AMSTERDAM, Jan. 27, 2021 /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 fourth quarter 2020 revenue of $113,700,000. Core's operating income was
$23,400,000, with earnings per
diluted share ("EPS") of $0.31, all
in accordance with U.S. generally accepted accounting principles
("GAAP"). The financial results for the fourth quarter of 2020
include a non-cash adjustment of $11.9
million to reverse previously recognized stock compensation
expense associated with performance share awards that did not fully
vest and were revalued. Operating income, ex-items, a
non-GAAP financial measure, was $13,000,000, yielding operating margins of 11%
and EPS, ex-items, of $0.18. A
full reconciliation of non-GAAP financial measures and
year-over-year comparisons are included in the attached financial
tables.
Core's CEO, Larry Bruno stated,
"Core's fourth quarter results demonstrate the dedicated efforts of
our innovative staff, the durability and adaptability of the
business model, as well as the benefits of the cost reduction plans
that were quickly enacted earlier this year. Despite the
challenges encountered in 2020, after adjusting for non-cash
impairments, Core generated sector-leading operating margins, four
consecutive quarters of positive earnings, and positive free cash
flow for 2020. This performance enabled the Company to reduce
net debt by $48,700,000 throughout
the year, while continuing to fund capital investments for growth
initiatives. As we embark on 2021, Core remains
well-positioned to navigate today's challenging market and
capitalize on future growth opportunities, while providing
innovative solutions that drive efficiency and reservoir
optimization for our clients."
Liquidity, Free Cash Flow, Private Placement Notes and
Dividend
Core continues to focus and generate free cash flow ("FCF"), a
non-GAAP financial measure defined as cash from operations less
capital expenditures. For the full year of 2020 cash from
operations was $57,900,000 and
capital expenditures were $11,900,000, yielding FCF of $ 46,000,000, marking the 19th
consecutive year in which the Company has generated positive free
cash flow. Cash flow from operations, for the fourth quarter of
2020, included cash payments unique to the quarter, and had a
negative impact on operational cash flow. These cash payments
included (i) $16 million for employee
post-retirement deferred compensation distributions and employment
separation payments and (ii) approximately $5 million for prepaid 2021 corporate insurance
programs, which resulted in lower annual premium costs.
Accounting for the $21 million
in cash payments ($16 million +
$5 million), cash from operations was
($2,900,000) for the fourth quarter
of 2020, and together with $3,300,000
in capital expenditures, FCF was ($6,200,000). Although these cash payments
for employee post-retirement benefits in the fourth quarter are
required to be deducted from operational cash flow and FCF, the
Company had partially funded the employee post-retirement payments
with $11,500,000 of cash received
through previously purchased company owned life insurance ("COLI")
policies. The cash received from COLI is considered investing
activities, and thus, is not included in cash generated from
operations or FCF. The following table summarizes the impact
of these cash payments on operational cash flow.
|
|
Quarter
ended
December 31,
2020
(in $
millions)
|
Net cash provided by
operations, before employee post-retirement and prepaid insurance
payments
|
|
$
18.1
|
Cash payments for
employee post-retirement and prepaid insurance
|
|
$
(21.0)
|
U.S. GAAP – net cash
used by operations
|
|
$
(2.9)
|
Capital
Expenditures
|
|
$
(3.3)
|
FCF
|
|
$
(6.2)
|
For the full year, free cash was used to reduce the Company's
outstanding debt, and net debt was decreased by $48,700,000 or 16.5%. Core will continue applying
its excess free cash flow towards debt reduction for the
foreseeable future.
The following graph summarizes the maximum leverage ratio
permitted over the relevant period:
As of 31 December 2020, Core Lab's
leverage ratio was 2.82, with $101,000,000 of excess capacity under the
Company's revolving credit facility. As previously disclosed,
subsequent to year-end, on 12 January
2021, the Company issued $60
million of senior unsecured notes in a private placement
transaction. Proceeds from the sale were exclusively used to reduce
outstanding borrowings under the credit facility.
The Company anticipates it will continue to
generate positive cash flow and reduce net debt, while maintaining
ample liquidity and remaining in compliance with debt
covenants.
