- REVENUE OF $125.3 MILLION;
DOWN 2% SEQUENTIALLY; FLAT YEAR-OVER-YEAR
- OPERATING INCOME OF $14.7
MILLION; EX-ITEMS, $16.0
MILLION, UP OVER 2% SEQUENTIALLY; UP 20%
YEAR-OVER-YEAR
- OPERATING MARGINS, EX-ITEMS, OF 13%
- GAAP EPS OF $0.19; EX-ITEMS,
$0.22, UP 5% SEQUENTIALLY; UP 24%
YEAR-OVER-YEAR
- RESERVOIR DESCRIPTION OPERATING MARGINS, EX-ITEMS, OF 17%;
INCREMENTAL MARGINS EXCEEDING 100% SEQUENTIALLY; EXCEEDING 90%
YEAR-OVER-YEAR
- COMPANY ANNOUNCES STRATEGIC DIGITAL ROCK CHARACTERIZATION
ALLIANCE WITH HALLIBURTON
- COMPANY ANNOUNCES Q4 2023 QUARTERLY DIVIDEND
HOUSTON, Nov. 1, 2023 /PRNewswire/ -- Core
Laboratories Inc. (NYSE: "CLB") ("Core", "Core Lab", or the
"Company") reported third quarter 2023 revenue of $125,300,000. Core's operating income was
$14,700,000, with diluted earnings
per share ("EPS") of $0.19, all in
accordance with U.S. generally accepted accounting principles
("GAAP"). Operating income, ex-items, a non-GAAP financial
measure, was $16,000,000, yielding
operating margins of 13%, and EPS, ex-items, of $0.22. During the third quarter of 2023,
the Company recorded aggregate charges of $1,100,000 associated with termination of its
at-the-market equity offering program and exit of facilities
aligned with Core's continuing efforts to improve operational
efficiencies. A full reconciliation of non-GAAP financial
measures is included in the attached financial tables.
Core's CEO, Larry Bruno stated,
"Demand for Reservoir Description services continued to expand in
the third quarter of 2023, with sequential improvement in both
revenue and operating margins. Execution of our long-term
strategy to improve operational efficiencies through technological
innovations, automation and digitalization is also yielding
results, as Reservoir Description's operating margins for the third
quarter were 17%, the highest in three years. As committed
work volumes continue to build across our global laboratory
network, these investments will produce superior, long-term
incremental margins. Production Enhancement's third quarter
financial performance was negatively impacted by a
steeper-than-expected decline in U.S. land completion
activity. As a result, Core's full company third quarter 2023
revenue was down slightly on a sequential basis. However,
despite the U.S. land headwinds, we achieved sequential and
year-over-year improvement in operating income, operating margins
and earnings per share. Core remains focused on reducing debt
and further strengthening our balance sheet, while at the same time
working to increase our return on invested capital, which improved
for the fourth consecutive quarter."
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. Revenue in the third quarter of 2023 was
$85,100,000, up over 2% sequentially
and up 8% year-over-year. Operating income on a GAAP basis
was $13,000,000, while operating
income, ex-items, was $14,100,000,
yielding operating margins of 17%, up approximately 320 basis
points sequentially and 590 basis points year-over-year.
Incremental margins exceeded 100% sequentially and 90%
year-over-year. The segment's financial performance reflects
improving client activity across the Company's global network, as
well as increased demand for analytical datasets from Core's
library of proprietary geological and petrophysical studies.
During the third quarter of 2023, Core's Middle East clients continued their plans to
expand future production capacity, increasing the need for
evaluation of complex unconventional and conventional reservoirs.
This emphasis is particularly pronounced in the characterization
and development of unconventional reservoir targets, where
determination of in-situ Gas-Oil-Ratio ("GOR") is critical.
Given the complex fluid and fluid-flow behaviors of these low
permeability reservoirs, the acquisition of GOR data from
traditional downhole fluid samples may not be representative.
