- SECOND QUARTER REVENUE OF $120.9
MILLION; UP 5% SEQUENTIALLY; UP 2% YEAR-OVER-YEAR
- SECOND QUARTER SEQUENTIAL INCREMENTAL MARGINS, EX-ITEMS,
43%, DRIVEN BY RESERVOIR DESCRIPTION
- SECOND QUARTER GAAP EPS OF $0.15; EPS, EX-ITEMS, $0.12
- RENEWS AND EXTENDS REVOLVING CREDIT FACILITY THROUGH
2026
- ANNOUNCES Q3 2022 QUARTERLY DIVIDEND
AMSTERDAM, July 27,
2022 /PRNewswire/ -- Core Laboratories N.V. (NYSE:
"CLB US" and Euronext Amsterdam: "CLB NA") ("Core", "Core Lab", or
the "Company") reported second quarter 2022 revenue of $120,900,000. Sequential revenue growth was
adversely impacted by approximately $2,000,000, due to the devaluation of the Euro
and British Pound, as well as a decrease in revenue from operations
based in Russia. Core's operating income was $11,700,000, with earnings per diluted share
("EPS") of $0.15, all in accordance
with U.S. generally accepted accounting principles ("GAAP").
Operating income, ex-items, a non-GAAP financial measure, was
$9,600,000, yielding operating
margins of 8%, sequential incremental margins of 43%, and EPS,
ex-items, of $0.12. An
adjustment to reverse previously recognized stock compensation
expense was recorded during the second quarter of 2022 for certain
performance share awards which are no longer expected to
vest. A full reconciliation of non-GAAP financial measures is
included in the attached financial tables.
Core's CEO, Larry Bruno stated,
"First, our thoughts remain with our Ukrainian employees and their
families during the on-going conflict. Turning to Core's results
during the second quarter of 2022, we achieved sequential
improvement in revenue, operating income, operating margins and
EPS; these financial improvements occurred despite somewhat greater
than expected business disruptions associated with the geopolitical
conflict between Russia and
Ukraine. Aside from the areas affected by this conflict, Core
sees improving momentum in both onshore and offshore client
activity across our global operations."
Russia-Ukraine Conflict
The on-going geopolitical conflict between Russia and Ukraine, along with the associated European
and U.S. sanctions, presents some measure of uncertainty for Core's
business and financial performance. Over the course of the
second quarter of 2022, the military conflict continued and
European sanctions against Russian crude oil imports were
expanded.
As part of Core's Reservoir Description laboratory network, the
Company provides analytical services on crude oil, natural gas and
derived products, including both reservoir condition analysis and
ambient condition assay work. Disruptions in assay work in
parts of Europe, Russia and Ukraine have persisted with the continuing
conflict, while traditional supply lines of crude oil and derived
products are realigning to new logistical patterns. Given
that current global demand for these liquid hydrocarbons remain
near pre-conflict levels, Core Lab expects supply patterns to
continue realigning, and demand for the Company's associated
laboratory services to trend back toward pre-conflict levels.
Liquidity, Free Cash Flow and Dividend
On 9 June 2022, Core Lab announced
a $60,000,000 At-The-Market ("ATM")
equity offering program. As of 27 July
2022, the Company had not sold any shares under the ATM
program.
On 25 July 2022, the Company
entered into an agreement to renew and extend its revolving credit
facility (the "Credit Facility"). The Credit Facility was
extended through 25 July 2026 with an
aggregate borrowing commitment of $135,000,000, and includes a $50,000,000 accordion option. Additionally,
the terms of the Credit Facility provide an increase to the maximum
permitted leverage ratio to be equal to (a) 2.75:1.00 through the
fiscal quarter ending 30 September
2022; and (b) 2.50:1.00 for the fiscal quarter ending 31
December 2022. For additional information regarding the
Credit Facility, see the Form 8-K filed with the Securities and
Exchange Commission by the Company on 26
July 2022.
