e Laboratories (US:CLB)2022-02-03 18:35Financial Data and Key Metrics Changes - Revenue from continuing operations was $125.1 million in Q4 2021, up over 6% from $118 million in the prior quarter and up 10% year-over-year [17] - For the full year 2021, revenue was $470.3 million, down about 3% from 2020 [17] - EBIT ex-items for the quarter was $14.2 million, up 9% from $13 million last quarter, representing an EBIT margin of over 11% [25] - Income from continuing operations ex-items for the quarter was $9.3 million, up 12% sequentially from $8.3 million last quarter [29] - Earnings per diluted share from continuing operations ex-items was $0.20 for the quarter, up from $0.18 last quarter [30] Business Line Data and Key Metrics Changes - Reservoir Description revenue was $80.1 million, up 2% sequentially, with operating income ex-items at $7.1 million and operating margins at 9% [48] - Production Enhancement revenue was $45 million, up 15% sequentially, with operating income ex-items at $7.1 million and operating margins at 16% [56] Market Data and Key Metrics Changes - Year-over-year revenue from international projects increased by 14% [11] - The company expects capital spending by operators to increase by 15% to 20% for North America and double digits for international markets [40] Company Strategy and Development Direction - Core Laboratories focuses on maximizing free cash flow, maximizing return on invested capital, and returning excess free cash to shareholders [13] - The company aims to expand market penetration by introducing new technologies and targeting new market opportunities [45] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the Omicron disruptions will dissipate as the year unfolds, positioning the company to capitalize on growth opportunities [41] - For Q1 2022, the company expects lower client activity due to seasonality, projecting revenue to be down low to mid-single digits sequentially [42] Other Important Information - The company has made significant progress in reducing long-term debt, with long-term debt at $190 million at year-end 2021, down from $261 million at the end of 2020 [33] - Core Laboratories has generated positive free cash flow for 20 consecutive years and projects to continue this trend in 2022 and beyond [37] Q&A Session Summary Question: What are the most consequential opportunities for Core in the next 2 to 3 years? - Management highlighted the resumption of activity to near normal levels in regions like the Middle East, Asia Pacific, and Latin America as significant opportunities [66] Question: What percent of the sequestration opportunities are non-energy related businesses? - Management noted a broadening base of opportunities, with traditional oil and gas companies now collaborating on CO2 sequestration initiatives alongside non-oil and gas companies [70] Question: Can you delve into the Q1 guidance and the expected growth rates for R&D? - Management indicated that production enhancement may see an increase, while reservoir description might experience a decline due to seasonality, but expects growth in the second half of the year [78][82] Question: What are the expected margins for the Reservoir Description segment by the end of 2022? - Management projected that double-digit margins are attainable, with potential for mid-teens margins depending on growth rates in the latter half of the year [92]