Key Takeaways Core Laboratories stock plunged 28.4% in six months, lagging sector and peer performance.CLB is expanding in the Middle East, reducing debt, and entering carbon capture and geothermal.Tariffs, U.S. market softness, and client drilling risks weigh on CLBs near-term growth outlook.Core Laboratories Inc. (CLB) , a global oilfield services provider specializing in reservoir management and production enhancement, has struggled to keep pace with the broader oil and energy  industry. Over the past si ...

Core Insights - Core Laboratories reported Q2 2025 GAAP revenue of $130.2 million, exceeding analyst expectations of $129.1 million, with adjusted EPS of $0.19 matching consensus estimates [1][3] - Revenue remained essentially unchanged compared to Q2 2024, indicating a lack of significant year-over-year growth despite operational progress [2][3] Financial Performance - Adjusted EPS for Q2 2025 was $0.19, down 13.6% from $0.22 in Q2 2024 [3] - Revenue of $130.2 million showed a slight decline of 0.3% from $130.6 million in the same quarter last year [3] - Operating income decreased by 11.6% to $14.5 million from $16.4 million year-over-year [3] - Free cash flow fell by 27% to $10.4 million compared to $14.3 million in Q2 2024 [3] Business Overview - Core Laboratories specializes in reservoir optimization and production enhancement services for the oil and gas industry, operating through two main segments: Reservoir Description and Production Enhancement [4][5] - The company emphasizes technological innovation and international expansion, with 66% of revenue generated outside the U.S. for the years ended December 31, 2024, and 2022 [5] Segment Performance - The Reservoir Description segment maintained steady performance, with flat revenue year-over-year but a 7% increase from the previous quarter, driven by demand for laboratory instrumentation [6][7] - The Production Enhancement segment experienced a 1.0% year-over-year revenue decline but a 3% sequential increase, with an operating income margin of 9%, reflecting a 50-basis point improvement [8] Financial Discipline - Free cash flow increased by 160% sequentially to $10.4 million, with net debt reduced to $94.8 million, the lowest in eight years [9] - The company maintained its quarterly dividend at $0.01 per share, consistent with prior quarters [9] Future Guidance - For Q3 2025, management forecasts GAAP revenue between $127.5 million and $134.5 million, with operating income expected to range from $13.6 million to $16.2 million [10] - Reservoir Description revenue is anticipated to remain flat sequentially, while Production Enhancement may see slight growth [10] Market Outlook - Management highlighted ongoing risks related to oil and gas industry cycles and unpredictable U.S. market activity, while emphasizing the importance of international project wins and cost discipline [11]

Financial Performance - Core Laboratories Inc. (CLB) reported second-quarter 2025 adjusted earnings of 19 cents per share, beating the Zacks Consensus Estimate of 18 cents, but down from 22 cents in the same quarter last year due to underperformance in the Reservoir Description segment [1] - The company achieved operating revenues of $130.2 million, exceeding the Zacks Consensus Estimate of $128 million, attributed to the rebound in maritime movement and crude oil trading, although it represented a slight decrease of 0.3% from $130.6 million in the prior year [2] - Total costs and expenses were reported at $114.9 million, a marginal increase of 0.3% from $114.6 million year-over-year, and below the estimate of $115.1 million [7] Segment Performance - Reservoir Description segment revenues remained flat at $86.3 million compared to the previous year, surpassing the estimate of $85 million [4] - Production Enhancement segment revenues decreased by 1% to $43.9 million from $44.3 million year-over-year, but still beat the estimate of $43.4 million [5] - Operating income for the Reservoir Description segment fell from $11.79 million to $10.84 million, missing the estimate of $11.18 million, influenced by geopolitical conflicts and tariffs [5] Cash Flow and Debt Management - The company reported a positive free cash flow of $10.4 million, with net cash provided by operating activities totaling $13.9 million and capital expenditure at $3.5 million [8] - CLB repurchased 237,632 shares for $2.7 million and reduced its debt leverage ratio to 1.27, with net debt decreasing by $9.1 million, marking the lowest leverage ratio in eight years [3][11] Future Outlook - For Q3 2025, CLB expects revenues between $127.5 million and $134.5 million, with operating income anticipated between $13.6 million and $16.2 million, and earnings per share projected between 18 cents and 22 cents [13] - The company forecasts Reservoir Description segment revenues to range from $84 million to $88 million, and Production Enhancement segment revenues to be between $43.5 million and $46.5 million [14] Industry Context - Global crude oil demand is projected to rise in 2025, estimated between 0.7-1.3 million barrels per day, primarily driven by non-OECD countries in Asia and emerging markets in the Middle East and Africa [15] - International oil and gas developments are expected to be more resilient to oil price fluctuations compared to domestic projects, with stable activity anticipated in global upstream markets [16] - Core Laboratories expects minimal disruption from proposed tariffs, as over 75% of its revenues come from services not currently subject to tariffs [17]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements present the company's financial position as of June 30, 2025, and its performance for the recent three and six-month periods [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased slightly to $602.1 million from $590.4 million at year-end 2024, driven by a rise in cash Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $237,677 | $226,606 | | **Total Assets** | **$602,111** | **$590,406** | | **Total Current Liabilities** | $104,772 | $97,586 | | **Long-Term Debt, net** | $124,613 | $126,111 | | **Total Liabilities** | $334,808 | $332,670 | | **Total Equity** | **$267,303** | **$257,736** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, revenue was flat year-over-year at $130.2 million while net income rose, whereas six-month revenue and net income both declined Q2 2025 vs Q2 2024 Statement of Operations (in thousands, except per share data) | Metric | Q2 2025 (Unaudited) | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $130,159 | $130,577 | | Operating Income | $15,291 | $16,008 | | Net Income Attributable to Core Laboratories Inc. | $10,636 | $9,032 | | Diluted EPS Attributable to Core Laboratories Inc. | $0.22 | $0.19 | Six Months 2025 vs 2024 Statement of Operations (in thousands, except per share data) | Metric | Six Months 2025 (Unaudited) | Six Months 2024 | | :--- | :--- | :--- | | Total Revenue | $253,744 | $260,214 | | Operating Income | $19,708 | $24,579 | | Net Income Attributable to Core Laboratories Inc. | $10,482 | $12,252 | | Diluted EPS Attributable to Core Laboratories Inc. | $0.22 | $0.26 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, operating cash flow decreased to $20.6 million, while a net increase in cash was driven by lower financing and investing outflows Six Months Ended June 30 Cash Flow Summary (in thousands) | Activity | 2025 (Unaudited) | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,583 | $22,676 | | Net cash used in investing activities | $(872) | $(2,344) | | Net cash used in financing activities | $(7,680) | $(17,757) | | **Net Change in