Core Laboratories (CLB) came out with quarterly earnings of $0.19 per share, missing the Zacks Consensus Estimate of $0.20 per share. This compares to earnings of $0.20 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -5%. A quarter ago, it was expected that this energy services company would post earnings of $0.23 per share when it actually produced earnings of $0.22, delivering a surprise of -4.35%.Over the last four quarters ...

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $125.3 million, down 2% sequentially and flat year-over-year [14] - Operating income, ex-items, was $16 million, up 2% sequentially and up 20% year-over-year [8][19] - Earnings per share, ex-items, was $0.22, up from $0.21 in Q2 2023 and $0.18 in Q3 2022 [19] - Operating margins improved to 13%, up from 12% in Q2 2023 and 11% in Q3 2022 [9] Business Line Data and Key Metrics Changes - Reservoir description revenue was $85.1 million, up 2% sequentially and 8% year-over-year, with operating margins at 17%, the highest since Q2 2020 [34] - Production enhancement revenue was $40.2 million, down approximately 10% sequentially and 14% year-over-year, with operating margins at 4% [37] Market Data and Key Metrics Changes - U.S. land completion activity was down 10% sequentially, impacting production enhancement [10] - International upstream project activity continued to expand, but U.S. activity was lower than expected [14][26] Company Strategy and Development Direction - The company aims to introduce new products and services in key geographic markets, maintain a lean organization, and focus on de-leveraging [10][11] - Core Laboratories is focused on maximizing free cash flow, return on invested capital, and returning excess free cash to shareholders [11] Management Comments on Operating Environment and Future Outlook - Management noted ongoing geopolitical uncertainties affecting demand for laboratory services, particularly due to the Russia-Ukraine conflict and Middle East tensions [10][27] - The company maintains a constructive outlook on international upstream activity for 2024 and beyond, anticipating increased investment in hydrocarbon production [29] Other Important Information - The company retired $75 million in senior notes and used $71 million of its bank credit facility to fund this maturity [21] - Cash flow used in operating activities was approximately $200,000, with free cash flow negative $3.7 million due to a build in working capital [22] Q&A Session Summary - No questions were posed during the Q&A session, leading to a wrap-up by management [43]

Financial Performance - Total revenue for Q3 2023 was $125.3 million, a decrease of 2% from $127.9 million in Q2 2023[115] - Net income for Q3 2023 was $9.2 million, down 60% from $22.9 million in Q2 2023[115] - Operating income for Q3 2023 was $14.7 million, a decline of 22% compared to $18.9 million in Q2 2023[115] - For the nine months ended September 30, 2023, total revenue was $381.6 million, a 5% increase from $362.2 million in the same period of 2022[116] - Net income attributable to Core Laboratories Inc. for the nine months ended September 30, 2023, was $34.5 million, a significant increase of 171% from $12.7 million in the same period of 2022[116] - For the three months ended September 30, 2023, service revenue was $92.9 million, an increase of 6% year-over-year[139] - Total revenue for the same period was $125.3 million, showing a slight decrease of 0% compared to $125.9 million in the previous year[134] - Operating income for the three months ended September 30, 2023, was $14.7 million, remaining relatively flat compared to $14.6 million in the previous year[134] - Net income attributable to Core Laboratories Inc. for the three months ended September 30, 2023, was $9.3 million, representing a 23% increase from $7.5 million in the prior year[134] Revenue Breakdown - Services revenue accounted for 74% of total revenue in Q3 2023, while product sales made up 26%[115] - Cost of product sales was $27.6 million for the three months ended September 30, 2023, a decrease of 12% year-over-year[142] - Revenue from the Reservoir Description segment was $85.1 million for the three months ended September 30, 2023, an increase of 8% year-over-year[178] - Revenue from the Production Enhancement segment was $40.2 million for the three months ended September 30, 2023, a decrease of 14% year-over-year[181] - For the nine months ended September 30, 2023, product sales revenue totaled $104.4 million, remaining relatively flat compared to the same period in the prior year[166] Expenses and Margins - Cost of services for Q3 2023 was $69.0 million, representing 74% of