dividend Policy The declaration and payment of future dividends will be at the discretion of our Board and will depend upon, among other things, future earnings, general financial condition, liquidity, capital requirements, restrictions contained in our financing agreements and general business conditions.
Item 5. Market for the Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NYSE under the symbol “XPRO”. Prior to the Merger, our common stock traded on the NYSE under the symbol “FI”. On February 21, 2023, we had 108,817,989 shares of common stock outstanding.
Item 5. Market for the Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NYSE under the symbol “XPRO”. On February 16, 2024, we had 110,079,739 shares of common stock outstanding. The common shares outstanding at February 16, 2024, were held by approximately 20 record holders.
The graph below compares the cumulative total return to holders of our common stock with the cumulative total returns of the Russell 2000 Index, the OSX, the XES and our peer group for the period from December 31, 2017 through December 31, 2022.
Accordingly, the graph below compares the cumulative total return to holders of our common stock with the cumulative total returns of the Russell 2000 Index, the PHLX Oil Service Sector Index (which was selected as an index for 2022), SPDR S&P Oil & Gas Equipment & Services ETF and our peer group for the period from December 31, 2018 through December 31, 2023.
The Stock Repurchase Program does not obligate us to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. From the inception of this program in June 2022 to date, we repurchased 1.1 million shares of our common stock for a total cost of approximately $13.0 million.
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.
Removed
The common shares outstanding at February 21, 2023, were held by approximately 20 record holders. The actual number of shareholders is greater than the number of holders of record.
Added
During the year ended December 31, 2023, we repurchased approximately 1.2 million shares of our common stock under the Stock Repurchase Program for a total cost of approximately $20.0 million, including shares repurchased prior to the extension of the Stock Repurchase Program.
Added
If a company selects a different index from that used in the immediately preceding fiscal year, the company’s stock performance must be compared with both the newly-selected index and the index used in the immediately preceding year.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

5 edited+1 added−0 removed5 unchanged
Biggest changeThese 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; • uncertainty regarding the timing, pace and extent of an economic recovery, or economic slowdown or recession, in the U.S. and other countries, which in turn will likely affect demand for crude oil and therefore the demand for the products and services we provide and the commercial opportunities available to us; • the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations; • unique risks associated with our offshore operations; • 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; 27 Table of Contents • our ability to develop new technologies and products; • our ability to 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 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.
Biggest changeThese risks, contingencies and uncertainties include, but are not limited to, the following: • continuing uncertainty relating to global crude oil demand and crude oil prices that correspondingly may lead to further significant reductions in domestic oil and gas activity, which in turn could result in further significant declines in demand for our products and services; • uncertainty regarding the timing, pace and extent of an economic recovery, or economic slowdown or recession, in the U.S. and other countries, which in turn will likely affect demand for crude oil and therefore the demand for the products and services we provide and the commercial opportunities available to us; • the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations; • unique risks associated with our offshore operations (including the ability to recover, and to the extent necessary, service and/or economically repair any equipment located on the seabed); • political, economic and regulatory uncertainties in our international operations, including the impact of actions taken by the OPEC and non-OPEC nations with respect to production levels and the effects thereof; • our ability to develop new technologies and products; • our ability to protect our intellectual property rights; 28 Table of Contents • our ability to attract, train and retain key employees and other qualified personnel; • operational safety laws and regulations; • international trade laws and sanctions; • severe weather conditions and natural disasters, and other operating interruptions (including explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); • policy or regulatory changes; • the overall timing and level of transition of the global energy sector from fossil-based systems of energy production and consumption to more renewable energy sources; and • perception related to our ESG performance as well as current and future ESG reporting requirements.
Item 6. Reserved 26 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Form 10-K 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”).
Item 6. Reserved 27 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Form 10-K 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”).
All such forward-looking statements in this Form 10-K are expressly qualified in their entirety by the cautionary statements in this section. 28 Table of Contents
All such forward-looking statements in this Form 10-K are expressly qualified in their entirety by the cautionary statements in this section. 29 Table of Contents
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, nature and timing of capital expenditures; • the amount, nature and timing of capital expenditures; • the availability and terms of capital; • the exploration, development and production activities of our customers; • the market for our existing and future products and services; • competition and government regulations; and • general economic and political conditions, including political tensions, conflicts and war (such as the ongoing Russian war in Ukraine).
Forward-looking statements include information regarding our future plans and goals and our current expectations with respect to, among other things: • our business strategy and prospects for growth; • our cash flows and liquidity; • our financial strategy, budget, projections and operating results; • the amount and timing of any future share repurchases; • the amount, nature and timing of capital expenditures; • the availability and terms of capital; • the exploration, development and production activities of our customers; • the market for our existing and future products and services; • competition and government regulations; and • general economic and political conditions, including political tensions, conflicts and war (such as the ongoing Russian war in Ukraine and heightened tensions resulting from the ongoing conflicts in the Middle East).
These and other important factors that could affect our operating results and performance are described in (i) Part I, Item 1A “Risk Factors” and in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K, and elsewhere within this Form 10-K, (ii) our other reports and filings we make with the SEC from time to time and (iii) other announcements we make from time to time.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K, and elsewhere within this Form 10-K, (ii) our other reports and filings we make with the SEC from time to time and (iii) other announcements we make from time to time.
