AMSTERDAM, April 22, 2020 /PRNewswire/ -- Core
Laboratories N.V. (NYSE: "CLB US" and Euronext Amsterdam: "CLB NA")
("Core", "Core Lab", or the "Company") reported that continuing
operations resulted in first quarter 2020 revenue of $152,400,000. The financial results for the
first quarter of 2020 include a non-cash charge of $122,000,000 for the impairment of goodwill and
intangible assets in the Production Enhancement segment, a charge
of $1,000,000 associated with
reductions in the workforce and other items. Core's operating
loss was $(109,000,000), with a loss
per diluted share ("EPS") of $(2.44),
all in accordance with U.S. generally accepted accounting
principles ("GAAP"). Operating income, ex-items, a non-GAAP
financial measure, was $20,600,000,
yielding operating margins of 13.5% and EPS, ex-items, of
$0.31. A full
reconciliation of non-GAAP financial measures is included in the
attached financial tables. First quarter operating margins for the
Company, across both the Reservoir Description and Production
Enhancement segments, were negatively affected by operational
workflow disruptions such as travel, product delivery and
quarantine restrictions as a result of Coronavirus 2019
("COVID-19").
Core's Board of Supervisory Directors ("Board") and the
Company's Executive Management continue to focus on strategies that
maximize return on invested capital ("ROIC") and free cash flow
("FCF"), a non-GAAP financial measure defined as cash from
operations less capital expenditures, factors that have high
correlation to maximizing total shareholder return. Core's
asset-light business model and capital discipline promote capital
efficiency and are designed to produce more predictable and
superior long-term ROIC. Bloomberg's calculations using
the latest comparable data available indicate that Core's ROIC
of 12.3% is the highest of the oilfield service companies
listed as Core's Comp Group by Bloomberg.
Cost Reduction Initiatives and Company Response to COVID-19
Pandemic
During the first quarter of 2020 the Company continued to
operate as an essential business in response to COVID-19; Core
immediately implemented plans and processes to protect the health
of employees while mitigating operational disruptions
world-wide. On 16 March 2020,
the Company publically announced immediate actions in response to
changing market conditions and operational disruptions related to
COVID-19, the resulting significant decrease in the commodity price
of crude oil, as well as the low-commodity price outlook for the
energy industry for the near- to mid-term.
Global cost-cutting measures previously announced on
16 March 2020, and implemented in
late March have been expanded. In total, the plans now
include: 1) a reduction of corporate and operating costs by
$11,500,000 on a quarterly basis or
approximately $46,100,000 on an
annual basis, and 2) a reduction of annual capital expenditures by
50%, or more, as compared to 2019. As of 31 March 2020, the Company had $4,100,000 accrued for future severance payments
associated with the reduction in its workforce which is estimated
to be recovered in less than one quarter through realized cost
savings. This plan seeks to align Core Lab's operations with
anticipated activity levels and will continue to be reviewed.
The corporate and operating cost reductions include a reduction
of senior executive and employee compensation. Specifically,
the Company has reduced senior executives' annual base salary by
20%. These pay reductions will continue for the foreseeable
future and remain in place until such time as market conditions and
the outlook improve.
In addition to the salary reductions, the current CEO and
Chairman, David M. Demshur, has
decided to accelerate his retirement to the end of May 2020.
This coincides with his previous announcement to not stand for
reelection to the Board of Supervisory Directors at the 2020 annual
shareholders' meeting (scheduled for 20 May
2020) and to resign as CEO, effective as of that
meeting. The end of his term on the Board assumes the
20 May 2020 shareholder meeting is
not delayed due to COVID-19 restrictions, and his successor to the
Board is elected. Mr. Demshur will be available to support
the Company in an uncompensated advisory role after his retirement,
as needed.
