- REVENUE OF $128 MILLION; UP
SLIGHTLY SEQUENTIALLY; UP 11% YEAR-OVER-YEAR
- OPERATING INCOME OF $6.5
MILLION; EX-ITEMS OF $14.5
MILLION, FLAT SEQUENTIALLY; UP OVER 100%
YEAR-OVER-YEAR
- OPERATING MARGINS, EX-ITEMS, OF 11%, WITH YEAR-OVER-YEAR
INCREMENTAL MARGINS EXCEEDING 55%
- GAAP EPS OF $0.05; EX-ITEMS,
$0.19; UP OVER 130%
YEAR-OVER-YEAR
- RESERVOIR DESCRIPTION INCREMENTAL MARGINS, EX-ITEMS,
EXCEEDING 80% SEQUENTIALLY; 70% YEAR-OVER-YEAR
- SHAREHOLDERS APPROVE REDOMESTICATION TO THE U.S.
- COMPANY ANNOUNCES Q2 2023 QUARTERLY DIVIDEND
AMSTERDAM, April 26,
2023 /PRNewswire/ -- Core Laboratories
N.V. (NYSE: "CLB") ("Core", "Core
Lab", or the "Company") reported first quarter 2023 revenue of
$128,400,000. Core's operating income
was $6,500,000, with diluted earnings
per share ("EPS") of $0.05, all in
accordance with U.S. generally accepted accounting principles
("GAAP"). Operating income, ex-items, a non-GAAP financial
measure, was $14,500,000, yielding
operating margins over 11%, and EPS, ex-items, of $0.19. During the first quarter of 2023,
the Company recorded: 1) approximately $6,500,000 of non-cash stock compensation expense
associated with full recognition of unvested awards for employees
who have reached their eligible retirement age, and 2) facility
exit and consolidation expenses of $1,700,000. The facility exit and
consolidation expenses are associated with Core's continuing
efforts to improve operational efficiencies and optimize Core's
global network to support its clients. A full reconciliation
of non-GAAP financial measures is included in the attached
financial tables.
Core's CEO, Larry Bruno stated,
"Built upon a foundation of an improving international market for
Reservoir Description, Core's first quarter 2023 results overcame
typical seasonal decline in client activity, as well as somewhat
lower-than-expected completion activity in the U.S. land
market. Despite these headwinds, the Company's revenue,
operating income and operating margins were comparable to last
quarter. Year-over-year, the first quarter of 2023 achieved
11% growth in revenue and, ex-items, 100% growth in operating
income with 56% incremental margins. First quarter 2023
operating margins, as well as year-over-year incremental margins,
were strong in both Reservoir Description and Production
Enhancement.
Core remains intently focused on executing its key financial and
operational strategies, including: 1) reducing debt and
strengthening our balance sheet, 2) consistently pursuing
operational efficiencies, and 3) continuing to introduce new,
problem-solving technologies. For the remainder of 2023, Core
sees the continuation of a multi-year recovery cycle for the oil
and gas industry, led by improvement in both onshore and offshore
client activity across our global operations. The
Russia-Ukraine conflict and associated sanctions
continue to create volatility and some uncertainties to growth
prospects in our European, Russian and Ukrainian operations."
Redomestication to the United
States
On 17 January 2023, Core Lab
announced its intention to reorganize the Company's corporate
structure, which includes redomestication (the "Redomestication")
of the parent company from the
Netherlands to the United
States as Core Laboratories Inc., a Delaware corporation.
The Redomestication required a shareholder vote for approval,
which was conducted through an extraordinary general meeting of the
Company's shareholders on 29 March
2023, and received an affirmative vote. The
Redomestication was adopted with approximately 99.3% of votes cast
in favor of the proposal, and is expected to become effective
approximately 30 days following the date of the extraordinary
general meeting, on or around 1 May 2023. Benefits of the
Redomestication include: 1) a reduction in the corporate footprint
and regulatory requirements associated with preparing duplicative
audited financial statements and other reporting obligations, 2)
improved efficiencies and opportunities in the Company's corporate
treasury, cash management, risk management and tax functions, and
3) a simplified and more efficient tax structure. Further
information regarding the Redomestication is provided in the
Company's proxy statement/prospectus dated 28 February 2023.