On 17 December 2020, Core
announced the launch of an "at-the-market offering" for the
issuance and sale of up to $60.0
million of common shares. Core Lab intends to use the
net proceeds from the sale of Shares, if any, for general corporate
purposes, which may include, among other things, investments in the
development of new products and technologies, capital expenditures,
repayments of indebtedness, working capital and potential
acquisitions. The Company has not sold shares under this
program as of 27 January 2021.
The following table summarizes the quarterly cash dividends paid
by the Company for the year ended 31 December 2020. Dutch
withholding tax was deducted from each dividend at a rate of
15%.
Quarter
Ending
|
Record
Date
|
Payment
Date
|
$ Amount per
Common Share
|
31 March
2020
|
24 January
2020
|
14 February
2020
|
$0.25
|
30 June
2020
|
8 May 2020
|
19 May
2020
|
$0.01
|
30 September
2020
|
27 July
2020
|
10 August
2020
|
$0.01
|
31 December
2020
|
26 October
2020
|
17 November
2020
|
$0.01
|
2020 Total
|
|
|
$0.28
|
On 15 January 2021, the Board
announced a quarterly cash dividend of $0.01 per share of common stock, payable on
16 February 2021 to shareholders of
record on 25 January 2021. Dutch
withholding tax will be deducted from the dividend at a rate of
15%.
Reservoir Description
Reservoir Description revenue in the fourth quarter of 2020 was
$83,800,000, up 5%
sequentially. Operating income for the fourth quarter of 2020
on a GAAP basis was $19,400,000, while operating income,
ex-items, was $12,300,000, up 5%
sequentially, yielding operating margins, ex-items, of 15%, which
were flat sequentially. Sequential performance was associated with
improved U.S. client activity and some improvement on longer-cycle
international project activity. Operating margins were
impacted by continued COVID-19 disruptions that included project
and logistical delays in various international markets; however,
the implemented cost controls in the segment helped mitigate the
impact on operating margins.
During the fourth quarter of 2020, Core continued to perform
highly specialized core and reservoir fluid analytical programs on
samples originating from the offshore South Atlantic Margin.
Additional opportunities along the South Atlantic Margin are
unfolding. Several international oil companies have obtained
licenses for pre-salt exploration and appraisal in Brazil, signaling that this region will be a
focus of near, mid and long-term capital deployment. To support
current and future programs, Core is in the final stages of
commissioning a new facility in Rio de
Janeiro. This laboratory will offer a wide range of
testing capabilities, including many of the proprietary and
patented technologies that are in high demand throughout Core's
global client base. These proprietary offerings include
Core's full visualization, pressure-volume-temperature ("PVT") cell
instrumentation and Core's Dual Energy CT rock evaluation
technologies. This new laboratory secures Core's position as
the leading provider of advanced reservoir description services in
the region and satisfies the growing demand for Core's patented and
proprietary laboratory technologies in this growing market.
Also, in the fourth quarter of 2020, Core continued analytical
programs on a variety of CO2 injection projects for both
carbon capture and sequestration ("CCS") and for enhanced oil
recovery ("EOR") efforts. Under the direction of The
CarbonNet Project, Core continued its laboratory analysis of
conventional core from the Gular-1 appraisal well, offshore
southeast Australia. Data
generated by Core is providing insight into seal capacity, storage
capacity, geomechanical properties and the pore system properties
of the target injection zones. Additionally, in the fourth
quarter of 2020, Core was engaged by a national oil company in the
Asia-Pacific region to evaluate
CO2 injection opportunities as part of an EOR program in
tight oil reservoirs. Core Lab combined its proprietary high
frequency nuclear magnetic resonance technology with physical
laboratory core flooding experiments to determine in-situ
hydrocarbon saturations during and after CO2
injection. This comprehensive dataset is providing the
operator with an understanding of fluid displacement and fluid
interactions throughout the CO2 flooding process.
For these EOR applications, CO2 purity, injection
parameters, fluid compatibility, and rock properties all need to be
measured and evaluated. These two projects are representative
of the various CO2 subsurface injection opportunities
that exist for Core and its clients.