Liquidity, Free Cash Flow, Dividends and Share
Repurchases
During the first quarter of 2020, Core continued to generate
FCF, with cash from operations of $22,000,000 and after capital expenditures of
$3,300,000, yielding FCF of
$18,700,000, up almost 13%
sequentially. The first quarter of 2020 marks the 74th consecutive
quarter that the Company generated positive FCF. Free
cash was returned to Core's shareholders via the Company's first
quarter 2020 dividend of $11,100,000,
plus $1,100,000 of share repurchases
that were executed in late January and early February. Since
15 February 2020, free cash was used
exclusively to reduce net debt by $5,800,000.
Core previously announced future quarterly dividends have been
reduced to $0.01 per share beginning
with the second quarter of 2020. Excess free cash flow will
be focused on debt reduction for the foreseeable future. As
described above, the Company's cost control initiatives are
significant and have already been substantially
implemented.
The following table summarizes the projected impact to cash flow
associated with the actions described above. Compared to 2019, the
forecast for 2020 shows reduced cash outflows totaling $130,600,000.
(in $
millions)
|
|
2019
|
|
|
Forecast
2020
|
|
|
Reduced
Cash
Outflows
vs 2019
|
|
|
Annualized
Reduced
Cash
Outflows
|
|
Dividend
Payout
|
|
$
|
97.7
|
|
|
$
|
12.4
|
|
|
$
|
(85.3)
|
|
|
$
|
(95.9)
|
|
Capital
Expenditures
|
|
|
22.3
|
|
|
|
11.0
|
|
|
|
(11.3)
|
|
|
|
(11.3)
|
|
Cost Reduction
Initiatives1
|
|
|
—
|
|
|
|
(34.0)
|
|
|
|
(34.0)
|
|
|
|
(46.1)
|
|
Reduced Cash
Outflows
|
|
$
|
120.0
|
|
|
$
|
(10.6)
|
|
|
$
|
(130.6)
|
|
|
$
|
(153.3)
|
|
|
|
(1) Includes
reduction in workforce, furloughs, salary reductions and other cost
reduction initiatives.
|
|
As of 31 March 2020, the Company
has $130,000,000 of excess capacity
under its $300,000,000 revolving
credit facility, and by reducing net debt during the first quarter,
was able to maintain the net debt leverage ratio at 1.93. Core
anticipates it will generate positive cash flow and have ample
liquidity to maintain a strong balance sheet and, if necessary,
manage future debt maturities with organic free cash flow or
through its revolving credit facility.
On 14 January 2020, the Board
announced a quarterly cash dividend of $0.25 per share of common stock, which was paid
on 14 February 2020 to shareholders
of record on 24 January 2020. Dutch
withholding tax was deducted from the dividend at a rate of
15%.
Reservoir Description
Reservoir Description revenue in the first quarter of 2020 was
$102,700,000. Operating income
for the first quarter of 2020 on a GAAP basis was $11,100,000,
while operating income, ex-items, was $15,600,000, yielding operating margins,
ex-items, of 15%. Revenue was flat on a sequential basis, in
spite of typical seasonal declines and operational disruptions
related to COVID-19.
Reservoir Description operations are heavily exposed to
international and offshore activity levels. Approximately 80%
of its revenue is sourced from projects outside of the U.S., where
core, reservoir fluid and derived product samples originate from
international project activity. As Core has highlighted for
many years, the reservoir fluids business continues to grow and has
become more substantial, representing over 65% of the business
segment's revenue. Reservoir fluids testing tends to be less
volatile, even in low-commodity price markets. Data
analytical programs were conducted for ongoing projects in areas
such as: Australia, Brazil, Guyana, Suriname, other areas offshore
South America, the Gulf of Mexico, the Middle East and offshore North America.
These analytical programs provide accurate, comprehensive datasets
of rock and hydrocarbon properties that are critical for optimizing
reservoir appraisal, development and production.
During the first quarter of 2020, Core finalized the commission
of a reservoir fluids laboratory in the Middle East, expanding capabilities in
response to client-driven demand for both reservoir rock and fluid
analyses. These new laboratory capabilities now provide a
range of proprietary and patented technologies, including Core's
full visualization, high-pressure, high-temperature,
pressure-volume-temperature ("PVT") cell instrumentation.