Core Lab initially began to refocus the use of free cash towards
reducing long-term debt in the first quarter of 2020. The
Company maintains this focused effort and continues to apply free
cash primarily towards reducing long-term debt. Long-term
debt has been reduced from $295,900,000 as of 31
December 2019 to $171,900,000
as of 30 June 2022, or a cumulative
debt reduction of $124,000,000 over
the last 30 months. Core will continue applying free cash
towards reducing debt until the Company reaches its target leverage
ratio (calculated as total net debt divided by trailing twelve
months adjusted EBITDA) of 1.5 times or lower. The following
graph summarizes the progress towards reducing the leverage ratio
during 2021 and the impact both the Russia-Ukraine conflict and significantly higher
COVID-19 cases have had on the Company's leverage ratio during the
first half of 2022.
![](https://mma.prnewswire.com/media/1867804/Core_Labs.jpg)
Core continues to focus on maximizing free cash flow ("FCF"), a
non-GAAP financial measure defined as cash from operations less
capital expenditures. For the second quarter of 2022, cash
from operations was $600,000 and
capital expenditures were $3,200,000,
yielding FCF of $(2,600,000).
Cash from operations declined sequentially in the second quarter of
2022, primarily due to three factors:
- The Russia-Ukraine conflict negatively impacted the level
of sales and revenue as the Company exited the first quarter and
began the second quarter of 2022. Consequently, cash
collections on accounts receivable were lower during the second
quarter of 2022.
- Additional cash was also used to fund working capital
requirements, as product sales continue to increase, supply chains
remain challenged, and inflationary factors are resulting in higher
levels of inventory.
- Cost reduction plans and associated severance obligations
accrued in the first quarter of 2022 have been partially executed
in the second quarter of 2022. Additionally, unfunded
liabilities associated with certain employee retirement plans were
paid from operating cash flow.
Core expects the growth in working capital associated with
higher levels of inventory to moderate, cash from operations to
strengthen and the Company to generate positive free cash in future
quarters. Core's free cash will continue to be returned to
its shareholders via the Company's regular quarterly dividend as
well as being focused towards reducing long-term debt.
On 27 April 2022, Core's Board of
Supervisory Directors ("Board") announced a quarterly cash dividend
of $0.01 per share of common stock,
which was paid on 31 May 2022 to
shareholders of record on 9 May 2022. Dutch withholding tax
was deducted from the dividend at a rate of 15%.
On 27 July 2022, the Board
approved a cash dividend of $0.01 per
share of common stock payable in the third quarter of 2022.
The third quarter dividend will be payable on 29 August 2022, to shareholders of record on 8
August 2022. Dutch withholding tax will be deducted from the
dividend at a rate of 15%.
Reservoir Description
Reservoir Description operations are closely correlated with
trends in international and offshore activity levels, with
approximately 80% of revenue sourced from outside the United
States. Reservoir Description revenue in the second quarter
of 2022 was $75,800,000, up 1%
sequentially and down 3% year-over-year. While
underlying activity has improved in multiple international regions,
there are two primary factors impeding the overall revenue growth:
1) the conflict between Russia and
Ukraine, and 2) devaluation of the
Euro and British Pound. Revenue from operations in
Russia in the second quarter of
2022 decreased approximately $800,000
sequentially, and $2,300,000
year-over-year; the revenue decline was $3,200,000 for the first half of 2022 when
compared to 2021. Additionally, the sharp devaluation of both
the Euro and British Pound during 2022 lowered revenue billed in
these currencies when translated into U.S. dollars by $2,900,000 for the second quarter of 2022 and
$4,800,000 for the first half of
2022, when compared to 2021. Operating income for the second
quarter of 2022 on a GAAP basis was $5,900,000, while operating income, ex-items, was
$5,000,000, yielding operating
margins of 7% and sequential incremental margins of 102%.
