Expro Group Holdings N.v. · NYSE:XPRO
Expro — Merger or Acquisition (March 2021)
42 slides from Expro's merger presentation, Mar 11, 2021
Slide 1: Creating a Leading Full-Cycle Service Provider
CREATING A LEADING FULL-CYCLE SERVICE PROVIDER March 11, 2021
Slide 2: Important Information
Important Information No Offer or Solicitation This communication relates to a proposed merger and related transactions (the “Transactions”) between Frank’s International N.V. (“Frank’s”) and Expro Group Holdings International Limited (“Expro”). This communication is for informational purposes only
Slide 3: Forward-Looking Statements
Forward-Looking Statements The foregoing contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included in this communication that address
Slide 4: Today's Presenters
Today’s Presenters Mike Kearney Mike Jardon Quinn Fanning Chairman, President Chief Executive Officer Chief Financial Officer and Chief Executive Officer Expro Expro Frank's International 3
Slide 5: Agenda
AGENDA 1 Transaction Overview 2 Expro Today 3 Frank’s Today The Powerful Potential of a Full-Cycle 4 Leader 45
Slide 6: A Compelling Opportunity for All Shareholders
A Compelling Opportunity for All Shareholders Illustrative Market Capitalization of Sector Companies ($ billion) • Transformative combination of iconic brands adds scale, breadth and stability $42 $25 $21 $6 5.0 4.5 • Stock for stock combination allows for upside participation, as 4.0 well as resili
Slide 7: Overview of the Transaction
Overview of the Transaction • Transaction structured as a stock for stock strategic combination1,2 Pro Forma • Expro shareholders will own approximately 65% at closing Ownership & • Frank's shareholders will own approximately 35% at closing Considerations • Transaction unanimously approved by direct
Slide 8: Investment Rationale
Investment Rationale Transformative Combination of Iconic Brands Adds Scale, Breadth, Stability and Upside Pro Forma Diversified Future Facing Significant Cost Significant Net Company Has Offering Across Technologies and Revenue Cash Balance; Meaningful Scale, Well Lifecycle and Better Position Syne
Slide 9: Expro Today
) EXPRO EeaNcS= Expro Today
Slide 10: Expro is the Leading, Independent Provider of Well Flow Optimization Solutions
Expro is the Leading, Independent Provider of Well Flow Optimization Solutions Nearly 50 years of market leadership Blue-chip customer base with strong Future facing technologies in well flow optimization revenue visibility • Digitization facilitates better, faster decisions • Founded in 1973 • ~$1b
Slide 11: Balanced Portfolio with Capabilities Across the Well Lifecycle
Balanced Portfolio with Capabilities Across the Well Lifecycle Well Flow Subsea Well Well Intervention Production Management Access & Integrity Solutions Proficiently gathering Ensuring safe well Innovative well Fast-track, cost- valuable well and access and optimized intervention effective, early f
Slide 12: Technology as a Core Competency
Technology as a Core Competency Returns-Focused Investment in Growth Market Opportunity Each 5% of market penetration adds nearly 15% to top line with attractive margins CoilHose Technology OctopodaTM Light Well Annulus Intervention Intervention ~$2 Billion Annual Addressable Market1 Solution Nitrog
Slide 13: Strong Financial Profile and Performance
Strong Financial Profile and Performance No Debt | Defensible Positions | Resilient Through-Cycle Margins | Positioned for Market Recovery Revenue ($m) $2,000 ~33% of revenue tied to production $1,750 optimization / opex $1,500 $1,380 $1,250 ~50% of revenue tied to production $1,003 optimization / o
Slide 14: Frank's Today
e) EXPRO aN Frank’s Today
Slide 15: Frank's is Well Positioned for a Market Recovery
Frank’s is Well Positioned for a Market Recovery Operations in ~40 Countries spanning all major markets Delivered positive free cash flow in extremely challenging 2020 Debt-free balance sheet with significant cash available Substantial operating leverage Attractive market exposure of ~80% Offshore,
Slide 16: Frank's is a Premier Well Construction Service Company
Frank’s is a Premier Well Construction Service Company Comprehensive range of differentiated and highly engineered tubular running services, drilling technologies, tubular fabrication, and specialty well construction and intervention solutions with a focus on complex and technically demanding wells.
