AMSTERDAM, July 28, 2021
/PRNewswire/ -- Core Laboratories N.V. (NYSE: "CLB US" and
Euronext Amsterdam: "CLB NA") ("Core", "Core Lab", or the
"Company") reported second quarter 2021 revenue of $118,700,000. Core's operating income was
$12,800,000, with earnings per
diluted share ("EPS") of $0.17, all
in accordance with U.S. generally accepted accounting principles
("GAAP"). Operating income, ex-items, a non-GAAP financial
measure, was $13,200,000, yielding
operating margins of 11% and EPS, ex-items, of $0.18. Year-over-year and sequential
financial improvements are attributed to a continuation of U.S.
onshore activity growth and market penetration, along with an
improving landscape for Core's international operations. 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,
"During the second quarter of 2021, the Company saw increased
revenue, increased EBITDA, increased free cash flow and increased
EPS. At the same time, Core continued to execute on its
strategic financial objectives by reducing net debt and improving
its leverage ratio compared to the first quarter. Core's revenue
growth improved sequentially, outpacing the rig count in both
North America and internationally.
Reservoir Description, having greater international exposure, did
face some continuing pandemic-related headwinds during the quarter.
Core's Production Enhancement segment exceeded sequential top and
bottom-line expectations, with U.S. energetic sales nicely
outpacing the growth in completions. Core remains optimistic
regarding the remainder of 2021, as activity in North America progresses and international
activity builds momentum."
Reservoir Description
Reservoir Description operations are heavily exposed to
international and offshore activity levels, with approximately 80%
of its revenue sourced from outside the U.S., where reservoir rock,
reservoir fluid and derived product samples originate from
international projects. Reservoir Description revenue in the
second quarter of 2021 was $78,300,000, up 2.3% sequentially.
Operating income for the second quarter of 2021 on a GAAP basis was
$7,300,000, while operating income,
ex-items, was $7,500,000, down 26.5%
sequentially, yielding operating margins, ex-items, of 9.6%. While
Reservoir Description revenue increased sequentially, the segment's
performance fell below the Company's second quarter 2021
projections. Operating income and operating margins for the quarter
were negatively impacted as the Company is in the process of
restoring temporary cost reduction measures previously put in
place. The segment continued to face project delays related to the
pandemic; client activity and project advancement in many
international markets, including parts of Europe, South
America, the Middle East
and Asia-Pacific regions were
impacted by government-enacted policies to mitigate COVID-19
transmission.
During the second quarter of 2021, Core Lab, under the direction
of Reconnaissance Energy Africa Ltd ("ReconAfrica"), was engaged to
provide laboratory analyses on conventional cores from exploratory
wells in the Kavango Basin, Northeastern
Namibia. The laboratory program for this project is
leveraging a number of proprietary and patented technologies, such
as Core Lab's Reservoir Applied Petrophysical Integrated Data Zoom
(RAPIDZoom™) services to assess rock properties and identify
prospective reservoir targets over a thick interval of
predominantly marine strata. RAPIDZoom™ allows the scientists
involved in the project to collaboratively examine the core samples
at high resolution, revealing details on lithology, texture and
stratigraphic relationships, all while working from remote
locations. The analytical program on these Kavango Basin cores also
includes Core's proprietary, native-state electrical properties
laboratory testing, which allows for both improved calibration of
downhole electric logs and expedited oil-in-place assessments. Core
Lab is very pleased to be assisting the technical experts at
ReconAfrica in their evaluation of potential reservoirs in this
expansive, onshore sedimentary basin.
Client adoption of Core's proprietary digital innovations that
leverage the Company's unparalleled database of global reservoirs
also expanded during the second quarter of 2021. Under the
direction of Carnarvon Petroleum Limited in Australia, Core Lab employed its Advanced Rock
Typing (ART™) technology, one of Core's latest and most advanced
digital and artificial intelligence ("AI") offerings. The robust
AI-based model provided Carnarvon with analog petrophysical and
engineering parameters on drill cuttings samples from the WA-521-P
exploration well on the Northwest Shelf of Australia. Drill cuttings are
millimeter-scale, irregularly-shaped fragments of rock produced by
the cutting action of the drill bit. Drill cuttings are not
suitable for many of the traditional laboratory measurements that
require larger, more uniformly-shaped samples. In the absence
of conventional core samples, Core Lab used AI technologies to
predict important reservoir properties from the drill cuttings,
until such time that conventional core can be obtained for
traditional laboratory testing protocols. The advanced insights
into reservoir quality provided by ART™ were utilized by Carnarvon
Petroleum Limited to de-risk geological uncertainties in their
offshore Labyrinth project. At the forefront of digitization
innovations for more than two decades, Core continues to develop
and introduce transformative digital technologies, such as ART™,
which leverage Core's proprietary databases. Core is pleased
to be assisting Carnarvon in their reservoir evaluation
program.