These highly automated systems are specially designed to measure
the phase behavior of reservoir fluids containing high
concentrations of H2S and CO2 gases commonly
found in the Middle East
region. The analytical programs enable Core's clients to
address challenging reservoirs during appraisal, development,
production and enhanced hydrocarbon recovery efforts. Core
remains a key industry partner by providing E&P companies with
the critical data sets required for evaluating opportunities in
both new and mature fields.
In the first quarter of 2020, Core Lab, under the direction of
BHP, was engaged to provide laboratory analyses for BHP's Deepwater
Northern Licenses project offshore Trinidad and Tobago. This multi-well
analytical program is employing Core's proprietary and patented
laboratory technologies to assess reservoir rock properties from
the Bele - 1 ST - 1, Bele - 1 ST - 2, Boom - 1, Hi Hat - 1, and Tuk
- 1 wells.
High quality, conventional core was recovered from
unconsolidated soft sediment in the target reservoir
interval. Once the cores reached the rig floor upon recovery
from the subsurface, the cores were stabilized using proprietary
Core Lab techniques that ensure the natural rock fabric and pore
fluids are retained during handling and transportation to the
laboratory.
Upon arrival at the laboratory, these cores were immediately
scanned using Core's proprietary Non-Invasive Testing and Reservoir
Optimization ("NITROSM") technologies. Core Lab's
proprietary Dual-Energy Computed Tomography and High Frequency
Spectral Gamma surface logging technologies quickly provided BHP's
experts with lithologic information, as well as a wide range of
critical petrophysical parameters for pay assessment. These
NITROSM deliverables were provided well in advance of
results derived from time-honored laboratory analyses.
NITROSM also provided the BHP team with a digital
archive of the cores in a three-dimensional format, with
millimeter-scale bed resolution. These conventional cores are
progressing through the traditional laboratory program of physical
measurements following consultations between BHP's and Core Lab's
technical teams.
Production Enhancement
Production Enhancement operations, which are largely focused on
complex completions in unconventional, tight-oil reservoirs in the
U.S., as well as conventional offshore projects across the globe,
posted first quarter 2020 revenue of $49,700,000, down 8%, sequentially. First quarter
performance was impacted by a sequential decline in U.S. onshore
well completion activity and COVID-19 related international product
shipment disruptions. Operating loss on a GAAP basis was
$(121,300,000), largely impacted by a
$122,000,000 non-cash charge for
impairment of goodwill and intangible assets. Operating
income, ex-items, was $3,800,000,
which yielded operating margins of 8%.
During the first quarter of 2020, Core Lab, a technological
leader in the design of efficient and effective high-end energetic
systems, expanded market penetration of the ReFRACTM
product line, as new clients adopted the technology for use in
mechanically isolated recompletions. Core's first-to-market
ReFRACTM technology creates a consistent hole size
through two strings of casing, allowing for optimized
recompletions. Operators using Core's ReFRACTM
technology have reported they can now complete twice as many stages
per day compared to traditional recompletions strategies.
Mechanically isolated recompletions are an ideal way for operators
to maintain or increase production without the expense of drilling
and completing a new well.
Also in the first quarter of 2020, Core's diagnostic technology
services were utilized to evaluate a deepwater Gulf of Mexico sand control completion in
Miocene sandstone strata. Core's initial diagnostic testing,
utilizing SpectraStim™, SpectraScan®, and
PackScan® downhole imaging technologies, revealed an
exposed sand control screen, exposed perforations, and a lack of
proppant reserve above the screen. Proper proppant
emplacement in the annulus is required to restrict the migration of
formation fines during production, and to keep mobile sand
particles from cutting the screens, damaging surface facilities,
and filling the wellbore.
During completion planning, operator calculations showed enough
proppant would be present to fill the annulus, with more than 50
feet of additional proppant reserve above the top of the
screen. Core's diagnostic services, which are based on direct
down-hole measurements, showed inadequate proppant levels.
