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 Insights - Core Laboratories Inc. (CLB) is expected to report first-quarter 2025 results on April 23, with a consensus estimate of 15 cents per share in profit and revenues of $124.1 million [1] Recent Performance - In the last reported quarter, CLB's adjusted earnings were 22 cents per share, missing the consensus estimate by 1 cent, primarily due to poor performance in the Production Enhancement segment [2] - Operating revenues for the last quarter were $129.2 million, which also fell short of the Zacks Consensus Estimate by 1.3% [2] - Over the trailing four quarters, CLB has beaten the consensus estimate twice, matched once, and missed once, with an average surprise of 4.79% [3] Earnings Estimates - The Zacks Consensus Estimate for first-quarter 2025 earnings has been revised downward by 11.8% in the past 30 days, indicating a 21.1% year-over-year decline [3] - Revenue estimates for the upcoming quarter also reflect a decline of 4.3% compared to the same period last year [3] Revenue Projections - Revenues are expected to decline due to weak performance in both the Reservoir Description and Production Enhancement segments [5] - Reservoir Description segment revenues are projected to decrease by 1.7% year-over-year to $82.8 million, influenced by global economic uncertainties and severe weather conditions [5] - Production Enhancement segment revenues are anticipated to drop by 8.6% year-over-year to $41.5 million, affected by freezing conditions impacting U.S. drilling activities [5] Cost Management - CLB's total operating expenses for the first quarter are expected to be $113.2 million, down 6.5% from the previous year [6] - Costs associated with services and product sales are projected to decrease from $104.6 million to $101.7 million, while general and administrative expenses are expected to decline from $11.8 million to $10.1 million [6] Earnings Prediction Model - The current model does not predict an earnings beat for CLB this season, as it lacks a positive Earnings ESP and holds a Zacks Rank of 4 (Sell) [8][9] - CLB's Earnings ESP stands at +2.27%, indicating a slight potential for earnings surprise, but overall expectations remain low [9]

Core Insights - Core Laboratories Inc. (CLB) has seen a significant share price decline of 33.7% over the past three months, which is worse than the broader oil and energy sector's decline of 14.5% and the Field Services sub-industry's decline of 20.3% [1][4] - The company is set to report first-quarter earnings on April 23, with estimates indicating a 34.8% year-over-year decline in earnings and a 4.3% decrease in revenues [3][4] Financial Performance - Q4 2024 revenues were $129.2 million, down 4% sequentially and missing the Zacks Consensus Estimate of $131 million by 1.4%, primarily due to lower U.S. land drilling activity and geopolitical sanctions [4][5] - The Production Enhancement segment reported a 3% year-over-year revenue decline and a 7% sequential drop in Q4 2024, reflecting a slowdown in U.S. onshore drilling activity [5] Guidance and Projections - For Q1 2025, Core Laboratories projects an operating margin decline to around 9%, down from 12% in Q4 2024, indicating lower earnings due to seasonal slowdowns and weak U.S. onshore activity [7] - The U.S. Energy Information Administration forecasts only a modest increase in U.S. oil production from 13.2 million barrels per day in 2024 to 13.5 million barrels per day in 2025, which may hinder recovery in CLB's Production Enhancement business [10] Operational Challenges - Expanded U.S. sanctions have negatively impacted crude assay laboratory services and product sales, particularly in international markets, affecting Reservoir Description revenues [9] - A 9% sequential decline in inventory levels in Q4 2024 suggests potential supply-chain challenges, which could impact revenues if demand increases unexpectedly [11] Capital Expenditures and Valuation - Higher planned capital expenditures in 2025, including rebuilding the Aberdeen facility, could temporarily reduce free cash flow available for shareholder returns and debt reduction [12] - Core's EV/EBITDA ratio is 8.26, significantly higher than the industry average of 5.62, indicating potential overvaluation compared to peers [13] Summary - The company is facing a mix of internal challenges and external pressures, including declining revenues, shrinking margins, and geopolitical disruptions, leading to a recommendation to avoid CLB stock for now [16]

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]

Group 1 - Core Laboratories Inc. held its Fourth Quarter 2024 Earnings Conference Call on January 30, 2025, with key participants including the Chairman and CEO, CFO, and Head of Investor Relations [1][2][3] - The call was structured into six segments, starting with remarks on forward-looking statements, followed by a high-level review of Q4 performance [4] - The company emphasized its strategies and three financial principles aimed at building long-term shareholder value [5] Group 2 - The CFO provided a detailed financial overview and additional comments regarding shareholder value [5] - The Head of Investor Relations discussed the company's outlook and guidance for the future [6] - The CEO reviewed the two operating segments of Core Laboratories, highlighting progress and the successful introduction of new technologies [6]