Core Lab's eighty-plus years of expertise evaluating both
subsurface geology and fluid flow through natural, porous media are
providing Reservoir Description with opportunities in emerging
energy transition initiatives. In addition to Core's
multi-faceted engagement in Carbon Capture and Sequestration
("CCS") projects, described over the past several quarters, the
Company has also been engaged to evaluate subsurface cores tied to
lithium extraction opportunities. Lithium is a valuable
commodity, essential to the creation of high efficiency
batteries. During the second quarter of 2022, Core Lab, under
the direction of 3PL Operating Inc., commenced work on a multi-well
core project from Railroad Valley, Nevada. 3PL Operating Inc. has targeted a
Pliocene continental evaporite sequence with extensive
metalliferous deposits that include: sodium, phosphorous, tungsten,
boron, lithium, and other metals, potentially making the Railroad
Valley deposit one of the most promising in the world of this
type. Multiple cored intervals from the 3PL Operating, Inc.
Li 10-28 and Li 11-18 wells were recovered from the subsurface and
stabilized at the wellsite with Core Lab's proprietary CoreSta™
technology. CoreSta™ is a superior preservation technology
specifically invented for friable and unconsolidated
formations. Upon arrival at the laboratory, these cores were
immediately scanned using Core Lab's proprietary Non-Invasive
Testing and Reservoir Optimization ("NITROSM")
technologies. Among these, Dual Energy Computed Tomography
("DECT") quickly provided experts at 3PL Operating, Inc. with
lithologic information and a wide range of geological and
petrophysical parameters, as well as high resolution
(millimeter-scale) 3D digital images of the recovered cores.
The cores are now progressing through the laboratory analytical
program. Geological insights and petrophysical parameters
obtained from this analytical program will provide a robust dataset
of physical measurements that 3PL Operating, Inc. will use for both
economic assessment of the strata and to establish optimized
development strategies. All of the analytical data for this
important project are being hosted in Core Lab's secure RAPID™
database, which 3PL Operating, Inc. will use as a shared digital
workspace.
Also in the second quarter of 2022, a client company in
Latin America employed Core Lab's
proprietary technologies to improve the utility of heavy and
extra-heavy crudes from an onshore field by blending them with
lighter crude oils. Laboratory fluid testing, including
assessment of the potential for the precipitation of organic
solids, is required to verify the viability of the resultant
blends. Responding to this need, Core Lab developed and
executed a testing protocol using its proprietary imaging system
for magnified viewing of fluids and fluid interactions at high
temperatures and pressures. This technology uses two methods
to evaluate and measure asphaltene flocculation: 1) a
high-resolution trinocular microscope for pressurized fluid imaging
("PFI"), and 2) a near infrared ("NIR") spectrophotometer.
Combined, these technologies determine the size and shape of
flocculated particles at various temperatures and pressures.
Successful development and deployment of these technologies,
coupled with the growing market for heavy oil blends, has led to
the commissioning of similar studies for additional clients in
South America in the second half
of 2022.
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 2022 revenue of $45,100,000, up 11%, both sequentially and
year-over-year. Operating income on a GAAP basis was
$4,900,000, while operating income,
ex-items, was $3,900,000, yielding
operating margins of 9% and sequential incremental margins of
18%. In the quarter, Core's proprietary product sales
experienced growth and market penetration in both U.S. and
international markets.
During the second quarter of 2022, working with a client in the
North Sea, Core Lab successfully launched its innovative energetic
perforating system, Helios™, aimed at improving the efficiency of
plug-and-abandonment ("P&A") programs. Helios™ is a
technology that creates a high-density perforation matrix,
providing improved access to the cement between the outermost
casing and the geologic formation. The optimized perforation
matrix allows for greater circulation and more efficient removal of
debris in the annular space during the perf and wash process.
The operator first perforated the casing with the Helios™
technology, and then, utilizing a specialized jet wash tool,
circulated fluid between the perforated casing and the formation to
create a clean annulus. Cement plugs were subsequently set to
secure the well for abandonment. Core's Helios™ technology
provided the opportunity to significantly reduce P&A expenses
by decreasing rig time, saving the operator up to $4,000,000 per abandoned well versus conventional
section milling. Helios™ provides Core's clients with an effective
and efficient solution when executing multimillion-dollar P&A
programs and demonstrates how Core's Production Enhancement
engineers are able to adapt downhole technological advances to
evolving industry needs.