In line with these challenges, and under a collaborative agreement
with Corsyde International ("Corsyde"), a team of Core Lab
reservoir optimization specialists executed a successful,
multi-trip, pressure core campaign for a Middle East National Oil
Company. Pressure cores allow for intervals of the target
reservoir zone to be cut and safely brought to the surface, all
while maintaining in-situ reservoir pressure. This technology
ensures that all three reservoir fluid phases are captured and
maintained at reservoir pressure in the core barrel. Upon
reaching the surface, Core Lab and Corsyde specialists orchestrated
meticulously-controlled depressurization processes to
systematically capture all reservoir fluids. The captured
reservoir fluids were quantified and comprehensive compositional
analyses were conducted. The process enabled Core Lab
specialists to accurately determine the in-situ GOR and hydrocarbon
properties, providing data that will improve reservoir models,
yield more accurate reserve calculations and allow the operator to
optimize completion and production strategies. This pressure
core project exemplifies Core Lab's commitment to delivering
technological and data-driven solutions that enable its clients to
navigate the complexities of reservoir evaluation and optimize
production strategies.
Also during the third quarter of 2023, Halliburton Company
("Halliburton") and Core Lab signed a strategic alliance in the
U.S. to combine their industry-leading digital rock
characterization and modeling services. These digital
solutions will help to accelerate clients' reservoir evaluation
programs while the traditional physical laboratory measurements
required for determinative reserve calculations are in
progress. This collaboration combines Core Lab's expertise in
reservoir description and optimization technologies with
Halliburton's specialization in pore-scale digital rock
analysis. Together, Core Lab and Halliburton will seamlessly
integrate best-in-class digital rock characterization technologies
at nano, micro and macro levels, enabling U.S. clients to run
pore-scale simulations in parallel with physical laboratory
experiments. Recently, Halliburton joined Core Lab's
Carbon Capture and Sequestration ("CCS") Consortium. This
consortium, in conjunction with Dr. Birol Dindoruk of the
University of Houston, allows technical
teams from twelve member companies to share expertise and datasets
related to assessing geological and engineering risks associated
with subsurface injection of CO2. One example of
how the collaboration between Halliburton and Core Lab will benefit
clients will be in the expedited delivery of digital rock
characterization data on CCS projects that are progressing through
time-sensitive subsurface evaluation and permitting processes.
Production Enhancement
Production Enhancement operations, which are focused on complex
completions in unconventional oil and gas reservoirs in the U.S.,
as well as conventional projects across the globe, posted third
quarter 2023 revenue of $40,200,000,
down approximately 10% sequentially, and 14% year-over-year.
Operating income on a GAAP basis was $1,500,000, while operating income, ex-items, was
$1,600,000, yielding operating
margins of 4%. The sequential and year-over-year declines
were tied to the reductions in U.S. onshore well completions,
although product sales in the U.S. were flat sequentially.
Additionally, certain well diagnostic projects in the Gulf of Mexico were delayed, and some
international product deliveries moved into October due to
third-party logistical delays.
During the third quarter of 2023, Core's Production Enhancement
segment was engaged by a client in the North Sea to provide plug
and abandonment technologies to efficiently perforate heavy-walled
13-3/8" diameter casing for cement wash and the subsequent plugging
operations required for well abandonment. Core provides
solutions that leverage its expertise in energetics as an
alternative to traditional casing section milling, which is slower
and more costly. Capitalizing on Core's proprietary Plug and
Abandonment Perforating System ("PAC™"), the Company's ballistic
engineering design team collaborated with the client to address the
additional depth of controlled penetration required to create
communication in the annular space between the 13-3/8" casing and
the 20" outer casing string. The PAC™-Extended Range
Energetic System successfully accomplished the task.
