Expro (XPRO) Q3 2026 Earnings Call Transcript

DATE

Nov. 3, 2026

CALL PARTICIPANTS

• Vice President, Investor Relations - Dave Wilson
• Chief Executive Officer - Michael Jardon
• Chief Financial Officer - Sergio Maiworm Jr.

TAKEAWAYS

• Revenue -- $439.9 million, growing 12% sequentially due to higher activity in underlying business lines and the inclusion of the Enhanced Drilling acquisition.
• Adjusted EBITDA -- $91.2 million, representing a 20% sequential increase and a 20.7% margin.
• Adjusted Free Cash Flow -- $52.3 million, reflecting improved cash generation despite $31.5 million in capital expenditures during the quarter.
• Full-Year Adjusted Free Cash Flow Guidance -- $140 million to $150 million, representing an increase from the previous range of $135 million to $145 million.
• Q4 Adjusted EBITDA Outlook -- $100 million to $110 million, reflecting a $20 million reduction from previous expectations due to deferred subsea and well intervention activity.
• 2027 Preliminary Guidance -- Management initially expects mid-teen growth in adjusted EBITDA and over 20% growth in adjusted free cash flow.
• NLA Segment Revenue -- $155.3 million, up 20% sequentially driven by higher well construction activity in Brazil, Suriname, and the U.S. Gulf.
• ESSA Segment Revenue -- $148.5 million, up 17% sequentially primarily due to the Enhanced Drilling acquisition and higher construction management in Ivory Coast and Azerbaijan.
• AMENA Segment Revenue -- $136.1 million, down 1% sequentially as growth in India was offset by lower well flow management revenue in Saudi Arabia and reduced activity in Malaysia.
• Share Repurchases -- $52 million year to date, totaling 3.2 million shares and exceeding the company's commitment to return at least one-third of adjusted free cash flow to shareholders.
• Liquidity -- $260 million, consisting of $172.5 million in cash and cash equivalents plus $87 million available under a revolving credit facility.
• Revolving Credit Facility -- $259 million outstanding, following a $180 million increase during the quarter to fund the Enhanced Drilling acquisition.
• Net Debt -- $87 million, placing the company in a strong financial position with a net leverage ratio of less than 0.5 turns.
• Full-Year Revenue Guidance -- $1.66 billion to $1.68 billion, incorporating the impact of the ongoing Middle East conflict and the inclusion of Enhanced Drilling.
• Maestro Technology Impact -- Full deployment of the modular well-test platform reduces red zone exposure by up to 67% through automation and remote control.
• Enhanced Drilling Contribution -- The acquisition is expected to provide approximately $25 million in incremental EBITDA on an annualized basis.
• Well Construction Revenue -- $186.9 million, representing 42% of total revenue during the quarter.
• Well Management Revenue -- $253.1 million, accounting for 58% of total revenue and including well flow management, subsea access, and well integrity services.
• CapEx Guidance -- $110 million to $115 million for the full year, focused on high-return organic investments rather than speculative spending.
• New Buyback Authorization -- $100 million, authorized by the Board of Directors on Oct. 26, 2026, and valid through Dec. 31, 2027.

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RISKS

• Jardon stated, "The delays in the subsea work in NLA are the result of loop currents in the US Gulf that impacted our operations late in the third quarter and early in the fourth quarter," noting that environmental factors pushed high-margin activity into 2027.
• Jardon noted that the Middle East conflict resulted in "originally anticipated and budgeted activity growth in 2026 in the region [that] did not materialize as we had expected at the start of the year."
• Jardon noted the inherent dangers of energy industry work following "the sinking of the Prospector 5 jackup rig in Gabon," where company personnel were recently evacuated.

SUMMARY

Expro Ltd (NYSE:XPRO) reported sequential increases in revenue and adjusted EBITDA driven by a step-change in offshore activity and the integration of its Enhanced Drilling acquisition. Management raised full-year adjusted free cash flow guidance despite tempering fourth-quarter expectations by $20 million due to subsea activity delays in the U.S. Gulf and well intervention schedule changes in Colombia. The company implemented a strategic realignment by merging its Asia-Pacific and Middle East regions into a single AMENA segment to leverage economies of scale and better align with national oil company behaviors. Looking toward 2027, the company expects continued growth in profitability and cash flow, assuming a stable environment in the Middle East and the realization of deferred project revenue.