Reservoir Description
Reservoir Description operations are closely correlated with
trends in international and offshore activity levels, with
approximately 80% of revenue sourced from projects originating
outside the U.S. Reservoir Description revenue in the first
quarter of 2023 was $80,200,000, up
3% sequentially and 7% year-over-year. Operating income on a GAAP
basis was $2,500,000, while operating
income, ex-items, was $7,800,000,
yielding operating margins of 10%, which expanded approximately 200
basis points sequentially and 450 basis points
year-over-year. The segment's financial performance was
underpinned by improving international client activity, which more
than offset typical seasonality. Additionally, crude-oil
trading patterns showed some signs of stabilizing late in the
quarter; however, crude-oil assay work in the Company's European
and Russian operations are still below pre-conflict levels.
During the first quarter of 2023, Core Lab's Advanced Technology
Center in the United Kingdom
commenced the next phase of analytical testing on reservoir core
and fluid samples from the Orange Basin, offshore Namibia.
Several hundred feet of conventional core from multiple wells were
recovered from various targeted reservoir intervals. The
conventional cores are being scanned using Core Lab's proprietary,
non-invasive testing and reservoir optimization technologies
("NITRO™") in advance of traditional physical measurements.
An extensive laboratory analysis program is also underway on
reservoir fluid samples collected from these wells. This analytical
program includes: 1) detailed determination of contamination levels
from oil-based drilling mud filtrate, 2) compositional analysis of
the hydrocarbons, and 3) measurement of the physical properties of
the hydrocarbons, such as: saturation pressure, density, viscosity,
gas-oil ratio and formation volume factor, all at various pressures
and temperatures. The extensive reservoir rock and fluid
laboratory program will assist Core's client in expeditiously
evaluating this promising new play.
Also during the first quarter of 2023, under the direction of a
Middle East National Oil Company ("NOC"), Core Lab successfully
completed a large, multi-well formation damage study. The
laboratory results are essential data for an NOC that is planning a
large-scale waterflood Enhanced Oil Recovery ("EOR") program.
Waterflood EOR involves injecting water into an oil reservoir to
increase hydrocarbon recovery. However, to ensure that the
injection water is compatible with the reservoir rocks and fluids,
the water must undergo preparation that involves several steps,
such as: chemical analysis, filtration, deaeration, disinfection,
and chemical treatment. In the laboratory, the prepared
injection water is then used for rock-fluid and fluid-fluid
compatibility testing at reservoir temperatures and
pressures. Core Lab's team of specialists are helping
the operator to optimize the injection water properties to enhance
crude-oil recovery, reduce associated processing costs, and
mitigate damage from fines migration. This project
illustrates how Core Lab uses innovative laboratory technologies to
enable operators to recover incremental barrels of oil from
existing fields. These incremental barrels of oil can be the
most profitable barrels produced over the life of the field.
Core Lab is pleased to announce two additional client members
have joined its growing, joint-industry, Carbon Capture and
Sequestration ("CCS") Consortium: EQT Production Company and BKV
dCarbon Ventures, LLC. The CCS Consortium, in collaboration
with Dr. Birol Dindoruk of the University of
Houston, was formed to support global energy transition and
decarbonization efforts. The analytical studies being
conducted in the CCS Consortium are currently focused on seal
integrity and containment. As the CCS Consortium's momentum
continues, Core Lab's engagement with multi-client studies and
other proprietary CCS projects is growing in both the U.S. and
internationally.
Production Enhancement
Production Enhancement operations, which are focused on complex
completions in unconventional, tight-oil reservoirs in the U.S., as
well as conventional projects across the globe, posted first
quarter 2023 revenue of $48,200,000,
down approximately 3% sequentially, although up 19%
year-over-year. Operating income on a GAAP basis was
$3,300,000, while operating income,
ex-items, was $6,000,000, yielding
operating margins of 13%, down 300 basis points sequentially
following strong international sales in the fourth quarter of
2022. Year-over-year, operating margins expanded over 490
basis points. The segment's results for the first quarter of
2023, reflect somewhat lower-than-expected U.S. land completion
activity.