Cash** | **$12,031** | **$2,575** | | **Cash at End of Period** | **$31,188** | **$17,695** | - Key investing activities included **$7.9 million in capital expenditures** (including $1.6 million for rebuilding the Aberdeen facility) offset by **$4.7 million in insurance proceeds**[27](index=27&type=chunk)[149](index=149&type=chunk) - Financing activities included a net debt repayment of **$2.0 million**, **$4.8 million in common stock repurchases**, and **$0.9 million in dividends paid**[27](index=27&type=chunk)[151](index=151&type=chunk) [Notes to the Interim Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Interim%20Consolidated%20Financial%20Statements) The notes detail the company's two business segments, a renewed $150 million credit facility, debt covenant compliance, and a $2.6 million insurance recovery - The company operates in two complementary segments: **Reservoir Description** and **Production Enhancement**[29](index=29&type=chunk) - On July 22, 2025, the company entered into a Ninth Amended and Restated Credit Agreement for an aggregate borrowing commitment of **$150.0 million** with a **$50.0 million "accordion" feature**[46](index=46&type=chunk) - The company is in compliance with all debt covenants as of June 30, 2025, with a **leverage ratio of 1.27** and an **interest coverage ratio of 7.22**[51](index=51&type=chunk) - A quarterly cash dividend of **$0.01 per share** was paid in March and May 2025, and another was declared for August 2025[59](index=59&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a mixed market outlook, flat Q2 2025 revenue, segment performance, and the company's strong liquidity and capital resources [Outlook](index=23&type=section&id=Outlook) Management anticipates continued demand growth but notes increased uncertainty from trade policies and OPEC+ decisions, impacting project outlooks - Global demand for crude oil and natural gas is expected to increase in 2025, but **new U.S. tariffs and OPEC+ production increases have raised uncertainty**[92](index=92&type=chunk) - Management believes changes in crude oil prices will have a **greater impact on U.S. onshore drilling** and completion activity, while large-scale international projects are expected to be more resilient[93](index=93&type=chunk) - The company is focused on **large-scale international projects** and has seen expanded activity in carbon capture and sequestration projects[95](index=95&type=chunk)[96](index=96&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Q2 2025 revenue was flat year-over-year at $130.2 million, while net income rose 18% due to a significantly lower effective tax rate Q2 2025 vs Q2 2024 and Q1 2025 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Q1 2025 | | :--- | :--- | :--- | :--- | | Total Revenue | $130,159 | $130,577 | $123,585 | | Operating Income | $15,291 | $16,008 | $4,417 | | Net Income Attributable to Core Labs | $10,636 | $9,032 | $(154) | - Service revenue in Q2 2025 was **flat year-over-year** as increased international demand was offset by a reduction in the U.S. market[106](index=106&type=chunk) - Product sales revenue **decreased 1% year-over-year** in Q2 2025 due to lower U.S. onshore drilling and completion activity[110](index=110&type=chunk) - Income tax expense for Q2 2025 was **$1.9 million (15.2% ETR)**, a significant decrease from $3.6 million (28.2% ETR) in Q2 2024, primarily due to the earnings mix of jurisdictions and other discrete items[128](index=128&type=chunk) [Segment Analysis](index=31&type=section&id=Segment%20Analysis) Reservoir Description revenue was flat with improved margins, while Production Enhancement revenue declined slightly with lower margins in Q2 2025 Q2 2025 Segment Performance (in thousands) | Segment | Revenue | % of Total | Operating Income | Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Reservoir Description | $86,280 | 66% | $12,203 | 14% | | Production Enhancement | $43,879 | 34% | $3,148 | 7% | | **Consolidated** | **$130,159** | **100%** | **$15,291** | **12%** | - Reservoir Description's sequential revenue growth was driven by **higher crude-assay services** and manufactured laboratory instrumentation sales[134](index=134&type=chunk) - Production Enhancement's YoY revenue decrease was due to **lower product sales in the U.S. land market**, partially offset by growth in international bulk shipments and diagnostic services[140](index=140&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains solid liquidity with $14.3 million in free cash flow for H1 2025 and $108.0 million available under its credit facility Free Cash Flow Calculation (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,583 | $22,676 | | Less: Cash paid for capital expenditures - operations | $(6,259) | $(5,918) | | **Free cash flow** | **$14,324** | **$16,758** | - As of June 30, 2025, the company had an available borrowing capacity of approximately **$108.0 million** under its Credit Facility[154](index=154&type=chunk) - The company is in compliance with all covenants, with a **leverage ratio of 1.27** and an **interest coverage ratio of 7.22** for the period ended June 30, 2025[159](index=159&type=chunk) - The company maintains a quarterly dividend of **$0.01 per share**[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risk exposures since its 2024 year-end annual report - There have been **no material changes in market risk** from the information provided in the Annual Report on Form 10-K for the year ended December 31, 2024[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective** as of June 30, 2025[163](index=163&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that materially affected, or are reasonably likely to materially affect, the internal controls[166](index=166&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the financial statement notes for details regarding the company's legal proceedings - Information on legal proceedings is available in **Note 9 - Commitments and Contingencies** of the financial statements[168](index=168&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company updated its risk factors to include potential adverse effects from tariffs and other trade measures on its business and supply chain - An updated risk factor highlights that **tariffs and other trade measures could adversely affect the business** by increasing input costs, disrupting the supply chain, and facing retaliatory measures[171](index=171&type=chunk) - Potential impacts include **increased costs for raw materials** like steel and electronic components, which may not be fully passed on to customers, thereby affecting results of operations[171](index=171&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 237,632 shares in Q2 2025 at an average price of $11.52 per share without a formal buyback program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1-30, 2025 | 139,435 | $11.70 | | May 1-31, 2025 | 83,197 | $11.13 | | June 1-30, 2025 | 15,000 | $12.14 | | **Total** | **237,632** | **$11.52** | - The company **does not have a formal share repurchase program**; repurchases are made at the discretion of management with Board authorization[178](index=178&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement during the second quarter of 2025 - **No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement** during the three months ended June 30, 2025[177](index=177&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including the amended credit agreement and required CEO/CFO certifications - Key exhibits filed include the **Ninth Amended and Restated Credit Agreement** and certifications by the CEO and CFO[179](index=179&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $130.2 