e Laboratories (US:CLB)2019-04-25 18:44Financial Data and Key Metrics Changes - In Q1 2019, Core Laboratories generated revenues of $169.2 million, slightly above guidance and comparable to the same quarter in 2018 [26] - Service revenue was $120.3 million, up slightly year-over-year, while product sales were $48.9 million, down 3% year-over-year [26][27] - The company generated $20 million in free cash flow, equating to 102% of net income, marking the 70th consecutive quarter of positive free cash flow [21][37] - The return on invested capital (ROIC) was 20.1%, representing the 38th consecutive quarter of industry-leading performance [23] Business Line Data and Key Metrics Changes - Reservoir Description business is expected to grow in line with international market improvements, with high single-digit growth anticipated [68] - Production Enhancement division reported increased sales of energetics by 9% year-over-year, with expectations of greater penetration into the customer base [76] Market Data and Key Metrics Changes - The worldwide crude oil market saw a supply correction, increasing prices by over 30% sequentially, with demand projected to rise by 1.4 million barrels per day in 2019 [40][41] - The international rig count is improving, with expectations of mid-to-high single-digit growth in 2019 [43] Company Strategy and Development Direction - Core Laboratories is focusing on technology-driven solutions to maximize clients' free cash flow and returns, emphasizing the importance of optimal well spacing and upsizing [10][14] - The acquisition of Guardian Global Technologies is expected to enhance Core's technological capabilities in the preassembled energetic systems market, projected to grow to approximately $300 million in three years [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the oilfield services market, particularly in the Middle East and offshore South America [65] - The company anticipates that capital conservatism by operators may limit growth activity in Q2 2019, with projected revenue of approximately $172 million to $175 million [46] Other Important Information - The effective tax rate for Q2 2019 is expected to approach 20%, with a guidance of 15% for comparison of operational performance [32][47] - The company plans to continue returning excess capital to shareholders through dividends and share repurchases as free cash flow levels increase [23] Q&A Session Summary Question: Which international countries or regions are likely to drive growth? - Management highlighted the Middle East and offshore South America as key areas for growth [65] Question: What is the current size of the preassembled perf systems market? - The market is estimated to be around $50 million to $60 million today, with rapid expansion expected [66] Question: What is the expected growth for Reservoir Description? - High single-digit growth is anticipated, with Core Lab expected to perform slightly better than the overall trend [69] Question: How does the Production Enhancement division expect to perform? - Incremental margins are expected to be similar to those in Reservoir Description, exceeding 50% [77] Question: What is the split between shallow water and deepwater in offshore business? - Approximately 70% of offshore revenue is derived from deepwater projects [86]