Also during the second quarter of 2022, Core's SpectraStim™,
SpectraScan™, and PackScan® downhole imaging technologies were
utilized in a client's deepwater Gulf of
Mexico well to assess a frac pack completion. A
successful frac pack requires an effective annular pack; this
includes uniform proppant placement across the annulus between the
casing and the sand control screen, along with ample proppant
reserve above the top of the screen, to accommodate in-filling of
any initial voids in the pack. When a successful frac pack is
placed, the well is protected from the influx of formation fines
that can cut the screen, damage surface facilities, and fill the
wellbore with produced solids, all of which can restrict production
and potentially compromise the completion. Based upon
traditional volumetric measurements during the frac pack treatment,
the frac pack was initially interpreted to have been successfully
placed. However, when Core's Production Enhancement engineers
analyzed the diagnostic data from its SpectraScan™ and PackScan®
logging tools, the results revealed a major void in the annular
pack, as well as inadequate proppant reserve to cover the top of
the screen and/or fill the annular void. Core's team
recommended a top-off proppant pumping procedure to ensure complete
screen coverage. A relog using Core's PackScan® showed the
top-off procedure was successfully completed, avoiding a
multimillion-dollar remedial completion intervention.
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 promotes capital
efficiency and are designed to produce more predictable and
superior long-term 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. Bloomberg's calculations using the
latest comparable data available indicate Core Lab's ROIC of
3.8%.
Industry and Core Lab Outlook and Guidance
As we look ahead to the second half of 2022 and into 2023, Core
anticipates the crude-oil commodity price will remain elevated, but
to be moderately volatile as crude-oil supply and demand may be
impacted by uncertainties related to slowing global economic
growth. Crude oil supply is projected to tighten as
production growth faces limitations due to prolonged
underinvestment in many regions around the globe. These
crude-oil market fundamentals are reflected in the year-over-year
increase in international onshore and offshore rig counts, with
oilfield drilling programs being executed and capital spending
plans expanding for 2022, 2023 and beyond. Core sees these as
leading indicators of a growing international multi-year cycle.
With Core Lab having more than 70% of its revenue exposed to
international activity, both business segments remain active on
international projects. The Company will have revenue
opportunities when wells are completed, stimulated, and once
reservoir rock or fluid samples have been collected. Core
continues to see modest improvement in client activity across many
international regions including the South Atlantic Margin,
Latin America, and the Middle
East. However, Core Lab's Russia, Ukraine and Western
Europe laboratory networks present some uncertainty, as the
Russia-Ukraine geopolitical conflict continues and
sanctions on Russia have
expanded.
Core expects Reservoir Description revenue to improve by
low-to-mid single digits in the third quarter of 2022.
Year-to-date the international rig count has been flat. When
the international rig count sustains improvement and Core's clients
drill and sample their reservoirs, Core's Reservoir Description
segment is expected to outperform the changes in industry activity
levels.
Core's Production Enhancement segment is more exposed to U.S.
onshore activity and typically correlates to well stimulation and
completion programs. The third quarter 2022 U.S. rig count is
projected to increase sequentially, however, the rate of growth for
completions may potentially be limited by the availability of third
party frac equipment and crews. Consequently, Core's
Production Enhancement segment revenue is projected to
increase sequentially by mid-to-high single digits.
For the third quarter of 2022, Core projects continued
improvement in U.S. activity and moderate improvement in
international, offshore and deepwater markets. The
realignment of crude-oil supply lines is projected to continue into
the third quarter of 2022, having a sequential positive impact on
Reservoir Description's assay laboratory testing in the affected
regions. Core projects third quarter 2022 revenue to range
from $123,000,000 to $129,000,000 and operating income of $10,100,000 to $13,300,000, yielding operating margins of
approximately 9%. EPS for the third quarter of 2022 is
expected to be $0.13 to $0.18.
