Core Laboratories Inc. (CLB) has experienced a year-to-date (“YTD”) stock price decrease of 29.7%, significantly underperforming the broader oil and gas sector and the oil and gas field services sub-industry’s decline of 1.2% and 12.7%, respectively. In comparison, competitors such as Oceaneering International (OII) , Halliburton (HAL) and RPC Inc. (RES) were down 22.8%, 21.8% and 16.5%, respectively. This steeper drop suggests that Core Laboratories may be facing company-specific challenges beyond broader ...

FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ______________ Commission File Number: 001-41695 CORE LABORATORIES INC. (Exact name of registrant as specified in its charter) Delaware 98 ...

Core Laboratories Inc. (NYSE:CLB) Q1 2025 Earnings Conference Call April 24, 2025 8:30 AM ET Company Participants Larry Bruno - Chairman and Chief Executive Officer Gwen Gresham - Senior Vice President and Head, Investor Relations Chris Hill - Chief Financial Officer Conference Call Participants Stephen Gengaro - Stifel Sean Mitchell - Daniel Energy Partners Operator Good day and welcome to the Core Laboratories N. V. First Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. ...

Core Laboratories (CLB) Q1 2025 Earnings Call April 24, 2025 08:30 AM ET Company Participants Lawrence Bruno - Chairman of the Board, CEO, President & COOGwendolyn Gresham - SVP - Corporate Development & Investor RelationsChristopher Hill - SVP & CFOStephen Gengaro - Managing DirectorSean Mitchell - Managing Partner Operator Good day, and welcome to the Core Laboratories First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Should you need assistance, pleas ...

Core Laboratories Earnings Summary - Core Laboratories reported quarterly earnings of $0.14 per share, missing the Zacks Consensus Estimate of $0.15 per share, and down from $0.19 per share a year ago, representing an earnings surprise of -6.67% [1] - The company posted revenues of $123.59 million for the quarter, missing the Zacks Consensus Estimate by 0.38%, and down from $129.64 million year-over-year [2] - Over the last four quarters, Core Laboratories has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] Stock Performance and Outlook - Core Laboratories shares have declined approximately 28.1% since the beginning of the year, compared to a decline of -10.1% for the S&P 500 [3] - The company's earnings outlook is currently unfavorable, leading to a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $127.62 million, and for the current fiscal year, it is $0.76 on revenues of $508.9 million [7] Industry Context - The Oil and Gas - Field Services industry, to which Core Laboratories belongs, is currently ranked in the top 35% of over 250 Zacks industries, suggesting a relatively strong industry performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

Financial Performance - Core Laboratories reported Q1 2025 revenue of $123.6 million, down 4% sequentially and 5% year-over-year[4]. - Operating income for Q1 2025 was $4.4 million; ex-items operating income was $11.8 million, down 25% sequentially and 21% year-over-year[4]. - Revenue for Q1 2025 was $123,585 thousand, a decrease of 4.4% compared to Q4 2024 and 4.7% compared to Q1 2024[28]. - Operating income dropped to $4,417 thousand, down 68.8% from Q4 2024 and 48.5% from Q1 2024[28]. - Net income for Q1 2025 was $69 thousand, representing a 99.1% decline from Q4 2024 and a 98.0% decline from Q1 2024[28]. - The effective tax rate for Q1 2025 was 96%, significantly higher than 35% in Q4 2024[28]. Segment Performance - Reservoir Description segment revenue was $80.9 million, down 7% sequentially and 4% year-over-year, with operating margins of 10%[5]. - Production Enhancement segment revenue was $42.7 million, flat sequentially but down 6% year-over-year, with operating margins of 8%[7]. - Revenue from the Reservoir Description segment was $80,897 thousand, down 6.8% from Q4 2024[28]. - Operating income from the Reservoir Description segment fell to $2,339 thousand, an 85.9% decrease from Q4 2024[28]. - Operating income for the three months ended March 31, 2025, was reported at $7,756 million, with a breakdown of $2,339 million from Reservoir, $1,503 million from Production Enhancement, and $575 million from Corporate and Other[43]. Cash Flow and Debt - Free cash flow for Q1 2025 was $3.9 million, up over 50% year-over-year[4]. - Net cash provided by operating activities was $6,660 thousand, an increase from $5,530 thousand in Q1 2024[32]. - Free cash flow for the three months ended March 31, 2025, was $3,875 million, derived from net cash provided by operating activities of $6,660 million, after capital expenditures of $2,785 million[48]. - The company repaid $15,000 thousand in long-term debt during Q1 2025[32]. - Net debt was reduced by $4.9 million, with a leverage ratio remaining at 1.31, the lowest level in eight years[11]. Future Guidance - Q2 2025 revenue guidance for Reservoir Description is projected between $85 million and $89 million, and for Production Enhancement between $43 million and $45 million[20]. - Core's overall Q2 2025 revenue is projected to range from $128 million to $134 million, with expected EPS of $0.17 to $0.21[21]. Return on Investment - Core's ROIC for Q1 2025 was reported at 8.3%, reflecting the company's focus on maximizing return on invested capital[15]. - The Return on Invested Capital (ROIC) was calculated at 8.3%, based on a Net Operating Profit After Tax (NOPAT) of $33.6 million and an Average Total Invested Capital of $402.2 million[45]. Asset Management - Cash and cash equivalents increased by 15.4% to $22,107 thousand compared to $19,157 thousand at the end of Q4 2024[30]. - Total current assets rose by 1.0% to $228,768 thousand, while total assets increased slightly by 0.2% to $591,519 thousand[30]. - The company plans to continue evaluating capital allocation to return value to shareholders while reducing its leverage ratio[12].

