EXPRO ANNOUNCES FULL YEAR 2018 FINANCIAL RESULTS1
Headline results for the fiscal year ended March 31, 2018:
International oilfield services company, Expro, has announced its financial results for the fiscal year ended March 31, 2018. This includes revenue of $651.7m, down 4%, and an adjusted operating profit of $97.7m, down 25.2% compared to the fiscal year ending March 31, 2017.
The results reflect slower market conditions in the first half of the fiscal year, as the industry demonstrated continued caution amid stabilising oil prices. However, the second half of the fiscal year saw confidence increase, particularly in the conventional sector, evidenced by a rise in project sanctions including more brownfield and deepwater projects.
This was echoed in Expro’s results, with several major contract awards in the latter half of the year. Asia, the Middle East and North Africa delivered a robust performance for the year, including a significant contract in North Africa that leverages the company’s expertise across well test, well intervention and production optimisation. The company’s Europe CIS division also performed strongly, primarily due to increased well testing and subsea activity across the region, alongside new subsea clients in the Norwegian Continental Shelf. Activity in North and Latin America was down marginally, predominantly due to sustained lower activity in the Gulf of Mexico. However, the company continues to make progress in Argentina and Bolivia, as operations commenced on a range of new well testing and intervention projects. Sub Saharan Africa, a largely deepwater market, was impacted by the industry’s global decline in activity but is starting to show signs of recovery.
Overall Expro’s four core businesses maintained or grew market share. Despite a fall in global exploration and appraisal activity, well testing and well intervention expanded market share by continuing its diversification into production and intervention. Subsea increased its market leading position for completions, demonstrating a strong bid-win ratio for the fiscal year, while production experienced an increase in demand for optimisation and enhancement solutions.
The emerging product lines continue to focus on delivering value through the successful introduction of new and next generation technologies, including a 30k TCP gun system for extreme high pressure applications, a second generation Cableless Telemetry System (CaTS™) for higher pressure/temperature environments, and the launch of a new Permanent Downhole Monitoring (PDM) business for delivering valuable downhole data solutions.
Expro reinforced its position as the industry’s leading wireless telemetry provider, delivering the world’s first proven wireless transmission of reservoir pressure data to surface, from a recently abandoned subsea appraisal well incorporating a rock-to-rock cement plug. The company also received the prestigious ‘Spotlight on New Technology’ Award at OTC in May for its Next Generation Landing String project, delivering in-riser well intervention technology that exceeds the new upcoming API 17G standards.
While Expro remains disciplined in its approach to cost management and capital expenditure, year-on-year, the company has increased its research and development spend in order to deliver key customer-driven technology solutions.
Depreciation, amortisation and goodwill impairment
The company booked $135.3m of non-cash depreciation and amortisation expenses and incurred non-cash impairment charges of $18.7m against its property, plant and equipment, and $4.2m against investments and intangible assets, resulting in a statutory operating loss of $118.7m.
In February 2018, Expro successfully completed its financial restructuring in just 50 days, delivering a sustainable financial foundation.
The restructuring eliminated the company’s entire $1.4b of funded debt, including the associated $80m of annual interest payments, leaving Expro with a stronger and more flexible balance sheet. It also raised $205.5m in equity from new shareholders, leaving the company ideally positioned to deliver long-term business growth.
Commenting on the company’s results, Mike Jardon, CEO, said:
“With the industry emerging from one of the most challenging periods in its history, this year our key financial priority was to deliver a strong and sustainable capital structure.
“We were delighted to achieve this in such a short period of time, with overwhelming support from shareholders, lenders, employees, customers and suppliers. While the business continues to maintain a focus on cost and capital discipline, it’s vital that we maintain our commitment to developing technology solutions that meet the evolving needs of our customers.
“Market confidence is returning, evidenced by the increase in financial investment decisions being made this year – and projected into next year. While we cannot predict the pace or scale of this, we must ensure that our business remains closely aligned and prepared.
“Thanks to our strong partnerships with customers, we have maintained a stable long-term customer base over the past three years. These relationships, alongside our industry-leading reputation for safety and service quality, position us well and we look forward to the future with continued confidence.”
In order to align the company with industry standards and client budget processes, Expro will transition its financial reporting period from a fiscal year to a calendar year, effective 2018.4
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, amortisation 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.
4 Inclusive of a calendar report year, the company will also move its financial reporting from International Financial Reporting Standards to US GAAP standards.
The consolidated financial data as of and for the years ended March 31, 2018 and 2017 has been derived from Expro Holding UK 2 Limited’s audited financial statements, which have been prepared in accordance with IFRS.