AMSTERDAM, Oct. 21, 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 third quarter 2020 revenue of $105,400,000. Core's operating income was
$11,300,000, with earnings per
diluted share ("EPS") of $0.07, all
in accordance with U.S. generally accepted accounting principles
("GAAP"). Operating income, ex-items, a non-GAAP financial
measure, was $12,300,000, yielding
operating margins of 12% and EPS, ex-items, of $0.16. A full reconciliation of non-GAAP
financial measures is included in the attached financial
tables.
The sequential decline in revenue was attributable to continued
global industry disruptions associated with COVID-19, as well as
four tropical weather systems impacting the Gulf of Mexico during the third quarter of
2020. Geographically, the sequential revenue decline was
primarily associated with a decrease in both international product
sales, as well as lower activity on international projects.
Improved revenue from the U.S. land market was offset by Gulf Coast
storm-related disruptions.
Previously announced Cost Reduction Plans (Phase 1 and Phase 2),
totaling $61,000,000 of annualized
cost savings, have now been fully implemented and were completed in
the third quarter of 2020, in line with Core's previously stated
expectations. Core's management will continue to evaluate
further options to align the Company's cost structure with
anticipated client activity as necessary.
Core's CEO, Larry Bruno stated,
"Core's third quarter results display both the durability and
adaptability of the business model, along with the benefit of our
cost reduction plans, as Core continued to generate free cash flow
despite the aforementioned industry disruptions. Core's
global exposure, talented and dedicated staff, along with our
expanding line of proprietary and patented products and services,
have us well positioned to navigate today's market and capitalize
on future opportunities".
Liquidity, Free Cash Flow, Private Placement Notes and
Dividend
During the third quarter of 2020, Core continued to generate
free cash flow ("FCF"), with cash from operations of $20,700,000 and incurred capital expenditures of
$2,200,000, yielding FCF of
$18,500,000. The third quarter
of 2020 marks the 76th
consecutive quarter that the Company generated positive FCF,
despite challenging market and industry conditions. Free cash
was almost entirely focused towards reducing the Company's debt,
with net debt reduced by $16,200,000
during the third quarter of 2020. Core will continue applying
its excess free cash flow towards debt reduction for the
foreseeable future.
As previously announced on 16 October
2020, Core Lab entered into an agreement to issue
$60,000,000 of new fixed-rate
long-term senior notes ("Notes") through a private placement to
extend the maturity for a portion of the Company's long-term debt.
The Note Purchase Agreement was signed on 16 October 2020, with funding to occur
12 January 2021.
The following table summarizes the terms of the new Notes:
Instrument
|
|
Face
Value
($
Millions)
|
|
|
Term
|
|
Interest
Coupon
|
|
|
Maturity
Date
|
U.S. Private
Placement Notes
|
|
$
|
45.0
|
|
|
5-Year
|
|
4.09%
|
|
|
12 January
2026
|
U.S. Private
Placement Notes
|
|
|
15.0
|
|
|
7-Year
|
|
4.38%
|
|
|
12 January
2028
|
TOTAL
|
|
$
|
60.0
|
|
|
|
|
|
|
|
|
|
The net proceeds from the new Notes are intended to be used
exclusively to reduce outstanding debt on the Company's revolving
credit facility ("Credit Facility"), thus increasing the available
borrowing capacity by $60,000,000.
The Company's Credit Facility has an aggregate borrowing capacity
of $225,000,000, of which
$116,000,000 was outstanding as of 30
September 2020. The Company's CFO, Chris Hill, had the following statement, "This
transaction accomplishes two goals as we manage the Company's
corporate debt structure through the disruptions associated with
the COVID-19 pandemic. First, it provides additional
liquidity under the Company's Credit Facility to address the
outstanding $75 million senior notes
maturing 30 September 2021, and
second, issuing $60 million in new
Notes and retiring $75 million of
existing notes next year is an additional step toward our long-term
strategy of reducing debt and Core Lab's debt leverage ratio". The
new Notes include certain financial covenants that align with the
financial covenants under the Company's Credit Facility, limiting
total Company net debt to a maximum leverage ratio and requiring a
minimum interest coverage ratio.
![This graph summarizes the maximum leverage ratio permitted over the relevant period. This graph summarizes the maximum leverage ratio permitted over the relevant period.](https://mma.prnewswire.com/media/1317672/Core_Laboratories__graph.jpg)
Quarter Ending 2020 2021 Jun. 30 Sept.