million, up 5% from Q1 2025 and flat year-over-year [13] - Operating income increased to $14.5 million, up from $11.8 million in Q1 2025, yielding an EBIT margin of over 11% [18] - Net income, excluding items, was $8.8 million, an increase from $6.7 million in the prior quarter but a decrease from $10.4 million in the same quarter last year [19] - Earnings per diluted share, excluding items, was $0.19, up from $0.14 in Q1 2025 and down from $0.22 last year [20] Business Line Data and Key Metrics Changes - Reservoir Description revenue was $86.3 million, up 7% compared to Q1 2025, with operating margins at 13%, up from 10% in Q1 [7][39] - Production Enhancement revenue was $43.9 million, up 3% compared to Q1 2025, with operating margins at 9%, up from 8% in Q1 [9][42] Market Data and Key Metrics Changes - International product sales increased by 25% sequentially, driven by bulk shipments and increased laboratory instrumentation sales [14] - Demand for product sales decreased in the U.S. onshore market but was offset by higher international sales [15] Company Strategy and Development Direction - The company focuses on technology investments to solve client problems and capitalize on technical and geographic opportunities [7] - Core Laboratories aims to maximize free cash flow, return on invested capital, and return excess free cash to shareholders [11] - The company plans to introduce new products and services in key geographic markets while maintaining a lean organization [10] Management's Comments on Operating Environment and Future Outlook - Management maintains a constructive long-term outlook for international upstream activity despite near-term volatility in crude oil prices [28] - The company anticipates that changes in crude oil prices will have a more immediate impact on U.S. onshore activity levels [30] - Core Laboratories expects third-quarter revenue to range from $127.5 million to $134.5 million, with operating income projected between $13.6 million and $16.2 million [32] Other Important Information - The company repurchased over 237,000 shares during Q2 2025, valued at $2.7 million [9] - Core's net debt was reduced by more than $9 million, with a leverage ratio of 1.27, the lowest in eight years [9][22] Q&A Session Summary Question: Additional details on the new proppant design partnered with a West Texas operator - The engagement focused on testing different designs of proppant particle size and sorting, confirming better results with the new design [48] Question: Insights on new product or service offerings, particularly in The Middle East - The company is focused on formation damage testing and has opened an unconventional laboratory in Dammam, Saudi Arabia, to support growing opportunities in unconventional resource development [52][53]

Group 1 - Core Laboratories reported quarterly earnings of $0.19 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, but down from $0.22 per share a year ago, representing an earnings surprise of +5.56% [1] - The company posted revenues of $130.16 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.45%, although this is a decrease from year-ago revenues of $130.58 million [2] - Core Laboratories has underperformed the market, with shares losing about 32% since the beginning of the year compared to the S&P 500's gain of 7.3% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.18 on revenues of $126.55 million, and for the current fiscal year, it is $0.71 on revenues of $505.39 million [7] - The Zacks Industry Rank indicates that the Oil and Gas - Field Services sector is currently in the bottom 5% of over 250 Zacks industries, suggesting a challenging environment for companies in this sector [8] Group 3 - The estimate revisions trend for Core Laboratories was unfavorable ahead of the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Company Overview - Core Laboratories Inc. reported second quarter 2025 revenue of $130.2 million, reflecting a 5% sequential increase and flat year-over-year performance [8][30] - The company's operating income was $15.3 million, with earnings per diluted share (EPS) of $0.22, while operating income excluding items was $14.5 million, yielding operating margins of 11% [8][30] - Free cash flow for the quarter was $10.4 million, up over 160% sequentially, and the company repurchased 237,632 shares valued at $2.7 million [8][11] Segment Performance - Reservoir Description segment generated revenue of $86.3 million, up 7% sequentially and flat year-over-year, with operating income of $12.2 million [3][30] - Production Enhancement segment reported revenue of $43.9 million, a 3% sequential increase but flat year-over-year, with operating income of $3.1 million [6][30] Strategic Initiatives - Core Lab opened a new Unconventional Core Analysis Laboratory in Dammam, Saudi Arabia, enhancing its service capabilities in the Middle East [4] - The company completed a comprehensive analytical program for a major International Oil Company in the Campos Basin, Brazil, reinforcing its role as a trusted technical partner [5] Financial Health - As of June 30, 2025, Core's net debt was $94.8 million, reduced by $9.1 million during the quarter, with a leverage ratio of 1.27, the lowest in eight years [12][13] - The company renewed its credit agreement, expanding to include a $100 million revolving credit facility and a $50 million delayed draw term loan [13] Market Outlook - Despite geopolitical challenges and softer U.S. land activity, Core maintains a positive long-term outlook for international upstream activity, with forecasts for crude oil demand growth between 0.7 and 1.3 million barrels per day in 2025 [19][20] - The company anticipates that large-scale international oil and gas projects will remain less sensitive to near-term crude oil price volatility [20]

[NINTH AMENDED AND RESTATED CREDIT AGREEMENT](index=1&type=section&id=NINTH%20AMENDED%20AND%20RESTATED%20CREDIT%20AGREEMENT) [Agreement Overview](index=1&type=section&id=Agreement%20Overview) This agreement, dated July 22, 2025, amends and restates the prior credit agreement, outlining terms for a credit facility provided to Core Laboratories Inc. and Core Laboratories (U.S.) Interests Holdings, Inc. by a syndicate of lenders led by Bank of America, N.A - The agreement is entered into by **CORE LABORATORIES INC.** and **CORE LABORATORIES (U.S.) INTERESTS HOLDINGS, INC.** as Borrowers, with **BANK OF AMERICA, N.A.** as the Administrative Agent[1](index=1&type=chunk)[19](index=19&type=chunk) - This agreement amends and restates the Eighth Amended and Restated Credit Agreement dated July 25, 2022, to restructure and refinance existing indebtedness and modify commitments[20](index=20&type=chunk) [ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS](index=10&type=section&id=ARTICLE%20I.%20DEFINITIONS%20AND%20ACCOUNTING%20TERMS) [Defined Terms](index=10&type=section&id=1.01.