During the first quarter of 2023, under the direction of a
Permian Basin operator, Core's Production Enhancement experts were
engaged to provide its proprietary Rapid Deployment System ("RDS™")
for a well remediation project. RDS™ offers a cost-effective
solution for remediating wells when: 1) artificial lift equipment
has failing valves, 2) the tubing string has become filled with
sand, or 3) the well is otherwise inoperable. Core's client
utilized the RDS™ technology to remedy a tubing string that had
malfunctioned and became plugged with sand, preventing the tubing
from draining properly during work-over operations. The RDS™
system allowed the client to quickly create perforations that
drained the working string. This was accomplished without the need
for an electric wireline unit, thus reducing costs and eliminating
environmental hazards associated with pulling a fluid-filled
pipe. Conventional remediation methods would have required
mobilizing a wireline unit and a multi-person field crew to the
wellsite, resulting in lost time and increased cost to the
operator. Based on the success of the RDS™ system, the client
has standardized this methodology for all future well remediation
projects.
Also during the first quarter of 2023, Core entered into a
multi-year partnership with MPC Future Co., Ltd. ("MPC") to provide
energetic systems and well abandonment applications to operators in
Thailand. Core's collaboration with MPC will support
the growing demand for energetic systems and well abandonment
applications in the Asia-Pacific
region. Initial product delivery occurred in the first
quarter of 2023, and the Company is building inventory in support
of this long-term contract.
Core's SpectraStim™, SpectraScan®, and PackScan® downhole
imaging technologies are gaining wider acceptance for evaluation of
deepwater Gulf of Mexico frac pack
completions. When Core's Production Enhancement engineers
processed the diagnostic data from a recent deepwater well, the
results revealed a major void in the annular pack across the lower
half of the screen, as well as no proppant pack across the upper 50
feet of screen. The operator chose to remove and replace the
existing hardware and re-frac pack the interval, avoiding a
severely damaged completion and a costly remediation program.
A log of the recompletion using Core's SpectraScan® and PackScan®
logging tools confirmed void-free annular packing, along with
substantial proppant reserve placement above the top of the
screen. In the process, a multi-million-dollar completion
failure was averted.
Liquidity, Free Cash Flow and Dividend
Core continues to focus on maximizing free cash flow ("FCF"), a
non-GAAP financial measure defined as cash from operations less
capital expenditures. For the first quarter of 2023, cash
used in operations was $3,200,000 and
capital expenditures were $2,200,000,
yielding negative FCF of $5,400,000. Cash from operations declined
sequentially in the first quarter of 2023, primarily due to the
following factors:
- Additional cash used to fund working capital requirements.
Growth in receivables is more associated with the timing of sales
and invoicing as the U.S. market softened from November through
February, followed by strong growth in March. Additionally,
the U.S. market is also the largest market the Company serves with
its product sales and the temporary slow-down in this market
resulted in a build of inventory. Some of the growth in
inventory is also attributable to building stock to serve large
international projects planned for 2023.
- Cash from operations was used during the first quarter of 2023
to execute facility exit and consolidation plans, which will result
in annual savings of more than $1,500,000.
- Payments for liabilities associated with certain employee
retirement plans, and
- Annual prepayment for the Company's corporate insurance
programs that would traditionally have occurred in the fourth
quarter of 2022.
Core expects cash from operations to strengthen and the Company
to generate positive free cash in future quarters. The
Company will continue to manage investment in working capital in a
period of growth. Core's free cash will continue to be
returned to its shareholders via the Company's regular quarterly
dividend, as well as being focused towards reducing long-term
debt.
At the end of the first quarter of 2023, Core's net debt was
$166,700,000, and the Company's
leverage ratio of 2.18, which decreased from 2.29 at the end of the
fourth quarter of 2022. The Company will continue applying
free cash towards reducing debt until the Company reaches its
target leverage ratio (calculated as total net debt divided by
trailing twelve months adjusted EBITDA) of 1.5 times or
lower.
