AMSTERDAM, February 7, 2012 /PRNewswire/ --
Core Laboratories N.V. (NYSE: "CLB") reported fourth quarter
2011 earnings per share ("EPS") of $1.11, up 32%, and net income of $53,076,000, up 29% from 2010 fourth quarter
totals, excluding the year-ago non-cash, non-operational item.
Foreign currency translations equaling a loss of $0.01 per diluted share and a $0.03 gain per diluted share from a
lower-than-expected tax rate were included in the fourth quarter
2011 results; therefore, Core's operations, excluding these items,
earned $1.09 per diluted share in the
quarter. Revenue for the quarter increased 17% to $243,786,000, while operating income increased
18% over last year's fourth quarter to $72,888,000. Operating margins for the quarter
were 30%.
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The fourth quarter 2011 EPS, net income, operating income, and
revenue totals were all-time quarterly records for the Company. The
results were bolstered by increased levels of international
activities - especially those in deepwater, increased deepwater
Gulf of Mexico activities, and
increased drilling in unconventional oil-shale reservoirs in North
and South America.
During the fourth quarter of 2011, Core generated $57,297,000 in cash from operations and had
capital expenditures of $11,724,000,
yielding $45,573,000 in free cash
flow, defined as cash provided by operating activities, less
capital expenditures. The Company returned approximately
$18,000,000 of this cash to
shareholders through its quarterly dividend and share
repurchases.
As reported the previous nine quarters, the Board of Supervisory
Directors (the "Board") of Core Laboratories N.V. has established
an internal performance metric of achieving a return on invested
capital ("ROIC") in the top decile of the service companies listed
as Core's Peers by Bloomberg Financial. Based on Bloomberg's
calculations for the latest comparable data available, Core's ROIC
was the highest in its oilfield services Peer Group. Moreover,
Core's ROIC exceeded the Peer Group average ROIC by approximately
36 percentage points, and the Company had the highest ROIC to
Weighted Average Cost of Capital ("WACC") ratio and one of the
lowest WACCs in the Peer Group.
Core's long-term focus on ROIC has produced exceptional total
shareholder returns for the Company's long-term shareholders.
According to Bloomberg Financial, at the end of the fourth quarter
of 2011, there were only five companies in the S&P 500, none of
which were in the oilfield services sector, that had produced
better total shareholder returns than Core Laboratories over the
last 15 years.
For the full year 2011, Core's revenue increased 14% to
$907,648,000, operating income
increased 14% excluding non-operational items creating operating
income margins of 29%. Net income was up 27% to $184,684,000, and EPS totaled $3.82, increasing 27% over full-year 2010
results. Cash from operating activities was $204,126,000 for 2011, while free cash flow
totaled $174,199,000. This cash and
borrowings under the Company's credit facility were used to
opportunistically repurchase shares and settle warrants that
represented over 5% of Core's outstanding diluted shares in 2011.
Total cash returned to shareholders through dividends, share
repurchases, and the settlement of warrants in 2011 was
approximately $327,303,000, or about
$6.76 per diluted share, the highest
per share amount in the oilfield services industry.
Segment Highlights
Core Laboratories reports results under three operating
segments: Reservoir Description, Production Enhancement, and
Reservoir Management.
Reservoir Description
Reservoir Description operations reported record quarterly
revenue and operating income for the fourth quarter 2011. Revenue
increased 14% to $123,543,000, and
operating income increased 23% to $34,397,000, while operating margins increased to
28%, 200 basis points over year-earlier fourth quarter levels.
Year-over-year quarterly incremental margins were 44%.
Reservoir Description operations continued to benefit from
increasing levels of international activities, especially in
deepwater offshore West and East
Africa, and the increased drilling in unconventional
oil-shale reservoirs in North and South
America. Projects from the Middle
East and Asia-Pacific
remained robust, while recent large oil discoveries in the northern
North Sea supported European-based operations. In the deepwater
Gulf of Mexico during the fourth
quarter, Core initiated several large core analyses and reservoir
fluids projects for multiple clients that were previewed in the
Company's third quarter 2011 earnings conference call.
The Company is introducing several advanced technologies related
to Digital Core Analyses. Core is integrating computer tomography
(CT) images with laboratory-measured petrophysical data sets.