service revenue, an improvement from 77% in the same period last year[119] - General and administrative expenses for Q3 2023 were $9.5 million, an increase of 63% sequentially from $5.8 million in Q2 2023[120] - General and Administrative (G&A) expense for the nine months ended September 30, 2023, was $31.6 million, an increase of $2.2 million from $29.4 million in the same period in 2022, mainly due to higher stock compensation expenses[169] - Operating margins improved to 12% for the nine months ended September 30, 2023, up from 7% in the same period of 2022[151] - Operating margins for the three months ended September 30, 2023, were 4%, down from 9% in the same period last year[183] Cash Flow and Financing - Cash flows provided by operating activities for the three months ended September 30, 2023, were $5.4 million, a decrease of 54% from $11.7 million in the same period in 2022[187] - Free cash flow for the nine months ended September 30, 2023, was $(2.5) million, compared to $3.6 million in the same period in 2022[190] - Cash flows used in financing activities for the nine months ended September 30, 2023, were nominal, driven by a $6.0 million net increase in long-term debt[188] Ratios and Financial Health - The current ratio improved to 2.71:1 in Q3 2023 from 2.23:1 in the previous quarter[114] - The debt to EBITDA ratio decreased to 2.26:1 in Q3 2023 from 2.81:1 in Q2 2023[114] - The current ratio improved to 2.71:1 from 2.45:1 year-over-year[136] - The debt to EBITDA ratio increased slightly to 2.26:1 from 2.18:1 year-over-year[136] Tax and Interest - The effective tax rate for the three months ended September 30, 2023, was 20%, compared to 33.5% for the same period in 2022[147] - Interest expense for the nine months ended September 30, 2023, was $9.8 million, up from $8.5 million in the same period of 2022, primarily due to rising interest rates[146] Market Conditions and Outlook - The geopolitical conflict between Russia and Ukraine has caused significant volatility in crude oil prices, impacting trading patterns and supply chains[130] - The company anticipates that crude oil commodity prices will remain stable or increase due to high global demand for crude oil and natural gas[129] - The company expects client activities related to increasing oil and gas reserves and production levels to continue to rise in the coming years[131] Shareholder Actions - The company repurchased 17,041 shares of common stock for an aggregate purchase price of $0.4 million during the nine months ended September 30, 2023[159] - The company continues to maintain a quarterly dividend of $0.01 per share[157]

Financial Data and Key Metrics Changes - The company achieved sequential improvements in operating income, operating margins, net income, free cash flow, and earnings per share [4] - Revenue for Q2 2023 was $127.9 million, flat compared to Q1 and up almost 6% year-over-year [19][136] - Earnings per diluted share, ex-items, was $0.21 for the quarter, up from $0.19 in Q1 2023 and significantly improved from $0.12 in Q2 2022 [11][121] - Operating income on a GAAP basis was $18.9 million, which includes a gain of $2.9 million [10] - Net income ex-items for the quarter was $9.8 million, up from $8.8 million last quarter and $5.4 million from last year [22] Business Line Data and Key Metrics Changes - Revenue from the reservoir description segment was $83.4 million, up 4% sequentially and 10% year-over-year [36] - Production enhancement revenue was $44.5 million, down approximately 8% sequentially but flat year-over-year [71] - Operating income for reservoir description, ex-items, was $13.3 million with operating margins over 13% [36] - Operating margins for production enhancement were 10%, down 270 basis points from Q1 [71] Market Data and Key Metrics Changes - International service revenue was $93.3 million for the quarter, up over 2% sequentially and over 9% year-over-year [8] - U.S. product sales decreased 3% sequentially, reflecting a softening U.S. land market [20] - The company anticipates third quarter 2023 revenue to range from $128 million to $132 million, with operating income projected between $15.2 million to $17.5 million [32] Company Strategy and Development Direction - The company focuses on maximizing free cash flow, maximizing return on invested capital, and returning excess free cash to shareholders [137] - Core Lab aims to introduce new product and service offerings in key geographic markets while maintaining a lean organization [122] - The company is positioned to benefit from increased international upstream spending and ongoing projects in regions like the Middle East and West Africa [29][56] Management's