Significantly, the Extended Range System was delivered with a
4-1/2" gun. This solution eliminated the need to run a
secondary retrieval operation to remove the downhole restriction
that would have been required for a larger diameter gun
system. Core's expertise and technologies successfully
created communication between the casing strings, maintained the
integrity of the 20" outer casing, and reduced rig time, all while
allowing for the efficient recovery of the interior casing.
These advancements in PAC™ energetic system technologies not only
contribute to the safety of offshore well abandonment, but also
align with increasing global demand for cost-effective solutions in
complex plug and abandonment applications.
Also during the third quarter of 2023, Core's completion
diagnostics were deployed in an innovative application for a client
exploring for helium resources in the Four Corners' area of New
Mexico. The project utilized Core's proprietary diagnostic
technologies to assess well production and identify an optimum
completion strategy. Core's Flow Profiler™ water-phase and
gas-phase tracers were deployed into four stages of this vertical
well, with unique tracers placed into each interval. Water
and gas tracer concentrations in flowback samples were collected at
the surface, allowing for delineation of the most promising
helium-producing intervals. The operator also utilized Core's
Completion Profiler® to better characterize the gas production from
each interval. Through the use of Core's technologies, the
operator identified the most promising stratigraphic target for
future helium-producing wells planned for this area.
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 third quarter of 2023, cash
used in operations was approximately $200,000 and capital expenditures were
$3,500,000, yielding negative FCF of
$3,700,000. Cash from
operations for the third quarter of 2023 was negatively affected by
the following items:
- An additional $14,000,000 of cash
used to fund working capital requirements. Growth in
inventory during the third quarter of 2023 was primarily caused by
the lower-than-expected level of activity in the U.S. onshore
market. The U.S. onshore market is the largest market the
Company serves with its product sales, and prolonged lead times
associated with purchasing raw materials has resulted in the need
to maintain higher levels of raw materials. Additionally, the
Company continued to build stock to serve large international
projects which are planned for delivery later in 2023 and
2024. The Company also carried approximately $5,000,000 less in accounts payable as of
September 30, 2023 when compared to
June 30, 2023.
- Cash from operations for the third quarter of 2023 also
includes $11,300,000 in cash tax
payments. Approximately $5,100,000 of these cash tax payments made during
the third quarter of 2023 are expected to be recovered through a
tax refund during the fourth quarter of 2023.
Core expects cash from operations to strengthen and the Company
to generate positive free cash in future quarters. At the end
of the third quarter of 2023, Core's net debt increased by
$5,600,000 from prior quarter-end to
$164,400,000, and the Company's
leverage ratio increased slightly to 1.92. The Company will
continue applying future 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 July 26, 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 August 28, 2023 to
shareholders of record on August 7,
2023.
On November 1, 2023, the Board
approved a cash dividend of $0.01 per
share of common stock payable on December 4,
2023 to shareholders of record on November 13, 2023.
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 are designed to produce more predictable and
superior long-term ROIC.
The Board has established an internal metric to demonstrate 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 third quarter of 2023, the Company's ROIC improved to
13.6%.
Industry and Core Lab Outlook and Guidance
Based on constant dialogue with the Company's global client
base, Core Lab maintains its constructive outlook on international
upstream activity for 2024 and beyond, as increasing levels of
investment will be required to maintain and grow hydrocarbon
production. The Company anticipates operator spending on
long-cycle upstream projects in both onshore and offshore
environments will continue to expand displaying an added level of
sustainability for this upcycle. In the near-term, the global
crude-oil market may remain volatile due to global recession fears,
the extent and timing of China's
economic recovery, and the uncertainties related to conflicts in
Russia-Ukraine and the Middle East. Globally,
crude-oil production growth continues to face constraints due to
prolonged underinvestment, as well as the loss of production due to
natural decline from existing fields.