%20Defined%20Terms) This section defines key terms, facility sizes, sublimits, pricing structure based on leverage, and the maturity date, including financial terms like EBITDA and Indebtedness | Facility/Sublimit | Amount | | :--- | :--- | | Aggregate Commitments | $150,000,000 | | Revolving Commitment | $100,000,000 | | Term Commitment | $50,000,000 | | Alternative Currency Sublimit | Lesser of Aggregate Commitments and $25,000,000 | | Letter of Credit Sublimit | Lesser of $50,000,000 and the Revolving Facility | | Swing Line Sublimit | Lesser of $25,000,000 and the Revolving Facility | | Pricing Level | Consolidated Net Indebtedness/Consolidated EBITDA | Commitment Fee / Ticking Fee | Term SOFR + Letters of Credit | Base Rate + | | :--- | :--- | :--- | :--- | :--- | | 1 | ≥ 2.50x | 50.0 bps | 300.0 bps | 200.0 bps | | 2 | < 2.50x but ≥ 2.00x | 50.0 bps | 275.0 bps | 175.0 bps | | 3 | < 2.00x but ≥ 1.50x | 37.5 bps | 250.0 bps | 150.0 bps | | 4 | < 1.50x but ≥ 1.00x | 37.5 bps | 225.0 bps | 125.0 bps | | 5 | < 1.00x | 35.0 bps | 200.0 bps | 100.0 bps | - The Maturity Date is **July 22, 2029**, with potential acceleration to October 14, 2027, or March 30, 2028, if certain notes are outstanding, unless specific liquidity conditions are met[158](index=158&type=chunk) - A "Change of Control" is triggered if any person or group acquires **30% or more** of the Parent's voting equity, among other conditions[62](index=62&type=chunk) [Other Interpretive Provisions](index=44&type=section&id=1.02.%20Other%20Interpretive%20Provisions) This section outlines the rules for interpreting the agreement, including how terms are defined in singular and plural forms, the meaning of words like "include," and how references to other documents and laws are construed - Provides rules of construction for the agreement, stating that definitions apply to singular and plural forms, and references to agreements include amendments, also specifying that section headings are for convenience only[239](index=239&type=chunk)[241](index=241&type=chunk) - Includes specific definitions for Dutch legal concepts such as "financial assistance," "security interest," and "winding-up" to align with Dutch Civil Code terminology[242](index=242&type=chunk)[243](index=243&type=chunk) [Accounting Terms](index=46&type=section&id=1.03.%20Accounting%20Terms) This section specifies that all accounting terms and financial data must conform to "Agreement Accounting Principles" (US GAAP or IFRS), applied consistently with Audited Financial Statements, and disregards certain accounting standards for covenant calculations - All accounting terms and financial data are to be construed and prepared in conformity with **Agreement Accounting Principles** (US GAAP or IFRS), applied consistently[244](index=244&type=chunk) - If a change in accounting principles affects financial ratios, the parties will negotiate in good faith to amend the ratio to preserve its original intent, with calculations using prior principles until amended[245](index=245&type=chunk) - For covenant compliance purposes, the effects of lease accounting standard **ASC 842** are to be disregarded, treating leases as they would have been under prior GAAP[245](index=245&type=chunk) [Exchange Rates; Currency Equivalents](index=46&type=section&id=1.05.%20Exchange%20Rates%3B%20Currency%20Equivalents) This section details procedures for handling foreign currencies, including the L/C Issuer's responsibility for determining the Dollar Equivalent of Letters of Credit and converting amounts for transactions - The L/C Issuer determines the **Dollar Equivalent** for Letters of Credit denominated in Alternative Currencies on each Revaluation Date[247](index=247&type=chunk)[248](index=248&type=chunk) - When an amount is expressed in Dollars but a Letter of Credit is in an Alternative Currency, the amount will be converted to the relevant **Alternative Currency Equivalent** as determined by the L/C Issuer[249](index=249&type=chunk) [ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS](index=49&type=section&id=ARTICLE%20II.%20THE%20COMMITMENTS%20AND%20CREDIT%20EXTENSIONS) [Loans](index=49&type=section&id=2.01.%20Loans) This section outlines the two primary loan facilities: a single, non-revolving Term Facility in Dollars and a Revolving Facility allowing Borrowers to borrow, prepay, and reborrow Revolving Loans up to their commitment amount - Each Term Lender agrees to make a single, non-revolving term loan to the Borrowers in Dollars during the Term Facility's availability period, with repaid or prepaid Term Loans unable to be reborrowed[261](index=261&type=chunk) - Each Revolving Lender agrees to make revolving loans in Dollars, which can be borrowed, prepaid, and reborrowed, provided the total outstanding revolving exposure does not exceed the Revolving Facility[262](index=262&type=chunk) [Letters of Credit](index=51&type=section&id=2.03.%20Letters%20of%20Credit) This section governs the issuance of Letters of Credit (L/Cs) in Dollars or Alternative Currencies, detailing procedures, limitations, participation obligations, reimbursement requirements, and fees - The Letter of Credit Sublimit is capped at the lesser of **$50 million** or the total Revolving Facility[148](index=148&type=chunk) - By issuing an L/C, the L/C Issuer grants each Revolving Lender a participation equal to its Applicable Percentage of the L/C amount, and each Revolving Lender agrees to fund its participation if a drawing is not reimbursed by the Borrower[280](index=280&type=chunk)[281](index=281&type=chunk) - The Borrowers are obligated to pay a Letter of Credit Fee based on the Applicable Rate and a fronting fee to the L/C Issuer, along with other standard processing charges[294](index=294&type=chunk)[295](index=295&type=chunk) - Upon an Event of Default, the Borrowers may be required to cash collateralize **103%** of the total L/C Obligations[299](index=299&type=chunk) [Swing Line Loans](index=60&type=section&id=2.04.%20Swing%20Line%20Loans) This section details the terms for Swing Line Loans, which are short-term loans in Dollars provided by the Swing Line Lender, outlining borrowing procedures and refinancing mechanisms - The Swing Line Sublimit is the lesser of **$25 million** or the Revolving Facility[216](index=216&type=chunk) - Swing Line Loans are made available by the Swing Line Lender (Bank of America) and are typically Base Rate Loans, with each Revolving Lender deemed to purchase a risk participation in each Swing Line Loan[303](index=303&type=chunk)[304](index=304&type=chunk) - The Swing Line Lender can, at its discretion, demand that Revolving Lenders refinance outstanding Swing Line Loans by making Base Rate Loans[308](index=308&type=chunk) [Prepayments](index=64&type=section&id=2.05.%20Prepayments) This section covers both optional and mandatory prepayments of loans, specifying conditions and requirements for each type [Optional Prepayments](index=64&type=section&id=2.05.a%20Optional) Borrowers are permitted to voluntarily prepay Term, Revolving, and Swing Line Loans in whole or in part at any time without penalty, subject to specified notice periods and minimum prepayment amounts - Borrowers may voluntarily prepay Term and Revolving Loans in whole or in part without premium or penalty, subject to notice requirements and minimum amounts[318](index=318&type=chunk) - Prepayments of Term SOFR Loans require **two Business Days' notice**, while Base Rate Loans require notice on the date of prepayment[318](index=318&type=chunk) [Mandatory Prepayments](index=65&type=section&id=2.05.b%20Mandatory) This subsection mandates prepayments under specific circumstances, such as when total revolving outstandings or L/C Obligations in Alternative Currencies exceed 105% of their respective limits - If Total Revolving Outstandings exceed **105%** of the Revolving Facility, Borrowers must prepay Revolving Loans and/or Cash Collateralize L/C Obligations to reduce the outstanding amount to no more than **100%** of the facility[321](index=321&type=chunk) - If L/C Obligations in Alternative Currencies exceed **105%** of the Alternative Currency Sublimit, Borrowers must Cash Collateralize the excess amount[322](index=322&type=chunk) [Repayment of Loans](index=66&type=section&id=2.07.