e Laboratories (US:CLB)2021-07-29 20:15Financial Data and Key Metrics Changes - Revenue from continuing operations for Q2 2021 was $118.7 million, up nearly 10% from $108.4 million in Q1 2021, driven by strong demand for energetic products in both U.S. and international markets [13] - EBITDA, free cash flow, and EPS also increased compared to Q1 2021, with EPS from continuing operations, excluding items, at $0.18, up 20% sequentially [10][18] - Net debt was reduced to $176 million, down $5.8 million from the previous quarter, with a leverage ratio of 2.18, improved from 2.33 [20] Business Line Data and Key Metrics Changes - Reservoir Description revenue was $78.3 million, up 2.3% sequentially, but operating income and margins were negatively impacted by reinstating temporary cost control measures and pandemic-related delays [29] - Production Enhancement revenue reached $40.5 million, up over 27% sequentially, with operating income more than doubling to $3.9 million and operating margins at 9.5% [35] Market Data and Key Metrics Changes - Client activity improved sequentially in both business segments, with U.S. energetic sales outpacing growth in completions [10] - International activity is expected to build momentum, with the company optimistic about growth opportunities in the second half of 2021 [24] Company Strategy and Development Direction - The company aims to generate free cash flow and reduce net debt while maximizing return on invested capital, focusing on client-driven technologies [22] - Core Laboratories is positioned to capitalize on international market growth, particularly in the South Atlantic margin, Mexico, and the Middle East [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing pandemic-related challenges but expressed optimism about recovery in oil and gas demand and activity levels [8][23] - The company expects Q3 2021 revenue to range from $122 million to $126 million, with operating income projected at $14 million to $15 million [25] Other Important Information - The company continues to focus on carbon capture and storage opportunities, evaluating geological attributes and interactions between CO2 and hydrocarbons [32][34] - Core Lab's innovative technologies, such as Pulse Wave and PACKSCAN, are gaining market acceptance and are expected to enhance operational efficiency for clients [36][39] Q&A Session Summary Question: Discussion on Reservoir Description growth - Management indicated that Reservoir Description tends to lag behind well construction activity but expects to eventually catch up and exceed growth rates [43] Question: Update on Kavango Basin and offshore opportunities - Management described the Kavango Basin as a significant sedimentary basin with various productive horizons, directing detailed inquiries to ReconAfrica [48] Question: Competitive landscape in Reservoir Description - Management noted no major changes in the competitive landscape, emphasizing that clients continue to outsource laboratory testing rather than in-house [57]