Added
These and other important factors that could affect our operating results and performance are described in (i) Part I, Item 1A. “Risk Factors” and in Part II, Item 7.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

103 edited+55 added−56 removed41 unchanged
Biggest changeAdjusted Cash Flow from Operations and Cash Conversion for the year ended December 31, 2022, were $115.3 million and 55.9%, respectively, compared to $65.3 million and 51.9%, respectively, for the year ended December 31, 2021. 34 Table of Contents Selected Unaudited Financial Information for the Three Months Ended December 31, 2022 and September 30, 2022 Operating Segment Results The following table shows revenue by segment and revenue as a percentage of total revenue by segment for the three months ended December 31, 2022 and September 30, 2022: Three Months Ended Percentage (in thousands) December 31, 2022 September 30, 2022 December 31, 2022 September 30, 2022 NLA $ 131,684 $ 134,574 37.5 % 40.2 % ESSA 117,344 99,809 33.4 % 29.9 % MENA 55,387 50,030 15.8 % 15.0 % APAC 46,551 49,938 13.3 % 14.9 % Total Revenue $ 350,966 $ 334,351 100.0 % 100.0 % The following table shows the Segment EBITDA and Segment EBITDA as a percentage of total revenue by segment (“Segment EBITDA margin”) and a reconciliation to income (loss) before income taxes for the three months ended December 31, 2022 and September 30, 2022: Three Months Ended Segment EBITDA Margin (in thousands) December 31, 2022 September 30, 2022 December 31, 2022 September 30, 2022 NLA $ 35,153 $ 39,743 26.7 % 29.5 % ESSA 30,179 17,760 25.7 % 17.8 % MENA 19,433 14,667 35.1 % 29.3 % APAC 3,673 (8,617 ) 7.9 % -17.3 % Total Segment EBITDA $ 88,438 $ 63,553 25.2 % 19.0 % Corporate costs (23,954 ) (18,849 ) Equity in income of joint ventures 5,590 3,510 Depreciation and amortization expense (34,538 ) (34,825 ) Merger and integration expense (4,996 ) (1,629 ) Severance and other expense (2,411 ) (3,242 ) Stock-based compensation expense (3,554 ) (4,684 ) Foreign exchange gain (loss) 2,044 (7,957 ) Other income, net 1,477 432 Interest and finance (expense) income, net (3,468 ) 1,502 Income (loss) before income taxes $ 24,628 $ (2,189 ) 35 Table of Contents Quarter ended December 31, 2022 compared to quarter ended September 30, 2022 NLA Revenue for the NLA segment was $131.7 million for the three months ended December 31, 2022, a decrease of $2.9 million, or 2.1%, compared to $134.6 million for the three months ended September 30, 2022.
Biggest changeThe following table provides a reconciliation of net cash provided by operating activities to Adjusted Cash Flow from Operations for each of the periods presented (in thousands): Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 138,309 $ 80,169 $ 16,144 Cash paid during the year for interest, net 2,177 3,851 4,192 Cash paid during the year for severance and other expense 12,304 3,970 8,052 Cash paid during the year for merger and integration expense 17,403 27,344 36,921 Adjusted Cash Flow from Operations $ 170,193 $ 115,334 $ 65,309 Adjusted EBITDA $ 248,880 $ 206,233 $ 125,940 Cash Conversion 68.4 % 55.9 % 51.9 % 37 Table of Contents Selected Unaudited Financial Information for the Three Months Ended December 31, 2023 and September 30, 2023 Operating Segment Results The following table shows revenue by segment and revenue as a percentage of total revenue by segment for the three months ended December 31, 2023 and September 30, 2023: Three Months Ended Percentage (in thousands) December 31, 2023 September 30, 2023 December 31, 2023 September 30, 2023 NLA $ 145,490 $ 105,252 35.8 % 28.5 % ESSA 133,846 135,395 32.9 % 36.6 % MENA 65,363 58,057 16.1 % 15.7 % APAC 62,051 71,114 15.3 % 19.2 % Total Revenue $ 406,750 $ 369,818 100.0 % 100.0 % The following table shows the Segment EBITDA and Segment EBITDA as a percentage of total revenue by segment (“Segment EBITDA margin”) and a reconciliation to income (loss) before income taxes for the three months ended December 31, 2023 and September 30, 2023: Three Months Ended Segment EBITDA Margin (in thousands) December 31, 2023 September 30, 2023 December 31, 2023 September 30, 2023 NLA $ 44,325 $ 19,967 30.5 % 19.0 % ESSA 40,990 39,268 30.6 % 29.0 % MENA 21,271 16,871 32.5 % 29.1 % APAC 5,337 (4,286 ) 8.6 % (6.0 )% Total Segment EBITDA $ 111,923 $ 71,820 27.5 % 19.4 % Corporate costs (31,894 ) (24,070 ) Equity in income of joint ventures 5,117 2,495 Depreciation and amortization expense (62,874 ) (37,414 ) Merger and integration expense (5,432 ) (817 ) Severance and other expense (8,901 ) (1,897 ) Stock-based compensation expense (4,892 ) (4,934 ) Foreign exchange loss (4,608 ) (4,260 ) Other income (expense), net 4,774 (1,129 ) Interest and finance expense, net (2,255 ) (373 ) Income (loss) before income taxes $ 958 $ (579 ) 38 Table of Contents Quarter ended December 31, 2023 compared to quarter ended September 30, 2023 NLA Revenue for the NLA segment was $145.5 million for the three months ended December 31, 2023, an increase of $40.2 million, or 38.2%, compared to $105.3 million for the three months ended September 30, 2023.
We define Adjusted EBITDA as net loss adjusted for (a) income tax expense (benefit), (b) depreciation and amortization expense, (c) impairment expense, (d) severance and other expense, net, (e) stock-based compensation expense, (f) merger and integration expense, (g) gain on disposal of assets, (h) other income, net, (i) interest and finance income (expense), net and (j) foreign exchange losses.
We define Adjusted EBITDA as net income (loss) adjusted for (a) income tax expense (benefit), (b) depreciation and amortization expense, (c) impairment expense, (d) severance and other expense, net, (e) stock-based compensation expense, (f) merger and integration expense, (g) (gain) loss on disposal of assets, (h) other (income) expense, net, (i) interest and finance (income) expense, net and (j) foreign exchange (gain) loss.
Our effective income tax rate fluctuates from the statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates along with jurisdictions utilizing a deemed profit taxation regime, the impact of valuation allowances, foreign inclusions and other permanent differences related to the recognition of income and expense. 42 Table of Contents Liquidity and Capital Resources Liquidity Our financial objectives include the maintenance of sufficient liquidity, adequate financial resources and financial flexibility to fund our business.
Our effective income tax rate fluctuates from the statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates along with jurisdictions utilizing a deemed profit taxation regime, the impact of valuation allowances, foreign inclusions and other permanent differences related to the recognition of income and expense. 43 Table of Contents Liquidity and Capital Resources Liquidity Our financial objectives include the maintenance of sufficient liquidity, adequate financial resources and financial flexibility to fund our business.
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 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 (“IRS”) and a vessel-deployed, wire through water Riserless Well Intervention System (“RWIS”).
GAAP, we recognize the effects of a tax position in the consolidated financial statements when it is more likely than not that, based on the technical merits, some level of tax benefit related to a tax position will be sustained upon audit by tax authorities.
In line with GAAP, we recognize the effects of a tax position in the consolidated financial statements when it is more likely than not that, based on the technical merits, some level of tax benefit related to a tax position will be sustained upon audit by tax authorities.