• Management merged the APAC and MENA regions to create the AMENA segment, which now accounts for approximately one-third of total company revenue.
• CEO Jardon noted that leading indicators for the offshore industry, including project final investment decisions and subsea tree orders, "have all been moving in the right direction."
• The company is assuming a "status quo" baseline for the Middle East for the remainder of 2026 and well into 2027, given current geopolitical volatility.
• CFO Maiworm stated that deferred projects in the U.S. Gulf and Colombia remain in the order backlog for 2027, meaning the schedule changes affect the timing rather than the ultimate value of the results.
• The company commenced its first operations using Enhanced Drilling technologies in West Africa, expanding the dual gradient EC-Drill system outside the North Sea and U.S. Gulf.
• CEO Jardon indicated that technology adoption through Maestro and ArticuLock is intended to expand the company's share of the customer wallet by driving operational efficiencies.

INDUSTRY GLOSSARY

• AMENA: The combined geographic segment covering Asia, the Middle East, and North Africa.
• ArticuLock: A technology designed to reduce fatigue and bending loads during well construction and subsea recovery.
• EC-Drill: A dual gradient managed pressure drilling technology acquired through Enhanced Drilling.
• FID: Final Investment Decision, a key milestone for large-scale energy projects.
• Loop Currents: Ocean circulation patterns in the Gulf of Mexico that can force dynamic positioning vessels to suspend operations.
• Maestro: A modular well-test platform utilizing automation and real-time visibility to improve safety and efficiency.
• MPD: Managed Pressure Drilling, a specialized technique for managing wellbore pressure.
• NOC: National Oil Company, a state-owned enterprise in the energy sector.
• Red Zone: Hazardous areas on a drilling rig floor where personnel exposure is minimized through automation.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us, welcome to the Expo Third Quarter 26 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Dave Wilson, Vice President, Investor Relations. Mister Wilson, please go ahead.

Dave Wilson: Thank you, operator. Good morning, everyone, and welcome to Expro's third quarter 26 earnings call. I am joined today by Michael Jardon, CEO and Sergio Maiworm, CFO. Both Mike and Sergio will have some prepared remarks, after which we will open the call for questions. In association with today's call, we have an accompanying presentation on our third quarter results, which is posted on the expo website, expro.com under the investors section. Before we begin today's call, I will remind everyone some of today's comments may refer to or contain forward looking statements.

Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These statements speak only as of today's date and the company assumes no responsibility to update such forward looking. The company has included in its SEC filings cautionary language identifying important risk factors that could cause actual results to materially differ from those set forth in any forward looking statements. Please note any non GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable GAAP financial measures in our third quarter 26 earnings release which was issued this morning.

With that said, I will turn it over to Mike.

Michael Jardon: Thanks, Dave. Good morning, everyone, and welcome to Expro's third quarter call. Before we begin our discussion around the third quarter results, I would like to mention the people recently impacted by the sinking of the Prospector 5 jackup rig in Gabon. We had a few folks assigned to the rig, all of which were thankfully safely evacuated. This incident serves as an unpleasant reminder of the inherent danger in the work the industry does in order to provide affordable and readily available energy to the world. It also highlights why safety remains a persistent focus for those of us involved in the energy industry. Again, our thoughts and prayers go out to those affected by this accident.

With regards to our third quarter, I will start off by reviewing the financial results found in today's press release. I will then comment briefly on the overall macro environment then address our fourth quarter and full year guidance and finally conclude with some operational highlights for the quarter. Following my comments, Sergio will then address Expro's new operating and financial reporting structure as well as the company's capital allocation during the quarter. Let's begin on slide number 3. For the third quarter, as expected, the company saw a sizable increase in both revenue and adjusted EBITDA. The company generated $440 million of revenue and $91 million of adjusted EBITDA representing a 21% margin.

Adjusted free cash flow for the quarter was $52 million. Overall, revenues were up 12% sequentially and adjusted EBITDA was up 20%. These increases were driven by higher activity in Expro's underlying business lines, as well as the inclusion of enhanced drilling operations during the quarter. For the 9 months ending September 30, the company has done well. Particularly in our efforts to increase our free cash flow generation. The recent third quarter represents a near record for free cash flow generation. Based upon these results and our projection for the fourth quarter, we are raising our annual 2026 guidance for adjusted free cash flow expectations.

