Expro announces full year 2017 financial results1
Headline results for the fiscal year ended March 31, 2017:
• Revenue was $678.6m, down 25% on the prior fiscal year (2016: $909.1m)
• Adjusted operating profit2 of $130.6m, down 41.6% (2016: $223.5m)
• Adjusted operating margin3 decreased year on year, at 19.3% (2016: 24.6%)
• Successful capital restructuring in October 2016, significantly de-leveraging the company, saving $40m annual cash interest payments
• Additional $100m cash contribution
International oilfield services company, Expro, has announced its financial results for fiscal year ended March 31, 2017. This includes revenue of $678.6m, down 25%, and an adjusted operating profit of $130.6m, down 41.6% compared to the fiscal year ending March 31, 2016.
Expro has adjusted its business to the challenging market conditions of a prolonged global downturn in the oil and gas industry, while maintaining the highest levels of safety and service delivery in the industry. Core areas of the business, including well testing and well intervention, have maintained market share by redeploying exploration and appraisal (E&A) related equipment to meet an increasing demand for production and intervention related services.
This complements an increased focus on Expro’s production optimisation business, which combines specialist subsurface and process engineering expertise, with cost effective flow measurement and production enhancement solutions. Key technologies include Expro’s sonar flow measurement meters, ExH20 bulk water removal system and fast track production enhancement solutions.
Operational efficiencies have been achieved through increased asset utilisation and the multi-skilling of offshore teams, alongside a select number of base consolidations. While revenue and adjusted operating margin is lower year on year, Expro’s careful approach to cost management has resulted in the company delivering an adjusted operating margin of 19.3% for the fiscal year 2017.
Depreciation, amortization and goodwill impairment
The company booked $209.3m of non-cash depreciation and amortisation expenses and incurred non-cash impairment charges of $26.9m against its property, plant and equipment, and a one-time non-recurring charge of $25m related to country risk exposure in Venezuela, resulting in a statutory operating loss of $157.3m.
In October 2016, Expro’s shareholders and lenders, representing approximately 98% of borrowings under the company’s mezzanine loan facility, completed a successful capital restructuring. This restructuring exchanged their entire outstanding principal and accrued payment in kind (PIK) interest for equity in Expro. As a result, virtually all of the company’s mezzanine facility (approximately $784m of $800m) was cancelled in return for equity in Expro, significantly reducing the company’s leverage, removing all covenants under the mezzanine facility and saving nearly $40m annually in cash interest.
Expro’s new shareholder base also committed to an additional $100m cash contribution completed and paid up in full during February of 2017.
Commenting on the company’s results, Mike Jardon, CEO, said:
“It’s been an incredibly tough year, not only for Expro, but for the oilfield services industry. In a highly cost competitive environment, we’ve had to work harder than ever to maintain market share in our core product lines, adapting our products and services to a changing market place.
“That said, we’ve had some good results this year which I genuinely believe are down to our reputation for safety and personalised customer service. Our Asia, Middle East and North Africa regions remained largely resilient, thanks to strong well testing activity associated with early production projects, increasing demand for our flow measurement services and a significant contract win for our well intervention business.
“We’ve worked tirelessly across all regions to maintain our strong customer relationships, deliver quality and champion safety, evidenced by a range of recent large contract wins in strongholds like Europe CIS.
“Expro also expanded its global footprint, as the competitive market place creates new opportunities for companies prepared to partner closer with the service industry. For example, the company has expanded its well intervention business in Bolivia, introduced drill stem testing in to Europe and has started work on its first production project in India.
“While the market recovery continues to unfold, we have a strong shareholder base behind us, ready to support and invest in our business as it recovers. In the meantime, we have adjusted the business to become even more lean, efficient and fully responsive to our customers’ needs.”
Notes to Editors:
1 All financial numbers reported under International Financial Reporting Standards (IFRS).
2 Adjusted operating profit (as reported under IFRS) is defined as operating profit excluding impairment, depreciation, amortization and other similar non-cash items, together with other items that either distort the underlying trends of the business or are not considered by management to be part of the core operations of Expro. Management believes that adjusted operating profit is a useful measure of operating performance due to the significance of Expro’s long-lived assets and level of indebtedness.
3 Adjusted operating margin is defined as adjusted operating profit over revenue.
The consolidated financial data as of and for the years ended March 31, 2017 and 2016 has been derived from Expro Holding UK 3 Limited’s audited financial statements, which have been prepared in accordance with IFRS.
Expro’s mission is well flow management. We provide services and products that measure, improve, control and process flow from high-value oil and gas wells, from exploration and appraisal through to mature field production optimisation and enhancement.
For more information, please visit: www.exprogroup.com/about-us
Expro – Kay Marshall +44 (0) 1224 225 700
Fifth Ring – Andrew Bradshaw +44 (0) 1224 626 288