Without Core's diagnostic data and interpretation, the client may
have brought the well on production, only to have the completion
fail due to an influx of formation fines. Core advised the client
to perform a top-off treatment, adding more proppant above the
screen. Following the top-off treatment, Core's
PackScan® imaging technology confirmed adequate proppant
coverage. Core's diagnostic services averted the possibility
of a multi-million dollar remediation, significantly delayed or
lost production, or even the total loss of the well.
Return On Invested Capital
Core Lab's ROIC of 12.3% is the highest of the peer group
compiled and reported by Bloomberg. The Company's Board has
established an internal performance metric of achieving a leading
relative ROIC performance compared with the oilfield service
companies listed as Core's Comp Group by Bloomberg. The
Company and its Board believe that ROIC is a leading long-term
performance metric used by shareholders to determine the relative
investment value of publicly-traded companies. Further, the
Company and its Board believe that shareholders will benefit if
Core consistently performs at high levels of ROIC relative to its
Comp Group. Core Lab's commitment to capital stewardship is driven
in part by the Company's continuing philosophy of having a low
capital-intensive business, averaging less than 4% of Company
revenues.
According to the latest Comp Group financial information from
Bloomberg, Core's ROIC is the highest of any comparably-sized
oilfield service company (greater than $500
million market capitalization). Comp Group companies
listed by Bloomberg include: Halliburton, Schlumberger, National
Oilwell Varco, Baker Hughes, TGS-NOPEC Geophysical Company, Wood
(formerly known as "The Wood Group"), and Apergy, among others.
Core Lab is one of only four of the 24 companies listed in the Comp
Group posting ROIC that exceeded their Weighted Average Cost of
Capital ("WACC"). Core's ratio of ROIC to WACC is the highest
of any company in the Comp Group.
Industry and Core Lab Outlook
On 12 April 2020, the Organization
of the Petroleum Exporting Countries and non-members ("OPEC+")
announced an initial reduction of crude-oil production of 9.7
million barrels of oil per day. As the remainder of 2020
unfolds, the OPEC+ agreement and possible COVID-19-related demand
disruptions abate, the price of crude oil and, consequently,
E&P industry activity, may modestly improve. Core
believes the actions taken by E&P companies during the first
quarter of 2020 in response to the decrease in the crude-oil price
indicate lower overall activity in 2020 versus 2019, particularly
with respect to U.S. land.
Core projects activity declines to continue internationally and
in North America during the second
quarter of 2020. The Company's clients are prioritizing operating
plans for conducting their activities in this unprecedented
environment. International activity is anticipated to
decrease; however, not as sharply as the anticipated decline in
U.S. onshore activity, year-over-year. There continues to be
a high level of uncertainty with regards to the level and timing of
Core's clients' activity. Consequently, Core is not in a
position to provide quantitative quarterly guidance for the
upcoming quarter at this time. From a qualitative
perspective, the Company anticipates that the outlook for project
work and international shipment of products will improve during the
second half of 2020.
Earnings Call Scheduled
The Company has scheduled a conference call to discuss Core's
first quarter 2020 earnings announcement. The call will begin
at 7:30 a.m. CDT / 2:30 p.m. CEST on Thursday, 23 April 2020.
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 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.
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
(amounts in
thousands, except per share data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
%
Variance
|
|
|
|
|
March 31,
2020
|
|
|
December
31, 2019
|
|
|
March 31,
2019
|
|
|
vs.
Q4-19
|
|
|
vs.
