Q – Steve Ferazani: Great. On the integration process, PRT is well underway. You’ve got Coretrax coming up. You did the smaller one DeltaTek a year ago. Can you tell me what your learning curve has been on integration? Is it getting easier? Or is it going to be different for each one? And obviously, Coretrax is larger. Or does it matter more what you’re buying in terms of the complexity of the integration considering the number of opportunities that may or may not be out there down the road?
Mike Jardon: Sure, no. Steve, it’s a great question. I can tell you one of the things we did, when we did the Frank’s transaction, the Frank’s merger, we – I really made sure that we looked at that through a long-term lens. We spent a lot of time and effort to develop an integration playbook because I had every intention of us doing more of those type transactions going forward. So we really laid out the methodology, the kind of the know-how. We dedicated one of the executives to be the integration lead on that project. So a lot of time and effort was spent on how do you develop a playbook and how do you make it sustainable and repeatable down the road. So we’ve really been able to – now the other transactions have been smaller.
So it’s not been to the same extent. But it’s the same methodology, the same approach. That particular executive has also played an advisory role for us because he retired I guess it was at the end of 2022, but he’s continued to play an advisory role for that. So I think we’re getting better at integration. A lot of lessons learned. A lot of – we should double-down on this. We should not focus on that. A lot of those kind of discussions. So I think it’s going to continue to help us be more efficient. But we learned a lot. When we did the original Frank’s transaction integration and we’re kind of able to use that as a good stepping stone how we lean into these other ones. The difference with PRT or with Coretrax, those are not fully – full-fledged global integrations.
Those are generally more regional integrations, which means that we should be able to execute on those more quickly than what we did on the bigger one.
Steve Ferazani: Perfect. Thanks Mike. Thanks, Quinn.
Mike Jardon: Thanks, Steve.
Quinn Fanning: Thanks, Steve.
Operator: Thank you. The next question comes from the line of Josh Jayne with Daniel Energy Partners. Your line is now open.
Josh Jayne: Thanks. Just to sort of build on the line of questioning around Frank’s, there was a presentation highlighting adjusted EBITDA margins for the combination back when it was done and they were between 7% and 14% in the five years prior to the deal closing, which also represented sort of a depressed offshore spending market. You were in the upper 20s, low 30s in 2014 and 2015. Obviously, low 20s guided for this year. As you sit today and look at the business what can be done outside of price to get back to those margin levels? And how do you see those evolving over the next couple of years?
Mike Jardon: Sure, Josh, it’s a good question. We appreciate it. A lot of it for us is really around the costs in the organization. If you look at kind of the last full quarter before we began the integration of the two companies, we were at 31% total support costs. And for us just to be clear the way we look at support costs is the support all the way down to the field level to the guy who’s going to go out and execute the job. So we don’t try to be cute and just talk about SG&A – corporate SG&A is 3%, 3.5% because I think that’s kind of hiding the bacon. I’m going to look at the total support that it takes for us to go out and execute a job. But we were at 31% then and we finished 2023 at 19.4% I believe. So we’ve taken a lot of support costs out of it, out of the organization.
So, I look at it as having a number of — I’ve got six or seven points of margin in my back pocket so to speak. And as we continue to grow and we continue to add top line, our support costs will grow at more of an inflationary rate, not at the same rate that our top line will grow. So, for us to get back to a — it’s the reason why we’ve talked about a pathway to $2 billion of revenue and mid-20s percent EBITDA margins. That’s something that’s imminently doable for us. And for me, it’s not a question of if, it’s a question of when that we can get back to those kind of EBITDA margins and I think even be able to push through the mid-20s into the upper 20s.
Josh Jayne: That’s great. Thanks. And just one follow-up. One of the things you mentioned, you talked about carbon capture for a moment. You highlighted in the press release Japan’s first clean hydrogen production demonstration. As it relates to Expro, could you just talk about the addressable market for the company over the next few years and give us a sense of the other inquiries you’re having or seeing there?
Mike Jardon: It’s a massive addressable market. I think as we start to see the Exxon’s in the Gulf of Mexico and other operators globally, I think it’s really going to be at the pace at which they continue to address their carbon capture needs and requirements. For us, it’s really — we can multipurpose our personnel and a lot of our equipment, especially when you start talking about clean projects, whether it’s clean hydrogen or ammonia type projects. We’re going to go through well testing, wellbore cleanup, cleaning up fluids, separation of fluids, those type of things. So it gives us a lot of flexibility on utilizing the same assets and same people and having the technique and having the kind of reservoir of knowledge and understanding to apply that. So, it’s a very significant opportunity. It’s really going to be driven by what’s the pace at which those operators and those customers focus on carbon capture.
Josh Jayne: Great. Thank you, very much.
Operator: Thank you. There are no additional questions waiting at this time. So I would now like to pass the conference back to management for any additional or closing remarks.
Mike Jardon: Great. So we’ll go ahead and close for now. I appreciate everybody listening in on in the first quarter. I think as we said, we continue to see some gaining momentum in the space, in the sector, particularly offshore international. And we look forward to speaking to all of you in the next quarterly call. Thank you.
Operator: That concludes today’s conference call. Thank you for your participation. You may now disconnect your lines.