30 Dec. 31 Mar. 31 Jun. 30
Sept. 30 Dec.
31 Maximum Leverage Ratio 3.00 2.75 2.50 2.00 1.50 1.00 Core
Lab's leverage ratio of 2.21 at 30 June
2020
As of 30 September 2020, the
Company's leverage ratio was 2.49 to 1, with $96,000,000 of excess capacity under the Credit
Facility. As stated earlier, the proceeds from the new Notes
on 12 January 2021 are intended to
reduce outstanding debt on the Company's Credit Facility and
provide an additional $60,000,000 of
borrowing capacity and liquidity. The Company anticipates it
will continue to generate positive cash flow and reduce net debt,
while maintaining ample liquidity.
On 17 July 2020, the Board
announced a quarterly cash dividend of $0.01 per share of common stock, which was paid
on 10 August 2020 to shareholders of
record on 27 July 2020. Dutch withholding tax was deducted
from the dividend at a rate of 15%.
On 15 October 2020, the Board
announced a quarterly cash dividend of $0.01 per share of common stock, payable on
17 November 2020 to shareholders of
record on 26 October 2020.
Dutch withholding tax will be deducted from the dividend at a
rate of 15%.
Reservoir Description
Reservoir Description revenue in the third quarter of 2020 was
$80,100,000, down 9% sequentially.
Operating income for the third quarter of 2020 on a GAAP basis
was $11,000,000, while operating income, ex-items, was
$11,700,000, yielding operating
margins, ex-items, of 15%, down slightly more than 200 BPS
sequentially. Revenue, operating income, and margins were all
affected by both continued COVID-19 project disruptions and weather
events in the Gulf of Mexico
during the third quarter of 2020. Implemented cost controls
in the segment helped mitigate the impact to operating margins.
Core's clients continue to be heavily focused on digital
transformation technologies to pursue operational excellence.
Core Lab has been at the forefront of this movement for more than
two decades. Core's extensive, proprietary databases and
analog technologies, coupled with artificial intelligence ("AI")
and machine learning, help the Company's clients improve
efficiencies and lower operating costs throughout the upstream
value chain. In the third quarter of 2020, Core Lab's Digital
Innovation Group worked collaboratively with multiple international
and national oil companies on projects that utilize several of
Core's proprietary digital technologies and services. Core's
proprietary Advanced Rock Typing technology combines Core's vast,
comprehensive database of physical measurements, and Rock
CatalogsTM with its proprietary image acquisition
technology and the latest in AI image recognition. These
technologies provide clients with analog data sets in situations
where acquisition of new conventional core may not be
possible. High-resolution images of wellbore cuttings and
sidewall cores are quickly and efficiently matched with analogs
from Core's proprietary database of samples from around the
world. Physically measured data sets from the matching
analogs are delivered to Core's clients in time to make appraisal
and development decisions.
During the third quarter of 2020, Core Laboratories, under the
direction of The CarbonNet Project ("CarbonNet") engaged in
laboratory analysis of 300 feet of conventional core from the
Gular-1 appraisal well in the offshore Gippsland Basin, in the Bass
Strait, off the southeast coast of Australia. CarbonNet is funded by the
Victorian and Commonwealth governments of Australia. In a
recent press release the CarbonNet team mentioned, "The CarbonNet
Project is advancing the science and viability for establishing a
commercial-scale carbon capture and storage ("CCS") network. The
network would bring together multiple carbon dioxide
("CO2") capture projects in Victoria's Latrobe Valley, transporting
CO2 via a shared pipeline and injecting it into deep,
underground, offshore storage sites in the Bass Strait. CCS
is being investigated as part of a suite of solutions with the
potential to mitigate greenhouse gas emissions." The cores are
progressing through physical laboratory measurements, in an
iterative analytical program. The data generated by Core Lab
will provide insight into seal capacity, storage capacity,
geomechanical properties and the pore system properties of the
rock. Core Laboratories is pleased to be playing a role in
evaluating this important CCS project, which is among the most
promising CO2 storage opportunities in the
region.