On 1 February 2023, Core's Board
of Supervisory Directors ("Board") announced a quarterly cash
dividend of $0.01 per share of common
stock, which was paid on 6 March 2023
to shareholders of record on 13 February 2023. Dutch
withholding tax was deducted from the dividend at a rate of
15%.
On 26 April 2023, the Board
approved a cash dividend of $0.01 per
share of common stock payable on 30 May
2023 to shareholders of record on 8 May 2023. The
Company expects the Redomestication to be completed on or around 1
May 2023. Consequently, the Company does not expect any Dutch
withholding taxes for any shareholders, or U.S. withholding taxes
for U.S.-based shareholders, associated with this or any future
dividends.
Return On Invested Capital
The Board and the Company's Executive Management continue to
focus on strategies that maximize return on invested capital
("ROIC") and FCF, factors that have high correlation to total
shareholder return. Core's commitment to an asset-light
business model and disciplined capital stewardship promote capital
efficiency and is designed to produce more predictable and superior
long-term ROIC.
The Board has established an internal metric of demonstrating
superior ROIC performance relative to the oilfield service
companies listed as Core's Comp Group by Bloomberg, as the Company
continues to believe superior ROIC will result in higher total
shareholder return. Using Bloomberg's formula to reflect
Core's financial performance in the first quarter of 2023,
indicates Core Lab's ROIC improved to 8.4%, up from 7.2% at the end
of last quarter.
Industry and Core Lab Outlook and Guidance
Looking forward, Core sees crude-oil macro fundamentals
continuing to support a multi-year recovery cycle for the oil and
gas industry. For the remainder of 2023, despite recession
concerns for key economies around the world, Core sees supply and
demand balance tightening as the year unfolds.
Crude-oil demand for 2023, as forecast by the International
Energy Agency in April 2023, is
projected to be a record 101.9 million barrels per day, as
consumption in China continues to
grow. As crude-oil demand is projected to exceed pre-COVID
levels, crude-oil supply is projected to tighten. With the
recently announced OPEC+ production cuts, crude-oil supply will be
in decline for the remainder of the year. In addition to the
OPEC+ crude-oil production cuts, production growth in other areas
continues to face constraints due to prolonged underinvestment in
many regions around the globe, as well as natural decline of
production from existing fields. As a result, Core Lab
continues to expect international operators to expand their
upstream spending plans for 2023 by mid-teens compared to 2022.
This supports Core's outlook for continued improvement in
international onshore and offshore activity, with projects emerging
and underway, most notably across the Middle East, Latin
America and West Africa
regions.
Turning to the U.S., U.S. land activity was somewhat weaker than
expected in the early part of 2023. The lower-than-expected
activity growth is associated with weak natural gas prices.
However, Core sees on-going challenges with crude-oil supply which
should require increased spending by operators to grow and replace
production. While operators remain focused on capital
discipline, 2023 forecasts continue to indicate U.S. upstream
spending will increase approximately 15% year-over-year.
As result, Core projects Reservoir Description's second quarter
2023 revenue to increase by low-single digits. Continued
volatility with crude-oil trading patterns may impact Core's
Reservoir Description segment's international growth within its
Russian, Ukrainian and European operations. Production Enhancement
segment revenue is estimated to increase by mid-single digits.
Core projects second quarter 2023 revenue to range from
$130,000,000 to $135,000,000 and operating income of $14,500,000 to $17,500,000, yielding operating margins of
approximately 12%. EPS for the second quarter of 2023 is
expected to be $0.20 to $0.24.
The Company's second quarter 2023 guidance is based on
projections for underlying operations and excludes gains and losses
in foreign exchange. Second quarter 2023 guidance also
assumes an effective tax rate of 20%.
Earnings Call Scheduled
The Company has scheduled a conference call to discuss Core's
first quarter 2023 earnings announcement. The call will begin
at 7:30 a.m. CDT / 2:30 p.m. CEST on Thursday, 27 April 2023.
To listen to the call, please go to Core's website at
www.corelab.com.