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
fourth quarter 2020 revenue of $29,900,000, up 18% sequentially. The revenue
increase was primarily driven by U.S. land energetic product sales,
which improved 65%, sequentially. This compares very favorably with
sequential U.S. land well completion activity. Operating income on
a GAAP basis was $4,500,000, and
$1,170,000 ex-items, both up
sequentially. Additionally, operating margins improved sequentially
from near break-even to 4% for the quarter.
Core's clients are always seeking innovative technological
solutions to optimize their completion techniques.
Recently, several of Core's technologically
sophisticated clients in North
America pursued an oriented downhole perforating technology
which would align the perforations in the direction of maximum
principal stress. To meet this objective, Core's Production
Enhancement engineering team developed the patent pending Oriented
GoGun™. Providing both very high alignment
accuracy and wellsite efficiency, this technological advancement is
designed to allow the frac energy to be focused in a manner that
maximizes the frac while minimizing tortuosity. Core's
Oriented GoGun™ also eliminates the need for
orientation subassemblies, minimizing the number of connections and
saving time by not having to recapture and redress orienting subs.
During the fourth quarter of 2020, one of the largest E&P
operators in North America
conducted field trials, including various offerings from
competitor's oriented systems. During the field trails,
downhole cameras were used by the operator to verify orientation
accuracy. Core Lab's Oriented GoGunTM proved to
have the highest level of accuracy, both from perforation to
perforation and from stage to stage. As a result of Core's
superior product performance, the operator has adopted the Oriented
GoGun™ as their preferred perforating system.
Also, during the fourth quarter of 2020, Core's proprietary
completion diagnostic services were utilized in a major Gulf Coast
natural gas storage project. Core was engaged by the operator
to assess the effectiveness of frac pack completions performed on a
number of wells in this gas storage field. Core utilized its
PackScan® density logging technology to determine the
competency of the annular packs that had been placed in these
wells. In one of the wells, Core's PackScan® density log
revealed insufficient coverage of the perforated interval and a
completely uncovered sand control screen. Core's engineers
identified these potential failure points and recommended a
proppant "top-off" treatment to remediate the interval of concern.
The operator agreed, and within a week a successful "top-off"
treatment was performed, resulting in 14 feet of proppant coverage
above the top of the sand control screen. It is critical that
these gas storage wells be effectively fracked and the annulus
competently packed in order to ensure their long-term functionality
for both injecting and withdrawing natural gas. Core Labs'
PackScan® technology and the resultant top-off treatment
avoided a costly completion remediation program.
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, 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
2020, Core Lab recorded $133 million
in non-cash charges associated with impairment of goodwill,
intangible assets and inventory. Excluding these adjustments,
Core's calculation of ROIC using Bloomberg's formula was
4.7%.
Industry and Core Lab Outlook
For 2021, Core will continue to focus on executing its strategic
plan of generating free cash and reducing net debt, while
maximizing ROIC. Additionally, as part of the Company's 2021
strategic focus, the Company will continue to invest in targeted,
client-driven technologies that aim to both solve client problems
and capitalize on Core's growth opportunities.
Core is optimistic about its international growth opportunities
as the second half of 2021 unfolds and COVID-19 disruptions are
expected to abate. With Core Lab having more than 70% of its
revenue exposed to international activity, the Company remains
active on international projects already underway.
International markets are expected to drive growth
opportunities for the Company in the second half of 2021 and
beyond; these areas include: Brazil, Mexico, Qatar
and various other areas of the Middle
East. Unpredictable project and logistical disruptions
related to COVID-19 are expected to persist in the near to
mid-term. For the first quarter of 2021, and consistent with
historical trends, Core Lab expects lower client activity due to
seasonality. This seasonal pattern typically results in a
decline in first quarter revenue by mid-single digits. Core
anticipates typical seasonal effects and COVID-19 restrictions to
impact the first quarter of 2021, with first quarter revenue
projected to be flat to down by low single digits,
sequentially. The projected decline in first quarter revenue
is slightly less pronounced, compared to historical trends, as the
Company expects momentum in U.S. land activity to continue.
Within Reservoir Description, Core expects reservoir fluid
analysis, which accounts for more than 65% of the segment's
revenue, to remain resilient as this work is diversified across the
life of the reservoir and less reliant on drilling and completion
of new wells. However, given Reservoir Description's strong
international exposure, COVID-19 disruptions present uncertainties
for near to mid-term client activity levels as travel restrictions
fluctuate due to virus trends.