Core Viewpoint - Core Laboratories Inc. (CLB) has demonstrated strong stock performance, with a 26.9% increase over the past six months, significantly outperforming the broader oil and energy sector and its competitors [1][4]. Group 1: Company Performance - CLB operates in over 50 countries, specializing in reservoir management and production enhancement, with approximately 80% of its revenues generated internationally [1][5]. - The company has successfully expanded its global presence, particularly in the Middle East, despite challenges in the U.S. land activity and geopolitical disruptions [5][11]. - CLB's free cash flow (FCF) reached $43.4 million in 2024, marking a 200% year-over-year increase, which supports shareholder value through buybacks and dividends [6][8]. Group 2: Competitive Advantages - CLB is at the forefront of reservoir evaluation technology, utilizing proprietary innovations such as Nuclear Magnetic Resonance (NMR) technology, which enhances hydrocarbon recovery [9][18]. - The asset-light business model allows CLB to maintain strong margins and high returns on invested capital, enabling it to weather downturns better than capital-intensive peers [10][18]. - The company is well-positioned to benefit from long-cycle offshore projects in regions like the South Atlantic Margin and West Africa, providing stability amid U.S. onshore uncertainties [11][18]. Group 3: Risks and Challenges - CLB faces competitive pricing pressure in the perforating and well-completion markets, which may limit margin expansion [12][19]. - A decline in U.S. onshore activity has led to a 7% sequential drop in Production Enhancement revenues, indicating potential revenue pressures [13][19]. - Geopolitical risks and sanctions have disrupted operations, particularly affecting crude assay laboratory services and demand for crude oil analysis [16][17][19].

Core Laboratories Earnings Summary - Core Laboratories reported Q4 2024 adjusted earnings of 23 cents per share, exceeding the Zacks Consensus Estimate of 21 cents and up from 19 cents in the same quarter last year, driven by strong performance in the Reservoir Description segment [2] - Operating revenues for the quarter were $129.2 million, missing the Zacks Consensus Estimate of $131 million by 1.4%, but showing a 0.9% increase from $128 million in the prior year, attributed to the Reservoir Description segment's performance [3] Segment Performance - **Reservoir Description**: Revenues increased by 2.1% to $86.8 million from $85 million year-over-year, although it fell short of the estimate of $88.2 million. Operating income rose from $12 million to $16.5 million, surpassing the estimate of $12.6 million due to increased demand for reservoir analysis [5] - **Production Enhancement**: Revenues decreased by 3.6% to $42.4 million from $44 million in the prior year, missing the estimate of $42.7 million. The segment reported an operating loss of $2.6 million, contrasting with an expected operating income of $3.6 million, primarily due to reduced U.S. onshore completion activity [6] Financial Metrics - Total costs and expenses for Q4 were $115.1 million, a 1.3% increase from the previous year, slightly below the estimate of $115.2 million [7] - As of December 31, 2024, the company had cash and cash equivalents of $19.2 million and long-term debt of $126.1 million, with a debt-to-capitalization ratio of 32.9%. Net cash from operating activities was $20.6 million, leading to a positive free cash flow of $16 million after capital expenditures of $4.4 million [8] Dividend Information - The board of directors declared a quarterly dividend of 1 cent per share, unchanged from the previous quarter, payable on March 3 to shareholders of record as of February 10 [9] Market Outlook - There has been a downward trend in estimates, with a consensus estimate shift of -9.76% in the past month [10] - Core Laboratories holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [12]