In determining the impact of variable consideration, we use the “most-likely amount” method whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts. 45 Table of Contents Business Combinations We record business combinations using the acquisition method of accounting.
In determining the impact of variable consideration, we use the “most-likely amount” method whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts. 46 Table of Contents Business Combinations We record business combinations using the acquisition method of accounting.
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 operating activities, the most directly comparable liquidity measure calculated and presented in accordance with GAAP.
We provide reconciliations of net income (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.
In such an event, we will record additional tax expense or tax benefit in the period in which such resolution occurs. New accounting pronouncements See Note 2 “ Basis of presentation and significant accounting policies ” in our consolidated financial statements under the heading “Recent accounting pronouncements.” 47 Table of Contents
In such an event, we will record additional tax expense or tax benefit in the period in which such resolution occurs. New accounting pronouncements See Note 2 “ Basis of presentation and significant accounting policies ” in our consolidated financial statements under the heading “Recent accounting pronouncements”. 48 Table of Contents
The discount rate that we use reflects the market rate of a portfolio of high-quality corporate bonds with maturities approximately matching the expected timing of payment of the related benefit obligations. The discount rates used to determine the benefit obligations for our principal pension plans were 4.7% in 2022, 1.8% in 2021 and 1.3% in 2020, reflecting market interest rates.
The discount rate that we use reflects the market rate of a portfolio of high-quality corporate bonds with maturities approximately matching the expected timing of payment of the related benefit obligations. The discount rates used to determine the benefit obligations for our principal pension plans were 4.5% in 2023, 4.7% in 2022 and 1.8% in 2021, reflecting market interest rates.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7. of the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2022.
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.
We also provide systems integration and project management services. • Well intervention and integrity: We provide well intervention solutions to acquire and interpret well data, maintain well bore integrity and improve production.
Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues. We define Adjusted Cash Flow from Operations as net cash 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 margin reflects our Adjusted EBITDA as a percentage of revenues. We define Adjusted Cash Flow from Operations as net cash provided by (used in) operating activities adjusted for cash paid during the period for interest, net, severance and other expense and merger and integration expense.
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.
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.
We also provide early production faciliti es 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 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 40 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to provide safe well access and optimized production throughout the lifecycle of the well.
This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The weighted average expected rate of return on plan assets for the pension plans was 5.6% in 2022, 3.2% in 2021 and 2.7% in 2020. A change in the expected rate of return of 1% would impact our net periodic pension expense by $2.7 million.
The weighted average expected rate of return on plan assets for the pension plans was 5.8% in 2023, 5.6% in 2022 and 3.2% in 2021. A change in the expected rate of return of 1% would impact our net periodic pension expense by $1.4 million.
Estimating the outcome of audits and assessments by the tax authorities involves uncertainty. We review the facts of each case and apply judgments and assumptions to determine the most likely outcome and provide for taxes, interest and penalties on this basis. In line with U.S.
Estimating the outcome of audits and assessments by the tax authorities involves uncertainty. We review the facts of each case and apply judgments and assumptions to determine the most likely outcome and provide for taxes, interest and penalties on this basis.
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.
With roots dating to 1938, we have approximately 8,000 employees and provide services and solutions to leading exploration and production companies in both onshore and offshore environments in approximately 60 countries.
The decrease was primarily attributable to lower legal and other professional fees, and lower integration and other costs related to the Merger incurred during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The decrease was primarily attributable to lower legal and other professional fees, and lower integration and other costs related to acquisitions incurred during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
In addition, we also generate revenue from the sale of certain well construction products. For the year ended December 31, 2022, approximately 79% of our revenue was generated outside of the United States and approximately 70% of our revenue was generated by activities related to offshore oil and gas operations.
In addition, we also generate revenue from the sale of certain well construction products. For the year ended December 31, 2023, approximately 82% of our revenue was generated outside of the United States and approximately 66% of our revenue was generated by activities related to offshore oil and gas operations.
The increase in Segment EBITDA and Segment EBITDA margin was primarily attributable to higher activity levels and a more favorable activity mix during the three months ended December 31, 2022.
The increase in Segment EBITDA and Segment EBITDA margin was primarily attributable to a more favorable activity mix during the three months ended December 31, 2023.
Revenue for our segments is discussed separately below under the heading “Operating Segment Results.” • We reported a net loss for the year ended December 31, 2022 of $20.1 million, compared to a net loss of $131.9 million for the year ended December 31, 2021.
Revenue for our segments is discussed separately below under the heading “Operating Segment Results.” • We reported a net loss for the year ended December 31, 2023 of $23.4 million, compared to a net loss of $20.1 million for the year ended December 31, 2022.
Our total capital expenditures were $81.9 million for year ended December 31, 2022, out 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.
Our total capital expenditures were $122.1 million for the year ended December 31, 2023, out of which approximately 90% were used for the purchase or manufacture of equipment to directly support customer-related activities and approximately 10% for other property, plant and equipment, inclusive of software costs.
The increase in Segment EBITDA and Segment EBITDA margin was primarily due to higher activity and a more favorable activity mix during the three months ended December 31, 2022.
The increase in Segment EBITDA and Segment EBITDA margin was primarily due to higher activity, improved operating leverage and a more favorable activity mix during the three months ended December 31, 2023.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operation The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes thereto included in Part II, Item 8, “ Financial Statements and Supplementary Data ” included in this Form 10-K.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operation The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes thereto included in Part II, Item 8.
As of December 31, 2022, we estimate that a 1% increase or decrease in the discount rate would result in an impact of approximately $18.5 million to our present value of defined benefit obligations at December 31, 2022.
As of December 31, 2023, we estimate that a 1% increase or decrease in the discount rate would result in an impact of approximately $19.7 million to our present value of defined benefit obligations as of December 31, 2023.
(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. 40 Table of Contents Year ended December 31, 2022 compared to the year ended December 31, 2021 NLA Revenue for the NLA segment was $499.8 million for the year ended December 31, 2022, an increase of 306.6 million, or 158.7%, compared to $193.2 million for the year ended December 31, 2021.
(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. 41 Table of Contents Year ended December 31, 2023 compared to the year ended December 31, 2022 NLA Revenue for the NLA segment was $511.8 million for the year ended December 31, 2023, an increase of $12.0 million, or 2.4%, compared to $499.8 million for the year ended December 31, 2022.
We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We evaluate estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
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.
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.