Financial Data and Key Metrics Changes - Fourth quarter revenue decreased by just under 4% compared to Q3 2024, but full year revenue increased by 3% [11] - Operating income and earnings per share were down sequentially in Q4, but for the full year 2024, operating income was up 7% and earnings per share were up 9% compared to 2023 [11] - For the full year 2024, earnings per diluted share ex-items was $0.87, representing a year-over-year growth of 9% [17][36] Business Line Data and Key Metrics Changes - In Reservoir Description, Q4 revenue was down 2% compared to Q3 2024 but up 3% year-over-year, with operating margins at 16% [12][60] - In Production Enhancement, Q4 revenue decreased by 7% sequentially and was roughly flat for the full year 2024 versus 2023, with operating margins at 4% [13][64] - Full year service revenue was $388.2 million, up over 4% compared to 2023, while product sales were $32.7 million for Q4, down 8% sequentially and down 2% year-over-year [25][36] Market Data and Key Metrics Changes - The company experienced a higher level of international product sales in 2024, offset by a decline in US product sales due to lower onshore completion activity [14] - Geopolitical conflicts and sanctions negatively impacted demand for laboratory services tied to crude oil and derived products [12][26] - The company anticipates that US onshore activity levels will begin to improve in 2025, despite current declines [28] Company Strategy and Development Direction - Core Laboratories continues to focus on technology investments to solve client problems and capitalize on geographic opportunities [10][48] - The company aims to maximize free cash flow, return on invested capital, and return excess free cash to shareholders [18][19] - Core Lab is expanding its portfolio of innovative offerings and opened a completion diagnostics lab in the Middle East [59] Management's Comments on Operating Environment and Future Outlook - Management maintains a constructive long-term outlook on international upstream projects for 2025, despite near-term volatility in crude oil markets [48][50] - The company expects mid-single-digit growth year-over-year in demand for its services and products, particularly in international markets [50][58] - Management acknowledges that geopolitical disruptions have had an outsized impact on margins, particularly in Q1 2025 [106] Other Important Information - The company reduced its net debt by nearly $12 million in Q4, decreasing the leverage ratio to 1.31%, the lowest in eight years [15][40] - Cash flow from operating activities was $20.6 million in Q4, leading to a free cash flow of $16.2 million [43] - Capital expenditures for 2025 are expected to be elevated due to the rebuilding of the Aberdeen facility, estimated between $10 million and $12 million [44][45] Q&A Session Summary Question: Competitive dynamics and pricing environment in the US production enhancement market - Management noted that the market is crowded with competition, leading to stable pricing but not necessarily higher prices for technology [76][78] Question: R&D business internationally and pricing drivers for 2025 - Management expects a seasonal decline in Q1 but remains optimistic about mid-single-digit growth in international reservoir description operations [80][84] Question: Details on international market growth and muted areas for 2025 - Management highlighted strong project activity in the Middle East and South Atlantic margin, while noting challenges in Mexico [90][93] Question: Impact of Q1 weather on operations - Management reported significant closures due to severe weather, resulting in approximately $1 million of lost revenue [99] Question: Geopolitical disruptions and their impact on margins - Management confirmed that geopolitical disruptions have significantly affected profitability, particularly in Q1 [106]

Core Laboratories Earnings Summary - Core Laboratories reported quarterly earnings of $0.22 per share, missing the Zacks Consensus Estimate of $0.23 per share, but showing an increase from $0.19 per share a year ago, resulting in an earnings surprise of -4.35% [1] - The company posted revenues of $129.24 million for the quarter ended December 2024, which was 1.27% below the Zacks Consensus Estimate, but slightly above the year-ago revenues of $128.21 million [2] - Over the last four quarters, Core Laboratories has surpassed consensus EPS estimates two times and has topped consensus revenue estimates two times [2] Stock Performance and Outlook - Core Laboratories shares have increased approximately 7.1% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The estimate revisions trend for Core Laboratories is currently unfavorable, leading to a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Future Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $131.62 million, and for the current fiscal year, it is $1.02 on revenues of $542.45 million [7] - The outlook for the Oil and Gas - Field Services industry, where Core Laboratories operates, is currently in the bottom 16% of Zacks industries, which may impact stock performance [8]