%20Repayment%20of%20Loans) This section specifies the repayment schedules for different loan types, including quarterly principal installments for Term Loans and full repayment at maturity for Revolving and Swing Line Loans | Loan Type | Repayment Schedule | | :--- | :--- | | Term Loans | Quarterly principal installments of **1.25%** of the initial principal amount, with the final balance due on the Maturity Date | | Revolving Loans | The aggregate principal amount is due on the Maturity Date | | Swing Line Loans | Due on the earlier of **10 Business Days** after a repayment demand or the Revolving Facility Maturity Date | [Increase in Commitments](index=73&type=section&id=2.15.%20Increase%20in%20Commitments) This section allows the Parent to request an increase in the Revolving Facility or Term Facility, capped at $50 million, subject to conditions including no existing Default and delivery of updated corporate resolutions - The Parent may request an increase in the Revolving Facility and/or Term Facility in a cumulative amount not to exceed **$50 million**[359](index=359&type=chunk)[366](index=366&type=chunk) - No Lender is obligated to commit to any portion of a facility increase, and the Parent may invite new Eligible Assignees to become Lenders to achieve the full requested amount[360](index=360&type=chunk)[361](index=361&type=chunk) - Effectiveness of any increase is conditional upon no Default existing, delivery of corporate resolutions, and certification that representations and warranties are true and correct[364](index=364&type=chunk)[370](index=370&type=chunk) [Defaulting Lenders](index=78&type=section&id=2.18.%20Defaulting%20Lenders) This section outlines the consequences for a Lender that fails to meet its funding obligations, including restricted voting rights, reallocation of payments, and limited entitlement to fees - A Defaulting Lender's right to approve amendments and waivers is restricted as defined in "Required Lenders" and Section 10.01[382](index=382&type=chunk) - Payments intended for a Defaulting Lender will be redirected to first pay amounts owed by that lender to the Administrative Agent, L/C Issuer, or Swing Line Lender[383](index=383&type=chunk) - A Defaulting Lender is not entitled to receive Commitment Fees and has limited rights to Letter of Credit Fees while in default status[385](index=385&type=chunk) - A Defaulting Lender's participation in L/C Obligations and Swing Line Loans is reallocated among non-Defaulting Lenders to the extent possible without exceeding their own commitments[386](index=386&type=chunk) [ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY](index=80&type=section&id=ARTICLE%20III.%20TAXES%2C%20YIELD%20PROTECTION%20AND%20ILLEGALITY) [Taxes](index=80&type=section&id=3.01.%20Taxes) This section establishes that all payments by the Borrowers must be made free of any tax deductions or withholdings, requiring additional amounts ("gross-up") if Indemnified Taxes are withheld, and outlines Lender documentation requirements - All payments by Borrowers must be made free and clear of taxes; if withholding for Indemnified Taxes is required, the payable sum must be increased so the Recipient receives the full amount as if no withholding occurred[390](index=390&type=chunk) - Borrowers must indemnify each Recipient for the full amount of any Indemnified Taxes paid or required to be withheld[392](index=392&type=chunk) - Lenders must provide appropriate tax forms (e.g., W-9, W-8BEN, W-8ECI) to the Borrowers and Administrative Agent to certify their exemption from or reduction of U.S. federal withholding tax[396](index=396&type=chunk)[397](index=397&type=chunk)[398](index=398&type=chunk) [Inability to Determine Rates](index=84&type=section&id=3.03.%20Inability%20to%20Determine%20Rates) This section provides a framework for addressing situations where the Term SOFR reference rate cannot be determined or no longer adequately reflects funding costs, allowing for suspension of Term SOFR loans and conversion to Base Rate loans - If Term SOFR cannot be determined or does not fairly reflect funding costs, the obligation to make or maintain Term SOFR Loans will be suspended, and such loans will be converted to Base Rate Loans[409](index=409&type=chunk)[410](index=410&type=chunk)[411](index=411&type=chunk) - The agreement establishes a process to replace Term SOFR with a "Successor Rate" if Term SOFR is no longer available or published, with the primary replacement being **Daily Simple SOFR**[412](index=412&type=chunk)[413](index=413&type=chunk) - The Administrative Agent has the right to make Conforming Changes to implement a Successor Rate without requiring further consent from other parties[418](index=418&type=chunk) [Increased Costs](index=87&type=section&id=3.04.%20Increased%20Costs) This section protects Lenders from increased costs resulting from a "Change in Law," requiring Borrowers to pay additional amounts to compensate Lenders for new reserve requirements, taxes, or capital/liquidity requirements - If a Change in Law increases the cost to a Lender of making or maintaining a Loan or Letter of Credit, or reduces the amount received, the Borrowers must pay additional amounts to compensate the Lender[419](index=419&type=chunk) - If a Change in Law regarding capital or liquidity requirements reduces a Lender's rate of return, the Borrowers must pay additional amounts to compensate for the reduction[420](index=420&type=chunk) - A Lender must demand compensation within **six months** of the Change in Law giving rise to the increased costs, unless the change is retroactive[424](index=424&type=chunk) [ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS](index=89&type=section&id=ARTICLE%20IV.%20CONDITIONS%20PRECEDENT%20TO%20CREDIT%20EXTENSIONS) [Conditions of Initial Credit Extension](index=90&type=section&id=4.01.%20Conditions%20of%20Initial%20Credit%20Extension) This section lists the conditions that must be satisfied before the Lenders and L/C Issuer are obligated to make their first credit extension, including delivery of executed documents, legal opinions, and payment of fees - Requires delivery of executed counterparts of the Agreement, Guaranties, Security Agreement, and other Collateral Documents[431](index=431&type=chunk) - Favorable legal opinions from counsel in the **U.S., Netherlands, Canada, and the UK** are required[431](index=431&type=chunk) - Requires delivery of a certificate from the Parent certifying that no Material Adverse Effect has occurred since the last Audited Financial Statements and that other conditions are met[432](index=432&type=chunk) - All fees due on or before the Closing Date must be paid, and all loans and fees under the prior Eighth Amended and Restated Credit Agreement must be paid in full[436](index=436&type=chunk)[438](index=438&type=chunk) [Conditions to all Credit Extensions](index=93&type=section&id=4.02.%20Conditions%20to%20all%20Credit%20Extensions) This section outlines the ongoing conditions required for any new credit extension, excluding simple conversions or continuations, mandating that Borrowers' representations and warranties remain true and no Default exists - The representations and warranties of the Borrowers and Loan Parties must be true and correct at the time of each Credit Extension[443](index=443&type=chunk) - No Default or Event of Default shall exist or would result from the proposed Credit Extension[444](index=444&type=chunk) - Each request for a credit extension is deemed a representation by the Borrowers that these conditions have been satisfied[446](index=446&type=chunk) [ARTICLE V. REPRESENTATIONS AND WARRANTIES](index=93&type=section&id=ARTICLE%20V.