Q1-19
|
|
|
REVENUE
|
|
$
|
152,400
|
|
|
$
|
156,778
|
|
|
$
|
169,194
|
|
|
(2.8)%
|
|
|
(9.9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
115,131
|
|
|
|
117,749
|
|
|
|
127,383
|
|
|
(2.2)%
|
|
|
(9.6)%
|
|
|
General and
administrative expense
|
|
|
19,567
|
|
|
|
9,773
|
|
|
|
17,437
|
|
|
100.2%
|
|
|
12.2%
|
|
|
Depreciation and
amortization
|
|
|
5,441
|
|
|
|
5,535
|
|
|
|
5,587
|
|
|
(1.7)%
|
|
|
(2.6)%
|
|
|
Impairments
|
|
|
122,204
|
|
|
|
—
|
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|
Other (income)
expense, net
|
|
|
(970)
|
|
|
|
2,666
|
|
|
|
2,373
|
|
|
NM
|
|
|
NM
|
|
|
Total operating
expenses
|
|
|
261,373
|
|
|
|
135,723
|
|
|
|
152,780
|
|
|
92.6%
|
|
|
71.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
(108,973)
|
|
|
|
21,055
|
|
|
|
16,414
|
|
|
NM
|
|
|
NM
|
|
|
Interest
expense
|
|
|
3,411
|
|
|
|
3,588
|
|
|
|
3,726
|
|
|
(4.9)%
|
|
|
(8.5)%
|
|
|
Income (loss) from
continuing operations before
income tax expense
|
|
|
(112,384)
|
|
|
|
17,467
|
|
|
|
12,688
|
|
|
NM
|
|
|
NM
|
|
|
Income tax expense
(benefit)
|
|
|
(4,046)
|
|
|
|
7,177
|
|
|
|
(27,610)
|
|
|
NM
|
|
|
NM
|
|
|
Income (loss) from
continuing operations
|
|
|
(108,338)
|
|
|
|
10,290
|
|
|
|
40,298
|
|
|
NM
|
|
|
NM
|
|
|
Income (loss) from
discontinued operations, net
of income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
259
|
|
|
NM
|
|
|
NM
|
|
|
Net income
(loss)
|
|
|
(108,338)
|
|
|
|
10,290
|
|
|
|
40,557
|
|
|
NM
|
|
|
NM
|
|
|
Net income (loss)
attributable to non- controlling
interest
|
|
|
83
|
|
|
|
(40)
|
|
|
|
47
|
|
|
NM
|
|
|
76.6%
|
|
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$
|
(108,421)
|
|
|
$
|
10,330
|
|
|
$
|
40,510
|
|
|
NM
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(2.44)
|
|
|
$
|
0.23
|
|
|
$
|
0.90
|
|
|
NM
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Core Laboratories N.V.
|
|
$
|
(2.44)
|
|
|
$
|
0.23
|
|
|
$
|
0.91
|
|
|
NM
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares
outstanding
|
|
|
44,447
|
|
|
|
44,634
|
|
|
|
44,734
|
|
|
(0.4)%
|
|
|
(0.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
(4)
|
%
|
|
|
41
|
%
|
|
|
(218)
|
%
|
|
NM
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
102,702
|
|
|
$
|
102,617
|
|
|
$
|
103,292
|
|
|
0.1%
|
|
|
(0.6)%
|
|
|
Production
Enhancement
|
|
|
49,698
|
|
|
|
54,161
|
|
|
|
65,902
|
|
|
(8.2)%
|
|
|
(24.6)%
|
|
|
Total
|
|
$
|
152,400
|
|
|
$
|
156,778
|
|
|
$
|
169,194
|
|
|
(2.8)%
|
|
|
(9.9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
11,062
|
|
|
$
|
14,248
|
|
|
$
|
6,179
|
|
|
(22.4)%
|
|
|
79.0%
|
|
|
Production
Enhancement
|
|
|
(121,299)
|
|
|
|
6,586
|
|
|
|
9,912
|
|
|
NM
|
|
|
NM
|
|
|
Corporate and
Other
|
|
|
1,264
|
|
|
|
221
|
|
|
|
323
|
|
|
NM
|
|
|
NM
|
|
|
Total
|
|
$
|
(108,973)
|
|
|
$
|
21,055
|
|
|
$
|
16,414
|
|
|
NM
|
|
|
NM
|
|
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
|
|
ASSETS:
|
|
March 31,
2020
|
|
|
December
31, 2019
|
|
|
March 31,
2019
|
|
|
vs.
Q4-19
|
|
|
vs.