Core sees continued, gradual sequential improvement in U.S. land
activity into 2021. As a result, Core Lab projects Production
Enhancement first quarter 2021 revenue to increase sequentially.
Core expects Production Enhancement to continue to track or
outperform activity levels in U.S. land completions.
In summary, despite the near-term international challenges
related to COVID-19 restrictions, Core Lab sees activity levels
improving as 2021 unfolds, with higher incremental margins emerging
in the second half of the year. Core's growth opportunities are
directly related to expanding client activity and new market
penetration, particularly internationally. Within that
context, Core remains focused on the on-going development of new
client driven technologies and market penetration, as well as the
continued focus on digitization and automation throughout Core's
business.
The Company's first quarter 2021 guidance is based on
projections for the underlying operations and exclude gains and
losses in foreign exchange. This initial first quarter 2021
guidance also assumes an effective tax rate of 20%.
Earnings Call Scheduled
The Company has scheduled a conference call to discuss Core's
fourth quarter 2020 earnings announcement. The call will begin at
7:30 a.m. CST / 2:30 p.m. CET on Thursday, 28 January 2021. 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
|
|
|
|
|
December 31,
2020
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
vs.
Q3-20
|
|
|
vs.
Q4-19
|
|
|
REVENUE
|
|
$
|
113,749
|
|
|
$
|
105,382
|
|
|
$
|
156,778
|
|
|
7.9%
|
|
|
(27.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
87,918
|
|
|
|
81,038
|
|
|
|
117,749
|
|
|
8.5%
|
|
|
(25.3)%
|
|
|
General and
administrative expenses 1
|
|
|
(3,692)
|
|
|
|
8,937
|
|
|
|
9,773
|
|
|
NM
|
|
|
NM
|
|
|
Depreciation and
amortization
|
|
|
4,837
|
|
|
|
5,164
|
|
|
|
5,535
|
|
|
(6.3)%
|
|
|
(12.6)%
|
|
|
Inventory
write-down
|
|
|
443
|
|
|
|
—
|
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|
Other (income)
expense, net
|
|
|
839
|
|
|
|
(1,088)
|
|
|
|
2,666
|
|
|
NM
|
|
|
(12.6)%
|
|
|
Total operating
expenses
|
|
|
90,345
|
|
|
|
94,051
|
|
|
|
135,723
|
|
|
(3.9)%
|
|
|
(33.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
23,404
|
|
|
|
11,331
|
|
|
|
21,055
|
|
|
106.5%
|
|
|
11.2%
|
|
|
Interest
expense
|
|
|
2,920
|
|
|
|
4,672
|
|
|
|
3,588
|
|
|
(37.5)%
|
|
|
(18.6)%
|
|
|
Income from
continuing operations
before
income tax expense
|
|
|
20,484
|
|
|
|
6,659
|
|
|
|
17,467
|
|
|
207.6%
|
|
|
17.3%
|
|
|
Income tax
expense
|
|
|
6,540
|
|
|
|
3,663
|
|
|
|
7,177
|
|
|
78.5%
|
|
|
(8.9)%
|
|
|
Income from
continuing operations
|
|
|
13,944
|
|
|
|
2,996
|
|
|
|
10,290
|
|
|
365.4%
|
|
|
35.5%
|
|
|
Income (loss) from
discontinued
operations, net of income taxes
|
|
|
(424)
|
|
|
|
—
|
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|
Net income
|
|
|
13,520
|
|
|
|
2,996
|
|
|
|
10,290
|
|
|
351.3%
|
|
|
31.4%
|
|
|
Net income
attributable to non-
controlling interest
|
|
|
(17)
|
|
|
|
33
|
|
|
|
(40)
|
|
|
NM
|
|
|
NM
|
|
|
Net income
attributable to Core
Laboratories N.V.
|
|
$
|
13,537
|
|
|
$
|
2,963
|
|
|
$
|
10,330
|
|
|
356.9%
|
|
|
31.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing
operations
|
|
$
|
0.31
|
|
|
$
|
0.07
|
|
|
$
|
0.23
|
|
|
342.9%
|
|
|
34.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Core
Laboratories N.V.