Slide 17: Technology as a Core Competency
Technology as a Core Competency Strong technology development capabilities with an attractive pipeline of emerging technologies focused on digital remote operations, automation and well integrity Latest equipment suite features cutting-edge efficiency, facilitating remote operation, providing unmatc
Slide 18: The Powerful Potential of a Full-Cycle Leader
THE POWERFUL POTENTIAL OF A FULL-CYCLE LEADER 17
Slide 19: Combination Provides Multiple Avenues for Value Creation
Combination Provides Multiple Avenues for Value Creation Combined Well Lifecycle Exposure - Service mix provides through-cycle revenue opportunity, with significant upside to cyclical recovery company expected to generate cash out of the gate, with Growth Opportunity - Globally recognized iconic bra
Slide 20: Further Extension of Well-Cycle Exposure
Further Extension of Well-Cycle Exposure Leading Positions in Large, Addressable Markets Across Well-Life and Customer Spend Product Mix Enhanced early Frank's1 Pro Forma1 visibility into the needs of customers Well Flow Management and a broader scope Tubular Running Subsea Wells Access of offerings
Slide 21: Complementary Global Footprint to Expand Customer Relationships
Complementary Global Footprint to Expand Customer Relationships Geographic Mix (2020 Revenue) With operations in +50 Pro Forma countries, the combined Expro 2020 Revenue: $1,065m Frank's 2020 Revenue: $675m 2020 Revenue: $390m company is better positioned to support customers and manage 16% 10% 7% c
Slide 22: Significant Growth Potential Across Geographies & Customers
Significant Growth Potential Across Geographies & Customers Complementary Footprint and Capabilities And Blue-Chip Customers Create a Range of Opportunities Scale and Scope Increases Relevance Cross-selling tubular running services in to Customers unpenetrated geographies Enhanced Ability to Respond
Slide 23: Differentiating Combined Technology Portfolio
Differentiating Combined Technology Portfolio Expro Subsea Test Tree Cut and Utilizing latest Frank’s iCAM® Seal Technology technology to provide AI connection analyzed make-up Latest subsea well intervention safety ensuring optimal connection system solution which optimizes rig customers with more
Slide 24: Through-Cycle Resilience and Cyclical Recovery Upside
Through-Cycle Resilience and Cyclical Recovery Upside Balanced Pro Forma Revenue Mix; Recent Cost Outs Have Achieved Scope for Margin Expansion Revenue Brent Crude ($ millions) Price $105 Expro Frank's Production and Intervention / Opex¹ Drilling and Completions / Capex¹ Brent Price $4,000 $99 $3,50
Slide 25: Substantial Synergies Create Near-term Value and Margin Expansion Opportunity
Substantial Synergies Create Near-term Value and Margin Expansion Opportunity High Confidence in Cost and Revenue Synergy Potential Overview of Run-Rate Synergies ($m) Drivers $m Combined Indirect Costs 1 Support and Indirect Costs $40m $333 2 Product Line and Operations $10m $70m 3 Facilities and O
Slide 26: Meaningful Scale, Improved Profitability and Increased Free Cash Flow
Meaningful Scale, Improved Profitability and Increased Free Cash Flow Significant Degree of Operational Flexibility and Strategic Optionality Revenue ($m) Adjusted EBITDA1 ($m) Cash2 ($m) Frank's Expro Frank’s Expro Frank's Pro Forma $285 $1,065 $177 Additional Cost $15 Synergies at 36 months Cost S
Slide 27: Illustrative Recovery Scenario
Illustrative Recovery Scenario Revenue ($m) Scenario Assumptions • $50-60 / bbl Brent through 2023 $1,390 • Gradual stabilization in production services activity through 2021; D&C activity begins to recover in 2022 • ~$55 million of estimated run-rate cost synergies realized by mid-2022 • $15 millio
Slide 28: Continued Commitment to ESG Leadership
Continued Commitment to ESG Leadership Taking pride in being a responsible and transparent business that operates against a clear set of environmental, social and governance principles Our Planet – Achieve net zero CO2e emissions by 2050 and a 50% reduction of carbon intensity by 2030 Environmental
Slide 29: Path to Close
Path to Close March 2021 Q2 2021 Q3 2021 • Announce transaction • S-4 expected to be filed • Transaction in April expected to close • Begin regulatory • Expro and Frank’s approval process shareholder votes • Satisfy other customary closing conditions 28