%20REPRESENTATIONS%20AND%20WARRANTIES) [General Representations and Warranties](index=93&type=section&id=5.01-5.28%20General%20Representations) This article contains a comprehensive set of representations and warranties made by the Borrowers to the Lenders, covering corporate existence, validity of loan documents, financial accuracy, compliance with laws, and collateral liens - Borrowers represent that their financial statements are prepared in accordance with Agreement Accounting Principles and fairly present their financial condition, and that no Material Adverse Effect has occurred since the last audited statements[454](index=454&type=chunk)[455](index=455&type=chunk)[456](index=456&type=chunk) - The Collateral Documents are represented to be effective in creating a valid and enforceable **first-priority Lien** on the Collateral, subject to Permitted Liens[458](index=458&type=chunk) - As of the Closing Date, the Loan Parties must represent that their aggregate total assets and revenues constitute at least **60%** of the consolidated total assets and revenues of the Parent and its Subsidiaries[479](index=479&type=chunk) - Borrowers represent compliance with Sanctions, the Foreign Corrupt Practices Act, and other anti-corruption laws, and confirm they are not located in or owned by entities in a Designated Jurisdiction[485](index=485&type=chunk)[486](index=486&type=chunk) [ARTICLE VI. AFFIRMATIVE COVENANTS](index=101&type=section&id=ARTICLE%20VI.%20AFFIRMATIVE%20COVENANTS) [Financial Reporting](index=101&type=section&id=6.01.%20Financial%20Reporting) This covenant requires the Parent to provide regular financial information to the Administrative Agent, including annual audited and quarterly unaudited consolidated financial statements, each accompanied by a compliance certificate - The Parent must furnish audited annual consolidated financial statements within **90 days** after each fiscal year-end[491](index=491&type=chunk) - The Parent must furnish unaudited quarterly consolidated financial statements within **45 days** after the end of each of the first three fiscal quarters[493](index=493&type=chunk) - A compliance certificate, demonstrating calculation of financial covenants and certifying no Default exists, must accompany all annual and quarterly financial statements[494](index=494&type=chunk) [Notices; Other Information](index=102&type=section&id=6.02.%20Notices%3B%20Other%20Information) This section obligates the Borrowers to provide prompt notice to the Administrative Agent of significant events, including Defaults, Material Adverse Effects, ERISA Events, and major litigation, and establishes electronic document distribution - Borrowers must promptly provide written notice of any Default, Event of Default, or any other development that could reasonably be expected to have a Material Adverse Effect[497](index=497&type=chunk) - Notice is required for any material ERISA Events, significant environmental issues, and major litigation or governmental proceedings[498](index=498&type=chunk)[499](index=499&type=chunk)[501](index=501&type=chunk) - The agreement allows for electronic delivery of documents via a platform and requires Borrowers to mark information as "PUBLIC" if it does not contain material non-public information[505](index=505&type=chunk)[506](index=506&type=chunk) [General Affirmative Covenants](index=104&type=section&id=6.03-6.15%20General%20Covenants) This group of covenants requires the Borrowers and their subsidiaries to perform various actions to maintain their business and financial health, including timely payment of obligations, corporate preservation, property maintenance, and legal compliance - Must pay all obligations, including taxes and indebtedness, as they become due[506](index=506&type=chunk)[507](index=507&type=chunk) - Must preserve corporate existence, maintain properties in good repair, and maintain adequate insurance with the Collateral Agent named as loss payee/additional insured[508](index=508&type=chunk)[510](index=510&type=chunk)[511](index=511&type=chunk) - Must comply with all applicable laws, including Environmental Laws, and allow the Administrative Agent and Lenders inspection rights to properties and books[513](index=513&type=chunk)[515](index=515&type=chunk) - If at any quarter-end the Guarantors represent less than **60%** of consolidated total revenues and assets, the Borrowers must cause additional subsidiaries to become Guarantors to meet the **60%** threshold[518](index=518&type=chunk) [Collateral Requirements](index=107&type=section&id=6.17.%20Collateral%20Requirements) This section details the ongoing requirement to maintain collateral, specifying that new Domestic, Canadian, or Dutch Subsidiary Guarantors must grant perfected first-priority security interests and pledge equity interests to continuously secure the Obligations - Loan Parties are required to secure the Obligations with **first-priority Liens** on substantially all tangible and intangible personal property, specified Equity Interests, and intercompany debt[524](index=524&type=chunk) - When a new Domestic or Canadian Subsidiary becomes a Guarantor, it must concurrently become a party to the Collateral Documents and take all actions to perfect the security interest in its assets[525](index=525&type=chunk) - When a new Dutch Subsidiary becomes a Guarantor, it must provide a pledge of its Equity Interests within **30 days**, subject to the Dutch Law Security Principles[526](index=526&type=chunk) [ARTICLE VII. NEGATIVE COVENANTS](index=109&type=section&id=ARTICLE%20VII.%20NEGATIVE%20COVENANTS) [Liens](index=109&type=section&id=7.01.%20Liens) This covenant prohibits the Borrowers and their subsidiaries from creating or permitting any Liens on their property, assets, or revenues, except for a specific list of "Permitted Liens" - Prohibits the creation of any Liens on property or assets, other than a defined list of "Permitted Liens"[530](index=530&type=chunk) - Permitted Liens include those securing the Obligations under this agreement, Liens securing Pari Passu Secured Indebtedness (like the Private Placement Notes) subject to an Intercreditor Agreement, and various statutory and ordinary course of business liens[530](index=530&type=chunk)[531](index=531&type=chunk) [Indebtedness](index=111&type=section&id=7.02.%20Indebtedness) This section restricts the Borrowers and their subsidiaries from creating, incurring, or assuming any Indebtedness, with specific exceptions for permitted debt, including a significant allowance for Private Placement Notes - Prohibits incurring any Indebtedness except as specifically permitted[532](index=532&type=chunk) - Permitted Indebtedness includes debt under the Loan Documents, existing debt scheduled at closing, and various baskets for unsecured debt, letters of credit, and subordinated debt[532](index=532&type=chunk)[533](index=533&type=chunk)[535](index=535&type=chunk) - Allows for up to **$250 million** in Indebtedness consisting of the Private Placement Notes and other similar debt, provided any new or refinanced debt meets certain maturity and covenant restrictions and is subject to the Intercreditor Agreement if secured[536](index=536&type=chunk) [Fundamental Changes; Dispositions](index=113&type=section&id=7.03.%20Fundamental%20Changes%3B%20Dispositions) This covenant restricts major corporate changes and asset sales, generally prohibiting mergers and consolidations except for subsidiary mergers into the Parent, and capping other asset sales at 7.5% of Consolidated Total Assets - Mergers and consolidations are restricted, but a Subsidiary may merge with another Subsidiary or into the Parent, provided the Parent or a Borrower is the surviving entity and no Default exists[537](index=537&type=chunk) - The sale, transfer, or disposition of the capital stock of any Loan Party is prohibited[538](index=538&type=chunk) - Aggregate asset sales (other than inventory in the ordinary course) are limited to **7.5%** of Consolidated Total Assets[538](index=538&type=chunk) [Restricted Disbursements and Acquisitions](index=113&type=section&id=7.04.