|
|
$
|
0.30
|
|
|
$
|
0.07
|
|
|
$
|
0.23
|
|
|
328.6%
|
|
|
30.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common
shares
outstanding
|
|
|
44,958
|
|
|
|
44,899
|
|
|
|
44,634
|
|
|
0.1%
|
|
|
0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
32
|
%
|
|
|
55
|
%
|
|
|
41
|
%
|
|
NM
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
83,838
|
|
|
$
|
80,060
|
|
|
$
|
102,617
|
|
|
4.7%
|
|
|
(18.3)%
|
|
|
Production
Enhancement
|
|
|
29,911
|
|
|
|
25,322
|
|
|
|
54,161
|
|
|
18.1%
|
|
|
(44.8)%
|
|
|
Total
|
|
$
|
113,749
|
|
|
$
|
105,382
|
|
|
$
|
156,778
|
|
|
7.9%
|
|
|
(27.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
19,426
|
|
|
$
|
11,022
|
|
|
$
|
14,248
|
|
|
76.2%
|
|
|
36.3%
|
|
|
Production
Enhancement
|
|
|
4,495
|
|
|
|
(321)
|
|
|
|
6,586
|
|
|
NM
|
|
|
(31.7)%
|
|
|
Corporate and
Other
|
|
|
(517)
|
|
|
|
630
|
|
|
|
221
|
|
|
NM
|
|
|
NM
|
|
|
Total
|
|
$
|
23,404
|
|
|
$
|
11,331
|
|
|
$
|
21,055
|
|
|
106.5%
|
|
|
11.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the quarter
ending December 31, 2020, General and administrative expenses
include an adjustment to reverse $11.3
million of
stock compensation that had been previously recognized.
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in
thousands, except per share data)
(Unaudited)
|
|
|
|
Twelve Months
ended
|
|
|
%
Variance
|
|
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
|
|
|
|
REVENUE
|
|
$
|
487,267
|
|
|
$
|
668,210
|
|
|
(27.1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
374,767
|
|
|
|
495,579
|
|
|
(24.4)%
|
|
|
General and
administrative expenses
|
|
|
34,033
|
|
|
|
48,023
|
|
|
(29.1)%
|
|
|
Depreciation and
amortization
|
|
|
20,867
|
|
|
|
22,605
|
|
|
(7.7)%
|
|
|
Impairments and other
charges
|
|
|
122,204
|
|
|
|
—
|
|
|
NM
|
|
|
Inventory
write-down
|
|
|
10,375
|
|
|
|
—
|
|
|
NM
|
|
|
Other (income)
expense, net
|
|
|
1,826
|
|
|
|
5,319
|
|
|
NM
|
|
|
Total operating
expenses
|
|
|
564,072
|
|
|
|
571,526
|
|
|
(1.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
(76,805)
|
|
|
|
96,684
|
|
|
NM
|
|
|
Interest
expense
|
|
|
14,372
|
|
|
|
14,690
|
|
|
(2.2)%
|
|
|
Income (loss) from
continuing operations before income tax expense
|
|
|
(91,177)
|
|
|
|
81,994
|
|
|
NM
|
|
|
Income tax expense
(benefit)
|
|
|
5,896
|
|
|
|
(12,290)
|
|
|
NM
|
|
|
Income (loss) from
continuing operations
|
|
|
(97,073)
|
|
|
|
94,284
|
|
|
NM
|
|
|
Income (loss) from
discontinued operations, net of income taxes
|
|
|
(424)
|
|
|
|
7,833
|
|
|
NM
|
|
|
Net income
(loss)
|
|
|
(97,497)
|
|
|
|
102,117
|
|
|
NM
|
|
|
Net income
attributable to non-controlling interest
|
|
|
140
|
|
|
|
134
|
|
|
NM
|
|
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$
|
(97,637)
|
|
|
$
|
101,983
|
|
|
(195.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(2.18)
|
|
|
$
|
2.11
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
attributable to Core Laboratories N.V.