Which will now be in the range of $140 million to $150 million While we are pleased with the sequential increases in our third quarter results, we note that they are in the lower half of the guidance range. This is primarily due to our NLA region or some of our subsea related activity late in the quarter was impacted by the ongoing loop currents in the US Gulf. I will touch on this as well as the impact on our fourth quarter expectations in a moment. Prior to addressing our fourth quarter guidance, I want to share a few thoughts on how we currently see the market.

We continue to observe a market that is particularly supportive of offshore and international investments especially in the coming years. This view really has not changed at all this year as we saw the genesis of this late last year. The leading indicators for offshore industry such as project FIDs, subsea tree orders, and floating rig utilization have all been moving in the right direction. Accordingly, they have served as the basis of the optimism in the market. The Middle East conflict remains 1 with global ramifications as does the Russia-Ukraine conflict. Collectively, these conflicts are expected to continue to have a meaningful global impact on overall energy markets commodity prices and trade flows.

The associated volatility and uncertainty have reinforced the strategic importance of energy security and dependable supply sources. This has prompted operators and governments to reassess supply chains and diversity of investment across multiple regions particularly offshore which has added to the long term optimism surrounding this market. Deep water remains 1 of the most attractive areas for incremental upstream investment and is expected to capture a significant share of future capital allocation. This trend aligns closely with Expro's core strengths and global footprint. As operators prioritize large, high quality offshore developments, that can deliver competitive returns and long term production.

Offshore is a long cycle business and 1 where we believe we are still in the early innings of a developing up cycle. Looking further ahead, we believe the outlook remains favorable through the end of the decade as breakeven prices are much lower today than they were a few years ago. Both offshore and international markets are expected to be healthy as producers continue to focus on recovery optimization, production enhancement, and faster execution more so rather than rig led expansion. This growing emphasis on operational efficiency and brownfield optimization represents a significant opportunity for Expro. Given our differentiated technologies and expertise in maximizing production performance from existing assets.

Turning to Slide 4, where we are providing our fourth quarter and our updated 2026 financial guidance. As I mentioned, we have experienced an operational and a financial sequential step change from the second quarter across the core business as well as the inclusion of our recently announced enhanced drilling acquisition. And we expect further sizable sequential increases in the coming fourth quarter. With regards to our expected EBITDA generation, while the bulk of the contributors to the anticipated sequential increase in the fourth quarter are still in place there has been some activity that has been pushed to the right. This has resulted in adjusted EBITDA expectations for the fourth quarter to be tempered by approximately $20 million.

However, you will note that we continue to make solid progress towards our ultimate goal of double digit free cash flow margins. The activity that has been pushed to the right centers on some high margin subsea operations in North and Latin America. The delays in the subsea work in NLA are the result of loop currents in the US Gulf that impacted our operations late in the third quarter and early in the fourth quarter. Additionally, the recent hurricane in The U. S. Gulf has temporarily affected the NLA operations.

On top of the weather and environmental factors, impacted the US Gulf activity, there has been a delay in well intervention integrity work in Colombia, which we expect to impact fourth quarter results as well. With regards to the Middle East, while uncertainty and volatility remains, our operations in the Middle East and North Africa regions have continued to be resilient as well. The main effect on the company from the Middle East conflict has been that our originally anticipated and budgeted activity growth in 2026 in the region did not materialize as we had expected at the start of the year.

However, despite the disruptions, we expect that a combined 2026 financial results from these regions to look similar to last year's. We continue to focus on factors that are within our control and will maintain the disciplined mindset of deployment of capital. We remain steadfast in our commitment to expand margins increase free cash flow generation, and return capital to shareholders. Looking a bit ahead to 2027, we are in the early phase of working through our budget but initially we expect mid teen growth in our adjusted EBITDA in 2027. We will refine these expectations as we and our customers more importantly conclude the budgeting process for next year.

And for the time being, we are assuming status quo in The Middle East for the remainder of 2026 and well into 2027. Now moving on to our customer technology highlights for the quarter on slide number 5. Expro's recently launched Maestro is a modular well test platform that is designed to support safer, more efficient operations while retaining human oversight of critical decisions. This product is very indicative of Expro's focus on technology where it combines automation, remote control and real time visibility, and decision support. Expro's Maestro technology and process helps reduce operational complexity, across both onshore as well as offshore environments. A full deployment of Maestro has shown to reduce red zone exposure by up to 67%.