Production Enhancement
Production Enhancement operations, which are focused on complex
completions in unconventional, tight-oil reservoirs in the U.S., as
well as conventional offshore projects across the globe, posted
third quarter 2020 revenue of $25,300,000, declining 7% sequentially. The
revenue decline was primarily associated with decreased
international product shipments due to COVID-19 disruptions and
weather events in the Gulf of Mexico. More positively, U.S.
land revenue increased 23% sequentially, partially mitigating the
sequential decline in international sales, and correlating
favorably with the improved U.S. land well completion activity
during the quarter. Operating loss on a GAAP basis was
$300,000, and approximately
break-even, ex-items. Although revenue sequentially
declined in the third quarter as compared to the second quarter of
2020, the operating loss was minimized, and improved significantly,
as a result of cost-control measures completed during the second
and third quarters of 2020.
During the third quarter of 2020, Core Lab introduced its next
generation, best-in-class, HERO®PerFRAC energetic
technology, which is now available in combination with the new,
patent pending Oriented GoGun™. This new technology provides Core's
clients with a technological solution for achieving: 1) extreme
limited entry perforating capability, 2) precisely aligned
perforations, and 3) minimized connections and completion string
length. Casing erosion around perforations can occur when
stimulating unconventional reservoirs. Larger perforating
holes preferentially increase in size and take more frac fluid,
robbing stimulation from smaller perforating holes, which results
in inconsistent breakdown of the formation. The consistent-sized
holes generated by the latest HERO®PerFRAC charges
reduce this problem. Core Lab partnered with major U.S.
operators to design custom, consistent-hole-size charges that can
be aligned in a specific orientation in order to achieve uniform
breakdown across each stage. Core Lab's Production
Enhancement development team designed a patent pending method to
orient the GoGun™, with both very high accuracy and
wellsite efficiency. By eliminating the need for reusable
orientation subassemblies, the Oriented
GoGun™ minimizes the number of connections and
saves time at the wellsite by not having to recapture and redress
the orienting subs.
Also during the third quarter of 2020, Core Lab's Production
Enhancement engineers developed and introduced a new application
for its proprietary SpectraChem® chemical frac water
tracer to determine whether horizontal wells are unobstructed and
flowing through the entire length of the lateral. Leveraged
by operators in the Permian, Eagle Ford, and Haynesville, this
technology can identify wellbore obstructions, often caused by
inter-well communication or dissolvable plug remnants. By
applying this technology, Core's clients can identify and remediate
well obstructions that can negatively impact well performance,
reserve calculations and reserve-based lending.
Return On Invested Capital
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 FCF, a non-GAAP
financial measure defined as cash from operations less capital
expenditures, 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.
Events associated with the COVID-19 pandemic have caused
significant disruptions in global markets and economies, with
adverse effects throughout the energy sector. These adverse effects
have triggered significant asset impairments for goodwill,
intangible assets, inventory and other fixed assets, which further
distort underlying financial performance and performance metrics,
such as ROIC.
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.
In the first half of 2020, Core Lab recorded $133 million in non-cash charges associated with
the impairments and inventory write-down. Excluding these
non-cash asset impairments and write-down, Bloomberg's calculation
of Core's ROIC was 4.3%. Under the current circumstances, and
considering the magnitude of the asset and goodwill impairment
charges incurred across the energy industry, it is difficult to
appropriately determine the underlying relative performance across
the Bloomberg Comp Group as compared with Core Lab.
Industry and Core Lab Outlook
Conversations with Core's clients broadly reaffirm the Company's
expectation that international projects already underway will
continue; however, the pace and breadth of recovery from COVID-19
restrictions remains uncertain, making it difficult to forecast
both the level and timing of such activity. Core Lab projects
international activity in the fourth quarter of 2020 may slightly
to modestly improve sequentially for both operating segments, if
COVID-19 travel restrictions and supply chain disruptions begin to
ease.
Within Reservoir Description, Core expects reservoir fluid
analysis, which accounts for more than 65% of the segment's
revenue, to be more resilient as this work is diversified across
the life of reservoir and less reliant on drilling and completion
of new wells.
U.S. land activity improved from the lows experienced during the
middle of the second quarter as the third quarter of 2020
unfolded. This trend of gradual improvement in U.S. land
activity is expected to continue into the fourth quarter of
2020. As a result, Core Lab projects overall fourth quarter
2020 U.S. land activity to modestly improve sequentially, and
expects Production Enhancement to continue to track or outperform
activity levels in U.S. land completions.
Collectively, these trends point toward slightly to modestly
improved sequential operational performance for Core Lab, barring
any COVID-19-related retrenchments in client activity.