Net cash (used in) provided by investing activities Net cash used in investing activities was $71.2 million during the year ended December 31, 2022 as compared to net cash provided by investing activities of $112.0 million during the year ended December 31, 2021. Our principal recurring investing activity is our capital expenditures.
Net cash used in investing activities Net cash used in investing activities was $148.2 million during the year ended December 31, 2023 as compared to $71.2 million during the year ended December 31, 2022, an increase of $77.0 million. Our principal recurring investing activity is our capital expenditures.
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.
“ Financial Statements and Supplementary Data ” included in this Form 10-K. 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.
Segment EBITDA for the APAC segment was $3.7 million, or 7.9% of revenues, for the three months ended December 31, 2022, an increase of $12.3 million compared to $(8.6) million, or (17.3)% of revenues, for the three months ended September 30, 2022.
Segment EBITDA for the APAC segment was $5.3 million, or 8.6% of revenues, for the three months ended December 31, 2023, an increase of $9.6 million compared to ($4.3) million, or (6.0)% of revenues, for the three months ended September 30, 2023.
Please refer to the section titled “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net loss, 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 operating activities, the most directly comparable liquidity measure calculated and presented in accordance with GAAP. 33 Table of Contents Executive Overview Year ended December 31, 2022 compared to year ended December 31, 2021 Certain highlights of our financial results and other key developments include: • Revenue for the year ended December 31, 2022 increased by $453.6 million, or 54.9%, to $1,279.4 million, compared to $825.8 million for the year ended December 31, 2021.
Please refer to the section titled “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial performance measure calculated and presented in accordance with accounting principles generally accepted in the United States of America (“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. 34 Table of Contents Executive Overview Year ended December 31, 2023 compared to year ended December 31, 2022 Certain highlights of our financial results and other key developments include: • Revenue for the year ended December 31, 2023 increased by $233.4 million, or 18.2%, to $1,512.8 million, compared to $1,279.4 million for the year ended December 31, 2022.
Segment EBITDA for the MENA segment was $19.4 million, or 35.1% of revenues, for the three months ended December 31, 2022, an increase of $4.7 million, or 32.5%, compared to $14.7 million, or 29.3% of revenues, for the three months ended September 30, 2022.
Segment EBITDA for the MENA segment was $21.3 million, or 32.5% of revenues, for the three months ended December 31, 2023, an increase of $4.4 million, or 26.0%, compared to $16.9 million, or 29.1% of revenues, for the three months ended September 30, 2023.
Activity and revenue across all our geography-based operating segments also increased during the year ended December 31, 2022.
Activity and revenue across all our geography-based operating segments increased during the year ended December 31, 2023, most notably in ESSA.
We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows.
Actual results may differ from these estimates under different assumptions or conditions. We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows.
Adjusted Cash Flow from Operations during the year ended December 31, 2022 was $115.3 million compared to $65.3 million during the year ended December 31, 2021. Our primary uses of net cash provided by operating activities were capital expenditures and funding obligations related to our financing arrangements.
Adjusted Cash Flow from Operations during the year ended December 31, 2023 was $170.2 million compared to $115.3 million during the year ended December 31, 2022. Our primary uses of net cash provided by operating activities were capital expenditures, acquisitions and repurchases of company stock.
The following table shows revenue by segment and revenue as a percentage of total revenue by segment for the years ended December 31, 2022 and December 31, 2021: Year Ended Percentage (in thousands) December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2022 December 31, 2021 December 31, 2020 NLA $ 499,813 $ 193,156 $ 115,738 39.1 % 23.4 % 17.2 % ESSA 389,342 300,557 219,534 30.4 % 36.4 % 32.5 % MENA 201,495 171,136 194,033 15.7 % 20.7 % 28.7 % APAC 188,768 160,913 145,721 14.8 % 19.5 % 21.6 % Total Revenue $ 1,279,418 $ 825,762 $ 675,026 100.0 % 100.0 % 100.0 % 39 Table of Contents The following table shows Segment EBITDA and Segment EBITDA margin by segment and a reconciliation to income (loss) before income taxes for the years ended December 31, 2022 and December 31, 2021: Year Ended Segment EBITDA Margin (in thousands) December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2022 December 31, 2021 December 31, 2020 NLA $ 135,236 $ 32,254 $ 54 27.1 % 16.7 % 0.0 % ESSA 74,681 53,336 35,393 19.2 % 17.7 % 16.1 % MENA 63,315 56,312 77,296 31.4 % 32.9 % 39.8 % APAC (1) 4,850 33,444 34,976 2.6 % 20.8 % 24.0 % Total Segment EBITDA 278,082 175,346 147,719 Corporate costs (2) (87,580 ) (66,153 ) (61,122 ) Equity in income of joint ventures 15,731 16,747 13,589 Depreciation and amortization expense (139,767 ) (123,866 ) (113,693 ) Impairment expense - - (287,454 ) Merger and integration expense (13,620 ) (47,593 ) (1,630 ) Severance and other expense (7,825 ) (7,826 ) (13,930 ) Stock-based compensation expense (18,486 ) (54,162 ) - Foreign exchange loss (8,341 ) (4,314 ) (2,261 ) Other income, net 3,149 3,992 3,908 Gain on disposal of assets - 1,000 10,085 Interest and finance expense, net (241 ) (8,795 ) (5,656 ) Income (loss) before income taxes $ 21,102 $ (115,624 ) $ (310,445 ) (1) Excluding $27.7 million of start-up and commissioning costs during the year ended December 31, 2022, Segment EBITDA would have been $32.6 million and Segment EBITDA margin would have been 17.3%.