Another of Expro's technology that gained traction in the third quarter was ArticuLock. Across the North Sea, ArticuLock has been utilized in well construction intervention, and subsea recovery projects and at water depths in excess of 3.3 thousand feet. This technology reduces fatigue and bending loads and on 1 campaign, actually enabled safe operations despite harsh weather conditions where we avoided several days of operational delays. Now continuing to highlight Expro's technology, the company secured 8 finalist nominations at the 26 Gulf Energy Information Excellence Awards demonstrating the breadth and strength of our technology portfolio. The company's iTONG won best controls instrumentation automation technology for upstream. Expro's success with nominations and award is impressive here.

I think for 2 main reasons. First, it demonstrates the success of the company's continued focus on developing and deploying practical technologies that support safer operations stronger performance, the evolving needs of our customers. And second, the nominations and awards were competitive with those received by much larger oil food services companies. This once again demonstrates how we often punch above our weight class when it comes to technology and service. Another area I would like to highlight here is the commencement of the company's first operations utilizing enhanced drilling technologies in West Africa. Expanding the technology usage outside the North Sea in the US Gulf, We remain very excited about the enhanced drilling acquisition and the technology offering.

Not only does it provide tremendous value to its customers, enabling them to access reserves that were previously thought inaccessible, this MPE technology provides value in normal drilling activities by enabling wells to be drilled more efficiently saving days of total spread costs and ultimately improving project economics for the customers. We believe this dual gradient EC-Drill technology is the industry leading MPD technology that it will continue to gain traction in the industry over the next couple of years. With that, I will turn the call over to Sergio for his comments on the quarter.

Sergio L. Maiworm Jr.: Thank you, Mike, and good morning to everyone on the call. Before I begin, I just wanted to quickly highlight that we are building strong momentum in cash generation, and we are further increasing our full year 2026 adjusted free cash flow guidance to a range of $140 million to $150 million What excites us is the opportunity to build on that performance in 2027. While our budgeting process is still underway, early indications are robust pointing to mid teens percentage growth in adjusted EBITDA, and an increase in more than 20% in adjusted free cash flow, both year over year.

That combination of earnings growth and even stronger cash flow growth underscores the opportunity ahead as we remain focused on translating improved profitability into cash and long term value for our shareholders. Now sticking with our last quarter's format, I do not intend to comment on the specific detailed results by geographic region. Rather, that commentary can be found in both the third quarter earnings release and the appendix of the accompanying presentation. Specifically for Q3, Expro's overall adjusted EBITDA was $91 million with a margin of approximately 21%. Which was an increase of almost 140 basis points from the previous quarter.

Our adjusted free cash flow was $52 million for the quarter, relatively flat with the previous quarter but reflects a good improvement year over year. Furthermore, we still expect a good improvement in 2020 free cash flow when compared to last year, even as we had to address some of our near term expectations. Moving on to Slide 6. We continue to explore ways to make our business more efficient and optimize our operating structure. As a consequence, during the quarter, we decided to merge a smaller region in terms of revenue and EBITDA our APAC region, into another region, the MENA region, to create the combined MENA-APAC region.

We believe this move will enable us to take advantage of economies of scale using the larger region in terms of operations and infrastructure to also support a smaller 1, The combination also makes operational sense. Both regions provide similar services supporting customers operating expenditure brownfield and greenfield projects, as well as deepwater operations. Additionally, the customer engagement is similar with some customers in the former APAC region behaving more NOC like with their oilfield service vendors. This combination of regions will enhance the support for our operations in Asia rather than taking away from it. As there will be more continuity through our product line offerings.

Initially, we do not see this as a major cost saving exercise though we do expect some small financial benefits in the near term. And finally, now each region will represent approximately 1-third of the total revenue of the company overall. Now turning to Slide 7. We remain focused on expanding our margins. And as we have mentioned previously, this journey will not necessarily be in a straight line. As Mike mentioned, some of our high margin work in the fourth quarter has been pushed to the right And as a result, our margin expectations for the fourth quarter has been moderated as well.

We still are committed to expanding our margins, We remain focused on cost efficiency and increasing our customer wallet share at higher margins. Additionally, we continue to internationalize services and technologies acquired through M&A. In the medium term, we still see improvement in our financial performance, some of which will be the result of market factors, but others will be driven by the Expro specific actions I just highlighted. A look at slide 8 shows what we are doing with our free cash flow on a relative basis.