The Company's third quarter 2022 guidance is based on
projections for underlying operations and excludes gains and losses
in foreign exchange. Third quarter 2022 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 2022 earnings announcement. The call will
begin at 7:30 a.m. CDT / 2:30 p.m. CEST on Thursday, 28 July 2022.
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, including
the Russia-Ukraine geopolitical conflict, 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,
2022
|
|
March 31,
2022
|
|
June 30,
2021
|
|
vs.
Q1-22
|
|
vs.
Q2-21
|
REVENUE
|
|
$120,898
|
|
$115,300
|
|
$118,745
|
|
4.9 %
|
|
1.8 %
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
sales
|
|
97,957
|
|
96,952
|
|
93,841
|
|
1.0 %
|
|
4.4 %
|
General and
administrative expense
|
|
6,847
|
|
12,545
|
|
9,670
|
|
(45.4) %
|
|
(29.2) %
|
Depreciation and
amortization
|
|
4,360
|
|
4,557
|
|
4,751
|
|
(4.3) %
|
|
(8.2) %
|
Other (income) expense,
net
|
|
82
|
|
1,637
|
|
(2,317)
|
|
(95.0) %
|
|
NM
|
Total operating
expenses
|
|
109,246
|
|
115,691
|
|
105,945
|
|
(5.6) %
|
|
3.1 %
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
11,652
|
|
(391)
|
|
12,800
|
|
NM
|
|
(9.0) %
|
Interest
expense
|
|
2,707
|
|
2,644
|
|
2,530
|
|
2.4 %
|
|
7.0 %
|
Income (loss) from
continuing operations
before income tax expense
|
|
8,945
|
|
(3,035)
|
|
10,270
|
|
NM
|
|
(12.9) %
|
Income tax expense
(benefit)
|
|
1,789
|
|
(1,196)
|
|
2,053
|
|
NM
|
|
(12.9) %
|
Income (loss) from
continuing operations
|
|
7,156
|
|
(1,839)
|
|
8,217
|
|
NM
|
|
(12.9) %
|
Net income
(loss)
|
|
7,156
|
|
(1,839)
|
|
8,217
|
|
NM
|
|
(12.9) %
|
Net income (loss)
attributable to non-controlling interest
|
|
90
|
|
49
|
|
157
|
|
NM
|
|
NM
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$7,066
|
|
$(1,888)
|
|
$8,060
|
|
NM
|
|
(12.3) %
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
|
$0.15
|
|
$(0.04)
|
|
$0.17
|
|
NM
|
|
(11.8) %
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share attributable to Core Laboratories
N.V.
|
|
$0.15
|
|
$(0.04)
|
|
$0.17
|
|
NM
|
|
(11.8) %
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding - assuming dilution
|
|
47,143
|
|
46,298
|
|
47,103
|
|
1.8 %
|
|
0.1 %
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
20 %
|
|
39 %
|
|
20 %
|
|
NM
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$75,818
|
|
$74,754
|
|
$78,252
|
|
1.4 %
|
|
(3.1) %
|
Production
Enhancement
|
|
45,080
|
|
40,546
|
|
40,493
|
|
11.2 %
|
|
11.3 %
|
Total
|
|
$120,898
|
|
$115,300
|
|
$118,745
|
|
4.9 %
|
|
1.8 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$5,925
|
|
$361
|
|
$7,265
|
|
1541.3 %
|
|
(18.4) %
|
Production
Enhancement
|
|
4,949
|
|
(918)
|
|
3,831
|
|
NM
|
|
29.2 %
|
Corporate and
Other
|
|
778
|
|
166
|
|
1,704
|
|
NM
|
|
NM
|
Total
|
|
$11,652
|
|
$(391)
|
|
$12,800
|
|
NM
|
|
(9.0) %
|
|
|
|
|
|
|
|
|
|
|
|
"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
|
|
|
2022
|
|
2021
|
|
|
REVENUE
|
|
$236,198
|
|
$227,128
|
|
4.0 %
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
Costs of services and
sales
|
|
194,909
|
|
177,991
|
|
9.5 %
|
General and
administrative expense
|
|
19,392
|
|
18,131
|
|
7.0 %
|
Depreciation and