Core continues to anticipate a multi-year international recovery
supported by increased spending on exploration in many regions
across the globe and expanded development of existing fields to
fortify crude-oil and natural gas reserves. This underlies Core's
outlook for continued improvement in international onshore and
offshore activity, with on-going projects around the globe, most
notably across the Middle East,
South Atlantic Margin, certain areas of Asia Pacific and West Africa. Turning to the U.S.,
onshore activity in 2023 has been lower than expected as reflected
by the decreased U.S. rig and frac spread counts. Core sees
sequential U.S. onshore completion activity to be slightly down due
to typical year-end seasonality as operators complete their 2023
spending plans.
Core projects Reservoir Description's fourth quarter 2023
revenue to range from $84,000,000 to
$86,000,000 and operating income of
$11,600,000 to $13,300,000. While Core expects its
international revenue to increase sequentially in several
geographic regions, the on-going Russia-Ukraine conflict and more recent conflict in
the Middle East are causing some
disruption to the movement and trade of crude oil. These two
geopolitical situations have created uncertainties with respect to
trading patterns of crude oil and derived products and the
associated laboratory assay services. These situations have
and may continue to adversely impact Core's Reservoir Description
segment's operations in Russia,
Ukraine, Europe, and the Middle East. Despite
these geopolitical uncertainties, client commitments on long-term
international projects have improved nicely year-over-year.
However, the pace at which these long-term projects are executed by
Core's clients may vary from quarter to quarter as momentum
builds. Core's Production Enhancement segment fourth quarter
2023 revenue is estimated to range from $41,000,000 to $46,000,000 and operating income of $2,200,000 to $4,000,000. Growth in Production
Enhancement international sales and well diagnostic projects in the
Gulf of Mexico are expected to
offset a projected decline in U.S. onshore
revenue.
The Company's fourth quarter 2023 revenue is projected to range
from $125,000,000 to $132,000,000 and operating income of $13,800,000 to $17,300,000, yielding operating margins of
approximately 12%. EPS for the fourth quarter of 2023 is
expected to be $0.17 to $0.23.
The Company's fourth quarter 2023 guidance is based on
projections for underlying operations and excludes gains and losses
in foreign exchange. Fourth 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
third quarter 2023 earnings announcement. The call will begin
at 7:30 a.m. CDT / 8:30 a.m. EDT on Thursday, November 2,
2023. To listen to the call, please go to Core's website at
www.corelab.com.
Core Laboratories Inc. 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 Company's future
revenue, profitability, business strategies and developments,
demand for the Company's products and services and for products and
services of the oil and gas industry generally, 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 of the parent company from
the Netherlands to the United States, international markets,
international political climates, including the Russia-Ukraine and the Middle East geopolitical conflicts, 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
INC. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except
per share data)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
%
Variance
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
|
September 30,
2022
|
|
|
vs.
Q2-23
|
|
vs.
Q3-22
|
REVENUE
|
|
$
|
125,343
|
|
|
$
|
127,881
|
|
|
$
|
125,966
|
|
|
(2.0) %
|
|
(0.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
|
96,617
|
|
|
|
100,295
|
|
|
|
98,930
|
|
|
(3.7) %
|
|
(2.3) %
|
General and
administrative expense
|
|
|
9,452
|
|
|
|
5,811
|
|
|
|
10,001
|
|
|
62.7 %
|
|
(5.5) %
|
Depreciation and
amortization
|
|
|
3,929
|
|
|
|
3,937
|
|
|
|
4,171
|
|
|
(0.2) %
|
|
(5.8) %
|
Other (income) expense,
net
|
|
|
673
|
|
|
|
(1,068)
|
|
|
|
(1,781)
|
|
|
NM
|
|
NM
|
Total operating
expenses
|
|
|
110,671
|
|
|
|
108,975
|
|
|
|
111,321
|
|
|
1.6 %
|
|
(0.6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
14,672
|
|
|
|
18,906
|
|
|
|
14,645
|
|
|
(22.4) %
|
|
0.2 %
|
Interest
expense
|
|
|
3,147
|
|
|
|
3,236
|
|
|
|
3,138
|
|
|
(2.8) %
|
|
0.3 %
|
Income before income
taxes
|
|
|
11,525
|
|
|
|
15,670
|
|
|
|
11,507
|
|
|
(26.5) %
|
|
0.2 %
|
Income tax expense
(benefit)
|
|
|
2,305
|
|
|
|
(7,259)
|
|
|
|
3,856
|
|
|
NM
|
|
(40.2) %
|
Net income
|
|
|
9,220
|
|
|
|
22,929
|
|
|
|
7,651
|
|
|
(59.8) %
|
|
20.5 %
|
Net income (loss)
attributable to non-controlling interest
|
|
|
(37)
|
|
|
|
83
|
|
|
|
127
|
|
|
NM
|
|
NM
|
Net income attributable
to Core Laboratories Inc.