Index back to 2022, Expro has 1 of the best free cash flow growth profiles in the industry, It is evidence that our focus on free cash flow is bearing fruit, and it has had a positive, impactful change to the company financial performance. And while we are extremely proud of that, we acknowledge more work needs to be done and we intend to continue to strive to improve our free cash flow profile. Now quickly turning to liquidity position, we have included this on Slide 9. The company has closed the quarter with $260 million in total liquidity.

That includes $172 million in cash on the balance sheet, At quarter end, we had $259 million outstanding on our revolving credit facility, which was an increase of approximately $180 million from the previous quarter. This was a result of using the RCF to fund the Enhanced Drilling acquisition less the amount of repayments made on the RCF during the quarter. This puts Expro at a net debt position of just $87 million at quarter end, so we are still in a very strong financial position with less than half a turn of net leverage. And by maintaining a strong balance sheet, the company is well positioned to execute on its other capital allocation priorities. These are on Slide 10.

And rather than go into detail reiterating our capital allocation framework, I will quickly highlight the 4 equally important capital deployment priorities. As I just discussed, 1 is maintaining a strong balance sheet. Again, by doing so, we maintain the financial flexibility and resiliency to act on our other capital allocation priorities. Another is M&A, where we focus on opportunities that offer clear industrial logic scalable technologies and synergies, and the potential to expand our presence in attractive markets. M&A is an integral part of our overall strategy, and we have a good track record in that regard.

We continue to look at a variety of opportunities from small bolt on to things that would have a much more transformative impact to the company. The third is investing in the business. We utilize CapEx to maintain and drive high return organic investments and do not spend CapEx speculatively. Every CapEx dollar is geared towards specific projects with known return profiles that meet or exceed our standards. And finally, return of capital to shareholders. As we have already stated, year to date in 2026, we have repurchased approximately 3.2 million shares for roughly $52 million.

While we have already returned above our at least 1-third of adjusted free cash flow commitments, we will remain opportunistic with share repurchases through the balance of this year. Before turning the call back over to Mike, I do want to address the financial outlook for the fourth quarter of 26 as Mike previously addressed in Slide 4. Given Expro's relative size, yet broad breadth of exposure globally, the company's overall results can be impacted by industry factors, isolated to a specific geographic region or regions from time to time. These industry factors are impacting our expected fourth quarter results, and they do not relate to Expro's level of performance, loss of market share or loss of contract.

Rather, they serve as a reminder of some of the challenges in a long cycle business that is often difficult to predict, Many sizable fourth quarter contributors such as a production solutions project in North Africa, the tubular sales in NLA and equipment sales in The Middle East and Asia are still on track Others, as Mike mentioned, have been pushed out. Namely some high margin subsea operations in NLA and the well intervention integrity work in Colombia. It is important to point out that despite these temporary headwinds, our updated fourth quarter guidance still reflects what would be a record quarter for the company. Another indicator that we are moving in the right direction.

With regards to work getting pushed to the right, these projects remain in our order backlog for execution in 2027 with their value profitability and associated cash flow still retained. These changes affect the timing, but not the value of our results. With the deferred activity now expected to contribute in 2027. Regarding the Middle East, we are maintaining our status quo view of the region for the fourth quarter and have kept that view as a baseline for 2027. With that, I will turn the call back to Mike for a few closing comments.

Michael Jardon: Thank you, Sergio. As we conclude our prepared remarks and before opening up for questions, I would like to conclude with the following comments. As Sergio just mentioned looking forward to executing on a record performance in this upcoming quarter. We continue to see strengthening in the key indicators that we actively monitor. Areas such as FID approvals, subsea tree orders, and overall rig utilization. We believe that our relentless focus on technology development improving internal and external operating efficiencies, and punching above our weight each and every day will position us very well for the upcoming offshore international growth.

I remain confident in the company's ability to deliver improving financial results in the future and our employees ability to deliver safe, high quality, value added services to our customers. With that, we can open up the call for questions.

Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset while asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line Keith Beckmann with Pickering Energy Partners. Your line is open. Please go ahead.

Keith Beckmann: Hey. Good morning, and thanks for taking my question. Just kind of wanted to ask around thinking about free cash flow here. You know, obviously, some headwinds here in Q4, but free cash flow guidance for 2026 was raised regardless of that. And then also 2027, 20%-plus growth. Trying to get a sense on maybe some of the internal improvements you guys have been able to make and look like trying to continue to make here into 2027 and maybe mechanically, a little bit more depth. How should we think about this? Thanks.