amortization
|
|
8,917
|
|
9,622
|
|
(7.3) %
|
Other (income) expense,
net
|
|
1,719
|
|
(3,038)
|
|
NM
|
Total operating
expenses
|
|
224,937
|
|
202,706
|
|
11.0 %
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
11,261
|
|
24,422
|
|
(53.9) %
|
Interest
expense
|
|
5,351
|
|
3,893
|
|
37.5 %
|
Income (loss) from
continuing operations before income tax expense
|
|
5,910
|
|
20,529
|
|
(71.2) %
|
Income tax expense
(benefit)
|
|
593
|
|
4,105
|
|
(85.6) %
|
Income (loss) from
continuing operations
|
|
5,317
|
|
16,424
|
|
(67.6) %
|
Net income
(loss)
|
|
5,317
|
|
16,424
|
|
(67.6) %
|
Net income (loss)
attributable to non-controlling interest
|
|
139
|
|
259
|
|
(46.3) %
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$5,178
|
|
$16,165
|
|
(68.0) %
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
|
$0.11
|
|
$0.35
|
|
(68.6) %
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share attributable to Core Laboratories
N.V.
|
|
$0.11
|
|
$0.35
|
|
(68.6) %
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding - assuming dilution
|
|
47,133
|
|
46,514
|
|
1.3 %
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
10 %
|
|
20 %
|
|
(49.8) %
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Reservoir
Description
|
|
$150,572
|
|
$154,738
|
|
(2.7) %
|
Production
Enhancement
|
|
85,626
|
|
72,390
|
|
18.3 %
|
Total
|
|
$236,198
|
|
$227,128
|
|
4.0 %
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
Reservoir
Description
|
|
$6,287
|
|
$17,317
|
|
(63.7) %
|
Production
Enhancement
|
|
4,030
|
|
5,391
|
|
(25.2) %
|
Corporate and
Other
|
|
944
|
|
1,714
|
|
NM
|
Total
|
|
$11,261
|
|
$24,422
|
|
(53.9) %
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
ASSETS:
|
|
June 30,
2022
|
|
|
March 31,
2022
|
|
|
December 31,
2021
|
|
|
vs.
Q1-22
|
|
vs.
Q4-21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
16,148
|
|
|
$
|
22,037
|
|
|
$
|
17,703
|
|
|
(26.7) %
|
|
(8.8) %
|
Accounts receivable,
net
|
|
|
99,180
|
|
|
|
98,900
|
|
|
|
96,830
|
|
|
0.3 %
|
|
2.4 %
|
Inventories
|
|
|
52,551
|
|
|
|
48,224
|
|
|
|
45,443
|
|
|
9.0 %
|
|
15.6 %
|
Other current
assets
|
|
|
31,742
|
|
|
|
33,031
|
|
|
|
29,079
|
|
|
(3.9) %
|
|
9.2 %
|
Total current
assets
|
|
|
199,621
|
|
|
|
202,192
|
|
|
|
189,055
|
|
|
(1.3) %
|
|
5.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
109,176
|
|
|
|
109,926
|
|
|
|
110,952
|
|
|
(0.7) %
|
|
(1.6) %
|
Right of use
assets
|
|
|
57,964
|
|
|
|
60,168
|
|
|
|
61,387
|
|
|
(3.7) %
|
|
(5.6) %
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
210,779
|
|
|
|
212,632
|
|
|
|
219,459
|
|
|
(0.9) %
|
|
(4.0) %
|
Total assets
|
|
$
|
577,540
|
|
|
$
|
584,918
|
|
|
$
|
580,853
|
|
|
(1.3) %
|
|
(0.6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
36,106
|
|
|
$
|
34,405
|
|
|
$
|
29,726
|
|
|
4.9 %
|
|
21.5 %
|
Short-term operating
lease liabilities
|
|
|
13,008
|
|
|
|
12,669
|
|
|
|
12,342
|
|
|
2.7 %
|
|
5.4 %
|
Other current
liabilities
|
|
|
46,795
|
|
|
|
52,688
|
|
|
|
48,714
|
|
|
(11.2) %
|
|
(3.9) %
|
Total current
liabilities
|
|
|
95,909
|
|
|
|
99,762
|
|
|
|
90,782
|
|
|
(3.9) %
|
|
5.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
186,979
|
|
|
|