Additionally, Core expects to generate positive FCF in the fourth
quarter of 2020 as Core's aggressive adjustments to its cost
structure further align with client activity, with continued focus
on free cash generation and strategic debt reduction.
Earnings Call Scheduled
The Company has scheduled a conference call to discuss Core's
third quarter 2020 earnings announcement. The call will begin at
7:30 a.m. CDT / 2:30 p.m. CEST on Thursday, 22 October 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, public
health crises, such as the COVID-19 pandemic, 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
|
(amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
%
Variance
|
|
|
|
|
September 30,
2020
|
|
|
June 30,
2020
|
|
|
September 30,
2019
|
|
|
vs.
Q2-20
|
|
|
vs.
Q3-19
|
|
|
REVENUE
|
|
$
|
105,382
|
|
|
$
|
115,736
|
|
|
$
|
173,200
|
|
|
(8.9)%
|
|
|
(39.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
81,038
|
|
|
|
90,680
|
|
|
|
125,996
|
|
|
(10.6)%
|
|
|
(35.7)%
|
|
|
General and
administrative expense
|
|
|
8,937
|
|
|
|
9,221
|
|
|
|
11,012
|
|
|
(3.1)%
|
|
|
(18.8)%
|
|
|
Depreciation and
amortization
|
|
|
5,164
|
|
|
|
5,425
|
|
|
|
5,697
|
|
|
(4.8)%
|
|
|
(9.4)%
|
|
|
Inventory
write-down
|
|
|
—
|
|
|
|
9,932
|
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|
Other (income)
expense, net
|
|
|
(1,088)
|
|
|
|
3,045
|
|
|
|
(712)
|
|
|
NM
|
|
|
NM
|
|
|
Total operating
expenses
|
|
|
94,051
|
|
|
|
118,303
|
|
|
|
141,993
|
|
|
(20.5)%
|
|
|
(33.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
11,331
|
|
|
|
(2,567)
|
|
|
|
31,207
|
|
|
NM
|
|
|
(63.7)%
|
|
|
Interest
expense
|
|
|
4,672
|
|
|
|
3,369
|
|
|
|
3,662
|
|
|
38.7%
|
|
|
27.6%
|
|
|
Income (loss) from
continuing operations
before
income tax expense
|
|
|
6,659
|
|
|
|
(5,936)
|
|
|
|
27,545
|
|
|
NM
|
|
|
(75.8)%
|
|
|
Income tax expense
(benefit)
|
|
|
3,663
|
|
|
|
(261)
|
|
|
|
3,335
|
|
|
NM
|
|
|
9.8%
|
|
|
Income (loss) from
continuing operations
|
|
|
2,996
|
|
|
|
(5,675)
|
|
|
|
24,210
|
|
|
NM
|
|
|
(87.6)%
|
|
|
Income (loss) from
discontinued
operations, net of income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
(397)
|
|
|
NM
|
|
|
NM
|
|
|
Net income
(loss)
|
|
|
2,996
|
|
|
|
(5,675)
|
|
|
|
23,813
|
|
|
NM
|
|
|
(87.4)%
|
|
|
Net income (loss)
attributable to non-
controlling interest
|
|
|
33
|
|
|
|
41
|
|
|
|
84
|
|
|
(19.5)%
|
|
|
(60.7)%
|
|
|
Net income (loss)
attributable to Core
Laboratories N.V.
|
|
$
|
2,963
|
|
|
$
|
(5,716)
|
|
|
$
|
23,729
|
|
|
NM
|
|
|
(87.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (loss
per share) from continuing operations
|
|
$
|
0.07
|
|
|
$
|
(0.13)
|
|
|
$
|
0.54
|
|
|
NM
|
|
|
(87.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (loss
per share) attributable to Core
Laboratories N.V.