|
|
$
|
(2.20)
|
|
|
$
|
2.28
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares outstanding
|
|
|
44,477
|
|
|
|
44,646
|
|
|
(0.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
(6)
|
%
|
|
|
(15)
|
%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
355,041
|
|
|
$
|
420,897
|
|
|
(15.6)%
|
|
|
Production
Enhancement
|
|
|
132,226
|
|
|
|
247,313
|
|
|
(46.5)%
|
|
|
Total
|
|
$
|
487,267
|
|
|
$
|
668,210
|
|
|
(27.1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
55,044
|
|
|
$
|
55,140
|
|
|
(0.2)%
|
|
|
Production
Enhancement
|
|
|
(133,449)
|
|
|
$
|
38,378
|
|
|
NM
|
|
|
Corporate and
Other
|
|
|
1,600
|
|
|
|
3,166
|
|
|
NM
|
|
|
Total
|
|
$
|
(76,805)
|
|
|
$
|
96,684
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(amounts in
thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
|
|
ASSETS:
|
|
December 31,
2020
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
vs.
Q3-20
|
|
|
vs.
Q4-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
13,806
|
|
|
$
|
15,146
|
|
|
$
|
11,092
|
|
|
(8.8)%
|
|
|
24.5%
|
|
|
Accounts receivable,
net
|
|
|
83,192
|
|
|
|
85,366
|
|
|
|
131,579
|
|
|
(2.5)%
|
|
|
(36.8)%
|
|
|
Inventory
|
|
|
38,151
|
|
|
|
42,908
|
|
|
|
50,163
|
|
|
(11.1)%
|
|
|
(23.9)%
|
|
|
Other current
assets
|
|
|
30,699
|
|
|
|
26,469
|
|
|
|
28,403
|
|
|
16.0%
|
|
|
8.1%
|
|
|
Total Current
Assets
|
|
|
165,848
|
|
|
|
169,889
|
|
|
|
221,237
|
|
|
(2.4)%
|
|
|
(25.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
115,293
|
|
|
|
117,123
|
|
|
|
123,506
|
|
|
(1.6)%
|
|
|
(6.6)%
|
|
|
Right-of-use
assets
|
|
|
66,385
|
|
|
|
69,228
|
|
|
|
75,697
|
|
|
(4.1)%
|
|
|
(12.3)%
|
|
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
221,053
|
|
|
|
234,574
|
|
|
|
354,233
|
|
|
(5.8)%
|
|
|
(37.6)%
|
|
|
Total
assets
|
|
$
|
568,579
|
|
|
$
|
590,814
|
|
|
$
|
774,673
|
|
|
(3.8)%
|
|
|
(26.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of
long-term debt
|
|
$
|
—
|
|
|
$
|
75,000
|
|
|
$
|
—
|
|
|
NM
|
|
|
NM
|
|
|
Accounts
payable
|
|
|
23,028
|
|
|
|
22,806
|
|
|
|
35,611
|
|
|
1.0%
|
|
|
(35.3)%
|
|
|
Short-term operating
lease obligations
|
|
|
11,437
|
|
|
|
11,807
|
|
|
|
11,841
|
|
|
(3.1)%
|
|
|
(3.4)%
|
|
|
Other current
liabilities
|
|
|
55,285
|
|
|
|
62,523
|
|
|
|
64,142
|
|
|
(11.6)%
|
|
|
(13.8)%
|
|
|
Total current
liabilities
|
|
|
89,750
|
|
|
|
172,136
|
|
|
|
111,594
|
|
|
(47.9)%
|
|
|
(19.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
259,433
|
|
|
|
189,566
|
|
|
|
305,283
|
|
|
36.9%
|
|
|
(15.0)%
|
|
|
Long-term operating
lease obligations
|
|
|
56,108
|
|
|
|
56,649
|
|
|
|
64,660
|
|
|
(1.0)%
|
|
|
(13.2)%
|
|
|
Other long-term
liabilities
|
|
|
87,715
|
|
|
|
100,754
|
|
|
|
110,996
|
|
|
(12.9)%
|
|
|
(21.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
75,573
|
|
|
|
71,709
|
|
|
|
182,140
|
|
|
5.4%
|
|
|
(58.5)%
|
|
|
Total liabilities and
equity
|
|
$
|
568,579
|
|
|
$
|
590,814
|
|
|
$
|
774,673
|
|
|
(3.8)%
|
|
|
(26.6)%
|
|
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in
thousands)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
ended
|
|
|
|
December 31,
2020
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
$