Core Laboratories N.V. is a leading provider of proprietary and
patented reservoir description and production enhancement services
and products 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, as well as other statements we make, includes
forward-looking statements regarding the future revenue,
profitability, business strategies and developments, including the
Redomestication 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 and general economic conditions, including inflationary
pressures, the ability to achieve the benefits of the
Redomestication, international markets, international political
climates, including the Russia-Ukraine geopolitical conflict, public health
crises, and any related actions taken by businesses and
governments, and other factors as more fully described in the
Company's most recent Forms 10-K, 10-Q and 8-K filed with or
furnished to the U.S. Securities and Exchange Commission. 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 or
revise any forward-looking statement to reflect events or
circumstances that may arise after the date of this press release,
except as required by law.
Visit the Company's website at www.corelab.com. Connect with
Core Lab on Facebook, LinkedIn and YouTube.
CORE
LABORATORIES N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands, except
per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
%
Variance
|
|
|
March 31,
2023
|
|
|
December 31,
2022
|
|
|
March 31,
2022
|
|
|
vs.
Q4-22
|
|
vs.
Q1-22
|
REVENUE
|
|
$
|
128,356
|
|
|
$
|
127,571
|
|
|
$
|
115,300
|
|
|
0.6 %
|
|
11.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
|
101,528
|
|
|
|
99,816
|
|
|
|
96,952
|
|
|
1.7 %
|
|
4.7 %
|
General and
administrative expense
|
|
|
16,331
|
|
|
|
8,724
|
|
|
|
12,545
|
|
|
87.2 %
|
|
30.2 %
|
Depreciation and
amortization
|
|
|
4,044
|
|
|
|
4,073
|
|
|
|
4,557
|
|
|
(0.7) %
|
|
(11.3) %
|
Other (income) expense,
net
|
|
|
(28)
|
|
|
|
(660)
|
|
|
|
1,637
|
|
|
NM
|
|
NM
|
Total operating
expenses
|
|
|
121,875
|
|
|
|
111,953
|
|
|
|
115,691
|
|
|
8.9 %
|
|
5.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
6,481
|
|
|
|
15,618
|
|
|
|
(391)
|
|
|
(58.5) %
|
|
NM
|
Interest
expense
|
|
|
3,429
|
|
|
|
3,081
|
|
|
|
2,644
|
|
|
11.3 %
|
|
29.7 %
|
Income (loss) before
income taxes
|
|
|
3,052
|
|
|
|
12,537
|
|
|
|
(3,035)
|
|
|
(75.7) %
|
|
NM
|
Income tax expense
(benefit)
|
|
|
610
|
|
|
|
5,847
|
|
|
|
(1,196)
|
|
|
(89.6) %
|
|
NM
|
Net income
(loss)
|
|
|
2,442
|
|
|
|
6,690
|
|
|
|
(1,839)
|
|
|
(63.5) %
|
|
NM
|
Net income (loss)
attributable to non-
controlling interest
|
|
|
69
|
|
|
|
(61)
|
|
|
|
49
|
|
|
NM
|
|
NM
|
Net income (loss)
attributable to Core
Laboratories N.V.
|
|
$
|
2,373
|
|
|
$
|
6,751
|
|
|
$
|
(1,888)
|
|
|
(64.8) %
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
$
|
0.05
|
|
|
$
|
0.14
|
|
|
$
|
(0.04)
|
|
|
(64.3) %
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
attributable to Core Laboratories
N.V.