|
|
$
|
0.07
|
|
|
$
|
(0.13)
|
|
|
$
|
0.53
|
|
|
NM
|
|
|
(86.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common
shares
outstanding
|
|
|
44,899
|
|
|
|
44,470
|
|
|
|
44,716
|
|
|
1.0%
|
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
55
|
%
|
|
|
4
|
%
|
|
|
12
|
%
|
|
NM
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
80,060
|
|
|
$
|
88,442
|
|
|
$
|
109,339
|
|
|
(9.5)%
|
|
|
(26.8)%
|
|
|
Production
Enhancement
|
|
|
25,322
|
|
|
|
27,294
|
|
|
|
63,861
|
|
|
(7.2)%
|
|
|
(60.3)%
|
|
|
Total
|
|
$
|
105,382
|
|
|
$
|
115,736
|
|
|
$
|
173,200
|
|
|
(8.9)%
|
|
|
(39.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
11,022
|
|
|
$
|
13,534
|
|
|
$
|
18,835
|
|
|
(18.6)%
|
|
|
(41.5)%
|
|
|
Production
Enhancement
|
|
|
(321)
|
|
|
|
(16,324)
|
|
|
|
11,456
|
|
|
NM
|
|
|
NM
|
|
|
Corporate and
Other
|
|
|
630
|
|
|
|
223
|
|
|
|
916
|
|
|
NM
|
|
|
NM
|
|
|
Total
|
|
$
|
11,331
|
|
|
$
|
(2,567)
|
|
|
$
|
31,207
|
|
|
NM
|
|
|
(63.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
%
Variance
|
|
|
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
|
|
|
|
|
REVENUE
|
|
$
|
373,518
|
|
|
$
|
511,432
|
|
|
(27.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
286,849
|
|
|
|
377,830
|
|
|
(24.1)%
|
|
|
General and
administrative expense
|
|
|
37,725
|
|
|
|
38,250
|
|
|
(1.4)%
|
|
|
Depreciation and
amortization
|
|
|
16,030
|
|
|
|
17,070
|
|
|
(6.1)%
|
|
|
Inventory write-down
and impairments
|
|
|
132,136
|
|
|
|
—
|
|
|
NM
|
|
|
Other (income)
expense, net
|
|
|
987
|
|
|
|
2,653
|
|
|
(62.8)%
|
|
|
Total operating
expenses
|
|
|
473,727
|
|
|
|
435,803
|
|
|
8.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
(100,209)
|
|
|
|
75,629
|
|
|
NM
|
|
|
Interest
expense
|
|
|
11,452
|
|
|
|
11,102
|
|
|
3.2%
|
|
|
Income (loss) from
continuing operations before income tax expense
|
|
|
(111,661)
|
|
|
|
64,527
|
|
|
NM
|
|
|
Income tax expense
(benefit)
|
|
|
(644)
|
|
|
|
(19,467)
|
|
|
NM
|
|
|
Income (loss) from
continuing operations
|
|
|
(111,017)
|
|
|
|
83,994
|
|
|
NM
|
|
|
Income (loss) from
discontinued operations, net of income taxes
|
|
|
—
|
|
|
|
7,833
|
|
|
NM
|
|
|
Net income
(loss)
|
|
|
(111,017)
|
|
|
|
91,827
|
|
|
NM
|
|
|
Net income (loss)
attributable to non-controlling interest
|
|
|
157
|
|
|
|
174
|
|
|
(9.8)%
|
|
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$
|
(111,174)
|
|
|
$
|
91,653
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (loss
per share) from continuing operations
|
|
$
|
(2.50)
|
|
|
$
|
1.87
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (loss
per share) attributable to Core Laboratories N.V.
|
|
$
|
(2.50)
|
|
|
$
|
2.04
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares outstanding
|
|
|
44,470
|
|
|
|
44,854
|
|
|
(0.9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
1
|
%
|
|
|
(30)
|
%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
271,203
|
|
|
$
|
318,280
|
|
|
(14.8)%
|
|
|
Production
Enhancement
|
|
|
102,315
|
|
|
|
193,152
|
|
|
(47.0)%
|
|
|
Total
|
|
$
|
373,518
|
|
|
$
|
511,432
|
|
|
(27.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
35,618
|
|
|
$
|
40,892
|
|
|
(12.9)%
|
|
|
Production
Enhancement
|
|
|
(137,944)
|
|
|
|
31,792
|
|
|
NM
|
|
|
Corporate and
Other
|
|
|
2,117
|
|
|
|
2,945
|
|
|
NM
|
|
|
Total
|
|
$
|
(100,209)
|
|
|
$
|
75,629
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
|
|
ASSETS:
|
|
September 30,
2020
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
vs.
Q2-20
|
|
|
vs.
