e Laboratories (US:CLB)2021-10-28 18:33Financial Data and Key Metrics Changes - Revenue from continuing operations was $118 million in Q3 2021, comparable to $118.7 million in the prior quarter and up 12% year-over-year [15] - Operating income for the quarter on a GAAP basis was $6.6 million, impacted by a $6.5 million non-cash stock compensation expense [20] - Cash flow from operating activities was $11.9 million, with free cash flow increasing to $8.8 million from $6.6 million in the second quarter [24] - Net debt was reduced to $171 million, a decrease of $5.4 million from June 30, with a leverage ratio of 2.1 [23] Business Line Data and Key Metrics Changes - Reservoir description revenue was $79 million, up slightly sequentially, with operating income ex-items at $8.6 million, up 14% sequentially [31] - Production enhancement revenue was $39.2 million, down 3% sequentially, but operating income ex-items was $5 million, up 29% sequentially [35] Market Data and Key Metrics Changes - US market revenue grew nearly 20% year-over-year, while international revenue was up 9% year-over-year [15] - The company anticipates operators to increase capital spending by 15% to 20% for North America and double digits for international in 2022 [26] 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 [12] - The company is committed to expanding market penetration by introducing new technologies and targeting new market opportunities [29] Management's Comments on Operating Environment and Future Outlook - Management noted that global demand for hydrocarbons continues to rise, with inventories declining, signaling positive trends for future oilfield activity [9] - The company expects continued growth in international revenue and moderate progress in US activity as 2021 concludes [27] Other Important Information - The company continues to experience challenges with supply chains and workflow disruptions due to the pandemic, impacting international operations [15][16] - Core's Advanced Technology Center launched an analytical program for a client in the North Sea, showcasing the company's innovative capabilities [32] Q&A Session Summary Question: Upstream spending growth rates and service pricing recovery - Management indicated that US activity is likely to grow 15% to 20%, with international growth expected in double digits, and emphasized the need for pricing recovery in the industry [41][42] Question: Strategic opportunities for M&A - Management stated that the focus remains on internal technology development, while also being open to M&A opportunities that align with Core Lab's expertise [43][44]