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
second quarter 2021 revenue of $40,500,000, up 27% sequentially, exceeding the
Company's second quarter 2021 projections. Core's proprietary
energetic product sales and diagnostic services, in both U.S. and
international markets, experienced growth and market penetration.
Operating income on a GAAP basis was $3,800,000, while operating income, ex-items, was
$3,900,000, up 114.3% sequentially.
Operating margins were 9.5% for the second quarter of 2021,
expanding 380 bps sequentially.
During the second quarter of 2021, Core Lab saw growing market
acceptance of its innovative, proprietary Pulse Wave™ Tubular
Conveyed System. Pulse Wave™ uses a unique energy transfer
technology to trigger multiple, unevenly-spaced perforating guns in
a single downhole trip. Traditionally, operators place a series of
inert guns between live guns to create a continuous communicating
string. This is a time-intensive process, requiring multiple down
hole trips. These types of configurations can lead to
extended rig times and may have low reliability. In the
second quarter of 2021, a client expressed a need to complete a
horizonal well, with predetermined, unevenly-spaced stages, with an
aim to optimize injection efficiencies. Utilizing the Pulse
Wave™ system, perforating guns were loaded with up to 20
perforating charges per gun, with intervals varying from 125 to 284
feet between each live gun. By using Pulse Wave™ to
sequentially trigger the live guns, the system eliminated the need
for hard-wired, gun-to-gun connections, and thus multiple potential
failure points. The perforation operation was performed as planned
and resulted in the client saving over 30% on the cost of
consumables, in addition to reduced rig time. The client was very
satisfied with the high reliability and effectiveness of the Pulse
Wave™ System; they are making plans to expand the use of Pulse
Wave™ for future injection wells, and potentially for
re-perforating existing producing wells. Pulse Wave™ is just one of
many Core Lab technologies that were developed by its internal team
of energetic product experts. Core's internal pipeline of new
technology offerings is a cornerstone of the Company's success and
a credit to Core's dedicated, innovative staff.
Also, during the second quarter of 2021, Core's completion
diagnostic services were on display. Core's
PackScan® technology was used in an offshore South
Atlantic margin development project to assess the effectiveness of
an open-hole, horizontal gravel pack. In offshore
environments, operators often complete wells using a gravel pack.
The goal is to gravel pack the screen annular space in order to
stabilize the formation and control the entry of formation fines
during production. The traditional method for assessing the
competence of gravel packs is a standard density log to identify
annular voids or formation intrusion. To better assess the
quality of the gravel pack, Core deployed its proprietary,
high-resolution PackScan® tool to identify even minor
gravel pack anomalies. The interpreted PackScan®
log enabled the operator to make critical decisions as to whether
to bring the well on aggressively, so as to accelerate production,
or slowly, so as to prevent a screen failure. Core's
PackScan® log identified a void in the annular pack that
would have led to screen erosion and ultimately a failure of the
completion. After reviewing the PackScan® log,
Core's diagnostic engineers recommended the operator bring the well
onto production at a lower rate, to enable the annular void to be
filled in from the ample reserve gravel that was emplaced above the
producing interval. Based on Core's recommendation, by using
this data-driven approach, the client decided to bring the well's
production at a reduced rate, minimizing the risk of a very
expensive completion failure.
Free Cash Flow and Dividend
Core continues to focus on generating free cash flow ("FCF"), a
non-GAAP financial measure defined as cash from operations less
capital expenditures. For the second quarter of 2021, cash
from operations was $9,500,000 and
capital expenditures were $2,900,000,
yielding FCF of $6,600,000, marking
another quarter in the Company's long history of generating
positive FCF.