The following table shows revenue by segment and revenue as a percentage of total revenue by segment for the years ended December 31, 2023, 2022 and 2021: Year Ended Percentage (in thousands) December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2023 December 31, 2022 December 31, 2021 NLA $ 511,800 $ 499,813 $ 193,156 33.8 % 39.1 % 23.4 % ESSA 520,951 389,342 300,557 34.4 % 30.4 % 36.4 % MENA 233,528 201,495 171,136 15.4 % 15.7 % 20.7 % APAC 246,485 188,768 160,913 16.3 % 14.8 % 19.5 % Total Revenue $ 1,512,764 $ 1,279,418 $ 825,762 100.0 % 100.0 % 100.0 % 40 Table of Contents The following table shows Segment EBITDA and Segment EBITDA margin by segment and a reconciliation to income (loss) before income taxes for the years ended December 31, 2023 and December 31, 2022: Year Ended Segment EBITDA Margin (in thousands) December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2023 December 31, 2022 December 31, 2021 NLA $ 132,869 $ 135,236 $ 32,254 26.0 % 27.1 % 16.7 % ESSA 136,007 74,681 53,336 26.1 % 19.2 % 17.7 % MENA 71,201 63,315 56,312 30.5 % 31.4 % 32.9 % APAC (1) 1,805 4,850 33,444 0.7 % 2.6 % 20.8 % Total Segment EBITDA $ 341,882 $ 278,082 $ 175,346 Corporate costs (2) (105,855 ) (87,580 ) (66,153 ) Equity in income of joint ventures 12,853 15,731 16,747 Depreciation and amortization expense (172,260 ) (139,767 ) (123,866 ) Merger and integration expense (9,764 ) (13,620 ) (47,593 ) Severance and other expense (14,388 ) (7,825 ) (7,826 ) Stock-based compensation expense (19,574 ) (18,486 ) (54,162 ) Foreign exchange loss (9,238 ) (8,341 ) (4,314 ) Other income, net 1,234 3,149 3,992 Gain on disposal of assets - - 1,000 Interest and finance expense, net (3,943 ) (241 ) (8,795 ) Income (loss) before income taxes $ 20,947 $ 21,102 $ (115,624 ) (1) Excluding $35.9 million of unrecoverable LWI-related costs during the year ended December 31, 2023, APAC Segment EBITDA would have been $37.7 million and Segment EBITDA margin would have been 15.3%.
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 timing and actual numbers of shares repurchased will depend on a variety of factors including price, corporate requirements, the constraints specified in the Stock Repurchase Program along with general business and market conditions.
GAAP requires Expro to make estimates and assumptions that affect the reported amounts of revenues and associated costs as well as reported amounts of assets and liabilities and related disclosures of contingent liabilities. Certain accounting policies involve judgments and uncertainties. We evaluate estimates and assumptions on a regular basis.
Critical accounting policies and estimates The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires Expro to make estimates and assumptions that affect the reported amounts of revenues and associated costs as well as reported amounts of assets and liabilities and related disclosures of contingent liabilities. Certain accounting policies involve judgments and uncertainties.
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 $120.0 million and $130.0 million for 2023.
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 $130.0 million and $140.0 million for 2024.
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. 37 Table of Contents The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the periods presented (in thousands): Year ended December 31, 2022 2021 2020 Net loss $ (20,145 ) $ (131,891 ) $ (307,045 ) Income tax expense (benefit) 41,247 16,267 (3,400 ) Depreciation and amortization expense 139,767 123,866 113,693 Impairment expense (1) - - 287,454 Severance and other expense 7,825 7,826 13,930 Merger and integration expense 13,620 47,593 1,630 Gain on disposal of assets - (1,000 ) (10,085 ) Other income, net (2) (3,149 ) (3,992 ) (3,908 ) Stock-based compensation expense 18,486 54,162 - Foreign exchange losses 8,341 4,314 2,261 Interest and finance expense, net 241 8,795 5,656 Adjusted EBITDA (3) $ 206,233 $ 125,940 $ 100,186 Adjusted EBITDA Margin 16.1 % 15.3 % 14.8 % (1) Impairment expense represents impairments recorded on goodwill and other long-lived assets, including property, plant and equipment, intangible assets and operating lease right-of-use assets.
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. 36 Table of Contents The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the periods presented (in thousands): Year ended December 31, 2023 2022 2021 Net loss $ (23,360 ) $ (20,145 ) $ (131,891 ) Income tax expense $ 44,307 $ 41,247 $ 16,267 Depreciation and amortization expense 172,260 139,767 123,866 Severance and other expense 14,388 7,825 7,826 Merger and integration expense 9,764 13,620 47,593 Gain on disposal of assets - - (1,000 ) Other income, net (1) (1,234 ) (3,149 ) (3,992 ) Stock-based compensation expense 19,574 18,486 54,162 Foreign exchange losses 9,238 8,341 4,314 Interest and finance expense, net 3,943 241 8,795 Adjusted EBITDA (2) $ 248,880 $ 206,233 $ 125,940 Adjusted EBITDA Margin 16.5 % 16.1 % 15.3 % (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.
If it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative impairment test is performed. The quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss.
The quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss. The test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.
Segment EBITDA for the NLA segment was $35.2 million, or 26.7% of revenues, during the three months ended December 31, 2022, compared to $39.7 million, or 29.5% of revenues, during the three months ended September 30, 2022.
Segment EBITDA for the NLA segment was $44.3 million, or 30.5% of revenues, during the three months ended December 31, 2023, compared to $20.0 million, or 19.0% of revenues, during the three months ended September 30, 2023.
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.
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.
(3) Excluding $27.7 million of start-up and commissioning costs on a large subsea project during the year ended December 31, 2022, Adjusted EBITDA would have been $233.9 million and Adjusted EBITDA margin would have been 18.3%.
(2) Excluding $35.9 million of unrecoverable LWI-related costs during the year ended December 31, 2023, Adjusted EBITDA would have been $284.8 million and Adjusted EBITDA margin would have been 18.8%. Excluding $27.7 million of unrecoverable LWI-related costs during the year ended December 31, 2022, Adjusted EBITDA would have been $233.9 million and Adjusted EBITDA margin would have been 18.3%.
Interest and finance expense, net Interest and finance expense, net, for the year ended December 31, 2022, was $0.2 million, a decrease of $8.6 million, or 97.7%, compared to $8.8 million for the year ended December 31, 2021.
Interest and finance expense, net Interest and finance expense, net, for the year ended December 31, 2023, was $3.9 million compared to $0.2 million for the year ended December 31, 2022.
Segment EBITDA for the MENA segment was $63.3 million, or 31.4% of revenues, during the year ended December 31, 2022, compared to $56.3 million, or 32.9% of revenues during the year ended December 31, 2021. The increase was primarily attributable to a combination of the impact of the Merger and higher activities during the year ended December 31, 2022.
Segment EBITDA for the MENA segment was $71.2 million, or 30.5% of revenues, during the year ended December 31, 2023, compared to $63.3 million, or 31.4% of revenues during the year ended December 31, 2022. The increase of $7.9 million was attributable to higher activity during the year ended December 31, 2023.