|
|
$
|
9,257
|
|
|
$
|
22,846
|
|
|
$
|
7,524
|
|
|
(59.5) %
|
|
23.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
0.19
|
|
|
$
|
0.48
|
|
|
$
|
0.16
|
|
|
(60.4) %
|
|
18.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to Core Laboratories Inc.
|
|
$
|
0.19
|
|
|
$
|
0.48
|
|
|
$
|
0.16
|
|
|
(60.4) %
|
|
18.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
|
|
47,604
|
|
|
|
47,497
|
|
|
|
47,012
|
|
|
0.2 %
|
|
1.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
20
|
%
|
|
|
(46)
|
%
|
|
|
34
|
%
|
|
NM
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
85,145
|
|
|
$
|
83,384
|
|
|
$
|
78,996
|
|
|
2.1 %
|
|
7.8 %
|
Production
Enhancement
|
|
|
40,198
|
|
|
|
44,497
|
|
|
|
46,970
|
|
|
(9.7) %
|
|
(14.4) %
|
Consolidated
|
|
$
|
125,343
|
|
|
$
|
127,881
|
|
|
$
|
125,966
|
|
|
(2.0) %
|
|
(0.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
12,992
|
|
|
$
|
13,316
|
|
|
$
|
9,798
|
|
|
(2.4) %
|
|
32.6 %
|
Production
Enhancement
|
|
|
1,544
|
|
|
|
5,498
|
|
|
|
4,417
|
|
|
(71.9) %
|
|
(65.0) %
|
Corporate and
Other
|
|
|
136
|
|
|
|
92
|
|
|
|
430
|
|
|
NM
|
|
NM
|
Consolidated
|
|
$
|
14,672
|
|
|
$
|
18,906
|
|
|
$
|
14,645
|
|
|
(22.4) %
|
|
0.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE LABORATORIES
INC. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except
per share data)
(Unaudited)
|
|
|
|
Nine Months Ended
September 30,
|
|
%
Variance
|
|
|
2023
|
|
2022
|
|
|
REVENUE
|
|
$381,580
|
|
$362,164
|
|
5.4 %
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
298,440
|
|
293,839
|
|
1.6 %
|
General and
administrative expense
|
|
31,594
|
|
29,393
|
|
7.5 %
|
Depreciation and
amortization
|
|
11,910
|
|
13,088
|
|
(9.0) %
|
Other (income) expense,
net
|
|
(423)
|
|
(62)
|
|
NM
|
Total operating
expenses
|
|
341,521
|
|
336,258
|
|
1.6 %
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
40,059
|
|
25,906
|
|
54.6 %
|
Interest
expense
|
|
9,812
|
|
8,489
|
|
15.6 %
|
Income before income
taxes
|
|
30,247
|
|
17,417
|
|
73.7 %
|
Income tax expense
(benefit)
|
|
(4,344)
|
|
4,449
|
|
NM
|
Net income
|
|
34,591
|
|
12,968
|
|
166.7 %
|
Net income attributable
to non-controlling interest
|
|
115
|
|
266
|
|
NM
|
Net income attributable
to Core Laboratories Inc.