Michael Jardon: Okay. Thanks for, thanks for joining. Thanks for the question. I mean, you know, fundamentally, it is 1 of the things I am extremely proud of is you know, we really have the organization focused on the things that they can control. And you know, activity that we have had in the US Gulf in Q3 or in Q4, when we are dealing with some weather challenges or we are dealing with weather currents, you know, loop currents you know, the guys cannot control that.

What they can control is you know, the efficiency on our spend, you know, cost management, cost control, as we introduce new technology that helps drive efficiency, know, reducing the number of personnel on board or you know, expanding the customer wallet for additional operations on a given, you know, on a given asset. Those kind of things. And we continue to, as we have always said, you know, we do not spend CapEx dollars speculatively. We spend CapEx dollars to projects.

We just continue to maintain that focus And, you know, the result of it is making sure that even when we have a, you know, a little bit of softness because of activity, we can continue to stay focused on the, you know, on the cash generation.

So it is really just seeing internal efficiencies of people utilization and how do we use more technology and, you know, for back off support and those kind of things. it is just kind of the culmination of all of those efforts internally to drive that efficiency and also with the efficiency that we have you know, on a rig, reducing number of personnel, additional services, I mean, those kind of things, they all kind of combine up. that is why we are continuing to be able to focus on expanding cash generation.

Keith Beckmann: Okay. Awesome. Thank you. And then just following up on that a little bit, how should we be thinking about capital allocation heading into next year where, you know, you guys had the $100 million buyback authorization. Right? Know, potential growth internally within enhanced, if that is possible. And then also the last piece, essentially, you know, further M&A and. On M&A, like, what is there any examples of acquisitions or product lines that you think would make more sense and then things that do not make as much sense to give a sense out there of what is possible. Thanks.

Michael Jardon: Sure. I. I will try to tackle a couple of those. I will kinda try to peel it onion back a little bit. I mean, fundamentally, know, still to be finalized because we are we are early innings on the budget process. What we tried to highlight was really kinda what our sense is of how 2027 is going to play out. I think we are probably being a little bit conservative today just given how we see the outlook for next year. I would anticipate we are still gonna be at least 1-third of our free cash flow, you know, return to shareholders.

I would not that to change, but frankly, that is a discussion we will have with the board once we actually go through the budget for 2027. But right now, I would not anticipate that is going to change You know, we continue in terms of M&A we continue to be, you know, focused on that. We continue to look at things that would help us expand our portfolio and help us expand relevancy with our customers.

I think we are in a unique position because we have touch points all the way from our customers' expiration programs, so they are appraisal to drilling to completions to production, all the way through abandonment We have a lot of opportunities to focus on know, bolt ons that will. Whether it is a technology expansion or it is gonna be something that just helps us you know, extend the breadth of the services that we have.

We have a lot of options and we continue to look at a number of transactions It gives me a lot of confidence because we have been able to go out and execute on transactions More importantly, we have been able to bring them in. We have been able to take the costs out. We have been able to achieve the synergies. Been able to integrate those. Just gives me more confidence that we can continue to do those things that make sense, and they are always going to be led by the industrial logic. And so nothing pleases me anymore than when customers.

We get feedback from customers like we did with enhanced drilling of that really makes good sense. We are glad to see you guys expand your portfolio into that. That tells me the industrial logic was really sound and easy for them to understand. Sergio, anything you want to add on either of those? No, Mike, I think that is pretty comprehensive.

Sergio L. Maiworm Jr.: The other thing is, as Mike mentioned, we look for additional bolt ons, whether those are technology, but we also look for transformative transactions. It really is guided by the industrial logic or the strategy of the company and how that makes strategic sense. that is what drives our actions. there is no other--no other metric that we look at to kind of drive those things.

Keith Beckmann: Okay. Perfect. Awesome. I will hop back in queue. Thanks.

Michael Jardon: Thanks, Keith.

Operator: Your next question comes from the line of Eddie Kim with Barclays. Your line is open. Please go ahead.

Edward Kim: Hi. Good morning.

Michael Jardon: So you reduced Q4 EBITDA expectation by about $20 million because of Gulf Of Mexico subsea work and Colombia intervention activity shifting into next year, how confident are you that essentially all of that EBITDA is going to be recovered next year? And should we think about most of it occurring in the first half of next year? Do you think it flips maybe to just to the second half of next year? Yeah. Eddie, thanks for joining. Yeah. Eddie, thanks for joining. I guess--so there is no risk of that activity being lost it is really a timing issue. And so, you know, it is more a matter of when they are gonna execute on those operations.

