e Laboratories (CLB) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $125.3 million, down 2% sequentially and flat year-over-year [14] - Operating income, ex-items, was$ 16 million, up 2% sequentially and up 20% year-over-year [8][19] - Earnings per share, ex-items, was $0.22, up from$ 0.21 in Q2 2023 and $0.18 in Q3 2022 [19] - Operating margins improved to 13%, up from 12% in Q2 2023 and 11% in Q3 2022 [9] Business Line Data and Key Metrics Changes - Reservoir description revenue was$ 85.1 million, up 2% sequentially and 8% year-over-year, with operating margins at 17%, the highest since Q2 2020 [34] - Production enhancement revenue was $40.2 million, down approximately 10% sequentially and 14% year-over-year, with operating margins at 4% [37] Market Data and Key Metrics Changes - U.S. land completion activity was down 10% sequentially, impacting production enhancement [10] - International upstream project activity continued to expand, but U.S. activity was lower than expected [14][26] Company Strategy and Development Direction - The company aims to introduce new products and services in key geographic markets, maintain a lean organization, and focus on de-leveraging [10][11] - Core Laboratories is focused on maximizing free cash flow, return on invested capital, and returning excess free cash to shareholders [11] Management Comments on Operating Environment and Future Outlook - Management noted ongoing geopolitical uncertainties affecting demand for laboratory services, particularly due to the Russia-Ukraine conflict and Middle East tensions [10][27] - The company maintains a constructive outlook on international upstream activity for 2024 and beyond, anticipating increased investment in hydrocarbon production [29] Other Important Information - The company retired$ 75 million in senior notes and used $71 million of its bank credit facility to fund this maturity [21] - Cash flow used in operating activities was approximately$ 200,000, with free cash flow negative $3.7 million due to a build in working capital [22] Q&A Session Summary - No questions were posed during the Q&A session, leading to a wrap-up by management [43]