Comments on Operating Environment and Future Outlook - Management expressed a constructive outlook on international upstream spending for the second half of 2023, anticipating a multi-year recovery [56] - The company noted that U.S. land completion activity is expected to be slightly down compared to the first half of 2023 [58] - Management highlighted the uncertainties related to the Russia/Ukraine conflict and its potential impact on operations in Europe [31] Other Important Information - The company recorded a tax benefit of approximately $11.6 million associated with its redomestication from the Netherlands to the U.S. [7] - Cash flow from operating activities was approximately $8.8 million, with free cash flow for the quarter at $6.6 million [25] - The company plans to maintain capital expenditures in the range of $11 million to $13 million for the full year of 2023 [54] Q&A Session Summary Question: What is the outlook for reservoir description growth relative to activity? - Management indicated that while high incremental margins are expected, the performance may vary based on project timing and execution [48] Question: How does the company view the impact of U.S. land market activity on margins? - The company noted that reduced manufacturing efficiencies in the U.S. land market have affected margins, but improvements are anticipated with projected growth in product sales [49] Question: What is the status of unconventional resource evaluation in the Middle East? - Management stated that some National Oil Companies (NOCs) are in the early stages of evaluating unconventional resources, with ongoing projects to assess their potential [109]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |---------------------------------------------------------------------------------------|--------------------------------------------------------------------------------- ...

Financial Data and Key Metrics Changes - Revenue for the first quarter was $128.4 million, a slight increase from $127.6 million in the prior quarter and up 11.3% year-over-year [5] - Earnings per diluted share ex-items was $0.19 for the quarter, down from $0.20 in the previous quarter but significantly improved from $0.08 in the first quarter of the previous year [9][60] - Cost of sales ex-items was 82% of revenue, up from 79% in the last quarter, attributed to reduced manufacturing efficiencies and lower international sales [7] - The company's leverage ratio improved from 2.29 to 2.18 [57] Business Line Data and Key Metrics Changes - Reservoir Description revenue was over $80 million, up 3% sequentially and 7% year-over-year, with operating income ex-items at $7.8 million and operating margins at 10% [21] - Production Enhancement revenue was $48.2 million, down approximately 3% sequentially but up 19% year-over-year, with operating income ex-items at $6 million and operating margins at 13% [36] Market Data and Key Metrics Changes - International product sales were down 8% sequentially but up 28% year-over-year, reflecting variability in large bulk orders [6] - U.S. land activity was weaker than expected due to low natural gas prices, but upstream spending is projected to increase approximately 15% year-over-year [16] Company Strategy and Development Direction - The company aims to introduce new product and service offerings in key geographic markets while maintaining a lean organization and focusing on deleveraging [60] - The company is positioned to benefit from a multiyear recovery cycle in the oil and gas industry, with crude oil demand projected to reach a record 101.9 million barrels per day in 2023 [14][15] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are recession concerns, supply and demand balance is tightening, supporting a positive outlook for the oil and gas industry [14] - The ongoing Russia-Ukraine conflict continues to create volatility and uncertainty in growth prospects, particularly in European operations [59] Other Important Information - The company is in discussions to refinance $50 million of senior notes maturing on September 30, 2023, and will continue to apply free cash flow towards reducing debt [11] - The company is also focusing on optimizing its operational footprint, which includes costs associated with exiting certain facilities [12] Q&A Session Summary Question: What are the reasons for potential revenue growth in Reservoir Description? - Management indicated that while there is potential for growth, there is caution due to the lack of backlog and advancement of projects [46] Question: What is the outlook for exploration activity? - Management noted that exploration projects are