|
|
$34,476
|
|
$12,702
|
|
171.4 %
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$0.73
|
|
$0.28
|
|
160.7 %
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to Core Laboratories Inc.
|
|
$0.73
|
|
$0.27
|
|
170.4 %
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
|
47,536
|
|
47,117
|
|
0.9 %
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
(14) %
|
|
26 %
|
|
NM
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Reservoir
Description
|
|
$248,717
|
|
$229,567
|
|
8.3 %
|
Production
Enhancement
|
|
132,863
|
|
132,597
|
|
0.2 %
|
Total
|
|
$381,580
|
|
$362,164
|
|
5.4 %
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
Reservoir
Description
|
|
$28,780
|
|
$16,085
|
|
78.9 %
|
Production
Enhancement
|
|
10,324
|
|
8,447
|
|
22.2 %
|
Corporate and
Other
|
|
955
|
|
1,374
|
|
NM
|
Total
|
|
$40,059
|
|
$25,906
|
|
54.6 %
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
CORE LABORATORIES
INC. & SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
ASSETS:
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
|
December 31,
2022
|
|
|
vs.
Q2-23
|
|
vs.
Q4-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
16,616
|
|
|
$
|
26,204
|
|
|
$
|
15,428
|
|
|
(36.6) %
|
|
7.7 %
|
Accounts receivable,
net
|
|
|
104,053
|
|
|
|
106,816
|
|
|
|
106,913
|
|
|
(2.6) %
|
|
(2.7) %
|
Inventories
|
|
|
75,060
|
|
|
|
71,658
|
|
|
|
60,445
|
|
|
4.7 %
|
|
24.2 %
|
Other current
assets
|
|
|
32,815
|
|
|
|
31,446
|
|
|
|
28,916
|
|
|
4.4 %
|
|
13.5 %
|
Total current
assets
|
|
|
228,544
|
|
|
|
236,124
|
|
|
|
211,702
|
|
|
(3.2) %
|
|
8.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
99,499
|
|
|
|
101,662
|
|
|
|
105,028
|
|
|
(2.1) %
|
|
(5.3) %
|
Right of use
assets
|
|
|
53,101
|
|
|
|
55,456
|
|
|
|
52,379
|
|
|
(4.2) %
|
|
1.4 %
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
211,270
|
|
|
|
208,606
|
|
|
|
209,245
|
|
|
1.3 %
|
|
1.0 %
|
Total assets
|
|
$
|
592,414
|
|
|
$
|
601,848
|
|
|
$
|
578,354
|
|
|
(1.6) %
|
|
2.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
34,097
|
|
|
$
|
39,145
|
|
|
$
|
45,847
|
|
|
(12.9) %
|
|
(25.6) %
|
Short-term operating
lease liabilities
|
|
|
9,794
|
|
|
|
10,731
|
|
|
|
11,699
|
|
|
(8.7) %
|
|
(16.3) %
|
Other current
liabilities
|
|
|
40,359
|
|
|
|
46,318
|
|
|
|
45,589
|
|
|
(12.9) %
|
|
(11.5) %
|
Total current
liabilities
|
|
|
84,250
|
|
|
|
96,194
|
|
|
|
103,135
|
|
|
(12.4) %
|
|
(18.3) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
177,863
|
|
|
|
182,583
|
|
|
|
172,386
|
|
|
(2.6) %
|
|
3.2 %
|
Long-term operating
lease liabilities
|
|
|
40,903
|
|
|
|
42,376
|
|
|
|
38,305
|
|
|
(3.5) %
|
|
6.8 %
|
Other long-term
liabilities
|
|
|
59,948
|
|
|
|
61,091
|
|
|
|
75,574
|
|
|
(1.9) %
|
|
(20.7) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