Market Trends - Core Laboratories reported a 5% reduction in the U.S. land-based rig count as of December 31, 2024, compared to December 31, 2023[182]. - The average crude oil price per barrel for WTI was $76.63 in 2024, down from $77.58 in 2023, and significantly lower than $94.90 in 2022[178]. - The average natural gas price per MMBtu decreased by approximately 13% in 2024 compared to 2023, reflecting ongoing price pressures in the market[184]. - The inventory of drilled but uncompleted (DUC) wells in the U.S. declined from 5,825 at the end of 2023 to 5,238 at the end of 2024[183]. - International average rig count increased by approximately 6% in 2023 from 2022 but remained flat in 2024, indicating stability in long-term projects[186]. - The global demand for crude oil and natural gas is expected to slow down in 2025 due to a weakening macroeconomic climate, particularly in major economies like China[181]. Financial Performance - Service revenue for the year ended December 31, 2024, was $388.2 million, an increase of 4% compared to 2023, driven by growth in both U.S. and international markets[191]. - Product sales revenue for the year ended December 31, 2024, was $135.6 million, a decrease of 2% compared to 2023, primarily due to a 13% decline in the U.S. land-based average rig count[192]. - Total revenue for the year ended December 31, 2024, was $523.8 million, reflecting a 2.8% increase compared to 2023[1]. - Operating income for the year ended December 31, 2024, was $58.6 million, representing an increase of 7.2% compared to 2023[1]. - Net income attributable to Core Laboratories Inc. for the year ended December 31, 2024, was $31.4 million, a decrease of 14.4% compared to 2023[1]. Cost and Expenses - General and administrative expense for 2024 was $39.8 million, a decrease of 1% compared to 2023, attributed to lower employee compensation costs[195]. - Cost of services for the year ended December 31, 2024, was $297.3 million, an increase of 5% compared to 2023, with costs as a percentage of service revenue rising to 77%[193]. - Cost of product sales for the year ended December 31, 2024, was $123.2 million, an increase of 5% compared to 2023, with costs as a percentage of product sales revenue increasing to 91%[194]. - Depreciation and amortization expense for the year ended December 31, 2024, was $15.0 million, a decrease from $15.8 million in 2023[196]. Liquidity and Debt - The current ratio as of December 31, 2024, was 2.32:1, down from 2.53:1 in 2023, indicating a decrease in liquidity[1]. - Interest expense for the year ended December 31, 2024, was $12.4 million, down from $13.4 million in 2023, due to a reduction in total outstanding debt by $38.0 million or 23%[204]. - The company has a total long-term debt of $128.0 million as of December 31, 2024, down from $166.0 million in 2023[229]. - The leverage ratio as of December 31, 2024, is 1.31, with an interest coverage ratio of 6.74, indicating compliance with all covenants[231]. Cash Flow - Cash provided by operating activities increased to $56.4 million in 2024, up from $24.8 million in 2023, driven by improved operational working capital[221]. - Cash used in investing activities for 2024 was $6.4 million, primarily driven by capital expenditures of $13.0 million, offset by $6.6 million from asset sales and insurance recoveries[222]. - Cash used in financing activities for 2024 was $46.0 million, mainly due to a net reduction in debt of $38 million and stock repurchases of $5.3 million[223]. - Free cash flow for 2024 increased significantly to $43.36 million, up $29.2 million from 2023, attributed to improved operational working capital despite higher capital spending[226]. Operational Insights - The company recorded insurance recovery net gains of $8.4 million due to a fire incident at a U.K. facility, with $4.0 million for business interruption and $4.4 million for property damage[200]. - Revenue from the Reservoir Description segment was $346.1 million in 2024, a 4% increase from $333.3 million in 2023, driven by growing client activity and demand for CCS projects[212]. - Operating income for the Reservoir Description segment increased by 25% to $51.5 million in 2024, with operating margins rising to 14.9% from 12.3% in 2023[213]. - Revenue from the Production Enhancement segment was $177.7 million in 2024, a slight increase of 1% compared to $176.4 million in 2023[215]. - Operating income for the Production Enhancement segment decreased by 47% to $6.6 million in 2024, with operating margins dropping to 3.7% from 7.1% in 2023[216]. Tax and Compliance - Income tax expense for 2024 was $14.0 million, resulting in an effective tax rate of 30.4%, compared to $4.2 million and 10.2% in 2023[205]. - The company has uncertain tax positions of $3.3 million accrued as of December 31, 2024, with potential future payments being uncertain[234]. - Valuation allowances for net deferred tax assets totaled $8.8 million and $8.3 million as of December 31, 2024 and 2023, respectively[244]. Risk Factors - The geopolitical conflict in the Middle East has caused additional disruptions in crude oil trading, impacting the company's laboratory services volume[181]. - The geopolitical conflict between Russia and Ukraine has not significantly impacted the company's operations, with no impairment identified for long-lived assets in these regions[251]. - The company operates in various international areas, exposing it to foreign currency exchange rate risk, but does not currently use forward exchange contracts for hedging[266]. - The company’s financial instruments are primarily exposed to credit risk from cash and cash equivalents and accounts receivable, which are considered limited due to the creditworthiness of counterparties[267]. - A 10% change in interest rates would not have a material impact on the company's results of operations or cash flows[265]. Strategic Outlook - Capital spending in the oil and gas sector reached its highest level in over a decade in 2023, with modest growth expected in 2024 and further growth anticipated in 2025[238]. - The company expects to continue investing in capital expenditures aligned with client demand, focusing on replacing obsolete equipment and consolidating facilities[236]. - Major clients are prioritizing capital management and free cash flow over production growth, which may influence the company's service demand[242]. - The company did not record any material impairment charges for long-lived assets and intangible assets during the years ended December 31, 2024, 2023, and 2022[250]. - The company does not have any off-balance sheet financing arrangements, minimizing exposure to financing, liquidity, market, or credit risk[256].