%20Restricted%20Disbursements%20and%20Acquisitions) This section limits the ability of the Borrowers and their subsidiaries to make "Restricted Disbursements," including dividends, stock repurchases, investments, and acquisitions, generally permitting them only if specific financial tests are met - Cash dividends are limited to **$8 million** per fiscal year, unless the pro forma Leverage Ratio is less than **1.50 to 1.00** and Consolidated Liquidity exceeds **$40 million**[539](index=539&type=chunk) - Stock repurchases are limited to **$8 million** per fiscal year, unless the pro forma Leverage Ratio is less than **1.50 to 1.00** and specific liquidity conditions are met[540](index=540&type=chunk) - Acquisitions are permitted up to certain thresholds based on the Leverage Ratio (e.g., up to Consolidated EBITDA if Leverage Ratio is <= **2.00x**), provided Consolidated Liquidity exceeds **$40 million** and no Event of Default exists[541](index=541&type=chunk)[542](index=542&type=chunk) [Financial Covenants](index=117&type=section&id=7.12.%20Financial%20Covenants) This section establishes the key financial covenants that the Parent must maintain, tested at the end of each fiscal quarter, including a minimum Coverage Ratio and a maximum Leverage Ratio | Covenant | Requirement | Frequency | | :--- | :--- | :--- | | **Coverage Ratio** | (Consolidated EBITDA / Consolidated Interest Expense) must be ≥ **3.00 to 1.00** | Quarterly | | **Leverage Ratio** | (Consolidated Net Indebtedness / Consolidated EBITDA) must be ≤ **2.50 to 1.00** | Quarterly | [ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES](index=117&type=section&id=ARTICLE%20VIII.%20EVENTS%20OF%20DEFAULT%20AND%20REMEDIES) [Events of Default](index=118&type=section&id=8.01.%20Events%20of%20Default) This section defines the events that constitute an "Event of Default," including failure to make payments, covenant violations, incorrect representations, cross-defaults on other material indebtedness, insolvency, and a Change of Control - Events of Default include non-payment of principal, interest, or fees; breach of covenants (particularly those in Article VII); and materially incorrect representations or warranties[556](index=556&type=chunk) - A cross-default is triggered by a failure to pay or a default on other Material Indebtedness (over **$5 million**) that permits acceleration of that debt[556](index=556&type=chunk)[155](index=155&type=chunk) - Insolvency proceedings, the entry of a final judgment exceeding **$10 million** (if not covered by insurance), or a Change of Control also constitute Events of Default[556](index=556&type=chunk)[557](index=557&type=chunk) [Remedies Upon Event of Default](index=120&type=section&id=8.02.%20Remedies%20Upon%20Event%20of%20Default) This section outlines the actions the Administrative Agent and Lenders can take if an Event of Default occurs, including terminating commitments, accelerating outstanding obligations, and requiring cash collateralization of L/C Obligations - Upon an Event of Default, the Administrative Agent, at the request of the Required Lenders, may terminate commitments and declare all outstanding Obligations immediately due and payable[559](index=559&type=chunk) - The Agent can also require the Parent to Cash Collateralize the L/C Obligations in an amount equal to the outstanding amount[559](index=559&type=chunk) - In the event of bankruptcy, the termination of commitments and acceleration of debt are automatic, without any further action required[559](index=559&type=chunk) [Application of Funds](index=120&type=section&id=8.03.%20Application%20of%20Funds) This section specifies the order of priority for applying any funds received after remedies have been exercised following an Event of Default, detailing the "waterfall" for payments - Establishes a payment waterfall for funds received after an Event of Default and acceleration[560](index=560&type=chunk) - The order of application is: 1) Agent fees/expenses, 2) Lender fees/expenses, 3) Accrued interest and fees, 4) Principal of Loans and other Secured Obligations, 5) L/C Cash Collateral, and 6) Balance to the Parent[561](index=561&type=chunk) [ARTICLE IX. ADMINISTRATIVE AGENT AND COLLATERAL AGENT](index=122&type=section&id=ARTICLE%20IX.%20ADMINISTRATIVE%20AGENT%20AND%20COLLATERAL%20AGENT) [Agent Roles, Rights, and Protections](index=122&type=section&id=9.01-9.08%20Agent%20Roles%20and%20Protections) This series of sections defines the role, authority, and protections for the Administrative Agent and Collateral Agent, outlining their administrative duties, exculpatory provisions, and the process for resignation and successor appointment - Lenders irrevocably appoint **Bank of America** as Administrative Agent and Collateral Agent to act on their behalf[565](index=565&type=chunk)[566](index=566&type=chunk) - The Agent's duties are expressly administrative and not fiduciary, and the Agent is protected from liability except for its own gross negligence or willful misconduct[567](index=567&type=chunk)[570](index=570&type=chunk)[571](index=571&type=chunk) - The Agent may resign by giving notice, and the Required Lenders have the right to appoint a successor; if they fail to do so within **30 days**, the retiring Agent may appoint one[577](index=577&type=chunk) - Each Lender acknowledges it has made its own credit decision independently and without reliance on the Agent[581](index=581&type=chunk) [Collateral and Guaranty Matters](index=128&type=section&id=9.10.%20Collateral%20and%20Guaranty%20Matters) This section grants the Administrative and Collateral Agents the authority to release liens on collateral or release a Subsidiary Guarantor under specific, permitted circumstances, requiring each Lender's consent for substantial releases - The Agent is authorized to release a Subsidiary Guarantor if it ceases to be a Subsidiary through a permitted transaction[588](index=588&type=chunk) - The Agent is authorized to release any Lien on property that is sold or disposed of in a transaction permitted under the Loan Documents[589](index=589&type=chunk) - Any release of collateral or a guaranty is conditioned on a substantially simultaneous release of the same for the Private Placement Notes and other specified indebtedness[588](index=588&type=chunk)[589](index=589&type=chunk) [ARTICLE X. MISCELLANEOUS](index=131&type=section&id=ARTICLE%20X.%20MISCELLANEOUS) [Amendments, Waivers, and Consents](index=131&type=section&id=10.01.%20Amendments%2C%20Etc.) This section specifies the requirements for amending or waiving provisions of the loan documents, generally requiring the consent of the Required Lenders, but mandating unanimous consent for fundamental changes - Amendments and waivers generally require the written consent of the Required Lenders and the Borrowers[599](index=599&type=chunk) - Unanimous consent of each affected Lender is required to extend payment dates, reduce principal or interest rates, or increase a Lender's commitment[599](index=599&type=chunk) - Consent of each Lender is required to release all or substantially all of the collateral or guaranties[600](index=600&type=chunk) [Successors and Assigns](index=137&type=section&id=10.06.