229,450
|
|
|
|
219,604
|
|
|
|
188,954
|
|
|
4.5 %
|
|
21.4 %
|
Total liabilities and
equity
|
|
$
|
592,414
|
|
|
$
|
601,848
|
|
|
$
|
578,354
|
|
|
(1.6) %
|
|
2.4 %
|
CORE LABORATORIES
INC. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands)
(Unaudited)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2023
|
|
|
2022
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$
|
34,591
|
|
|
$
|
12,968
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
12,406
|
|
|
|
7,452
|
|
Depreciation and
amortization
|
|
|
11,910
|
|
|
|
13,088
|
|
Deferred income
taxes
|
|
|
(14,757)
|
|
|
|
(1,807)
|
|
Accounts
receivable
|
|
|
2,872
|
|
|
|
(3,390)
|
|
Inventories
|
|
|
(15,707)
|
|
|
|
(9,188)
|
|
Accounts
payable
|
|
|
(13,101)
|
|
|
|
4,288
|
|
Other adjustments to
net income
|
|
|
(12,854)
|
|
|
|
(11,666)
|
|
Net cash provided
by (used in) operating activities
|
|
|
5,360
|
|
|
|
11,745
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(7,843)
|
|
|
|
(8,195)
|
|
Net proceeds on life
insurance policies and from insurance recovery
|
|
|
3,375
|
|
|
|
2,642
|
|
Other investing
activities
|
|
|
262
|
|
|
|
639
|
|
Net cash provided
by (used in) investing activities
|
|
|
(4,206)
|
|
|
|
(4,914)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Repayment of long-term
debt
|
|
|
(184,000)
|
|
|
|
(49,000)
|
|
Proceeds from long-term
debt
|
|
|
190,000
|
|
|
|
44,000
|
|
Dividends
paid
|
|
|
(1,401)
|
|
|
|
(1,389)
|
|
Repurchase of common
stock
|
|
|
(418)
|
|
|
|
(2,311)
|
|
Equity related
transaction costs
|
|
|
(2,842)
|
|
|
|
(411)
|
|
Other financing
activities
|
|
|
(1,305)
|
|
|
|
(1,691)
|
|
Net cash provided
by (used in) financing activities
|
|
|
34
|
|
|
|
(10,802)
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS
|
|
|
1,188
|
|
|
|
(3,971)
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
15,428
|
|
|
|
17,703
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
16,616
|
|
|
$
|
13,732
|
|
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, Net Income and Diluted Earnings Per Share
Attributable to Core Laboratories Inc.
(In thousands, except
per share data)
(Unaudited)
|
|
|
|
Operating
Income
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
|
September 30,
2022
|
|
GAAP
reported
|
|
$
|
14,672
|
|
|
$
|
18,906
|
|
|
$
|
14,645
|
|
Stock compensation
(1)
|
|
|
—
|
|
|
|
(934)
|
|
|
|
—
|
|
Loss on lease
abandonment and assets write-down (2)
|
|
|
633
|
|
|
|
—
|
|
|
|
—
|
|
Gain on life insurance
policies (3)
|
|
|
—
|
|
|
|
(1,965)
|
|
|
|
—
|
|
ATM termination costs
(4)
|
|
|
455
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
238
|
|
|
|
(386)
|
|
|
|
(1,303)
|
|
Excluding specific
items
|
|
$
|
15,998
|
|
|
$
|
15,621
|
|
|
$
|
13,342
|
|
|
|
|
|
Net Income
Attributable to Core Laboratories Inc.