For the second quarter of 2021, after funding the quarterly
dividend, free cash was accumulated on the balance sheet, reducing
net debt by $5,800,000 or 3.2%, and
bringing Core's leverage ratio down to 2.18 as of 30 June
2021. Core will use excess free cash towards retiring some of
its long-term debt which is maturing 30
September 2021 and continue its strategy of reducing the
Company's leverage ratio.
On 21 April 2021, Core's Board of
Supervisory Directors ("Board") announced a quarterly cash dividend
of $0.01 per share of common stock,
which was paid on 18 May 2021 to
shareholders of record on 3 May 2021. Dutch withholding tax
was deducted from the dividend at a rate of 15%.
On 28 July 2021, the Board
approved a cash dividend of $0.01 per
share of common stock payable in the third quarter of 2021. The
third quarter dividend will be payable on 24
August 2021, to shareholders of record on 9 August
2021. Dutch withholding tax will be deducted from the
dividend at a rate of 15%.
Return On Invested Capital
The Board and the Company's Executive Management continue to
focus on strategies that maximize return on invested capital
("ROIC") and FCF, factors that have high correlation to total
shareholder return. Core's commitment to an asset-light
business model and disciplined capital stewardship promote capital
efficiency and are designed to produce more predictable and
superior long-term ROIC.
Global events in 2020 created adverse effects which 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, as the
Company continues to believe superior ROIC will result in higher
total return to shareholders. As of 30
June 2021, Core Lab's ROIC was 9.9% as calculated using the
Bloomberg formula and is expected to continue to improve in future
periods.
Industry and Core Lab Outlook and Guidance
For the remainder of 2021, Core will continue to execute its
strategic plan with a focus on generating FCF and reducing net
debt, while maximizing ROIC. Additionally, as part of Core's 2021
strategic focus, the Company will continue to invest in targeted,
client-driven technologies that aim to both solve problems and
capitalize on Core's growth opportunities. The Company remains
well-positioned to meet the needs of its clients, with ample
liquidity to invest in its global capabilities. These
capabilities include Core's expanding proprietary databases, along
with innovations in AI and machine learning, which are the
foundation of Core's transformative digital technologies.
With the rapid onset of COVID-19 variants and continued market
disruptions, the pace of economic reopening has slowed; however,
Core remains optimistic about its growth opportunities throughout
the remainder of 2021, as the momentum for international crude-oil
markets continues to build and U.S. activity continues to
moderately progress. Strong crude-oil commodity prices, the
lack of investment in international and offshore crude-oil
developments, and increasing crude-oil demand continue to support a
recovery of the energy industry over the mid to long term. These
crude-oil market circumstances are resulting in an increase in the
international rig count and heavy oilfield equipment coming under
contract, which are leading indicators of a growing
international cycle. With Core Lab having more than 70% of
its revenue exposed to international activity, the Company remains
active on international projects. As additional field development
projects emerge, wells need to be drilled and reservoir rock and
fluid sampled before Reservoir Description realizes a revenue
opportunity. Expansion of the international market provides growth
opportunities for the Company into the second half of 2021 and
beyond, with a particular focus on the South Atlantic Margin,
Mexico, and the Middle East.
Considering the improvement in international activity and with
U.S. land activity projected to grow modestly from second quarter
2021 levels, Core projects third quarter revenue to range from
$122,000,000 to $126,000,000 and operating income of $14,000,000 to $15,000,000, yielding operating margins of
approximately 12% with incremental margins, ex-items, of 20% to
25%. As stated during the second quarter outlook in
April 2021, as employee costs are
reinstated into the Company's cost structure, incremental margins
will be temporarily impacted. Once these costs are fully restored,
Core expects its historical incremental margin performance or
better. EPS for the third quarter of 2021 is expected to modestly
improve to approximately $0.19 to
$0.21.
In summary, Core Lab sees activity levels and financial
performance improving throughout the remainder of 2021.
Core's growth opportunities are directly related to existing
long-term projects returning to normal workflows, as well as
expanding client activity and new market penetration, particularly
internationally.
The Company's third quarter 2021 guidance is based on
projections for underlying operations and excludes gains and losses
in foreign exchange. Third 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
second quarter 2021 earnings announcement. The call will begin at
7:30 a.m. CDT / 2:30 p.m. CEST on Thursday, 29 July 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
|
|
|
|
June 30,
2021
|
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
|
vs.