Slide 30: Compelling Investment Rationale
Compelling Investment Rationale Transformative Combination of Iconic Brands Adds Scale, Breadth, Stability and Upside Pro Forma Diversified Future Facing Significant Cost Significant Net Company Has Offering Across Technologies and Revenue Cash Balance; Meaningful Scale, Well Lifecycle and Better Po
Slide 31: Appendix
Appendix A-0
Slide 32: Historical Pro Forma Revenue and Adjusted EBITDA
Historical Pro Forma Revenue and Adjusted EBITDA Revenue ($m) Adjusted EBITDA ($m) Expro Frank's Expro Frank's $2,533 $792 $1,978 $1,153 $452 $535 $975 $1,390 $1,212 $1,261 $1,084 $1,065 $319 $580 $488 $522 $455 $390 $1,380 $173 $171 $1,003 $340 $137 $810 $25 $58 $107 $725 $630 $739 $675 $216 $80 $3
Slide 33: Historical Pro Forma Adjusted CFFO and Capex
Historical Pro Forma Adjusted CFFO and Capex Adjusted Cash Flow from Operations ($m) Capital Expenditures ($m) $630 $637 Expro Frank's Expro (Core Capex) Frank's $397 $369 $173 $428 $219 $100 $138 $139 $109 $37 $103 $127 $224 $89 $261 $114 $69 $56 $28 $210 $68 $34 $27 $40 $42 $150 $119 $22 $101 $25
Slide 34: Use of Non-GAAP Financial Measure
Use of Non-GAAP Financial Measure This presentation includes the non-GAAP financial measures of Adjusted EBITDA, Adjusted EBITDA margin, Free cash flow and Adjusted cash flow from operations. These non-GAAP financial measures are presented because management believes these measures provide additiona
Slide 35: Non-GAAP Reconciliations - Expro
Non-GAAP Reconciliations - Expro ($ in millions) Twelve Months Ended December 31, 2014 2015 2016 2017 2018 2019 2020 Adjusted EBITDA 1 $ 340 $ 216 $ 147 $ 75 $ 103 $ 113 $ 98 Depreciation, amortization and impairment charges (184) (193) (532) (552) (131) (172) (401) Restructuring (3) (17) (26) (14)
Slide 36: Investments and Free Cash Flow- Expro
Investments and Free Cash Flow- Expro ($ in millions) Twelve Months Ended December 31, Investments 2014 2015 2016 2017 2018 2019 2020 1 Research and development $ 11 $ 12 $ 6 $ 9 $ 12 $ 14 $ 10 Capital expenditures Capex - Core Operations 224 119 47 47 52 101 74 2 Capex - Qi and LWI - - - - - 3 29 3
Slide 37: Quarterly Non-GAAP Reconciliations - Expro
Quarterly Non-GAAP Reconciliations - Expro ($ in millions) Three Months Ended, 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 31-Mar-20 30-Jun-20 30-Sep-20 31-Dec-20 1 Adjusted EBITDA $ 21 $ 28 $ 28 $ 36 $ 29 $ 25 $ 23 $ 21 Depreciation, amortization and impairment charges (30) (32) (31) (78) (306) (27) (2
Slide 38: Quarterly Investments and Free Cash Flow- Expro
Quarterly Investments and Free Cash Flow- Expro ($ in millions) Three Months Ended, Investments 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 31-Mar-20 30-Jun-20 30-Sep-20 31-Dec-20 1 Research and development $ 3 $ 3 $ 3 $ 5 $ 4 $ 3 $ 2 $ 2 Capital expenditures Capex - Core Operations 25 24 27 25 25 20 18
Slide 39: Non-GAAP Reconciliations – Frank's
Non-GAAP Reconciliations – Frank's ($ in millions) Twelve Months Ended December 31, 2014 2015 2016 2017 2018 2019 2020 Net income (loss) $ 229 $ 106 $ (156) $ (159) $ (91) $ (235) $ (156) Severance and other charges (credits) - 35 46 75 (0) 50 33 Goodwill impairment - - - - - 111 57 Interest income,
Slide 40: Quarterly Non-GAAP Reconciliations – Frank's
Quarterly Non-GAAP Reconciliations – Frank's ($ in millions) Three Months Ended 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 31-Mar-20 30-Jun-20 30-Sep-20 31-Dec-20 Net income (loss) $ (28) $ (15) $ (24) $ (168) $ (86) $ (34) $ (28) $ (8) Severance and other charges (credits) 0 1 5 44 21 5 4 4 Goodwill i
Slide 41: Glossary of Terms
Glossary of Terms As shown on page 10 Cased Hole Applications – Downhole wireline tools and services deployed to perform a variety of services including the evaluation of well flow, reservoir performance and the condition of the wellbore and completion CoilHose – A flexible hose deployed on a modula
Slide 42: Glossary of Terms (continued)
Glossary of Terms (continued) As shown on page 10 (continued) Subsea Test Tree Assembly (SSTTA) – Systems integral to subsea landing string run inside a marine riser that allows well operations during drill stem testing, well completion or intervention from a semi-submersible rig or drillship. The s
Expro Group Holdings — Merger or Acquisition (March 2021) on 6ix