Segment EBITDA for the ESSA segment was $30.2 million, or 25.7% of revenues, for the three months ended December 31, 2022, an increase of $12.4 million, or 69.9%, compared to $17.8 million, or 17.8% of revenues, for the three months ended September 30, 2022.
Segment EBITDA for the ESSA segment was $41.0 million, or 30.6% of revenues, for the three months ended December 31, 2023, an increase of $1.7 million, or 4.3%, compared to $39.3, or 29.0% of revenues, for the three months ended September 30, 2023.
Segment EBITDA for the NLA segment was $135.2 million, or 27.1% of revenues, during the year ended December 31, 2022, compared to $32.3 million or 16.7% of revenues during the year ended December 31, 2021, an increase of $102.9 million.
Segment EBITDA for the ESSA segment was $136.0 million, or 26.1% of revenues, during the year ended December 31, 2023, compared to $74.7 million, or 19.2% of revenues, during the year ended December 31, 2022, an increase of $61.3 million.
Refer to Note 4 “ Fair value measurements ” of our consolidated financial statements for further details. 46 Table of Contents Defined benefit plans Our post-retirement benefit obligations are described in detail in Note 19 “ Post-retirement benefits ” of our consolidated financial statements.
The inputs used in the determination of fair value are generally level 3 inputs. 47 Table of Contents Defined benefit plans Our post-retirement benefit obligations are described in detail in Note 19 “ Post-retirement benefits ” of our consolidated financial statements.
ESSA Revenue for the ESSA segment was $117.3 million for the three months ended December 31, 2022, an increase of $17.5 million, or 17.6%, compared to $99.8 million for the three months ended September 30, 2022.
MENA Revenue for the MENA segment was $65.4 million for the three months ended December 31, 2023, an increase of $7.3 million, or 12.6%, compared to $58.1 million for the three months ended September 30, 2023.
We have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The qualitative assessment determines whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount.
The qualitative assessment determines whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative impairment test is performed.
Excluding the $27.7 million of such start-up and commissioning costs during the year ended December 31, 2022, Segment EBITDA would have been $32.6 million and Segment EBITDA margin would have been 17.3%. 41 Table of Contents Corporate Costs Corporate costs for the year ended December 31, 2022 increased by $21.4 million, or 32.3%, to $87.6 million as compared to $66.2 million for the year ended December 31, 2021.
Excluding $35.9 million and $27.7 million of unrecoverable LWI-related costs during the years ended December 31, 2023 and 2022, respectively, APAC Segment EBITDA would have been $37.7 million and $32.6 million and APAC segment Adjusted EBITDA margin would have been 15.3% and 17.3%, respectively. 42 Table of Contents Corporate Costs Corporate costs for the year ended December 31, 2023 increased by $18.3 million, or 20.9%, to $105.9 million, as compared to $87.6 million, for the year ended December 31, 2022.
We used the income approach and the market approach to estimate the fair value of our reporting units. The income approach estimates the fair value by discounting the reporting unit’s estimated future cash flows using what we believe to be an appropriate risk-adjusted rate.
The income approach estimates the fair value by discounting the reporting unit’s estimated future cash flows using what we believe to be an appropriate risk-adjusted rate. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results and involves significant judgment in the selection of the appropriate peer group companies and valuation multiples.
On July 21, 2022, the Company entered into an agreement to increase the facility available for letters of credit to $92.5 million, on the same terms as the current facility, increasing total facility commitments to $222.5 million. 43 Table of Contents 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): Year Ended December 31, (in thousands) 2022 2021 2020 Net cash provided by operating activities $ 80,169 $ 16,144 $ 70,391 Net cash (used in) provided by investing activities (71,206 ) 112,046 (96,773 ) Net cash used in financing activities (25,612 ) (7,176 ) (625 ) Effect of exchange rate changes on cash activities (4,738 ) (1,876 ) 631 Net (decrease) increase to cash and cash equivalents and restricted cash $ (21,387 ) $ 119,138 $ (26,376 ) Analysis of cash flow changes between the years ended December 31, 2022 and 2021 Net cash provided by operating activities Net cash provided by operating activities was $80.2 million during the year ended December 31, 2022 as compared to $16.1 million during the year ended December 31, 2021.
Please see Note 16 “Interest bearing loans” in the Notes to the Consolidated Financial Statements for additional information. 44 Table of Contents Cash flow from operating, investing and financing activities Cash flows provided by our operations, investing and financing activities are summarized below (in thousands): Year Ended December 31, (in thousands) 2023 2022 2021 Net cash provided by operating activities $ 138,309 $ 80,169 $ 16,144 Net cash (used in) provided by investing activities (148,232 ) (71,206 ) 112,046 Net cash used in financing activities (49,339 ) (25,612 ) (7,176 ) Effect of exchange rate changes on cash activities (6,032 ) (4,738 ) (1,876 ) Net (decrease) increase to cash and cash equivalents and restricted cash $ (65,294 ) $ (21,387 ) $ 119,138 Analysis of cash flow changes between the years ended December 31, 2023 and 2022 Net cash provided by operating activities Net cash provided by operating activities was $138.3 million during the year ended December 31, 2023 as compared to $80.2 million during the year ended December 31, 2022.
If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the consolidated financial statements may be exposed to potential impairment of long-lived assets, including intangible assets and goodwill. The Merger of Frank’s with Legacy Expro pursuant to the Merger Agreement was completed on October 1, 2021.
If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the consolidated financial statements may be exposed to potential impairment of long-lived assets, including intangible assets and goodwill. Refer to Note 3 “Business combinations and dispositions” of our consolidated financial statements for further details.
The Stock Repurchase Program does not obligate us to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. During the year ended December 31, 2022, we repurchased 1.1 million shares at an average price of $11.81 per share, for a total cost of $13.0 million under this $50.0 million program.
During the year ended December 31, 2022, we repurchased 1.1 million shares at an average price of $11.81 per share, for a total cost of $13.0 million under the preceding program.
The decrease of $4.5 million in Segment EBITDA was attributable to lower activity and the reduction in Segment EBITDA margin was attributable to a less favorable product mix during the three months ended December 31, 2022.
The increase of $24.3 million in Segment EBITDA was attributable to higher activity and the increase in Segment EBITDA margin was attributable to improved operating leverage and a more favorable activity mix during the three months ended December 31, 2023.
As a result, we expect demand for our services and solutions to continue to trend positively through 2023. The following provides an outlook for 2023 by our reporting segments based on data from Spears and Associates, Inc.