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
|
September 30,
2022
|
|
GAAP
reported
|
|
$
|
9,257
|
|
|
$
|
22,846
|
|
|
$
|
7,524
|
|
Stock compensation
(1)
|
|
|
—
|
|
|
|
(747)
|
|
|
|
—
|
|
Loss on lease
abandonment and assets write-down (2)
|
|
|
505
|
|
|
|
—
|
|
|
|
—
|
|
Gain on life insurance
policies (3)
|
|
|
—
|
|
|
|
(1,572)
|
|
|
|
—
|
|
ATM termination costs
(4)
|
|
|
364
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
190
|
|
|
|
(309)
|
|
|
|
(1,043)
|
|
Debt issuance costs
write off (5)
|
|
|
—
|
|
|
|
—
|
|
|
|
171
|
|
Reversal of net
deferred tax liabilities and effect of higher (lower) tax rate
(6)
|
|
|
—
|
|
|
|
(10,394)
|
|
|
|
1,553
|
|
Excluding specific
items
|
|
$
|
10,316
|
|
|
$
|
9,824
|
|
|
$
|
8,205
|
|
|
|
|
|
Diluted Earnings Per
Share Attributable to Core Laboratories Inc.
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2023
|
|
|
June 30,
2023
|
|
|
September 30,
2022
|
|
GAAP
reported
|
|
$
|
0.19
|
|
|
$
|
0.48
|
|
|
$
|
0.16
|
|
Stock compensation
(1)
|
|
|
—
|
|
|
|
(0.02)
|
|
|
|
—
|
|
Loss on lease
abandonment and assets write-down (2)
|
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
Gain on life insurance
policies (3)
|
|
|
—
|
|
|
|
(0.03)
|
|
|
|
—
|
|
ATM termination costs
(4)
|
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
0.01
|
|
|
|
—
|
|
|
|
(0.01)
|
|
Reversal of net
deferred tax liabilities and effect of higher (lower) tax rate
(5)
|
|
|
—
|
|
|
|
(0.22)
|
|
|
|
0.03
|
|
Excluding specific
items
|
|
$
|
0.22
|
|
|
$
|
0.21
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
(1) Three months
ended June 30, 2023 include reversals of stock compensation expense
previously recognized due to a change in probability of performance
condition for certain executive's share awards.
|
|
(2) Three months
ended September 30, 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 June 30, 2023 includes gain on life insurance policies death
benefit proceeds.
|
|
(4) Three months
ended September 30, 2023 includes the write off of previously
deferred costs upon termination of our "at-the-market offering"
("ATM Program").
|
|
(5) Three months
ended June 30, 2023 includes the reversal of certain net deferred
tax liabilities which will not be realized as a result of the
Redomestication Transaction and the effect to reflect tax expense
at a normalized rate of 20%. Three months ended September 30,
2022 includes the effect to reflect tax expense at a normalized
rate of 20%.
|
|
Segment
Information
(In
thousands)
(Unaudited)
|
|
|
|
Operating
Income
|
|
|
|
Three Months Ended
September 30, 2023
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
12,992
|
|
|
$
|
1,544
|
|
|
$
|
136
|
|
Loss on lease
abandonment and assets write-down (1)
|
|
|
633
|
|
|
|
—
|
|
|
|
—
|
|
ATM termination costs
(2)
|
|
|
292
|
|
|
|
163
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
162
|
|
|
|
(65)
|
|
|
|
141
|
|
Excluding specific
items
|
|
$
|
14,079
|
|
|
$
|
1,642
|
|
|
$
|
277
|
|
(1) Includes the
write-down of right of use assets and leasehold improvements and
other exit costs associated with consolidation of certain
facilities.
|
|
(2) Includes the
write off of previously deferred costs upon termination of our ATM
Program.
|
|
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 metric to demonstrate 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 13.6% is defined by Bloomberg as Net Operating Profit
After Tax ("NOPAT") of $53.0 million
divided by Average Total Invested Capital ("Average TIC") of
$390.7 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 for the last four quarters. 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
|
|
|
Nine Months
Ended
|
|
|
|
|
September 30,
2023
|
|
|
September 30,
2023
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
(212)
|
|
|
$
|
5,360
|
|
|
Capital
expenditures
|
|
|
(3,461)
|
|
|
|
(7,843)
|
|
|
Free cash
flow
|
|
$
|
(3,673)
|
|
|
$
|
(2,483)
|
|
|
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SOURCE Core Laboratories Inc