Q1-21
|
|
vs.
Q2-20
|
|
REVENUE
|
|
$
|
118,745
|
|
|
$
|
108,383
|
|
|
$
|
115,736
|
|
|
9.6%
|
|
2.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
93,841
|
|
|
|
84,150
|
|
|
|
90,680
|
|
|
11.5%
|
|
3.5%
|
|
General and
administrative expense
|
|
|
9,670
|
|
|
|
8,461
|
|
|
|
9,221
|
|
|
14.3%
|
|
4.9%
|
|
Depreciation and
amortization
|
|
|
4,751
|
|
|
|
4,871
|
|
|
|
5,425
|
|
|
(2.5)%
|
|
(12.4)%
|
|
Inventory
write-down
|
|
|
—
|
|
|
|
—
|
|
|
|
9,932
|
|
|
NM
|
|
NM
|
|
Other (income) expense,
net
|
|
|
(2,317)
|
|
|
|
(721)
|
|
|
|
3,045
|
|
|
NM
|
|
NM
|
|
Total operating
expenses
|
|
|
105,945
|
|
|
|
96,761
|
|
|
|
118,303
|
|
|
9.5%
|
|
(10.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
12,800
|
|
|
|
11,622
|
|
|
|
(2,567)
|
|
|
10.1%
|
|
NM
|
|
Interest
expense
|
|
|
2,530
|
|
|
|
1,363
|
|
|
|
3,369
|
|
|
85.6%
|
|
(24.9)%
|
|
Income (loss) from
continuing operations
before income tax expense
|
|
|
10,270
|
|
|
|
10,259
|
|
|
|
(5,936)
|
|
|
0.1%
|
|
NM
|
|
Income tax expense
(benefit)
|
|
|
2,053
|
|
|
|
2,052
|
|
|
|
(261)
|
|
|
—%
|
|
NM
|
|
Income (loss) from
continuing operations
|
|
|
8,217
|
|
|
|
8,207
|
|
|
|
(5,675)
|
|
|
0.1%
|
|
NM
|
|
Income (loss) from
discontinued
operations, net of income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
NM
|
|
NM
|
|
Net income
(loss)
|
|
|
8,217
|
|
|
|
8,207
|
|
|
|
(5,675)
|
|
|
0.1%
|
|
NM
|
|
Net income (loss)
attributable to non-controlling interest
|
|
|
157
|
|
|
|
102
|
|
|
|
41
|
|
|
53.9%
|
|
282.9%
|
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$
|
8,060
|
|
|
$
|
8,105
|
|
|
$
|
(5,716)
|
|
|
(0.6)%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
|
$
|
0.17
|
|
|
$
|
0.18
|
|
|
$
|
(0.13)
|
|
|
(5.6)%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share attributable to Core Laboratories
N.V.
|
|
$
|
0.17
|
|
|
$
|
0.18
|
|
|
$
|
(0.13)
|
|
|
(5.6)%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding - assuming dilution
|
|
|
47,103
|
|
|
|
45,964
|
|
|
|
44,470
|
|
|
2.5%
|
|
5.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
(4)
|
%
|
|
NM
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
78,252
|
|
|
$
|
76,486
|
|
|
$
|
88,442
|
|
|
2.3%
|
|
(11.5)%
|
|
Production
Enhancement
|
|
|
40,493
|
|
|
|
31,897
|
|
|
|
27,294
|
|
|
26.9%
|
|
48.4%
|
|
Total
|
|
$
|
118,745
|
|
|
$
|
108,383
|
|
|
$
|
115,736
|
|
|
9.6%
|
|
2.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
7,265
|
|
|
$
|
10,051
|
|
|
$
|
13,534
|
|
|
(27.7)%
|
|
(46.3)%
|
|
Production
Enhancement
|
|
|
3,831
|
|
|
|
1,560
|
|
|
|
(16,324)
|
|
|
145.6%
|
|
NM
|
|
Corporate and
Other
|
|
|
1,704
|
|
|
|
11
|
|
|
|
223