And frankly, we have had more we have had a greater proportion of our customers being in completion phase in the US Gulf than in the drilling phase. And for us, our service intensity is a little bit higher when we are in drilling operations versus completion operations. So that is a little bit of a timing effect that we have had here in Q3 and Q4.

Part of it is because as they are dealing with loop currents, and we are dealing with vessels that have they have a limitation on their ability to reposition dynamically. it is easier to be in the middle of a completion operation be able to shut things down than it is when you are in the middle of a drilling operation. So it is it is really just kind of the timing of that. I would anticipate all of that activity will still happen next year.

Part of what we will sort through with the budget process here now is kind of putting pen to paper on what is the exact timing of how those operations are they going to happen in you know, January, they are gonna happen in, you know, April, that is kind of what the timing is. But overall, we will not lose that activity in any way shape or form And frankly, the thing coming into Q3 and Q4 that I was the most probably had the highest situational awareness too was some of the bigger lumpier kind of project related things we had. Those were the ones that I was concerned about.

Actually happening here in the fourth quarter in particular. Those are not the ones that we are having a you know, a bit of a challenge with in the fourth quarter. it is just more of the normal operational rhythm of some of the activity. So those are things that will continue to, you know, come back into the fold as we move into 2027, if that makes sense.

Edward Kim: It does. It does. Thanks for that color, Mike. My follow-up is just maybe peeling back the onion a bit on the preliminary mid-teens EBITDA growth guidance for next year. that is about a $50 million increase. 20 million of that shifted from Q4 into 2027. And if I am not mistaken, you should be getting about a $25 million kind of incremental contribution from the enhanced drilling acquisition. So putting all that together, I mean, those 2 items make up almost the entirety of that increase. So is it fair to assume that your preliminary guidance of mid teens growth assumes little to maybe no growth in your underlying business.

Next year, or are there other factors that I should be considering that I am not?

Sergio L. Maiworm Jr.: Hey, Eddie. This is Sergio. No. Thanks for the question. Look, I think as Mike said, this is preliminary, right? And it is still, we are taking a conservative approach here to not to over promise on any of this. But we are expecting some growth in our base business this despite this change from the fourth quarter activity in The U. S. Gulf to 2027. Take that as aside, we are expecting some growth in our base business as well. Plus the full year activity of enhanced drilling. So again, it is a conservative approach on our guidance for next year's EBITDA at this point. But you should expect some base some growth in our base business as well.

Edward Kim: Understood. Thank you. I will turn it back. Thanks, Eddie. Thanks, Eddie.

Operator: Your next question comes from the line of Alexa Brenna with Goldman Sachs. Your line is open. Please go ahead.

Analyst: Hey. Good morning, team, and thanks for taking our question. Can you just talk a little bit more about that 2027 outlook? What kind of activity is embedded in that? And then as we just think about top line versus margins, how should we think about some of those moving pieces from a regional perspective?

Sergio L. Maiworm Jr.: Hi, Alexa. Good morning, and thank you for the question. Look, we are not in a position to give you that level of detail today. This is as Mike mentioned, we are still in the early innings of our budgeting process. We are just trying to give a flavor to the market on where we think or the direction that things are moving. But we are not in a position to give you detailed expectations on regional and top lines and those kinds of things. So I think that is the best guidance we can give you is what we have already provided.

Analyst: Okay. that is helpful. And then maybe just a follow-up As we kind of think about some of these differentiated technologies, can you just talk about potential for incremental market share or pricing? How do you think about those moving pieces?

Michael Jardon: Yeah, it is a great question. it is you know, so many of these are know, it is not necessarily going to be a market share gain. What it is gonna allow us to do is to expand the wallet. You know, we are going to add an additional service You know, we talked about Maestro. You know, Maestro is 1 in which it will bring some value to us as a company because it will reduce our dependency on the number of personnel on a well flow management job. It also will bring more automation to the customer So it is really.

And that does not have a does not have a market share impact for us necessarily directly But what it does do is it allows us to expand our margins because we are more reliant on technology, we are able to reduce the footprint, those type of things. So that is really where it is you know, so much of our I kind of alluded to it in our relentless focus on internal and external efficiencies. it is really in just how do we how do we drive more How do we drive more cash generation? How do we drive more margin expansion? And it is more so around that than it is.