The following provides an outlook for 2024 by our reporting segments based on data from Spears and Associates, Inc.
The increase of $18.4 million in cash used in financing activities is primarily related to repurchase of common stock of $13.0 million, an increase in payment of financed insurance premium of $7.0 million, and an increase in payment of withholding taxes on stock-based compensation plans of $3.4 million, partially offset by lower payment of loan issuance and other transaction costs of $5.0 million during 2022. 44 Table of Contents Off-balance sheet arrangements We have outstanding letters of credit/guarantees that relate to performance bonds, custom/excise tax guaranties and facility lease/rental obligations.
The increase of $23.5 million in net cash used in financing activities is primarily due to net repayments of long term borrowings of $15.1 million and an increase in the repurchase of our common stock of $7.0 million. 45 Table of Contents Off-balance sheet arrangements We have outstanding letters of credit/guarantees that relate to performance bonds, custom/excise tax guaranties and facility lease/rental obligations.
Segment EBITDA for the APAC segment was $4.9 million, or 2.6% of revenues, during the year ended December 31, 2022, compared to $33.4 million, or 20.8% of revenues, during the year ended December 31, 2021.
Also contributing to the increase was higher well intervention and integrity and well construction activity in Southeast Asia. Segment EBITDA for the APAC segment was $1.8 million, or 0.7% of revenues, during the year ended December 31, 2023, compared to $4.9 million, or 2.6% of revenues, during the year ended December 31, 2022.
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. 29 Table of Contents 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.
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.
Changes in oil and gas prices impact customers' 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.
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. • Average daily oil demand in the fourth quarter of 2023 exceeded average daily demand levels in 2022, with liquid demand recovering to annualized 2019 levels in 2023.
APAC Revenue for the APAC segment was $46.6 million for the three months ended December 31, 2022, a decrease of $3.3 million, or 6.8%, compared to $49.9 million for the three months ended September 30, 2022. The decrease in revenue was primarily due to lower subsea well access revenue in Australia and Malaysia.
APAC Revenue for the APAC segment was $246.5 million for the year ended December 31, 2023, an increase of $57.7 million, or 30.6%, compared to $188.8 million for the year ended December 31, 2022. The increase was primarily attributable to higher subsea well access revenue in Australia, China and Malaysia.
Goodwill is not subject to amortization and is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. A qualitative assessment is allowed to determine if goodwill is potentially impaired.
Goodwill We record the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as goodwill. Goodwill is not subject to amortization and is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Our statutory tax rate for the year ended December 31, 2022 was 25.8% as compared to 25.0% for the year ended December 31, 2021. The effective tax rate was 768.0% and (12.3%) for the years ended December 31, 2022 and 2021 respectively.
Income tax (expense) benefit Income tax expense for the year ended December 31, 2023 was $44.3 million, compared to an income tax expense of $41.2 million for the year ended December 31, 2022. Our statutory tax rate for the years ended December 31, 2023 and December 31, 2022 was 25.8%.
ESSA Revenue for the ESSA segment was $389.3 million for the year ended December 31, 2022, an increase of $88.7 million, or 29.5%, compared to $300.6 million for the year ended December 31, 2021. The Merger contributed an increase of $85.6 million, reflecting well construction revenue during the year ended December 31, 2022.
ESSA Revenue for the ESSA segment was $521.0 million for the year ended December 31, 2023, an increase of $131.7 million, or 33.8%, compared to $389.3 million for the year ended December 31, 2022.
Capital expenditures during the years ended December 31, 2022 and December 31, 2021 both approximated $82 million. Net cash used in financing activities Net cash used in financing activities was $25.6 million during the year ended December 31, 2022 as compared to $7.2 million during the year ended December 31, 2021.
In addition, cash used to acquire technology of $7.9 million during 2022 was not repeated in 2023. Net cash used in financing activities Net cash used in financing activities was $49.1 million during the year ended December 31, 2023 as compared to $25.6 million during the year ended December 31, 2022.
Excluding $4.8 million and $16.8 million of start-up and commissioning costs during the three months ended December 31, 2022 and September 30, 2022, respectively, Segment EBITDA would have been $8.5 million and $8.1 million and Segment EBITDA margin would have been 18.2% and 16.3% respectively, for the three months ended December 31, 2022 and September 30, 2022. 36 Table of Contents Non-GAAP Financial Measures We include in this Form 10-K the non-GAAP financial measures Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion.
Adjusted Cash Flow from Operations and Cash Conversion for the year ended December 31, 2023 were $170.2 million and 68.4%, respectively, compared to $115.3 million and 55.9%, respectively, for the year ended December 31, 2022 35 Table of Contents Non-GAAP Financial Measures We include in this Form 10-K the non-GAAP financial measures Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion.
We also expect that the demand for services related to brownfield and production enhancement and infield development programs will continue to show increased demand. In addition, we envisage an increase in demand for early production facilities, especially in support of gas and liquified natural gas (“LNG”) developments. • The clean energy transition continues to gain momentum.
In addition, we have seen an increase in demand for early production facilities and production optimization technologies, especially in support of gas and LNG developments. • The clean energy transition continues to gain momentum.
Approximately 70% of our revenue was generated by services tied to drilling and completions-related activities, which are generally funded by customers’ capital expenditures, and approximately 30% of our revenue was generated by production optimization related activities, which are generally funded by customers’ operating expenditures rather than capital expenditures. 30 Table of Contents Market Conditions and Price of Oil and Gas Fiscal year 2022 has seen positive signs of recovery in the market following the impact of the COVID-19 pandemic and the Russian war in Ukraine.
Approximately 63% of our revenue was generated by services tied to drilling and completions-related activities, which are generally funded by customers’ capital expenditures, and approximately 37% of our revenue was generated by production optimization related activities, which are generally funded by customers’ operating expenditures. 31 Table of Contents Market Conditions and Price of Oil and Gas The fourth quarter of 2023 has seen continued growth and increased activity as the market rebounds from the effects of the COVID-19 pandemic and Russia’s invasion of Ukraine, with limited effect currently from the heightened tensions resulting from the ongoing conflicts in the Middle East.
Equity in income of joint ventures Equity in income of joint ventures for the year ended December 31, 2022 decreased by $1.0 million, or 6.1%, to $15.7 million as compared to $16.7 million for the year ended December 31, 2021. The decrease reflects lower income from our joint venture in China compared to the previous year.