emerging, but the company's focus is on field appraisal, development, and production [46] Question: What are the challenges regarding supply chain and inventory? - Management acknowledged ongoing supply chain uncertainties and the need to maintain higher inventory levels due to longer lead times for specialty products [80][84] Question: What is the company's view on Tier 1 inventory in the U.S.? - Management expressed that there is less Tier 1 property available, and as technology advances, lower quality rock can still yield acceptable results [88] Question: What are the implications of the redomestication of the company? - Management expects annual savings of $1.5 million to $2 million from the redomestication, which will help reduce future costs [101]

Financial Data and Key Metrics Changes - For the full-year 2022, revenue was $490 million, increasing by more than 4% compared to 2021, but adversely impacted by currency devaluation of the Euro and British pound [12] - For Q4 2022, revenue from continuing operations was $127.6 million, up slightly from $126 million in the prior quarter, driven by growth in both U.S. and international markets [23] - EPS grew sequentially by 11% to $0.20 per share ex-items for Q4 2022 [13] Business Line Data and Key Metrics Changes - Reservoir Description revenue for Q4 2022 was just over $78 million, down slightly compared to Q3 [51] - Production Enhancement revenue was $49 million for Q4 2022, up 5% sequentially and up 10% year-over-year [69] - Service revenue for the full-year 2022 was $347 million, relatively flat compared to $344.3 million in 2021 [39] Market Data and Key Metrics Changes - The company experienced a sequential growth of 11% in the U.S. during Q4 2022, led by laboratory services and well diagnostic services [37] - International product sales for Q4 2022 were up 15% sequentially, although overall international revenue was adversely impacted by the Russia-Ukraine conflict [40][34] Company Strategy and Development Direction - The company aims to maximize free cash flow, maximize return on invested capital, and return excess free cash to shareholders [35] - The company plans to reorganize its corporate structure by redomesticating from the Netherlands to the U.S. to enhance long-term shareholder value [20] Management's Comments on Operating Environment and Future Outlook - The company anticipates crude oil demand for 2023 to increase by 1.9 million barrels per day, reaching a record 101.7 million barrels per day [60] - Management expects continued volatility in trading patterns due to the Russia-Ukraine conflict but believes that trading patterns will stabilize throughout 2023 [38] Other Important Information - The company reduced net debt by $11.7 million or 7% in Q4 2022, improving its leverage ratio to 2.29 from 2.42 [15][57] - Capital expenditures for 2023 are expected to be in the range of $12 million to $15 million, an increase from $10.2 million in 2022 [46] Q&A Session Summary Question: Insights on EOR and resource evaluation in the U.S. - Management highlighted the growing interest in CO2 injection for enhanced oil recovery (EOR) projects globally, indicating a shift in focus towards optimizing existing wells [75][102] Question: Anticipated demand for energetic products and frac activity - Management expects a rebound in frac activity throughout 2023, with energetic sales anticipated to be better than in 2022 [94][104] Question: Share buyback strategy - The company clarified that the recent share buyback was primarily to settle tax burdens for employees, with plans to resume open market buybacks as leverage ratios improve [99][112]

Financial Data and Key Metrics Changes - For Q3 2022, Core Lab achieved a sequential improvement in revenue, operating income, operating margins, free cash flow, EPS, and EBIT margins. Year-over-year, revenue increased by 7% [9][10] - Revenue from continuing operations was $126 million, up over 4% from $120.9 million in the prior quarter and up almost 7% year-over-year [17] - EPS grew by 50% to $0.18 per share excluding items [10][26] Business Line Data and Key Metrics Changes - Reservoir Description segment revenue was $79 million, up 4% compared to Q2 2022. Operating income for this segment was $8.4 million with operating margins at 11% [40][41] - Production Enhancement segment revenue was $47 million, up 4% sequentially and up 20% year-over-year. Operating income was $4.7 million with operating margins at 10% [48] Market Data and Key Metrics Changes - Service revenue was $87.9 million, up 3% sequentially from $85.4 million last quarter, with growth coming from multiple international regions [18] - International