Q4-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
15,146
|
|
|
$
|
20,958
|
|
|
$
|
11,092
|
|
|
(27.7)%
|
|
|
36.5%
|
|
|
Accounts receivable,
net
|
|
|
85,366
|
|
|
|
101,464
|
|
|
|
131,579
|
|
|
(15.9)%
|
|
|
(35.1)%
|
|
|
Inventory
|
|
|
42,908
|
|
|
|
41,528
|
|
|
|
50,163
|
|
|
3.3%
|
|
|
(14.5)%
|
|
|
Other current
assets
|
|
|
26,469
|
|
|
|
27,443
|
|
|
|
28,403
|
|
|
(3.5)%
|
|
|
(6.8)%
|
|
|
Total Current
Assets
|
|
|
169,889
|
|
|
|
191,393
|
|
|
|
221,237
|
|
|
(11.2)%
|
|
|
(23.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
117,123
|
|
|
|
119,866
|
|
|
|
123,506
|
|
|
(2.3)%
|
|
|
(5.2)%
|
|
|
Right-of-use
assets
|
|
|
69,228
|
|
|
|
70,147
|
|
|
|
75,697
|
|
|
(1.3)%
|
|
|
(8.5)%
|
|
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
234,574
|
|
|
|
233,035
|
|
|
|
354,233
|
|
|
0.7%
|
|
|
(33.8)%
|
|
|
Total
assets
|
|
$
|
590,814
|
|
|
$
|
614,441
|
|
|
$
|
774,673
|
|
|
(3.8)%
|
|
|
(23.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
22,806
|
|
|
$
|
23,693
|
|
|
$
|
35,611
|
|
|
(3.7)%
|
|
|
(36.0)%
|
|
|
Short-term operating
lease obligations
|
|
|
11,807
|
|
|
|
12,028
|
|
|
|
11,841
|
|
|
(1.8)%
|
|
|
(0.3)%
|
|
|
Current maturities of
long-term debt
|
|
|
75,000
|
|
|
|
—
|
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|
Other current
liabilities
|
|
|
62,523
|
|
|
|
63,563
|
|
|
|
64,142
|
|
|
(1.6)%
|
|
|
(2.5)%
|
|
|
Total current
liabilities
|
|
|
172,136
|
|
|
|
99,284
|
|
|
|
111,594
|
|
|
73.4%
|
|
|
54.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
189,566
|
|
|
|
286,610
|
|
|
|
305,283
|
|
|
(33.9)%
|
|
|
(37.9)%
|
|
|
Long-term operating
lease obligations
|
|
|
56,649
|
|
|
|
57,449
|
|
|
|
64,660
|
|
|
(1.4)%
|
|
|
(12.4)%
|
|
|
Other long-term
liabilities
|
|
|
100,754
|
|
|
|
104,951
|
|
|
|
110,996
|
|
|
(4.0)%
|
|
|
(9.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
71,709
|
|
|
|
66,147
|
|
|
|
182,140
|
|
|
8.4%
|
|
|
(60.6)%
|
|
|
Total liabilities and
equity
|
|
$
|
590,814
|
|
|
$
|
614,441
|
|
|
$
|
774,673
|
|
|
(3.8)%
|
|
|
(23.7)%
|
|
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
|
September 30,
2020
|
|
|
June 30,
2020
|
|
|
September 30,
2019
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
$
|
2,996
|
|
|
$
|
(5,675)
|
|
|
$
|
24,210
|
|
|
Income (loss) from
discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(397)
|
|
|
Net Income
(loss)
|
|
$
|
2,996
|
|
|
$
|
(5,675)
|
|
|
$
|
23,813
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
2,859
|
|
|
|
2,865
|
|
|
|
3,311
|
|
|
Depreciation and
amortization
|
|
|
5,164
|
|
|
|
5,425
|
|
|
|
5,697
|
|
|
Deferred income
tax
|
|
|
(5,460)
|
|
|
|
(180)
|
|
|
|
(3,353)
|
|
|
Inventory
write-down
|
|
|
—
|
|
|
|
9,932
|
|
|
|
—
|
|
|
Adjustment to gain on
sale of discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
397
|
|
|
Accounts
receivable
|
|
|
16,157
|
|
|
|
24,288
|
|
|
|
(2,603)
|
|
|
Inventory
|
|
|
(1,582)
|
|
|
|
987
|
|
|
|
(4,287)
|
|
|
Accounts
payable
|
|
|
(1,051)
|
|
|
|
(12,343)
|
|
|
|
815
|
|
|
Other adjustments to
net income (loss)
|
|
|
1,610
|
|
|
|
1,697
|
|
|
|
2,199
|
|
|
Net cash provided
by operating activities
|
|
$
|
20,693
|
|
|
$
|
26,996
|
|
|
$
|
25,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(2,172)
|
|
|
$
|
(3,066)
|
|
|
$
|
(5,307)
|
|
|
Proceeds from sale of
discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,853)
|
|
|
Other investing
activities
|
|
|
(202)
|
|
|
|
(206)
|
|
|
|
(437)
|
|
|
Net cash used in
investing activities
|
|
$
|
(2,374)
|
|
|
$
|
(3,272)
|
|
|
$
|
(7,597)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of debt
borrowings
|
|
$
|
(25,000)
|
|
|
$
|
(26,000)
|
|
|
$
|
(28,000)
|
|
|
Proceeds from debt
borrowings
|
|
|
3,000
|
|
|
|
10,000
|
|
|
|
35,000
|
|
|
Dividends
paid
|
|
|
(445)
|
|
|
|
(445)
|
|
|
|
(24,399)
|
|
|
Repurchase of treasury
shares
|
|
|
(157)
|
|
|
|
(198)
|
|
|
|
(411)
|
|
|
Other financing
activities
|
|
|
(1,529)
|
|
|
|
(13)
|
|
|
|
—
|
|
|
Net cash used in
financing activities
|
|
$
|
(24,131)
|
|
|
$
|
(16,656)
|
|
|
$
|
(17,810)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
|
(5,812)
|
|
|
|
7,068
|
|
|
|
582
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
20,958
|
|
|
|
13,890
|
|
|
|
12,546
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
15,146
|
|
|
$
|
20,958
|
|
|
$
|
13,128
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
$
|
(111,017)
|
|
|
$
|
83,994
|
|
|
Income (loss) from
discontinued operations
|
|
|
—
|
|
|
|
7,833
|
|
|
Net Income
(loss)
|
|
$
|
(111,017)
|
|
|
$
|
91,827
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
16,254
|
|
|
|
17,652
|
|
|
Depreciation and
amortization
|
|
|
16,030
|
|
|
|
17,070
|
|
|
Deferred income
tax
|
|
|
(13,014)
|
|
|
|
(38,469)
|
|
|
Inventory write-down
and impairments
|
|
|
132,136
|
|
|
|
—
|
|
|
Gain on sale of
business
|
|
|
—
|
|
|
|
(1,154)
|
|
|
Gain on sale of
discontinued operations
|
|
|
—
|
|
|
|
(8,411)
|
|
|
Accounts
receivable
|
|
|
45,229
|
|
|
|
(8,924)
|
|
|
Inventory
|
|
|
(2,880)
|
|
|
|
(7,202)
|
|
|
Accounts
payable
|
|
|
(13,262)
|
|
|
|
1,762
|
|
|
Other adjustments to
net income (loss)
|
|
|
238
|
|
|
|
4,074
|
|
|
Net cash provided
by operating activities
|
|
$
|
69,714
|
|
|
$
|
68,225
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(8,578)
|
|
|
$
|
(17,537)
|
|
|
Proceeds from sale of
business
|
|
|
—
|
|
|
|
2,980
|
|
|
Proceeds from sale of
discontinued operations
|
|
|
—
|
|
|
|
14,789
|
|
|
Other investing
activities
|
|
|
(952)
|
|
|
|
(775)
|
|
|
Net cash used in
investing activities
|
|
$
|
(9,530)
|
|
|
$
|
(543)
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Repayment of debt
borrowings
|
|
$
|
(71,000)
|
|
|
$
|
(96,000)
|
|
|
Proceeds from debt
borrowings
|
|
|
30,000
|
|
|
|
103,000
|
|
|
Dividends
paid
|
|
|
(12,001)
|
|
|
|
(73,168)
|
|
|
Repurchase of treasury
shares
|
|
|
(1,593)
|
|
|
|
(1,502)
|
|
|
Other financing
activities
|
|
|
(1,536)
|
|
|
|
—
|
|
|
Net cash used in
financing activities
|
|
$
|
(56,130)
|
|
|
$
|
(67,670)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
|
4,054
|
|
|
|
12
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
11,092
|
|
|
|
13,116
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
15,146
|
|
|
$
|
13,128
|
|
|
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
|
|
|
|
September 30,
2020
|
|
|
June
30,
2020
|
|
|
September 30,
2019
|
|
GAAP
reported
|
|
$
|
11,331
|
|
|
$
|
(2,567)
|
|
|
$
|
31,207
|
|
Inventory write-down
1
|
|
|
—
|
|
|
|
9,932
|
|
|
|
—
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
3,415
|
|
|
|
—
|
|
Foreign exchange
losses (gains)
|
|
|
982
|
|
|
|