|
|
$
|
0.05
|
|
|
$
|
0.14
|
|
|
$
|
(0.04)
|
|
|
(64.3) %
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common
shares outstanding
|
|
|
47,481
|
|
|
|
46,826
|
|
|
|
46,298
|
|
|
1.4 %
|
|
2.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
20
|
%
|
|
|
47
|
%
|
|
|
39
|
%
|
|
NM
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
80,188
|
|
|
$
|
78,124
|
|
|
$
|
74,754
|
|
|
2.6 %
|
|
7.3 %
|
Production
Enhancement
|
|
|
48,168
|
|
|
|
49,447
|
|
|
|
40,546
|
|
|
(2.6) %
|
|
18.8 %
|
Consolidated
|
|
$
|
128,356
|
|
|
$
|
127,571
|
|
|
$
|
115,300
|
|
|
0.6 %
|
|
11.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
2,471
|
|
|
$
|
6,817
|
|
|
$
|
361
|
|
|
(63.8) %
|
|
584.5 %
|
Production
Enhancement
|
|
|
3,281
|
|
|
|
7,904
|
|
|
|
(918)
|
|
|
(58.5) %
|
|
NM
|
Corporate and
Other
|
|
|
729
|
|
|
|
897
|
|
|
|
166
|
|
|
NM
|
|
NM
|
Consolidated
|
|
$
|
6,481
|
|
|
$
|
15,618
|
|
|
$
|
(391)
|
|
|
(58.5) %
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE
LABORATORIES N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
%
Variance
|
ASSETS:
|
|
March 31,
2023
|
|
|
December 31,
2022
|
|
|
vs.
Q4-22
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
16,285
|
|
|
$
|
15,428
|
|
|
5.6 %
|
Accounts receivable,
net
|
|
|
110,699
|
|
|
|
106,913
|
|
|
3.5 %
|
Inventories
|
|
|
67,342
|
|
|
|
60,445
|
|
|
11.4 %
|
Other current
assets
|
|
|
33,601
|
|
|
|
28,916
|
|
|
16.2 %
|
Total current
assets
|
|
|
227,927
|
|
|
|
211,702
|
|
|
7.7 %
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
102,341
|
|
|
|
105,028
|
|
|
(2.6) %
|
Right of use
assets
|
|
|
56,663
|
|
|
|
52,379
|
|
|
8.2 %
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
206,686
|
|
|
|
209,245
|
|
|
(1.2) %
|
Total assets
|
|
$
|
593,617
|
|
|
$
|
578,354
|
|
|
2.6 %
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
38,366
|
|
|
$
|
45,847
|
|
|
(16.3) %
|
Short-term operating
lease liabilities
|
|
|
11,073
|
|
|
|
11,699
|
|
|
(5.4) %
|
Other current
liabilities
|
|
|
46,185
|
|
|
|
45,589
|
|
|
1.3 %
|
Total current
liabilities
|
|
|
95,624
|
|
|
|
103,135
|
|
|
(7.3) %
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
180,440
|
|
|
|
172,386
|
|
|
4.7 %
|
Long-term operating
lease liabilities
|
|
|
43,793
|
|
|
|
38,305
|
|
|
14.3 %
|
Other long-term
liabilities
|
|
|
73,609
|
|
|
|
75,574
|
|
|
(2.6) %
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
200,151
|
|
|
|
188,954
|
|
|
5.9 %
|
Total liabilities and
equity
|
|
$
|
593,617
|
|
|
$
|
578,354
|
|
|
2.6 %
|
CORE
LABORATORIES N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2023
|
|
|
2022
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net Income
(loss)
|
|
$
|
2,442
|
|
|
$
|
(1,839)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
8,984
|
|
|
|
6,227
|
|
Depreciation and
amortization
|
|
|
4,044
|
|
|
|
4,557
|
|
Deferred income
taxes
|
|
|
936
|
|
|
|
1,698
|
|
Accounts
receivable
|
|
|
(4,024)
|
|
|
|
(2,831)
|
|
Inventories
|
|
|
(7,126)
|
|
|
|
(2,498)
|
|
Accounts
payable
|
|
|
(7,078)
|
|
|
|
3,693
|
|
Other adjustments to
net income (loss)
|
|
|
(1,347)
|
|
|
|
(3,717)
|
|
Net cash provided
by (used in) operating activities
|
|
|
(3,169)
|
|
|
|
5,290
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(2,208)
|
|
|
|
(2,297)
|
|
Proceeds from insurance
recovery
|
|
|
—
|
|
|
|
583
|
|
Other investing
activities
|
|
|
170
|
|
|
|
2,142
|
|
Net cash provided
by (used in) investing activities
|
|
|
(2,038)
|
|
|
|
428
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Repayment of long-term
debt
|
|
|
(16,000)
|
|
|
|
(14,000)
|
|
Proceeds from long-term
debt
|
|
|
24,000
|
|
|
|
15,000
|
|
Dividends
paid
|
|
|
(466)
|
|
|
|
(463)
|
|
Repurchase of common
shares
|
|
|
(1)
|
|
|
|
(1,920)
|
|
Equity related
transaction costs
|
|
|
(1,285)
|
|
|
|
—
|
|
Other financing
activities
|
|
|
(184)
|
|
|
|
(1)
|
|
Net cash provided
by (used in) financing activities
|
|
|
6,064
|
|
|
|
(1,384)
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS
|
|
|
857
|
|
|
|
4,334
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
15,428
|
|
|
|
17,703
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
16,285
|
|
|
$
|
22,037
|
|
|
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, management uses certain non-GAAP measures that exclude
these Items and believes that this presentation provides a clearer
comparison with the results reported in prior periods. The non-GAAP
financial measures should be considered in addition to, and not as
a substitute for, the financial results prepared in accordance with
GAAP, as more fully discussed in the Company's financial statements
and filings with the Securities and Exchange Commission.
