AMSTERDAM, Dec. 30, 2019 /PRNewswire/ -- Core
Laboratories N.V. (NYSE: "CLB US" and Euronext Amsterdam: "CLB NA")
("Core", "Core Lab", or the "Company") is announcing revised
guidance from continuing operations for the fourth quarter of 2019,
initial first quarter 2020 guidance and a reduction of its future
quarterly dividend.
Updated Fourth Quarter 2019 Guidance
The decline in U.S. onshore activity has proven to be more
pronounced than originally forecast in Core Lab's third quarter
earnings release on 23 October 2019.
The U.S. rig count quarter-to-date is down approximately 11%, with
U.S. completion activity tracking downward over 20%, primarily
affecting Core's Production Enhancement segment. In addition,
client discussions required to advance large international and
offshore projects have progressed slower than expected. These
developments have negatively impacted the fourth quarter of 2019
financial results for Core's Reservoir Description segment.
Core now projects that fourth quarter 2019 revenue will range
from $154,000,000 to $156,000,000, with operating income of
approximately $24,000,000 to
$25,000,000, yielding operating
margins of 16%. Earnings per share ("EPS") for the fourth
quarter of 2019 is expected to be $0.37 to $0.38.
Initial First Quarter 2020 Guidance
Core Lab remains constructive on the mid- to long-term outlook
for the international and offshore crude oil markets and client
activity levels, with multi-year growth on the horizon. In
particular, offshore South America
and the Middle East, as well as
the Gulf of Mexico, should show
increased client activity. Over the past three years,
announced final investment decisions have progressed more slowly
than in previous cycles. For 2020, investment on
international client appraisal and development programs is expected
to increase by mid-single digits. These factors will contribute to
both future reserve replacement for clients and more steady and
predictable workflows for Core Lab.
Core is providing initial guidance for the first quarter of
2020. Guidance for the first quarter of 2020 will be updated
during the fourth quarter 2019 conference call. Core expects
consolidated first quarter 2020 revenue of approximately
$159,000,000 to $164,000,000, with operating income of
approximately $25,000,000 to
$27,000,000, yielding operating
margins of 16%. EPS for the first quarter of 2020 is expected
to be approximately $0.39 to
$0.41.
The Company's revised fourth quarter 2019 and initial first
quarter 2020 guidance are based on projections for the underlying
operations, excludes gains or losses in foreign exchange and
assumes an effective tax rate of 20%.
Future Quarterly Dividends
Considering projected modest growth in the international markets
for the near-term and continued volatility in the U.S. land market,
Core's Board of Supervisory Directors has approved a plan to reduce
the Company's future quarterly dividends to $0.25 per share beginning with the first quarter
of 2020. While cost reductions have been implemented and the
Company will continue to right-size the business, Core believes
reducing future quarterly dividends is in the best interest of the
Company and its shareholders. Reducing the dividend will
preserve Core's strong balance sheet. Based upon a quarterly
dividend of $0.25 per share and the
number of shares currently outstanding, the annual dividend
distribution will decrease by approximately $53 million, providing additional flexibility in
the Company's capital allocation policy. Core continues to
generate significant levels of free cash flow, which will be
returned to shareholders via the Company's regular quarterly
dividend and opportunistic share repurchases, as well as to manage
the Company's level of outstanding debt.
Any determination regarding future quarterly cash dividends, 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.
Core Lab will host its fourth quarter 2019 earnings call on
Thursday, 30 January 2020 at
7:30 a.m. CST / 2:30 p.m. CET to discuss financial and
operational results. The fourth quarter 2019 earnings release will
be issued after market close on 29 January
2020.
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 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 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.
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SOURCE Core Laboratories N.V.