Accurate and precise porosity measurements coupled with data sets
from Core's patented and proprietary Nano-Perm™ and MRShale™
services are used to quantify and calibrate petrophysical and
hydrocarbon saturation properties of CT imaged cores. The
integrated technologies are especially effective in unconventional
oil-shale reservoirs. Data sets can be quickly generated and are
cost effective. Moreover, all of the analyses are non-destructive
and the data sets generated are superior to data sets, especially
permeabilities, estimated using older sample-destructive
ion-milling techniques.
Production Enhancement
Production Enhancement operations reported record quarterly
revenue and operating income for the fourth quarter 2011. Revenue
increased 19% to $103,157,000,
operating income increased 22% to $34,086,000, and operating margins increased 100
basis points over year-earlier fourth quarter levels to 33%.
Year-over-year quarterly incremental margins were 37%.
Production Enhancement operations continued to benefit from
increased market penetration by the Company's proprietary and
patented HTD-Blast™ perforating systems. This technology is
enabling longer horizontal lateral segments to be effectively and
efficiently perforated for optimal completion and stimulation
programs. In addition, the Company continues to see high demand for
its SpectraScan®, SpectraStim™, and SpectraChem®Plus+ completion
and fracture diagnostic services. SpectraFlood™ technology
continued to be applied to monitor field flood efficiencies in
Oman and Kuwait and in offshore fields in Ghana, Equatorial
Guinea, and the Eastern Mediterranean.
Reservoir Management
Reservoir Management operations reported fourth quarter 2011
revenue of $17,086,000, up 31% from
year-earlier totals, and operating income of $4,414,000. Operating margins were 26%, lower
than the year-earlier quarter because of sales mix and project
timing.
Reservoir Management operations continued to build regional and
worldwide consortium studies with most client interest focused on
unconventional oil from shale reservoirs. Operations also continued
to add formations to the Worldwide Oil and Natural Gas Shale
Reservoir Study, including potential oil-shale reservoirs from
Argentina, North Africa, the Middle East, and China. The Company's Eagle Ford Shale
Study now has 38 participants as interest continues to grow in
unconventional oil-shale reservoirs in West Texas, including the Wolfcamp in the
Permian Basin.
Quarterly Dividends
On 11 October 2011, the Company's
Board announced a quarterly cash dividend of $0.25 per share that was paid on 22 November 2011 to shareholders of record on
21 October 2011. Dutch withholding
tax was deducted from the dividend at the rate of 15%. The dividend
payment represented a return of approximately $12,000,000 to Company shareholders.
On 13 January 2012, the Company's
Board announced a cash dividend of $0.28 per share of common stock payable in the
first quarter of 2012. This amount represents a 12% increase over
the quarterly dividends of $0.25 per
share that were paid in 2011, and if paid each quarter of 2012, it
would equal a payout of $1.12 per
share of common stock. The quarterly $0.28 per share cash dividend will be paid on
24 February 2012 to shareholders of
record on 24 January 2012. Dutch
withholding tax will be deducted from the payment at a rate of
15%.
Any determination to declare a future quarterly cash dividend,
as well as the amount of any such cash dividend that may be
declared, will be based on the Company's financial position,
earnings, earnings outlook, capital expenditure plans, ongoing
share repurchases, potential acquisition opportunities, and other
relevant factors at the time.
Free Cash Flow - Share Repurchase Program - Capital Returned To
Shareholders
In the fourth quarter of 2011, Core generated $57,297,000 in cash from operations, had capital
expenditures of $11,724,000, and
generated free cash flow of $45,573,000. During the quarter, the Company
returned approximately $18,000,000 of
this cash through its regular quarterly dividend and by
repurchasing 64,677 shares of stock.
For the full year 2011, the Company generated $204,126,000 in cash from operations, had capital
expenditures of $29,927,000, and
generated free cash flow of $174,199,000. This cash and borrowings under the
Company's credit facility were used to fund approximately
$46,027,000 in regular quarterly
dividends and to repurchase shares and settle warrants for
approximately $281,276,000. The
repurchased shares and warrant settlements represented
approximately 3,000,000 diluted shares, or approximately 5% of the
Company's diluted outstanding shares. Total capital returned to
shareholders in 2011 was approximately $327,303,000, or about $6.76 per diluted share.
Since the Company initiated its share repurchase program in
October 2002, Core has returned
almost $1.2 billion to its
shareholders via quarterly and special dividends, the repurchase of
shares, and settlements of warrants. The total number of shares
repurchased and warrants settled by the Company over the
nine-plus-year period represents 35,194,000 diluted shares. As of
the fourth quarter 2011, when Core's average diluted share count
reached 47,677,000, the Company had repurchased over 42% of its
outstanding diluted shares, a return to its shareholders of
approximately $24.00 per diluted
share.