Core Points - Core Laboratories Inc. (CLB) reported fourth-quarter 2024 adjusted earnings of 23 cents per share, exceeding the Zacks Consensus Estimate of 21 cents and up from 19 cents in the prior year, driven by strong performance in the Reservoir Description segment [1] - The company's operating revenues for the fourth quarter were $129.2 million, slightly missing the Zacks Consensus Estimate of $131 million, but representing a 0.9% increase from $128 million in the same quarter last year, attributed to the Reservoir Description segment [2] - CLB repurchased 264,982 shares for $4.9 million and reduced its debt leverage ratio to 1.31, down from 1.47 as of September 30, 2024, while decreasing net debt by $11.7 million [3] Segment Performance - **Reservoir Description**: Revenues increased by 2.1% to $86.8 million from $85 million year-over-year, although it fell short of the estimate of $88.2 million. Operating income rose from $12 million to $16.5 million, surpassing the estimate of $12.6 million due to increased demand for reservoir analysis [4] - **Production Enhancement**: Revenues decreased by 3.6% to $42.4 million from $44 million in the prior year, missing the estimate of $42.7 million. The segment reported an operating loss of $2.6 million, contrasting with an expected operating income of $3.6 million, primarily due to lower U.S. onshore completion activity [5] Financial Overview - Total costs and expenses for the fourth quarter were $115.1 million, a 1.3% increase from the previous year, slightly below the estimate of $115.2 million [6] - As of December 31, 2024, CLB had cash and cash equivalents of $19.2 million and long-term debt of $126.1 million, with a debt-to-capitalization ratio of 32.9%. Net cash from operating activities was $20.6 million, leading to a positive free cash flow of $16 million after capital expenditures of $4.4 million [7] - The board declared a quarterly dividend of 1 cent per share, unchanged from the previous quarter, payable on March 3 [8] Management Outlook - CLB anticipates a decline in activity in some regions during the first quarter of 2025 due to geopolitical risks and seasonal industry patterns [9] - For Q1 2025, revenues are expected to range from $121 million to $127 million, with operating income between $10.2 million and $12.8 million, and earnings per share projected between 12 cents and 16 cents [10] - The Reservoir Description segment is expected to generate revenues between $82 million and $85 million, while the Production Enhancement segment is projected to bring in revenues between $39 million and $42 million [11][12] - The company expects to maintain positive free cash flow and focus on strategic goals, including debt reduction and technology investments to meet client needs [14][15] Industry Context - Industry forecasts indicate crude oil demand growth of approximately 1.1-1.4 million barrels per day in 2025, necessitating continued investment in oil field development [16] - The company expects crude oil markets to remain volatile due to global economic uncertainties and geopolitical risks, with expanded sanctions disrupting crude oil trading [17] - CLB plans to remain engaged in long-term international projects, with stable activity expected in regions like the South Atlantic Margin and North Africa, while U.S. onshore activity may remain flat or decline slightly [18] Key Projects and Technology - In Q4 2024, CLB completed a study for a Middle Eastern National Oil Company using its Nuclear Magnetic Resonance technology, which improved the accuracy of recoverable reserves estimation [19][20] - The company utilized its STIMGUNTM propellant technology in Southeast Asia, resulting in a 55% increase in expected natural gas production from a low-permeability gas reservoir [21] - CLB also assisted a Canadian operator in confirming oil production from 87% of traced horizontal well legs using its FlowProfiler oil tracers [22]