Q1-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
13,890
|
|
|
$
|
11,092
|
|
|
$
|
13,206
|
|
|
25.2%
|
|
|
5.2%
|
|
|
Accounts receivable,
net
|
|
|
126,872
|
|
|
|
131,579
|
|
|
|
132,859
|
|
|
(3.6)%
|
|
|
(4.5)%
|
|
|
Inventory
|
|
|
52,263
|
|
|
|
50,163
|
|
|
|
50,147
|
|
|
4.2%
|
|
|
4.2%
|
|
|
Other current
assets
|
|
|
26,682
|
|
|
|
28,403
|
|
|
|
40,211
|
|
|
(6.1)%
|
|
|
(33.6)%
|
|
|
Total Current
Assets
|
|
|
219,707
|
|
|
|
221,237
|
|
|
|
236,423
|
|
|
(0.7)%
|
|
|
(7.1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
123,112
|
|
|
|
123,506
|
|
|
|
124,758
|
|
|
(0.3)%
|
|
|
(1.3)%
|
|
|
Right-of-use
assets
|
|
|
74,943
|
|
|
|
75,697
|
|
|
|
77,537
|
|
|
(1.0)%
|
|
|
(3.3)%
|
|
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
228,847
|
|
|
|
354,233
|
|
|
|
353,042
|
|
|
(35.4)%
|
|
|
(35.2)%
|
|
|
Total
assets
|
|
$
|
646,609
|
|
|
$
|
774,673
|
|
|
$
|
791,760
|
|
|
(16.5)%
|
|
|
(18.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
37,054
|
|
|
$
|
35,611
|
|
|
$
|
44,467
|
|
|
4.1%
|
|
|
(16.7)%
|
|
|
Short-term operating
lease obligations
|
|
|
12,583
|
|
|
|
11,841
|
|
|
|
13,003
|
|
|
6.3%
|
|
|
(3.2)%
|
|
|
Other current
liabilities
|
|
|
58,810
|
|
|
|
64,142
|
|
|
|
71,145
|
|
|
(8.3)%
|
|
|
(17.3)%
|
|
|
Total current
liabilities
|
|
|
108,447
|
|
|
|
111,594
|
|
|
|
128,615
|
|
|
(2.8)%
|
|
|
(15.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
302,420
|
|
|
|
305,283
|
|
|
|
294,896
|
|
|
(0.9)%
|
|
|
2.6%
|
|
|
Long-term operating
lease obligations
|
|
|
60,162
|
|
|
|
64,660
|
|
|
|
64,090
|
|
|
(7.0)%
|
|
|
(6.1)%
|
|
|
Other long-term
liabilities
|
|
|
105,506
|
|
|
|
110,996
|
|
|
|
116,806
|
|
|
(4.9)%
|
|
|
(9.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
70,074
|
|
|
|
182,140
|
|
|
|
187,353
|
|
|
(61.5)%
|
|
|
(62.6)%
|
|
|
Total liabilities and
equity
|
|
$
|
646,609
|
|
|
$
|
774,673
|
|
|
$
|
791,760
|
|
|
(16.5)%
|
|
|
(18.3)%
|
|
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
|
March 31, 2020
|
|
|
December 31,
2019
|
|
|
March 31, 2019
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
$
|
(108,338)
|
|
|
$
|
10,290
|
|
|
$
|
40,298
|
|
|
Income (loss) from
discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
259
|
|
|
Net Income
(loss)
|
|
$
|
(108,338)
|
|
|
$
|
10,290
|
|
|
$
|
40,557
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
10,530
|
|
|
|
3,228
|
|
|
|
11,096
|
|
|
Depreciation and
amortization
|
|
|
5,441
|
|
|
|
5,536
|
|
|
|
5,587
|
|
|
Deferred income
tax
|
|
|
(7,374)
|
|
|
|
2,124
|
|
|
|
—
|
|
|
Impairments
|
|
|
122,204
|
|
|
|
—
|
|
|
|
—
|
|
|
Accounts
receivable
|
|
|
4,784
|
|
|
|
5,733
|
|
|
|
(3,936)
|
|
|
Inventory
|
|
|
(2,285)
|
|
|
|
3,310
|
|
|
|
(4,407)
|
|
|
Accounts
payable
|
|
|
132
|
|
|
|
(5,519)
|
|
|
|
1,346
|
|
|
Other adjustments to
net income (loss)
|
|
|
(3,069)
|
|
|
|
(3,400)
|
|
|
|
(25,087)
|
|
|
Net cash provided
by operating activities
|
|
$
|
22,025
|
|
|
$
|
21,302
|
|
|
$
|
25,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(3,340)
|
|
|
$
|
(4,732)
|
|
|
$
|
(5,183)
|
|
|
Other investing
activities
|
|
|
(544)
|
|
|
|
(402)
|
|
|
|
(22)
|
|
|
Net cash provided
by (used in) investing activities
|
|
$
|
(3,884)
|
|
|
$
|
(5,134)
|
|
|
$
|
(5,205)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of debt
borrowings
|
|
$
|
(20,000)
|
|
|
$
|
(27,000)
|
|
|
$
|
(32,000)
|
|
|
Proceeds from debt
borrowings