Return On Invested Capital
As reported in the previous nine quarters, the Company's Board
has established an internal performance metric of achieving an ROIC
in the top decile of the oilfield service companies listed as
Core's Peers by Bloomberg Financial. The Company and its Board
believe that ROIC is a leading performance metric used by
shareholders to determine the relative investment value of publicly
traded companies. Further, the Company and its Board believe
shareholders will benefit if Core consistently performs in the
highest ROIC decile among its Bloomberg
Peers. According to the latest financial information from
Bloomberg, Core Laboratories' ROIC was the highest of any of the
oilfield service companies listed in its Peer Group. In addition,
Core's ROIC was approximately 36 percentage points above the Peer
Group average. Several of the Peer companies failed to post ROICs
that exceeded their WACCs, thereby eroding capital and shareholder
value. Core's ratio of ROIC to WACC is the highest, and its WACC is
one of the lowest of any company in the Peer Group.
Peer companies listed by Bloomberg include Halliburton,
Schlumberger, Tidewater, Carbo Ceramics, FMC Technologies, Baker
Hughes, Cameron International, Oceaneering, National Oilwell Varco,
and Oil States International, among others. Core will update the
ROIC for the oilfield services sector for the fourth quarter 2011
in its first quarter 2012 earnings release.
NYSE Euronext Amsterdam Dual Listing
Core Laboratories N.V. is a Dutch company with operations,
employees and clients in over 50 countries providing Core with one
of the most geographically diversified operational platforms in the
oilfield service sector. As the Company's market capitalization has
grown, so too has the interest from prospective international
institutional investors to participate in the ownership of Core Lab
through its publicly traded shares. Given Core's international
business platform, the Company is interested in expanding investor
ownership beyond the United
States. Accordingly, Core has begun the process to dual list
the Company's shares on the NYSE Euronext Exchange in Amsterdam effective in the second quarter of
2012. European institutional investors currently hold approximately
5% of Core's outstanding shares, and the Company believes the
Euronext listing will expand Core's international investor
ownership.
First Quarter 2012 and Full-Year 2012 Earnings Guidance
For 2012, the Company expects increasing international growth,
especially in deepwater projects supported by the scheduled
arrivals of additional deepwater rigs. Deepwater pre-salt
activities in several international basins, such as the Kwanza
Basin offshore Angola, should
increase significantly throughout 2012. In addition, Core should
benefit from increasing activities in the deepwater Gulf of Mexico, which is projected to approach
early 2008 highs by late 2012. Core will also benefit from
increasing activities in unconventional oil-shale reservoirs, not
only in North America, but also
South America - particularly
Argentina - and North Africa. The Company expects to generate
$200,000,000 in revenue from
primarily oil-shale reservoirs in 2012. Core assumes that worldwide
activity levels will increase by 10%, and the Company's annual
revenue is expected to grow 13%.
As a result of the Company's outlook, for the first quarter of
2012 Core expects revenue of approximately $230,000,000 to $240,000,000, with EPS between
$1.01 and $1.06, where the midpoints
of guidance represent an increase in revenue of approximately 14%
and EPS growth of 35% over first quarter 2011 totals, excluding
year-ago non-operational gains and charges. First quarter 2012
operating margins are projected to be 29%, up approximately 200
basis points over year-earlier levels.
For the full year 2012, the Company expects revenue of
approximately $1,005,000,000 to
$1,045,000,000, with EPS between $4.50 and $4.82. Using the mid-points of the
yearly guidance, the Company's annual revenue is expected to grow
13%. Using an effective tax rate of 25% yields a mid-point of EPS
guidance at $4.66, a 23% increase
over full-year 2011 EPS, excluding non-operational gains and
charges. Full-year 2012 operating margins are projected to be in
the 30% range, an increase of approximately 100 basis points over
full-year 2011 levels.
For 2012, Core expects to generate over $200,000,000 in free cash flow, an all-time high,
while increasing capital expenditures to an estimated $33,000,000. This capital program, the largest in
the Company's history, is in response to anticipated strong client
demand for Core's proprietary and patented technologies in 2012 and
into 2013. Up to 80% of the 2012 capital program will address
opportunities that are driven by increasing client activity levels,
primarily in international areas. The Company will maintain its
strict ROIC standards when deploying 2012 capital with the goal of
Core remaining the industry leader for returns on invested capital.