product sales decreased approximately 4% sequentially but were up over 16% year-over-year [20] Company Strategy and Development Direction - Core Lab continues to focus on introducing new products and services in key geographic markets, maintaining a lean organization, and deleveraging the company [12] - The company anticipates continued improvement in both business segments across international arenas and in the US for the remainder of 2022 and into 2023 [11] Management's Comments on Operating Environment and Future Outlook - Management expects crude oil supply to tighten due to prolonged underinvestment, leading to increased upstream spending plans into 2023 [35] - The company projects fourth quarter revenue to range from $126 million to $131 million, with EPS expected to be between $0.17 and $0.21 [37] Other Important Information - The company recorded a net debt of $171 million, with a leverage ratio of 2.42, projected to improve through year-end [29] - Cash flow from operating activities was $5.8 million, with free cash flow of $3.1 million, up $5.7 million from the last quarter [30] Q&A Session Summary Question: What is the outlook for the Reservoir Description business in light of expected international growth? - Management agrees that Reservoir Description is entering a multiyear upcycle, with expectations for improved margins and activity levels [57][58] Question: What drove the strong product sales in North America? - The company saw a 19% sequential increase in US energetic product sales, attributed to market penetration and modest pricing improvements [60][61] Question: How does the company view the geographic leverage in different markets? - Management indicated a broad international footprint, with the Middle East showing the most significant activity pickup [72][73] Question: What is the current status of the ATM program? - The company has not sold any shares under the ATM and plans to keep options open for liquidity without utilizing the ATM unless necessary [81] Question: What are the prospects for shareholder returns? - Management indicated that raising the dividend would depend on achieving a sustainable recovery, with buybacks being a more flexible option initially [84] Question: What opportunities exist in the CCS space? - The company sees CCS potentially becoming 5% to 10% of its business over time, with ongoing projects and collaborations [88]

Financial Data and Key Metrics Changes - In Q2 2022, Core Lab's revenue from continuing operations was $120.9 million, up approximately 5% from $115.3 million in the prior quarter and up almost 2% year-over-year [19][31] - Full company sequential margins for Q2 were 43%, reflecting operational leverage as global activity improves [10] - Income from continuing operations ex-items for the quarter was $5.5 million, up from $3.6 million last quarter, with earnings per diluted share from continuing operations ex-items at $0.12, up from $0.08 last quarter [31] Business Line Data and Key Metrics Changes - Revenue from the Reservoir Description segment was $75.8 million, slightly up compared to Q1, with operating income ex-items at $5 million and operating margins at 7% [51][53] - Production Enhancement revenue was $45.1 million, up 11% sequentially and year-over-year, with operating income ex-items at $3.9 million and operating margins at 9% [58] Market Data and Key Metrics Changes - Revenue from operations in Russia decreased approximately $800,000 sequentially and $2.3 million year-over-year, with a total decline of about $3.2 million in the first half of 2022 compared to 2021 [22] - The sharp devaluation of the Euro and British Pound lowered revenue by about $1 million in Q2 2022 compared to Q1 and by about $2.6 million compared to Q2 2021 [23] Company Strategy and Development Direction - Core Lab continues to execute on key strategic objectives by introducing new product and service offerings, maintaining a lean organization, and focusing on deleveraging [13] - The company aims to maximize free cash flow, return on invested capital, and return excess free cash to shareholders [15] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued improvement in both business segments across most international arenas and in the U.S., despite headwinds from the conflict in Ukraine [9] - The company expects Reservoir Description revenue to improve by low-to-mid single digits in Q3 2022, while Production Enhancement revenue is projected to increase sequentially by mid-to-high single digits [46][47] Other Important Information - Cash from operating activities was $600,000, with free cash flow for the quarter being negative $2.6 million due to various factors