|
13,944
|
|
|
$
|
(97,073)
|
|
|
$
|
94,284
|
|
Income (loss) from
discontinued operations
|
|
|
(424)
|
|
|
|
(424)
|
|
|
|
7,833
|
|
Net income
(loss)
|
|
$
|
13,520
|
|
|
$
|
(97,497)
|
|
|
$
|
102,117
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
(8,860)
|
|
|
|
7,394
|
|
|
|
20,879
|
|
Depreciation and
amortization
|
|
|
4,837
|
|
|
|
20,867
|
|
|
|
22,605
|
|
Impairments, inventory
write-down and other charges
|
|
|
443
|
|
|
|
132,579
|
|
|
|
—
|
|
Deferred income
tax
|
|
|
798
|
|
|
|
(12,216)
|
|
|
|
(36,345)
|
|
Gain on sale of
business
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,154)
|
|
(Gain) loss on sale of
discontinued operations
|
|
|
573
|
|
|
|
573
|
|
|
|
(8,411)
|
|
Accounts
receivable
|
|
|
1,192
|
|
|
|
46,421
|
|
|
|
(3,191)
|
|
Inventory
|
|
|
4,351
|
|
|
|
1,471
|
|
|
|
(3,892)
|
|
Accounts
payable
|
|
|
424
|
|
|
|
(12,838)
|
|
|
|
(3,757)
|
|
Other adjustments to
net income
|
|
|
(20,190)
|
|
|
|
(28,886)
|
|
|
|
676
|
|
Net cash provided
by (used in) by operating activities
|
|
$
|
(2,912)
|
|
|
$
|
57,868
|
|
|
$
|
89,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(3,302)
|
|
|
$
|
(11,880)
|
|
|
$
|
(22,269)
|
|
Proceeds from sale of
business
|
|
|
—
|
|
|
|
—
|
|
|
|
2,980
|
|
Proceeds from cash
surrender value of company-owned life insurance
|
|
|
11,509
|
|
|
|
20,443
|
|
|
|
—
|
|
Proceeds (adjustments)
from sale of discontinued operations
|
|
|
(225)
|
|
|
|
(225)
|
|
|
|
14,789
|
|
Other investing
activities
|
|
|
465
|
|
|
|
(487)
|
|
|
|
(1,177)
|
|
Net cash provided
by (used in) investing activities
|
|
$
|
8,447
|
|
|
$
|
7,851
|
|
|
$
|
(5,677)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of debt
borrowings
|
|
$
|
(31,000)
|
|
|
$
|
(102,000)
|
|
|
$
|
(123,000)
|
|
Proceeds from debt
borrowings
|
|
|
26,000
|
|
|
|
56,000
|
|
|
|
138,000
|
|
Dividends
paid
|
|
|
(445)
|
|
|
|
(12,446)
|
|
|
|
(97,574)
|
|
Repurchase of treasury
shares
|
|
|
(1,201)
|
|
|
|
(2,794)
|
|
|
|
(3,308)
|
|
Other financing
activities
|
|
|
(229)
|
|
|
|
(1,765)
|
|
|
|
—
|
|
Net cash used in
financing activities
|
|
$
|
(6,875)
|
|
|
$
|
(63,005)
|
|
|
$
|
(85,874)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
|
(1,340)
|
|
|
|
2,714
|
|
|
|
(2,024)
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
15,146
|
|
|
|
11,092
|
|
|
|
13,116
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
13,806
|
|
|
$
|
13,806
|
|
|
$
|
11,092
|
|
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
from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
December 31,
2020
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
GAAP
reported
|
|
$
|
23,404
|
|
|
$
|
11,331
|
|
|
$
|
21,055
|
|
Stock compensation
1
|
|
|
(11,934)
|
|
|
|
—
|
|
|
|
—
|
|
Inventory
write-down
|
|
|
443
|
|
|
|
—
|
|
|
|
—
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
—
|
|
|
|
2,578
|
|
Facility exit
cost
|
|
|
256
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange
losses (gains)
|
|
|
852
|
|
|
|
982
|
|
|
|
1,359
|
|
Excluding specific
items
|
|
$
|
13,021
|
|
|
$
|
12,313
|
|
|
$
|
24,992
|
|
|
|
|
|
|
|
|
|
Income from
Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
December 31,
2020