|
|
|
17,000
|
|
|
|
35,000
|
|
|
|
37,000
|
|
|
Dividends
paid
|
|
|
(11,111)
|
|
|
|
(24,406)
|
|
|
|
(24,374)
|
|
|
Repurchase of treasury
shares
|
|
|
(1,238)
|
|
|
|
(1,806)
|
|
|
|
(487)
|
|
|
Other financing
activities
|
|
|
6
|
|
|
|
8
|
|
|
|
—
|
|
|
Net cash provided
by (used in) financing activities
|
|
$
|
(15,343)
|
|
|
$
|
(18,204)
|
|
|
$
|
(19,861)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
|
2,798
|
|
|
|
(2,036)
|
|
|
|
90
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
11,092
|
|
|
|
13,128
|
|
|
|
13,116
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
13,890
|
|
|
$
|
11,092
|
|
|
$
|
13,206
|
|
|
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 use certain non-GAAP measures that exclude these Items;
and we feel 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 statement
and filings with the Securities and Exchange Commission.
Reconciliation of
Operating Income, Income from Continuing Operations and Earnings
Per Diluted Share from Continuing Operations
|
(amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
Operating Income
(loss) from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
March 31, 2020
|
|
|
December 31,
2019
|
|
|
March 31, 2019
|
|
GAAP
reported
|
|
$
|
(108,973)
|
|
|
$
|
21,055
|
|
|
$
|
16,414
|
|
Stock compensation
1
|
|
|
6,750
|
|
|
|
—
|
|
|
|
7,203
|
|
Employment related
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
3,200
|
|
Cost reduction and
other charges
|
|
|
1,155
|
|
|
|
2,578
|
|
|
|
—
|
|
Impairments
2
|
|
|
122,204
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange
losses (gains)
|
|
|
(576)
|
|
|
|
1,359
|
|
|
|
37
|
|
Excluding specific
items
|
|
$
|
20,560
|
|
|
$
|
24,992
|
|
|
$
|
26,854
|
|
|
|
|
|
|
|
Income (loss) from
Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
March 31, 2020
|
|
|
December 31,
2019
|
|
|
March 31, 2019
|
|
GAAP
reported
|
|
$
|
(108,338)
|
|
|
$
|
10,290
|
|
|
$
|
40,298
|
|
Stock compensation
1
|
|
|
6,750
|
|
|
|
—
|
|
|
|
7,203
|
|
Employment related
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
2,528
|
|
Cost reduction and
other charges
|
|
|
924
|
|
|
|
2,062
|
|
|
|
—
|
|
Impairments
2
|
|
|
113,181
|
|
|
|
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate 3
|
|
|
1,663
|
|
|
|
3,684
|
|
|
|
(30,402)
|
|
Foreign exchange
losses (gains)
|
|
|
(461)
|
|
|
|
1,087
|
|
|
|
31
|
|
Excluding specific
items
|
|
$
|
13,719
|
|
|
$
|
17,123
|
|
|
$
|
19,658
|
|
|
|
|
|
|
|
Earnings Per
Diluted Share from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
March 31, 2020
|
|
|
December 31,
2019
|
|
|
March 31, 2019
|
|
GAAP
reported
|
|
$
|
(2.44)
|
|
|
$
|
0.23
|
|
|
$
|
0.90
|
|
Stock compensation
1
|
|
|
0.15
|
|
|
|
—
|
|
|
|
0.16
|
|
Impact on assuming
dilution
|
|
|
0.02
|
|
|
|
—
|
|
|
|
—
|
|
Employment related
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
0.06
|
|
Cost reduction and
other charges
|
|
|
0.02
|
|
|
|
0.05
|
|
|
|
—
|
|
Impairments
2
|
|
|
2.53
|
|
|
|
—
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate 3
|
|
|
0.04
|
|
|
|
0.08
|
|
|
|
(0.68)
|
|
Foreign exchange
losses
|
|
|
(0.01)
|
|
|
|
0.02
|
|
|
|
—
|
|
Excluding specific
items
|
|
$
|
0.31
|
|
|
$
|
0.38
|
|
|
$
|
0.44
|
|
|
|
(1)
|
Stock compensation
expense recognized pursuant to FASB ASC 718 "Stock Compensation"
associated with executives reaching eligible retirement age, which is
nondeductible in the U.S.