The Company also anticipates that it will continue opportunistic
repurchases of shares in 2012.
If worldwide activity levels increase more than the anticipated
10%, the Company's results will trend toward the upper end of the
2012 revenue and EPS guidance. Conversely, if worldwide activity
levels increase less than 10%, the Company's results will trend
lower. Future guidance excludes any foreign currency translations
or any shares that may be repurchased by the Company.
The Company has scheduled a conference call to discuss Core's
fourth quarter 2011 earnings announcement. The call will begin at
7:30 a.m. CST on Thursday,
2 February 2012. To listen to the
call, please go to Core's website at http://www.corelab.com.
Core Laboratories N.V. (http://www.corelab.com) is a leading
provider of proprietary and patented reservoir description,
production enhancement, and reservoir management services used to
optimize petroleum reservoir performance. The Company has over 70
offices in more than 50 countries and is located in every major
oil-producing province in the world.
This release includes forward-looking statements regarding the
future revenue, profitability, business strategies and developments
of the Company made in reliance upon the safe harbor provisions of
Federal securities law. The Company's outlook is subject to various
important cautionary factors, including risks and uncertainties
related to the oil and natural gas industry, business conditions,
international markets, international political climates and other
factors as more fully described in the Company's 2010 Form 10-K
filed on 22 February 2011, and in
other securities filings. These important factors could cause the
Company's actual results to differ materially from those described
in these forward-looking statements. Such statements are based on
current expectations of the Company's performance and are subject
to a variety of factors, some of which are not under the control of
the Company. Because the information herein is based solely on data
currently available, and because it is subject to change as a
result of changes in conditions over which the Company has no
control or influence, such forward-looking statements should not be
viewed as assurance regarding the Company's future performance. The
Company undertakes no obligation to publicly update any forward
looking statement to reflect events or circumstances that may arise
after the date of this press release.
CORE LABORATORIES N.V. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
Three Months Ended Twelve Months Ended
31 December 31 December 31 December 31 December
2011 2010 2011 2010
(Unaudited) (Unaudited) (Unaudited)
REVENUE $ 243,786 $ 208,193 $ 907,648 $ 794,653
OPERATING EXPENSES:
Costs of services
and sales 154,034 133,513 593,369 513,790
General and
administrative
expenses 10,678 9,022 41,141 33,029
Depreciation
and amortization 5,929 5,779 23,303 23,113
Other (income)
expense, net 257 (1,697) (919) (2,205)
OPERATING INCOME 72,888 61,576 250,754 226,926
Loss on exchange of
Senior Exchangeable
Notes 142 1,264 1,012 1,939
Interest expense 2,216 3,651 10,900 15,839
INCOME BEFORE INCOME
TAX EXPENSE 70,530 56,661 238,842 209,148
INCOME TAX EXPENSE 17,371 16,671 54,198 63,747
NET INCOME 53,159 39,990 184,644 145,401
NET INCOME (LOSS)
ATTRIBUTABLE TO
NON-CONTROLLING
INTEREST 83 48 (40) 484
NET INCOME
ATTRIBUTABLE TO CORE
LABORATORIES N.V. $ 53,076 $ 39,942 $ 184,684 $ 144,917
Diluted Earnings Per
Share: $ 1.11 $ 0.81 $ 3.82 $ 3.00
WEIGHTED AVERAGE
DILUTED COMMON
SHARES OUTSTANDING 47,677 49,195 48,393 48,241
SEGMENT INFORMATION:
Revenue:
Reservoir
Description $ 123,543 $ 108,723 $ 469,775 $ 425,829
Production
Enhancement 103,157 86,403 371,449 313,956
Reservoir
Management 17,086 13,067 66,424 54,868
Total $ 243,786 $ 208,193 $ 907,648 $ 794,653
Operating income
(loss):
Reservoir
Description $ 34,397 $ 27,950 $ 116,244 $ 106,179
Production
Enhancement 34,086 27,886 112,576 101,241
Reservoir
Management 4,414 4,932 21,887 19,759
Corporate and other (9) 808 47 (253)
Total $ 72,888 $ 61,576 $ 250,754 $ 226,926
CORE LABORATORIES N.V. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(amounts in thousands)