189,807
|
|
|
|
188,636
|
|
|
(1.5) %
|
|
(0.9) %
|
Long-term operating
lease liabilities
|
|
|
44,231
|
|
|
|
46,883
|
|
|
|
49,286
|
|
|
(5.7) %
|
|
(10.3) %
|
Other long-term
liabilities
|
|
|
76,654
|
|
|
|
82,080
|
|
|
|
91,148
|
|
|
(6.6) %
|
|
(15.9) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
173,767
|
|
|
|
166,386
|
|
|
|
161,001
|
|
|
4.4 %
|
|
7.9 %
|
Total liabilities and
equity
|
|
$
|
577,540
|
|
|
$
|
584,918
|
|
|
$
|
580,853
|
|
|
(1.3) %
|
|
(0.6) %
|
|
"NM" means not meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(amounts in
thousands)
|
(Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
|
|
2021
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net Income
(loss)
|
|
$
|
5,317
|
|
|
$
|
16,424
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
5,218
|
|
|
|
8,086
|
|
Depreciation and
amortization
|
|
|
8,917
|
|
|
|
9,622
|
|
Deferred income
taxes
|
|
|
530
|
|
|
|
2,732
|
|
Accounts
receivable
|
|
|
(2,202)
|
|
|
|
(10,013)
|
|
Inventories
|
|
|
(6,827)
|
|
|
|
480
|
|
Accounts
payable
|
|
|
5,062
|
|
|
|
6,536
|
|
Other adjustments to
net income (loss)
|
|
|
(10,120)
|
|
|
|
(15,382)
|
|
Net cash provided
by operating activities
|
|
$
|
5,895
|
|
|
$
|
17,473
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
(5,493)
|
|
|
$
|
(5,657)
|
|
Proceeds from insurance
recovery
|
|
|
583
|
|
|
|
—
|
|
Other investing
activities
|
|
|
2,553
|
|
|
|
2,279
|
|
Net cash provided
by (used in) investing activities
|
|
$
|
(2,357)
|
|
|
$
|
(3,378)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Repayment of long-term
debt
|
|
$
|
(31,000)
|
|
|
$
|
(119,000)
|
|
Proceeds from long-term
debt
|
|
|
29,000
|
|
|
|
68,000
|
|
Proceeds from issuance
of common shares
|
|
|
—
|
|
|
|
60,000
|
|
Transaction costs on
the issuance of common shares
|
|
|
—
|
|
|
|
(861)
|
|
Dividends
paid
|
|
|
(926)
|
|
|
|
(909)
|
|
Repurchase of common
shares
|
|
|
(2,166)
|
|
|
|
(1,031)
|
|
Other financing
activities
|
|
|
(1)
|
|
|
|
(483)
|
|
Net cash provided
by (used in) financing activities
|
|
$
|
(5,093)
|
|
|
$
|
5,716
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS
|
|
|
(1,555)
|
|
|
|
19,811
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
17,703
|
|
|
|
13,806
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
16,148
|
|
|
$
|
33,617
|
|
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, management uses certain non-GAAP measures that exclude
these Items and believes 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 statements
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,
2022
|
|
|
March 31,
2022
|
|
|
June 30,
2021
|
|
GAAP
reported
|
|
$
|
11,652
|
|
|
$
|
(391)
|
|
|
$
|
12,800
|
|
Stock compensation
(1)
|
|
|
(3,303)
|
|
|
|
3,850
|
|
|
|
—
|
|
Severance and other
charges
|
|
|
—
|
|
|
|
3,332
|
|
|
|
—
|
|
Bad Debt
|
|
|
—
|
|
|
|
810
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
1,258
|
|
|
|
(417)
|
|
|
|
352
|
|
Excluding specific
items
|
|
$
|
9,607
|
|
|
$
|
7,184
|
|
|
$
|
13,152
|
|
|
|
|
|
Income (loss) from
Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2022
|
|
|
March 31,
2022
|
|
|
June 30,
2021
|
|
GAAP
reported
|
|
$
|
7,156
|
|
|
$
|
(1,839)
