EXPRO GROUP HOLDINGS N.V. Fair Value Disclosure

4.	Fair value measurements

 

Recurring Basis

 

A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of December 31, 2025 and 2024, were as follows (in thousands):

 

		December 31, 2025
		Level 1				Level 2				Level 3				Total
Assets:
Non-current accounts receivable, net		$	-			$	7,432				-			$	7,432
Liabilities:
Contingent consideration liabilities			-				-				9,470				9,470
Long-term borrowings			-				79,065				-				79,065
Finance lease liabilities			-				15,121				-				15,121

 

		December 31, 2024
		Level 1				Level 2				Level 3				Total
Assets:
Non-current accounts receivable, net		$	-			$	7,432				-			$	7,432
Liabilities:
Contingent consideration liabilities			-				-				11,026				11,026
Long-term borrowings			-				121,065				-				121,065
Finance lease liabilities			-				16,240				-				16,240

 

We have certain contingent consideration liabilities related to acquisitions which are measured at fair value using Level 3 inputs. The amount of contingent consideration due to the sellers is based on the achievement of agreed-upon financial performance metrics by the acquired company, as determined by the terms of the contingent consideration agreements with the sellers of each acquired company. We record a liability at the time of the acquisition based on the present value of management’s best estimates of the future results of the acquired companies compared to the agreed-upon metrics. After the date of acquisition, we update the original valuation to reflect the passage of time and current projections of future results of the acquired companies. Accretion of, and changes in the valuations of, contingent consideration are reported on the consolidated statement of operations within “Severance and other expense.”

 

Non-recurring Basis

 

We apply the provisions of the fair value measurement standard to our non-recurring, non-financial measurements including business combinations and assets identified as held for sale, as well as impairment related to goodwill and other long-lived assets. For business combinations, the purchase price is allocated to the assets acquired and liabilities assumed based on a discounted cash flow model for most intangibles as well as market assumptions for the valuation of equipment and other fixed assets.

 

Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. A qualitative assessment is allowed to determine if goodwill is potentially impaired. We have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The qualitative assessment determines whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative impairment test is performed. The quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss. The test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference. 

 

When conducting an impairment test on long-lived assets, other than goodwill, we first compare estimated future undiscounted cash flows associated with the asset to the asset’s carrying amount. If the undiscounted cash flows are less than the asset’s carrying amount, we then determine the asset’s fair value by using a discounted cash flow analysis. These analyses are based on estimates such as management’s short-term and long-term forecast of operating performance, including revenue growth rates and expected profitability margins, estimates of the remaining useful life and service potential of the asset, and a discount rate based on our weighted average cost of capital. For assets that meet the criteria to be classified as held for sale, a market approach is used to determine fair value based on third-party appraisal reports.

 

The impairment assessments discussed above incorporate inherent uncertainties, including projected commodity pricing, supply and demand for our services and future market conditions, which are difficult to predict in volatile economic environments and could result in impairment expense in future periods if actual results materially differ from the estimated assumptions utilized in our forecasts. If crude oil prices decline significantly and remain at low levels for a sustained period of time, we could be required to record an impairment of the carrying value of our long-lived assets in the future which could have a material adverse impact on our operating results. Given the unobservable nature of the inputs, the discounted cash flow models are deemed to use Level 3 inputs.

 

Goodwill

 

During the year ended December 31, 2025, we identified an indicator of impairment due to the decline in our stock price during the first quarter. As such, we performed a quantitative goodwill impairment assessment as of March 31, 2025 and determined that the fair value was in excess of the carrying value for each reporting unit. Additionally, we performed a qualitative goodwill impairment assessment for our annual assessment as of October 31 and determined there were not any factors that indicated the fair value was more likely than not reduced below the carrying value of each reporting unit.

 

For the years ended December 31, 2024 and 2023, we performed a quantitative goodwill impairment assessment as of our annual testing date and determined that the fair value was substantially in excess of the carrying value for each reporting unit. Accordingly, no impairment expense related to goodwill was recorded during the years ended December 31, 2025, 2024 and 2023.

 

In performing our quantitative goodwill impairment assessments, we used the income approach and the market approach to estimate the fair value of our reporting units. The income approach estimates the fair value by discounting the reporting unit’s estimated future cash flows using an estimated discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results and involves significant judgment in the selection of the appropriate peer group companies and valuation multiples. Under the income approach, we utilized third-party valuation advisors to assist us with these valuations. These analyses included significant judgment, including significant Level 3 assumptions related to management’s short-term and long-term forecast of operating performance, discount rates based on our estimated weighted average cost of capital, revenue growth rates, profitability margins and capital expenditures.

 

Long-lived Assets

 

The Company did not identify any indicators of impairment related to our long-lived assets during the years ended December 31, 2025, 2024 and 2023.

 

Financial Instruments

 

The estimated fair values of the Company’s financial instruments have been determined at discrete points in time based on relevant market information. The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and accrued liabilities and interest-bearing loans. The carrying amounts of the Company’s financial instruments other than interest bearing loans approximate fair value due to the short-term nature of the items. The Company has $79.1 million of outstanding borrowings on its interest-bearing loan as of December 31, 2025.