The decrease reflects lower income from our joint venture in China compared to the previous year. Depreciation and amortization expense Depreciation and amortization expense for the year ended December 31, 2023 increased by $32.5 million or 23.2% to $172.3 million as compared to $139.8 million for the year ended December 31, 2022.
The decrease in interest and finance expense was primarily due to fees incurred with respect to the New Facility established following the Merger during the previous year. Income tax (expense) benefit Income tax expense for the year ended December 31, 2022 was $41.2 million, compared to an income tax expense of $16.3 million for the year ended December 31, 2021.
The increase in interest and finance expense of $3.7 million was primarily due to fees incurred with respect to the Amended and Restated Facility Agreement (as defined below) established during the year ended December 31, 2023.
As of December 31, 2022, we had no material off-balance sheet financing arrangements other than those discussed above. Critical accounting policies and estimates The preparation of consolidated financial statements and related disclosures in conformity with U.S.
As of December 31, 2023, we had no material off-balance sheet financing arrangements other than those discussed above.
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 Board approved the Stock Repurchase Program. Under the Stock Repurchase Program, we may repurchase shares of our common stock in open market purchases, in privately negotiated transactions or otherwise.
The actual amount of capital expenditures for the purchase and manufacture of equipment may fluctuate based on market conditions. 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.
Production enhancement, well intervention and well abandonment activities are also gaining momentum. 32 Table of Contents 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.
LNG development projects are driving the activity growth in Australia and Indonesia as operators look to meet the increased global demand driven by energy security concerns and the energy transition. 33 Table of Contents 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.
At December 31, 2022, total available liquidity was $348.5 million, including cash and cash equivalents and restricted cash of $218.5 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.
Expro believes these amounts, along with cash generated by ongoing operations, will be sufficient to meet future business requirements for the next 12 months and beyond. Our primary sources of liquidity have been cash flows from operations. Our primary uses of capital have been for capital expenditures, acquisitions and repurchases of company stock.
The decrease was primarily due to lower well management services revenue in Mexico and the U.S., partially offset by higher well construction services revenue in the Gulf of Mexico driven by higher customer activities.
The increase in revenue is primarily due to higher subsea well access revenue in the U.S., higher well intervention and integrity activity in South America, and higher well construction activity in Mexico, offset by lower well flow management revenue in Mexico and Canada.
Our reporting structure and the key financial information used by our management team is organized around our four operating segments: (i) NLA, (ii) ESSA, (iii) MENA and (iv) APAC. How We Generate Our Revenue Our revenue is derived primarily from providing services in well construction, well flow management, subsea well access and well intervention and integrity to operators globally.
How We Generate Our Revenue Our revenue is derived primarily from providing services in well construction, well flow management, subsea well access and well intervention and integrity to operators globally. Our revenue includes equipment service charges, personnel charges, run charges and consumables.

… 134 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+2 added−0 removed6 unchanged
Biggest changeCredit risk Our exposure to credit risk is primarily through cash and cash equivalents, restricted cash and accounts receivable, including unbilled balances. Our liquid assets are invested in cash, with a mix of local and international banks, and highly rated, short-term money market deposits, generally with original maturities of less than 90 days.
Biggest changeOur liquid assets are invested in cash, with a mix of local and international banks, and highly rated, short-term money market deposits, generally with original maturities of less than 90 days. We monitor the ratings of such investments and mitigate counterparty risks as appropriate.
Foreign currency risk Cash flow exposure We expect many of the subsidiaries of our business to have future cash flows that will be denominated in currencies other than the United States Dollar ("USD"). Our primary cash flow exposures are revenues and expenses.
Foreign currency risk Cash flow exposure We expect many of the subsidiaries of our business to have future cash flows that will be denominated in currencies other than the United States Dollar (“USD”). Our primary cash flow exposures are revenues and expenses.
We closely monitor accounts receivable and raise provisions for expected credit losses where it is deemed appropriate. 48 Table of Contents
We closely monitor accounts receivable and raise provisions for expected credit losses where it is deemed appropriate. 49 Table of Contents
We operate in approximately 60 countries and as such, our receivables are spread over many countries and customers. Accounts receivable in Algeria and the U.S. represented approximately 13% and 17%, respectively, of our net accounts receivable balance at December 31, 2022. No other country accounted for greater than 10% of our accounts receivable balance.
We operate in approximately 60 countries and as such, our receivables are spread over many countries and customers. Accounts receivable in Algeria and the U.S. represented approximately 15% and 12%, respectively, of our net accounts receivable balance as of December 31, 2023. No other country accounted for greater than 10% of our accounts receivable balance.
We monitor the ratings of such investments and mitigate counterparty risks as appropriate. We extend credit to customers and other parties in the normal course of business and are thus subject to concentrations of customer credit risk. We have established various procedures to manage our credit exposure, including credit evaluations and maintaining an allowance for credit losses.
We extend credit to customers and other parties in the normal course of business and are thus subject to concentrations of customer credit risk. We have established various procedures to manage our credit exposure, including credit evaluations and maintaining an allowance for credit losses.
As of December 31, 2022, we estimate that a 5% appreciation (depreciation) in USD would result in a change in our net loss of approximately $3.2 million. Interest rate risk We currently have no outstanding variable interest rate bearing debt and accordingly, we are not exposed to variability in interest expense and cash flows due to interest rate changes.
As of December 31, 2023, we estimate that a 5% appreciation (depreciation) in USD would result in a change in our net loss of approximately $2.8 million. Interest rate risk We are exposed to the impact of interest rate changes primarily through our borrowing activities.
Added
Borrowings under the Amended and Restated Facility Agreement bear interest at a rate per annum of the Secured Overnight Financing Rate (“SOFR”) subject to a 0.00% floor, plus an applicable margin of 3.75% (which is subject to a margin ratchet which reduces the margin in 4 step downs according to the Total Net Leverage Ratio (as defined in the Amended and Restated Facility Agreement)) for cash borrowings or 2.50% for letters of credit (which are similarly subject to a margin ratchet which reduces the margin in 4 step downs according to the Total Net Leverage Ratio).
Added
As of December 31, 2023, we had outstanding borrowings of $20 million. A 5% change in interest rates would have an approximate impact of $1.0 million on our results of operations and cash flows. Credit risk Our exposure to credit risk is primarily through cash and cash equivalents, restricted cash and accounts receivable, including unbilled balances.

Other XPRO 10-K year-over-year comparisons