|
|
|
$
|
8,217
|
|
Stock compensation
(1)
|
|
|
(2,642)
|
|
|
|
3,850
|
|
|
|
—
|
|
Severance and other
charges
|
|
|
—
|
|
|
|
2,666
|
|
|
|
—
|
|
Bad Debt
|
|
|
—
|
|
|
|
648
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate (2)
|
|
|
—
|
|
|
|
(1,359)
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
1,007
|
|
|
|
(334)
|
|
|
|
281
|
|
Excluding specific
items
|
|
$
|
5,521
|
|
|
$
|
3,632
|
|
|
$
|
8,498
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2022
|
|
|
March 31,
2022
|
|
|
June 30,
2021
|
|
GAAP
reported
|
|
$
|
0.15
|
|
|
$
|
(0.04)
|
|
|
$
|
0.17
|
|
Stock compensation
(1)
|
|
|
(0.06)
|
|
|
|
0.08
|
|
|
|
—
|
|
Severance and other
charges
|
|
|
—
|
|
|
|
0.06
|
|
|
|
—
|
|
Bad Debt
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
Impact on assuming
dilution
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate (2)
|
|
|
—
|
|
|
|
(0.03)
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
0.03
|
|
|
|
(0.01)
|
|
|
|
0.01
|
|
Excluding specific
items
|
|
$
|
0.12
|
|
|
$
|
0.08
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
(1) Three months
ended June 30, 2022 includes reversals of stock compensation
expense previously recognized due to a change in
probability of performance condition
for certain executive's share awards. Three months ended March 31,
2022 includes primarily
stock compensation expense
recognized pursuant to FASB ASC 718 "Stock Compensation" associated
with employees reaching
eligible retirement age, which is
nondeductible or partially deductible for tax purposes.
(2) Three months ended March 31, 2022 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, 2022
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
5,925
|
|
|
$
|
4,949
|
|
|
$
|
778
|
|
Foreign exchange
losses
|
|
|
1,180
|
|
|
|
132
|
|
|
|
(54)
|
|
Stock
compensation
|
|
|
(2,103)
|
|
|
|
(1,200)
|
|
|
|
—
|
|
Excluding specific
items
|
|
$
|
5,002
|
|
|
$
|
3,881
|
|
|
$
|
724
|
|
Return on Invested Capital
Return on Invested Capital ("ROIC") is presented based on
management's belief that this non-GAAP measure is useful
information to investors and management when comparing
profitability and the efficiency with which capital has been
employed over time relative to other companies. 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. ROIC is not a
measure of financial performance under GAAP and should not be
considered as an alternative to net income.
ROIC of 3.8% is defined by Bloomberg as Net Operating Profit
After Tax ("NOPAT") of $14.7 million
divided by Average Total Invested Capital ("Average TIC") of
$384.8 million where NOPAT 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 tax effect on income before interest and tax
expense. Average TIC is defined as average of beginning and ending
periods' 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.
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,
2022
|
|
|
June 30,
2022
|
|
|
Net cash provided by
operating activities
|
|
$
|
605
|
|
|
$
|
5,895
|
|
|
Capital
expenditures
|
|
|
(3,196)
|
|
|
|
(5,493)
|
|
|
Free cash
flow
|
|
$
|
(2,591)
|
|
|
$
|
402
|
|
|
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SOURCE Core Laboratories N.V.