(98)
|
|
|
|
569
|
|
Excluding specific
items
|
|
$
|
12,313
|
|
|
$
|
10,682
|
|
|
$
|
31,776
|
|
|
|
|
|
Income (loss) from
Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2020
|
|
|
June
30,
2020
|
|
|
September 30,
2019
|
|
GAAP
reported
|
|
$
|
2,996
|
|
|
$
|
(5,675)
|
|
|
$
|
24,210
|
|
Inventory write-down
1
|
|
|
—
|
|
|
|
9,495
|
|
|
|
—
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
3,265
|
|
|
|
—
|
|
Debt issuance cost
write-off
|
|
|
—
|
|
|
|
328
|
|
|
|
—
|
|
Debt
restructuring
|
|
|
1,223
|
|
|
|
—
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate 2
|
|
|
2,773
|
|
|
|
(1,208)
|
|
|
|
(2,172)
|
|
Foreign exchange
losses (gains)
|
|
|
344
|
|
|
|
(79)
|
|
|
|
455
|
|
Excluding specific
items
|
|
$
|
7,336
|
|
|
$
|
6,126
|
|
|
$
|
22,493
|
|
|
|
|
|
Earnings (Loss)
Per Diluted Share from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2020
|
|
|
June
30,
2020
|
|
|
September 30,
2019
|
|
GAAP
reported
|
|
$
|
0.07
|
|
|
$
|
(0.13)
|
|
|
$
|
0.54
|
|
Inventory write-down
1
|
|
|
—
|
|
|
|
0.21
|
|
|
|
—
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
0.07
|
|
|
|
—
|
|
Debt issuance cost
write-off
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
Debt
restructuring
|
|
|
0.03
|
|
|
|
—
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate 2
|
|
|
0.06
|
|
|
|
(0.02)
|
|
|
|
(0.05)
|
|
Foreign exchange
losses
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Excluding specific
items
|
|
$
|
0.16
|
|
|
$
|
0.14
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Three months
ended June 30, 2020 includes inventory write-down charge of $9.9
million, pretax.
|
|
(2) Includes
adjustments to reflect tax expense at a normalized rate of
20%.
|
|
Segment
Information
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
Operating Income
(Loss) from Continuing Operations
|
|
|
|
Three Months Ended
September 30, 2020
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
11,022
|
|
|
$
|
(321)
|
|
|
$
|
630
|
|
Foreign exchange
losses
|
|
|
696
|
|
|
|
275
|
|
|
|
11
|
|
Excluding specific
items
|
|
$
|
11,718
|
|
|
$
|
(46)
|
|
|
$
|
641
|
|
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 is defined by Bloomberg as Net Operating Profit (Loss)
("NOP") less Cash Operating Tax ("COT") divided by Total Invested
Capital ("TIC"), 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.
Reconciliation of
ROIC
|
(amounts in millions,
except for ROIC and WACC data)
|
(Unaudited)
|
|
|
|
Bloomberg
|
|
|
Effect of
non-cash
charges
|
|
|
Excluding
non-cash
charges
|
|
Net operating
profit
|
|
$
|
(59.5)
|
|
|
$
|
132.6
|
|
|
$
|
73.1
|
|
Cash operating
taxes
|
|
|
42.6
|
|
|
|
8.8
|
|
|
|
51.4
|
|
Total invested
capital
|
|
|
381.3
|
|
|
|
126.7
|
|
|
|
508.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on invested
capital
|
|
|
(26.8)
|
%
|
|
NM
|
|
|
|
4.3
|
%
|
Weighted average cost
of capital
|
|
|
7.7
|
%
|
|
|
|
|
|
|
|
|
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
|
|
|
Nine Months
Ended
|
|
|
|
|
September 30,
2020
|
|
|
September 30,
2020
|
|
|
Net cash provided by
operating activities
|
|
$
|
20,693
|
|
|
$
|
69,714
|
|
|
Capital
expenditures
|
|
|
(2,172)
|
|
|
|
(8,578)
|
|
|
Free cash
flow
|
|
$
|
18,521
|
|
|
$
|
61,136
|
|
|
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SOURCE Core Laboratories N.V.