31 December 31 December
ASSETS: 2011 2010
(Unaudited)
Cash and Cash Equivalents $ 29,332 $ 133,880
Accounts Receivable, net 170,805 154,726
Inventory 53,214 33,979
Other Current Assets 22,787 26,735
Total Current Assets 276,138 349,320
Property, Plant and Equipment, net 115,295 104,223
Intangibles, Goodwill and Other
Long Term Assets, net 203,499 182,499
Total Assets $ 594,932 $ 636,042
LIABILITIES AND EQUITY:
Short-Term Debt & Lease
Obligations $ 2,344 $ 147,543
Accounts Payable 57,639 44,710
Other Current Liabilities 72,802 87,100
Total Current
Liabilities 132,785 279,353
Long-Term Debt & Lease Obligations $ 223,075 $ -
Other Long-Term Liabilities 57,417 55,485
Equity Component of Senior
Exchangeable Notes - 8,864
Total Equity 181,655 292,340
Total Liabilities and
Equity $ 594,932 $ 636,042
CORE LABORATORIES N.V. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(amounts in thousands)
(Unaudited)
Twelve Months Ended
31 December 2011
CASH FLOWS FROM OPERATING ACTIVITIES $ 204,126
CASH FLOWS FROM INVESTING ACTIVITIES (52,018)
CASH FLOWS FROM FINANCING ACTIVITIES (256,656)
NET CHANGE IN CASH AND CASH EQUIVALENTS (104,548)
CASH AND CASH EQUIVALENTS, beginning of
period 133,880
CASH AND CASH EQUIVALENTS, end of period $ 29,332
Non-GAAP Information
Management believes that the exclusion of certain income and
expenses enables it to evaluate more effectively the Company's
operations period over period and to identify operating trends that
could otherwise be masked by the excluded Items. For this reason,
we used certain non-GAAP measures that exclude these Items; and we
feel that this presentation provides the public a clearer
comparison with the numbers reported in prior periods.
Reconciliation of Operating Income
(amounts in thousands)
(Unaudited)
Twelve Months Ended Twelve Months Ended
December 31, 2011 December 31, 2010
Operating income $ 250,754 $ 226,926
Employee retention
stock awards cost 4,431 -
One time severance
benefits and other
personnel costs 3,665 -
Legal entity
realignment 711 -
Foreign exchange losses 1,809 1,712
Operating income
excluding specific
items $ 261,370 $ 228,638
Reconciliation of Net Income
(amounts in thousands)
(Unaudited)
Three Months Ended
December 31, 2010
Net income $ 39,942
Loss on exchange of Notes 1,264
Net income excluding specific items $ 41,206
Reconciliation of Earnings Per Diluted Share
(Unaudited)
Three Months Three Months Twelve Months
Ended Ended Ended
December 31, December 31, December 31,
2011 2010 2011
Earnings per
diluted share $ 1.11 $ 0.81 $ 3.82
Employee
retention
stock awards
cost - - 0.09
One time
severance
benefits and
other
personnel
costs (net of
tax) - - 0.05
Legal entity
realignment
(net of tax) - - 0.01
Foreign
exchange
losses (net
of tax) 0.01 - 0.03
Loss on
exchange of
Notes - 0.03 0.02
Financing
costs (net of
tax) - - 0.02
Impact of
lower
effective tax
rate (0.03) - (0.29)
Earnings per
diluted share
excluding
specific
items $ 1.09 $ 0.84 $ 3.75
Free Cash Flow
Core uses the non-GAAP measure of free cash flow to evaluate its
cash flows and results of operations. Free cash flow is an
important measurement because it represents the cash from
operations, in excess of capital expenditures, available to operate
the business and fund non-discretionary obligations. Free cash flow
is not a measure of operating performance under GAAP, and should
not be considered in isolation nor construed as an alternative
consideration to operating income, net income, earnings per share,
or cash flows from operating, investing, or financing activities,
each as determined in accordance with GAAP. You should also not
consider free cash flow as a measure of liquidity. Moreover, since
free cash flow is not a measure determined in accordance with GAAP
and thus is susceptible to varying interpretations and
calculations, free cash flow as presented may not be comparable to
similarly titled measures presented by other companies.
Computation of Free Cash Flow
(amounts in thousands)
(Unaudited)
Three Months Twelve Months
Ended Ended
31 December 2011 31 December 2011
Net cash provided by
operating activities $ 57,297 $ 204,126
Less: capital expenditures (11,724) (29,927)
Free cash flow $ 45,573 $ 174,199