|
(2)
|
2020 Quarter 1,
includes goodwill impairment charge of $114 million, which is
partially deductible for tax of approximately
$9.0
million.
|
(3)
|
2020 Quarter 1,
2019 Quarter 4 and 2019 Quarter 1 include adjustments to reflect
tax expense at a normalized rate of 20%, 20%
and 15% respectively. 2020 Quarter 1
includes impairment charge and stock compensation expense which are
partially deductible and
nondeductible in the U.S. 2019 Quarter 1 includes a tax benefit
resulting from a corporate restructuring, net of withholding
taxes on unremitted
earnings from subsidiaries, stock compensation expense which is
nondeductible in the U.S.
|
Segment
Information
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
Operating Income
from Continuing Operations
|
|
|
|
Three Months Ended
March 31, 2020
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
11,062
|
|
|
$
|
(121,299)
|
|
|
$
|
1,264
|
|
Foreign exchange
losses
|
|
|
(718)
|
|
|
|
163
|
|
|
|
(21)
|
|
Stock
compensation
|
|
|
4,426
|
|
|
|
2,324
|
|
|
|
—
|
|
Cost reduction and
other charges
|
|
|
796
|
|
|
|
358
|
|
|
|
1
|
|
Impairment
|
|
|
—
|
|
|
|
122,204
|
|
|
|
—
|
|
Excluding specific
items
|
|
$
|
15,566
|
|
|
$
|
3,750
|
|
|
$
|
1,244
|
|
Return on Invested Capital
Return on Invested Capital ("ROIC") is based on Bloomberg's
calculation on the trailing four quarters from the most recently
reported quarter and the balance sheet of the most recent reported
quarter, and is presented based on our belief that this non-GAAP
measure is useful information to investors and management when
comparing our profitability and the efficiency with which we have
employed capital over time relative to other companies. ROIC is not
a measure of financial performance under GAAP and should not be
considered as an alternative to net income.
ROIC of 12.3% is defined by Bloomberg as Net Operating Profit
("NOP") of $97 million less Cash
Operating Tax ("COT") of $30 million
divided by Total Invested Capital ("TIC") of $539 million, where NOP is defined as GAAP net
income before minority interest plus the sum of income tax expense,
interest expense, and pension expense less pension service cost and
COT is defined as income tax expense plus the sum of the change in
net deferred taxes, and the tax effect on interest expense and TIC
is defined as GAAP stockholder's equity plus the sum of net
long-term debt, allowance for doubtful accounts, net balance of
deferred taxes, income tax payable, and other charges.
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. 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
|
|
(amounts in
thousands)
|
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March 31, 2020
|
|
|
Net cash provided by
operating activities
|
|
$
|
22,025
|
|
|
Capital
expenditures
|
|
|
(3,340)
|
|
|
Free cash
flow
|
|
$
|
18,685
|
|
|
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SOURCE Core Laboratories N.V.