including the impact of the Ukraine-Russia conflict [36][38] - The company expects capital expenditures for the full year 2022 to be in the range of $12 million to $13 million, maintaining strict capital discipline [39] Q&A Session Summary Question: What is the market potential for lithium extraction? - Management indicated that lithium will play a significant role in creating efficient batteries, with potential growth to 5% or even 10% of Core Lab's revenue over time [68] Question: Is the Helios product designed for specific regions? - The Helios product is applicable to any offshore well plug-and-abandonment program, with significant economic opportunities for cost savings [70] Question: What indicators are being monitored for international operations? - Management highlighted the international offshore rig count and data from Wood Mackenzie regarding FIDs as key indicators for future activity [88]

Financial Data and Key Metrics Changes - For Q1 2022, revenue from continuing operations was $115.3 million, down approximately 7.9% from $125.1 million in the prior quarter, but up 6.4% year-over-year [20] - Service revenue was $84.7 million, down approximately 5% sequentially, while product sales were $30.6 million, down 14.7% sequentially but up over 25% year-over-year [22][23] - EBIT ex-items for the quarter was $7.2 million, down from $14.2 million last quarter, yielding an EBIT margin of over 6% [27] - Income from continuing operations ex-items for the quarter was $3.6 million, down from $9.3 million last quarter [29] Business Line Data and Key Metrics Changes - Reservoir Description revenue was $74.8 million, down 7% sequentially, with operating income ex-items at $3.9 million and operating margins at 5% [42] - Production Enhancement revenue was $40.5 million, down 10% sequentially but up 27% year-over-year, with operating income ex-items at $3.1 million and operating margins at 8% [50] Market Data and Key Metrics Changes - The U.S. land market showed strength, with service revenue in the U.S. increasing 8% sequentially [22] - International operations were disrupted more than expected due to COVID-19 and the Russia-Ukraine conflict, impacting demand for services [20][11] Company Strategy and Development Direction - Core Laboratories continues to focus on introducing new product and service offerings, maintaining a lean organization, and deleveraging the company [14] - The company aims to maximize free cash flow, return on invested capital, and return excess free cash to shareholders [16] Management's Comments on Operating Environment and Future Outlook - Management noted that global demand for hydrocarbons continues to rise, indicating positive trends for future oilfield activity [10] - The outlook for the remainder of 2022 remains positive, with expectations for sequential improvement in the second quarter and further acceleration in the second half of the year [40] Other Important Information - The company has initiated a joint industry carbon capture and sequestration consortium to analyze geological risks associated with subsurface carbon sequestration [47] - Core Lab is expanding its penetration of carbon capture and sequestration opportunities, with a strategic alliance with Talos Energy Inc. [48] Q&A Session Summary Question: How should we think about your Reservoir Description business in the context of macro growth? - Management indicated that while they align with industry expectations, the international market's outlook is softened due to the Russia-Ukraine conflict [54][55] Question: Can you provide details on the business in Russia and how it's being handled? - Historically, Russia and nearby regions accounted for 5% to 8% of the business, with expectations for a rebound in demand for crude oil assay work as supply patterns realign [56][57] Question: What is the visibility on margin improvements going forward? - Management expressed confidence in improving margins as employee compensation is restored and top-line growth is expected [59][60] Question: What is the outlook for Production Enhancement margins? - Management expects margins to expand in the range of 25% to 30% on products, with improvements anticipated as manufacturing disruptions are resolved [64] Question: What is the next step for carbon capture and sequestration projects? - The focus is on execution, with a growing client base for CCS projects and an increase in planned projects [68][69] Question: Can you elaborate on the GoTrace technology? - GoTrace allows for simultaneous perforation and tracer placement, providing more granularity in completion diagnostics, which is a competitive advantage for the company [71][73]