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
GAAP
reported
|
|
$
|
13,944
|
|
|
$
|
2,996
|
|
|
$
|
10,290
|
|
Stock compensation
1
|
|
|
(11,934)
|
|
|
|
—
|
|
|
|
—
|
|
Inventory
write-down
|
|
|
301
|
|
|
|
—
|
|
|
|
—
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
—
|
|
|
|
2,062
|
|
Facility exit
cost
|
|
|
174
|
|
|
|
—
|
|
|
|
—
|
|
Debt
restructuring
|
|
|
—
|
|
|
|
1,223
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate 2
|
|
|
5,018
|
|
|
|
2,773
|
|
|
|
3,684
|
|
Foreign exchange
losses (gains)
|
|
|
578
|
|
|
|
344
|
|
|
|
1,087
|
|
Excluding specific
items
|
|
$
|
8,081
|
|
|
$
|
7,336
|
|
|
$
|
17,123
|
|
|
|
|
|
|
|
|
|
Earnings Per
Diluted Share from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
December 31,
2020
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
GAAP
reported
|
|
$
|
0.31
|
|
|
$
|
0.07
|
|
|
$
|
0.23
|
|
Stock compensation
1
|
|
|
(0.27)
|
|
|
|
—
|
|
|
|
—
|
|
Inventory
write-down
|
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
—
|
|
|
|
0.05
|
|
Debt
restructuring
|
|
|
—
|
|
|
|
0.03
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate 2
|
|
|
0.11
|
|
|
|
0.06
|
|
|
|
0.08
|
|
Foreign exchange
losses (gains)
|
|
|
0.02
|
|
|
|
—
|
|
|
|
0.02
|
|
Excluding specific
items
|
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes an
adjustment to reverse previously recognized stock compensation
expense for shares that were granted but did not vest
and were revalued. This
adjustment is non-taxable.
|
|
(2) Includes
adjustments to reflect tax expense at a normalized rate of
20%.
|
|
Segment
Information
(amounts in
thousands)
(Unaudited)
|
|
|
|
Operating Income
from Continuing Operations
|
|
|
|
Three Months Ended
December 31, 2020
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
19,426
|
|
|
$
|
4,495
|
|
|
$
|
(517)
|
|
Stock
compensation
|
|
|
(7,713)
|
|
|
|
(3,523)
|
|
|
|
—
|
|
Foreign exchange
losses
|
|
|
578
|
|
|
|
202
|
|
|
|
73
|
|
Excluding specific
items
|
|
$
|
12,291
|
|
|
$
|
1,174
|
|
|
$
|
(444)
|
|
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.
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
2020, Core Lab recorded $133 million
in non-cash charges associated with impairment of goodwill,
intangible assets and inventory. Excluding these adjustments,
Core's calculation of ROIC using Bloomberg's formula was
4.7%.
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
|
|
$
|
(79.3)
|
|
|
$
|
132.6
|
|
|
$
|
53.3
|
|
Cash operating
taxes
|
|
|
51.2
|
|
|
|
(20.8)
|
|
|
|
30.4
|
|
Total invested
capital
|
|
|
362.1
|
|
|
|
126.7
|
|
|
|
488.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on invested
capital
|
|
|
(36.0)
|
%
|
|
NM
|
|
|
|
4.7
|
%
|
Weighted average cost
of capital
|
|
|
6.9
|
%
|
|
|
|
|
|
|
|
|
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
|
|
|
Twelve Months
ended
|
|
|
|
|
December 31,
2020
|
|
|
December 31,
2020
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
(2,912)
|
|
|
$
|
57,868
|
|
|
Capital
expenditures
|
|
|
(3,302)
|
|
|
|
(11,880)
|
|
|
Free cash
flow
|
|
$
|
(6,214)
|
|
|
$
|
45,988
|
|
|
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SOURCE Core Laboratories N.V.