%20Successors%20and%20Assigns) This section governs the transfer of rights and obligations by Lenders, allowing assignments to eligible entities subject to conditions, minimum amounts, and required consents, with the Administrative Agent maintaining a Register of all Lenders - A Lender may assign its rights and obligations to an eligible assignee, typically requiring a minimum assignment of **$5 million**[623](index=623&type=chunk) - Consent from the Borrowers and the Administrative Agent is generally required for an assignment, unless the assignment is to another Lender or an affiliate, or if an Event of Default is ongoing[624](index=624&type=chunk)[625](index=625&type=chunk) - The Administrative Agent maintains a Register of all Lenders, and any assignment is effective upon its recordation in the Register[631](index=631&type=chunk) [Confidentiality](index=142&type=section&id=10.07.%20Treatment%20of%20Certain%20Information%3B%20Confidentiality) This section obligates the Administrative Agent, Lenders, and L/C Issuer to maintain the confidentiality of all non-public information received from the Borrowers, with specific exceptions for permitted disclosures - The Agents and Lenders agree to keep all non-public information received from the Borrowers confidential[638](index=638&type=chunk) - Disclosure is permitted to affiliates, auditors, regulators, in legal proceedings, and to potential assignees or participants under a confidentiality agreement[638](index=638&type=chunk)[639](index=639&type=chunk) [Governing Law and Jurisdiction](index=147&type=section&id=10.14.%20Governing%20Law%3B%20Jurisdiction%3B%20Etc.) This section establishes the legal framework for the agreement, specifying that it is governed by the laws of the State of Texas and that all parties submit to the nonexclusive jurisdiction of courts in Harris County, Texas - This Agreement is governed by the law of the **State of Texas**[651](index=651&type=chunk) - Parties submit to the nonexclusive jurisdiction of state courts in **Harris County, Texas**, and the U.S. District Court for the Southern District of Texas[652](index=652&type=chunk) [Waiver of Jury Trial](index=147&type=section&id=10.15.%20Waiver%20of%20Jury%20Trial) In this section, all parties to the agreement irrevocably waive their right to a trial by jury in any legal proceeding that arises directly or indirectly from the agreement or any other loan document - Each party to the agreement irrevocably waives any right to a trial by jury in any legal proceeding related to the Loan Documents[655](index=655&type=chunk)[656](index=656&type=chunk) [Schedules and Exhibits](index=9&type=section&id=Schedules%20and%20Exhibits) [List of Schedules and Exhibits](index=9&type=section&id=List%20of%20Schedules%20and%20Exhibits) This section lists the various schedules and exhibits that are part of the credit agreement, providing specific details on existing conditions and forms for key operational and legal documents - The agreement includes numerous schedules detailing existing conditions as of the closing date, such as Existing Letters of Credit (1.01), Commitments (2.01), Existing Liens (7.01), and Existing Indebtedness (7.02)[17](index=17&type=chunk) - The agreement includes form exhibits for critical operational and legal documents, including the Loan Notice (A), Compliance Certificate (D), Assignment and Assumption (E), various Guaranties (F, G), and legal opinions (H-1 to H-4)[17](index=17&type=chunk)

Core Insights - Core Laboratories Inc. (CLB) is expected to report second-quarter 2025 results on July 23, with a consensus estimate of 18 cents per share profit and revenues of $129.3 million [1][9] - The company has faced challenges in its previous quarter, with adjusted earnings of 14 cents per share, missing the consensus estimate by one cent, primarily due to poor performance in the Reservoir Description segment [2][3] Financial Performance - CLB's earnings have missed the Zacks Consensus Estimate in two of the last four quarters, with an average negative surprise of 1.6% [3] - The Zacks Consensus Estimate for Q2 2025 indicates an 18.2% year-over-year decline in earnings and a 1% decline in revenues compared to the previous year [3] Revenue Breakdown - Revenues from the Reservoir Description segment are expected to decrease by 0.7% year-over-year to $85.7 million, influenced by global economic uncertainties and geopolitical risks [5] - The Production Enhancement segment's revenues are projected to decline by 1.6% year-over-year to $43.6 million, impacted by recent tariff announcements [5] Cost and Expense Analysis - Total operating expenses for Q2 are anticipated to be $115.1 million, reflecting a 0.4% increase from the previous year [6] - Costs associated with services and product sales are expected to rise from $102.9 million to $104.8 million [6] Future Outlook - Despite current challenges, CLB expects steady international project activity in the upcoming quarter, with long-term commitments in various regions including South Atlantic Margin, North and West Africa, Norway, the Middle East, and parts of Asia Pacific [7] Earnings Prediction Model - The current model does not predict an earnings beat for CLB, as the Earnings ESP is 0.00% and the Zacks Rank is 5 (Strong Sell) [10][11]

Core Insights - Core Laboratories Inc. (CLB) has experienced a significant decline in share price, dropping 21.6% over the past six months, which is worse than the broader oil and energy sector's 1.7% loss and the 13.1% drop in the oil and gas field services sub-industry [1][7] - The company's recent performance indicates internal challenges, as evidenced by a 4.4% sequential and 5% year-over-year revenue decline in Q1 2025, alongside a 25% sequential and 21% year-over-year drop in operating income [4][17] - Geopolitical sanctions and operational inefficiencies have disrupted CLB's operations, particularly affecting product deliveries and crude assay services in Eastern Europe and the Middle East [5][17] Financial Performance - CLB's Q1 2025 results showed a decline in revenues and earnings, driven by sanctions, seasonal slowdowns, and weak U.S. activity [7][17] - The company's Reservoir Description segment experienced a 7% sequential revenue drop, raising concerns about future profitability [4][17] - Despite a slight decrease in net debt by $4.9 million, CLB's leverage ratio remains high at 1.31x, limiting financial flexibility [13][17] Market Conditions - The U.S. onshore market outlook is weak, with peers projecting a 10-15% decline in 2025, which could pressure CLB's Production Enhancement segment [9][17] - Ongoing geopolitical conflicts, particularly in Russia-Ukraine and the Middle East, may lead to further disruptions in international revenue streams [8][17] - CLB's exposure to crude oil price volatility poses additional risks, as recent OPEC+ production increases and U.S. tariffs have pressured oil prices [11][17] Operational Challenges - Margin compression is evident, with Reservoir Description margins falling 670 basis points sequentially to 10% due to revenue declines and fixed-cost absorption [10][17] - The company faces competitive and technological risks, relying on proprietary technologies that require sustained R&D investment [16][17] - Operational inefficiencies and cost challenges persist, with management indicating that restructuring costs may recur [15][17] Growth Prospects - CLB's near-term growth relies on uncertain international projects in regions like Africa and the Middle East, with revenue guidance for Q2 2025 suggesting only modest sequential improvement [12][17] - Limited growth catalysts and a focus on debt reduction over shareholder returns reduce the appeal for income investors [14][17]