|
|
|
NM
|
|
NM
|
|
Total
|
|
$
|
12,800
|
|
|
$
|
11,622
|
|
|
$
|
(2,567)
|
|
|
10.1%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (amounts in thousands, except per share
data)
(Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
|
%
Variance
|
|
|
2021
|
|
|
2020
|
|
|
|
REVENUE
|
|
$
|
227,128
|
|
|
$
|
268,136
|
|
|
(15.3)%
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
|
177,991
|
|
|
|
205,811
|
|
|
(13.5)%
|
General and
administrative expense
|
|
|
18,131
|
|
|
|
28,788
|
|
|
(37.0)%
|
Depreciation and
amortization
|
|
|
9,622
|
|
|
|
10,866
|
|
|
(11.4)%
|
Impairments, inventory
write-down and other charges
|
|
|
—
|
|
|
|
132,136
|
|
|
NM
|
Other (income) expense,
net
|
|
|
(3,038)
|
|
|
|
2,075
|
|
|
NM
|
Total operating
expenses
|
|
|
202,706
|
|
|
|
379,676
|
|
|
(46.6)%
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
24,422
|
|
|
|
(111,540)
|
|
|
NM
|
Interest
expense
|
|
|
3,893
|
|
|
|
6,780
|
|
|
(42.6)%
|
Income (loss) from
continuing operations before income tax expense
|
|
|
20,529
|
|
|
|
(118,320)
|
|
|
NM
|
Income tax expense
(benefit)
|
|
|
4,105
|
|
|
|
(4,307)
|
|
|
NM
|
Income (loss) from
continuing operations
|
|
|
16,424
|
|
|
|
(114,013)
|
|
|
NM
|
Income (loss) from
discontinued operations, net of income taxes
|
|
|
—
|
|
|
|
—
|
|
|
NM
|
Net income
(loss)
|
|
|
16,424
|
|
|
|
(114,013)
|
|
|
NM
|
Net income (loss)
attributable to non-controlling interest
|
|
|
259
|
|
|
|
124
|
|
|
108.9%
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$
|
16,165
|
|
|
$
|
(114,137)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
|
$
|
0.35
|
|
|
$
|
(2.57)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share attributable to Core Laboratories
N.V.
|
|
$
|
0.35
|
|
|
$
|
(2.57)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding - assuming dilution
|
|
|
46,514
|
|
|
|
44,459
|
|
|
4.6%
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
20
|
%
|
|
|
(4)
|
%
|
|
NM
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
154,738
|
|
|
$
|
191,144
|
|
|
(19.0)%
|
Production
Enhancement
|
|
|
72,390
|
|
|
|
76,992
|
|
|
(6.0)%
|
Total
|
|
$
|
227,128
|
|
|
$
|
268,136
|
|
|
(15.3)%
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
17,317
|
|
|
$
|
24,596
|
|
|
(29.6)%
|
Production
Enhancement
|
|
|
5,391
|
|
|
|
(137,623)
|
|
|
NM
|
Corporate and
Other
|
|
|
1,714
|
|
|
|
1,487
|
|
|
NM
|
Total
|
|
$
|
24,422
|
|
|
$
|
(111,540)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEET (amounts in
thousands) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
|
ASSETS:
|
|
June 30,
2021
|
|
|
March 31,
2021
|
|
|
December
31, 2020
|
|
|
vs.
Q1-21
|
|
vs.