Reconciliation of
Operating Income (Loss), Net Income (Loss) and Diluted Earnings
(Loss) Per Share
|
(In thousands, except
per share data)
|
(Unaudited)
|
|
|
|
Operating Income
(Loss)
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2023
|
|
|
December 31,
2022
|
|
|
March 31,
2022
|
|
GAAP
reported
|
|
$
|
6,481
|
|
|
$
|
15,618
|
|
|
$
|
(391)
|
|
Stock compensation
(1)
|
|
|
6,515
|
|
|
|
(1,868)
|
|
|
|
3,850
|
|
Loss on lease
abandonment and other exit costs (2)
|
|
|
641
|
|
|
|
—
|
|
|
|
—
|
|
Assets write-down
(2)
|
|
|
1,015
|
|
|
|
—
|
|
|
|
—
|
|
Severance and other
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
3,332
|
|
Redomestication
costs
|
|
|
—
|
|
|
|
246
|
|
|
|
—
|
|
Bad debt
|
|
|
—
|
|
|
|
—
|
|
|
|
810
|
|
Foreign exchange losses
(gains)
|
|
|
(144)
|
|
|
|
691
|
|
|
|
(417)
|
|
Excluding specific
items
|
|
$
|
14,508
|
|
|
$
|
14,687
|
|
|
$
|
7,184
|
|
|
|
|
|
Net Income
(Loss)
|
|
|
|
Three Months
Ended
|
|
|
|
March 31, 2023
|
|
|
December 31,
2022
|
|
|
March 31,
2022
|
|
GAAP
reported
|
|
$
|
2,442
|
|
|
$
|
6,690
|
|
|
$
|
(1,839)
|
|
Stock compensation
(1)
|
|
|
5,212
|
|
|
|
(1,494)
|
|
|
|
3,850
|
|
Loss on lease
abandonment and other exit costs (2)
|
|
|
513
|
|
|
|
—
|
|
|
|
—
|
|
Assets write-down
(2)
|
|
|
812
|
|
|
|
—
|
|
|
|
—
|
|
Severance and other
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
2,666
|
|
Redomestication
costs
|
|
|
—
|
|
|
|
197
|
|
|
|
—
|
|
Bad debt
|
|
|
—
|
|
|
|
—
|
|
|
|
648
|
|
Foreign exchange losses
(gains)
|
|
|
(114)
|
|
|
|
552
|
|
|
|
(334)
|
|
Impact of higher
(lower) tax rate (3)
|
|
|
—
|
|
|
|
3,341
|
|
|
|
(1,359)
|
|
Excluding specific
items
|
|
$
|
8,865
|
|
|
$
|
9,286
|
|
|
$
|
3,632
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share
|
|
|
|
Three Months
Ended
|
|
|
|
March 31, 2023
|
|
|
December 31, 2022
|
|
|
March 31, 2022
|
|
GAAP
reported
|
|
$
|
0.05
|
|
|
$
|
0.14
|
|
|
$
|
(0.04)
|
|
Stock compensation
(1)
|
|
|
0.11
|
|
|
|
(0.03)
|
|
|
|
0.08
|
|
Loss on lease
abandonment and other exit costs (2)
|
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
Assets write-down
(2)
|
|
|
0.02
|
|
|
|
—
|
|
|
|
—
|
|
Severance and other
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
0.06
|
|
Bad debt
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Foreign exchange losses
(gains)
|
|
|
—
|
|
|
|
0.02
|
|
|
|
(0.01)
|
|
Impact of higher
(lower) tax rate (3)
|
|
|
—
|
|
|
|
0.07
|
|
|
|
(0.03)
|
|
Impact on assuming
dilution
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Excluding specific
items
|
|
$
|
0.19
|
|
|
$
|
0.20
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
(1) Three months
ended March 31, 2023 and 2022 includes stock compensation expense
recognized pursuant to FASB ASC 718 "Stock
Compensation" associated with employees reaching eligible
retirement age, which is nondeductible for tax purposes. Three
months ended
December 31, 2022 includes non-cash adjustment of stock
compensation expense associated with certain performance share
awards that
vested during the quarter.