And frankly, we will have some market share opportunities, but that is not the focus of it because in so in the majority of our product lines today, have very, very high market shares. So it is not about market share. it is about expanding that customer wallet.

Analyst: Appreciate the color. We will turn it back. Thank you. Thanks for the question.

Operator: Your next question comes from the line of Joshua Jayne with Daniel Energy Partners. Your line is open. Please go ahead.

Joshua Jayne: Thanks for taking my questions. I just wanted to follow-up on maybe how the environment is different today versus where we were a year ago, and obviously, things have changed since the Iran conflict since the beginning of the year. Could you just comment as we have seen day rates for rigs approach $500 thousand a day, is there a difference in the sense of urgency that you are having with customers as you head into contract negotiations or talking to 2027 than you were facing a year ago or even earlier this year?

Michael Jardon: Yeah. Joshua, thanks for joining. it is a good question. it is I would say it is more constructive today than what it was a year ago. I think there continues to be some more you know, some more positive sentiment around, you know, rig rate utilization, you know, I kind of alluded some of the key factors and some of the key metrics that we monitor and watch. You know, the number of FIDs being approved, the dollar value of FIDs being approved, geographically where those FIDs are occurring, I think those are all positive, moved in a good direction. There continues to be a robust, you know, subsea tree you know, backlog, you know, those type of things.

Rig utilization, I think, continues to be quite robust. So a lot of these are heading in the right direction. I think what is a little bit different today is historically I would have said by November 3 each year, we probably have more clarity on customer projects from a you know, almost down to a drilling program or completion program. You know, across the board, we typically have more details on that than what we have today. as of November 3, 2026. I think part of that is just the uncertainty across the globe. We see that in the choppiness in commodity prices, and you see that just, you know, kind of geopolitically.

So I think that is introduced a little bit more uncertainty. But I think there tends to be--there continues to be some really positive good long term indicators that we are continuing to move to the right. I think 2027 is gonna be strong and robust. I think that just sets things up for an even more, you know, an even better activity set as we go into 2028, 2029. Thanks for that detail.

Joshua Jayne: And then this 1 may be for Sergio. The company made the decision to combine the MENA and APAC geographic regions. Could you noted looking for ways to optimize and enhance efficiency across the organization. Could you just go into some more of the details on the benefits of doing this, when you can expect to see tangible benefits, And is it fair to assume that there is some sort of cost savings associated with this? Maybe just some more details would be great, and then I will turn it back. Thanks.

Sergio L. Maiworm Jr.: Yeah, Joshua, I appreciate the question. Yeah, so your assumption is correct. We do expect some financial benefits by combining the region. But I think at the end of the day, this creates more efficiencies in the operations of those 2 regions. there is a lot of common product lines that we serve in both those regions. So that makes the operations more efficient. I think on the long term, there is a lot of additional things that make sense as well to put these 2 businesses together as customers, customer behaviors in a lot of ways are very similar in the Asia region.

And in the former MENA region, as well as some deepwater operations that we have in Africa and in APAC, so you can actually or the former APAC, you can actually combine a lot of those activities into fewer people, more clear decision and faster reaction to customer needs.

Michael Jardon: And Josh, just to add, because this is part of the complexity of and I have had historic exposure to, you know, Asia and Middle East, North Africa, you know, alignments organizationally. Part of the challenge is it is geographically very spread, time zone is very complex very complex. We did not arrive at this decision lightly. it is something we have been analyzing and looking at for an extended period of time. And fundamentally, we made the decision to, you know, integrate and move those together and move those forward together largely because we feel like we can better support our customers We think we can. that is a more appropriately sized, region for us.

We can actually provide overall better support to them and frankly better support to our organization as well operationally. It was much more around how do we continue to drive those kind of efficiencies? Yes, there is gonna be some cost benefits to this, but it was not the cost benefits that drove us to make this change. It really was around how do we better support our customers How do we have, as Sergio alluded to earlier, the customer engagements, the customer behaviors across those NOC- or NOC-like customers is very similar. Just think we are gonna better be able to have that customer centric focus by having the 2 areas come together.

Joshua Jayne: Thanks. I will turn it back. Thanks, Joshua.

Operator: There appears to be no more questions in the queue, so that concludes today's call. You may now disconnect.

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