Q4-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
33,617
|
|
|
$
|
27,806
|
|
|
$
|
13,806
|
|
|
20.9%
|
|
143.5%
|
|
Accounts receivable,
net
|
|
|
93,217
|
|
|
|
86,567
|
|
|
|
83,192
|
|
|
7.7%
|
|
12.1%
|
|
Inventories
|
|
|
38,946
|
|
|
|
39,117
|
|
|
|
38,151
|
|
|
(0.4)%
|
|
2.1%
|
|
Other current
assets
|
|
|
35,369
|
|
|
|
32,327
|
|
|
|
30,699
|
|
|
9.4%
|
|
15.2%
|
|
Total current
assets
|
|
|
201,149
|
|
|
|
185,817
|
|
|
|
165,848
|
|
|
8.3%
|
|
21.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
112,398
|
|
|
|
113,491
|
|
|
|
115,293
|
|
|
(1.0)%
|
|
(2.5)%
|
|
Right of use
assets
|
|
|
66,482
|
|
|
|
70,295
|
|
|
|
66,385
|
|
|
(5.4)%
|
|
0.1%
|
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
218,396
|
|
|
|
214,843
|
|
|
|
221,053
|
|
|
1.7%
|
|
(1.2)%
|
|
Total assets
|
|
$
|
598,425
|
|
|
$
|
584,446
|
|
|
$
|
568,579
|
|
|
2.4%
|
|
5.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
30,383
|
|
|
$
|
25,500
|
|
|
$
|
23,028
|
|
|
19.1%
|
|
31.9%
|
|
Short-term operating
lease liabilities
|
|
|
12,150
|
|
|
|
12,357
|
|
|
|
11,437
|
|
|
(1.7)%
|
|
6.2%
|
|
Other current
liabilities
|
|
|
48,321
|
|
|
|
47,676
|
|
|
|
55,285
|
|
|
1.4%
|
|
(12.6)%
|
|
Total current
liabilities
|
|
|
90,854
|
|
|
|
85,533
|
|
|
|
89,750
|
|
|
6.2%
|
|
1.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
208,305
|
|
|
|
208,166
|
|
|
|
259,433
|
|
|
0.1%
|
|
(19.7)%
|
|
Long-term operating
lease liabilities
|
|
|
55,121
|
|
|
|
58,635
|
|
|
|
56,108
|
|
|
(6.0)%
|
|
(1.8)%
|
|
Other long-term
liabilities
|
|
|
89,801
|
|
|
|
86,066
|
|
|
|
87,715
|
|
|
4.3%
|
|
2.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
154,344
|
|
|
|
146,046
|
|
|
|
75,573
|
|
|
5.7%
|
|
104.2%
|
|
Total liabilities and
equity
|
|
$
|
598,425
|
|
|
$
|
584,446
|
|
|
$
|
568,579
|
|
|
2.4%
|
|
5.2%
|
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (amounts in thousands)
(Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
$
|
16,424
|
|
|
$
|
(114,013)
|
|
|
Income (loss) from
discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
Net Income
(loss)
|
|
$
|
16,424
|
|
|
$
|
(114,013)
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
8,086
|
|
|
|
13,395
|
|
|
Depreciation and
amortization
|
|
|
9,622
|
|
|
|
10,866
|
|
|
Deferred income
taxes
|
|
|
2,732
|
|
|
|
(7,554)
|
|
|
Impairments, inventory
write-down and other charges
|
|
|
—
|
|
|
|
132,136
|
|
|
Gain on sale of
business
|
|
|
(1,012)
|
|
|
|
—
|
|
|
Accounts
receivable
|
|
|
(10,013)
|
|
|
|
29,072
|
|
|
Inventories
|
|
|
480
|
|
|
|
(1,298)
|
|
|
Accounts
payable
|
|
|
6,536
|
|
|
|
(12,211)
|
|
|
Other adjustments to
net income (loss)
|
|
|
(15,382)
|
|
|
|
(1,372)
|
|
|
Net cash provided
by operating activities
|
|
$
|
17,473
|
|
|
$
|
49,021
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(5,657)
|
|
|
$
|
(6,406)
|
|
|
Proceeds from sale of
business, net of cash sold
|
|
|
513
|
|
|
|
—
|
|
|
Other investing
activities
|
|
|
1,766
|
|
|
|
(750)
|
|
|
Net cash used in
investing activities
|
|
$
|
(3,378)
|
|
|
$
|
(7,156)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Repayment of debt
borrowings
|
|
$
|
(119,000)
|
|
|
$
|
(46,000)
|
|
|
Proceeds from debt
borrowings
|
|
|
68,000
|
|
|
|
27,000
|
|
|
Proceeds from issuance
of common stock
|
|
|
59,139
|
|
|
|
—
|
|
|
Dividends
paid
|
|
|
(909)
|
|
|
|
(11,556)
|
|
|
Repurchase of common
shares
|
|
|
(1,031)
|
|
|
|
(1,436)
|
|
|
Other financing
activities
|
|
|
(483)
|
|
|
|
(7)
|
|
|
Net cash provided
by (used in) financing activities
|
|
$
|
5,716
|
|
|
$
|
(31,999)
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
AND CASH EQUIVALENTS
|
|
|
19,811
|
|
|
|
9,866
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
13,806
|
|
|
|
11,092
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
33,617
|
|
|
$
|
20,958
|
|
|
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 (Loss), Income (Loss) from Continuing Operations