|
|
(2) Three months
ended March 31, 2023 includes the write-down of right of use assets
and leasehold improvements and other exit costs
associated with consolidation of certain facilities.
|
|
(3) Three months
ended December 31, 2022 and March 31, 2022 include adjustments to
reflect tax expense at a normalized rate of 20%.
|
|
|
|
Segment
Information
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Operating Income
(Loss)
|
|
|
|
Three Months Ended
March 31, 2023
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
2,471
|
|
|
$
|
3,281
|
|
|
$
|
729
|
|
Stock compensation
(1)
|
|
|
4,156
|
|
|
|
2,359
|
|
|
|
—
|
|
Loss on lease
abandonment and other exit costs (2)
|
|
|
377
|
|
|
|
264
|
|
|
|
—
|
|
Assets write-down
(2)
|
|
|
958
|
|
|
|
—
|
|
|
|
57
|
|
Foreign exchange losses
(gains)
|
|
|
(188)
|
|
|
|
134
|
|
|
|
(90)
|
|
Excluding specific
items
|
|
$
|
7,774
|
|
|
$
|
6,038
|
|
|
$
|
696
|
|
(1) Stock
compensation expense recognized pursuant to FASB ASC 718 "Stock
Compensation" associated with executives
reaching
eligible retirement age.
|
|
(2) Write-down of
right of use assets and leasehold improvements and other exit costs
associated with consolidation of certain facilities.
|
|
|
Return on Invested Capital
Return on Invested Capital ("ROIC") is presented based on
management's belief that this non-GAAP measure is useful
information to investors and management when comparing
profitability and the efficiency with which capital has been
employed over time relative to other companies. The Board has
established an internal performance metric of demonstrating
superior ROIC performance relative to the oilfield service
companies listed as Core's Comp Group by Bloomberg. ROIC is not a
measure of financial performance under GAAP and should not be
considered as an alternative to net income.
ROIC of 8.4% is defined by Bloomberg as Net Operating Profit
After Tax ("NOPAT") of $32.6 million
divided by Average Total Invested Capital ("Average TIC") of
$389.4 million where NOPAT is defined
as GAAP net income before non-controlling interest plus the sum of
income tax expense, interest expense, and pension expense less
pension service cost and tax effect on income before interest and
tax expense. Average TIC is defined as the average of beginning and
ending periods' GAAP stockholders' equity plus the sum of net
long-term debt, lease liabilities, allowance for credit losses, net
of deferred taxes, and income taxes payable.
Free Cash Flow
Core uses the non-GAAP financial 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, or cash flows from
operating, investing, or financing activities, each as determined
in accordance with GAAP. Free cash flow should not be considered 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
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
|
March 31,
2023
|
|
|
Net cash used in
operating activities
|
|
$
|
(3,169)
|
|
|
Capital
expenditures
|
|
|
(2,208)
|
|
|
Free cash
flow
|
|
$
|
(5,377)
|
|
|
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SOURCE Core Laboratories N.V.