and Diluted Earnings (Loss) Per Share from Continuing
Operations (amounts in thousands, except per share data)
(Unaudited)
|
|
|
|
Operating Income
(loss) from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2021
|
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
GAAP
reported
|
|
$
|
12,800
|
|
|
$
|
11,622
|
|
|
$
|
(2,567)
|
|
Stock compensation
1
|
|
|
—
|
|
|
|
752
|
|
|
|
—
|
|
Inventory write-down
3
|
|
|
—
|
|
|
|
—
|
|
|
|
9,932
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
—
|
|
|
|
3,415
|
|
Foreign exchange
losses (gains)
|
|
|
352
|
|
|
|
(408)
|
|
|
|
(98)
|
|
Excluding specific
items
|
|
$
|
13,152
|
|
|
$
|
11,966
|
|
|
$
|
10,682
|
|
|
|
|
|
Income (loss) from
Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2021
|
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
GAAP
reported
|
|
$
|
8,217
|
|
|
$
|
8,207
|
|
|
$
|
(5,675)
|
|
Stock compensation
1
|
|
|
—
|
|
|
|
602
|
|
|
|
—
|
|
Inventory write-down
3
|
|
|
—
|
|
|
|
—
|
|
|
|
9,495
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
—
|
|
|
|
3,265
|
|
Interest rate hedge
settlement and restructuring 2
|
|
|
—
|
|
|
|
(1,506)
|
|
|
|
—
|
|
Debt issuance cost
write-off
|
|
|
—
|
|
|
|
—
|
|
|
|
328
|
|
Impact of higher
(lower) tax rate 4
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,208)
|
|
Foreign exchange
losses (gains)
|
|
|
281
|
|
|
|
(326)
|
|
|
|
(79)
|
|
Excluding specific
items
|
|
$
|
8,498
|
|
|
$
|
6,977
|
|
|
$
|
6,126
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2021
|
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
GAAP
reported
|
|
$
|
0.17
|
|
|
$
|
0.18
|
|
|
$
|
(0.13)
|
|
Stock compensation
1
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
Inventory write-down
3
|
|
|
—
|
|
|
|
—
|
|
|
|
0.21
|
|
Cost reduction and
other charges
|
|
|
—
|
|
|
|
—
|
|
|
|
0.07
|
|
Interest rate hedge
settlement and restructuring 2
|
|
|
—
|
|
|
|
(0.03)
|
|
|
|
—
|
|
Debt issuance cost
write-off
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Impact of higher
(lower) tax rate 4
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.02)
|
|
Foreign exchange
losses (gains)
|
|
|
0.01
|
|
|
|
(0.01)
|
|
|
|
—
|
|
Excluding specific
items
|
|
$
|
0.18
|
|
|
$
|
0.15
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
(1) Three months
ended March 31, 2021 includes stock compensation expense recognized
pursuant to FASB ASC 718 "Stock Compensation" associated with
employees reaching eligible retirement age.
|
|
(2) Three months
ended March 31, 2021 includes a credit to interest expense
associated with the settlement and restructuring of interest rate
hedges.
|
|
(3) Three months
ended June 30, 2020 includes inventory write-down charge of $9.9
million.
|
|
(4) Three months
ended June 30, 2020 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
June 30, 2021
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
7,265
|
|
|
$
|
3,831
|
|
|
$
|
1,704
|
|
Foreign exchange
losses
|
|
|
248
|
|
|
|
20
|
|
|
|
84
|
|
Excluding specific
items
|
|
$
|
7,513
|
|
|
$
|
3,851
|
|
|
$
|
1,788
|
|
Return on Invested Capital
Return on Invested Capital ("ROIC") 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, lease liabilities, allowance for doubtful accounts, net
balance of deferred taxes, and income tax payable.
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. As of
30 June 2021, Core's calculation of
ROIC using Bloomberg's formula, as described above, was 9.9%.
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
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
2021
|
|
|
June 30,
2021
|
|
|
Net cash provided by
operating activities
|
|
$
|
9,486
|
|
|
$
|
17,473
|
|
|
Capital
expenditures
|
|
|
(2,885)
|
|
|
|
(5,657)
|
|
|
Free cash
flow
|
|
$
|
6,601
|
|
|
$
|
11,816
|
|
|
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SOURCE Core Laboratories N.V.