- REVENUE OF $127.9 MILLION;
FLAT SEQUENTIALLY; UP 6% YEAR-OVER-YEAR
- OPERATING INCOME OF $18.9
MILLION; EX-ITEMS, $15.6
MILLION, UP 8% SEQUENTIALLY; UP OVER 60%
YEAR-OVER-YEAR
- OPERATING MARGINS OF 15%; EX-ITEMS, OVER 12%, WITH
YEAR-OVER-YEAR INCREMENTAL MARGINS EXCEEDING 85%
- GAAP EPS OF $0.48; EX-ITEMS,
$0.21, UP 12% SEQUENTIALLY; UP 80%
YEAR-OVER-YEAR
- RESERVOIR DESCRIPTION INCREMENTAL MARGINS, EX-ITEMS,
EXCEEDING 100% SEQUENTIALLY; EXCEEDING 80% YEAR-OVER-YEAR
- FREE CASH FLOW OF $6.6
MILLION
- AT-THE-MARKET EQUITY OFFERING PROGRAM TERMINATED
- COMPANY ANNOUNCES Q3 2023 QUARTERLY DIVIDEND
HOUSTON, July 26,
2023 /PRNewswire/ -- Core Laboratories Inc. (NYSE:
"CLB") ("Core", "Core Lab", or the "Company") reported second
quarter 2023 revenue of $127,900,000.
Core's operating income was $18,900,000, with diluted earnings per share
("EPS") of $0.48, all in accordance
with U.S. generally accepted accounting principles ("GAAP").
Operating income, ex-items, a non-GAAP financial measure, was
$15,600,000, yielding operating
margins over 12%, and EPS, ex-items, of $0.21. During the second quarter of 2023, the
Company recorded: 1) a tax benefit of approximately $11,600,000 associated with the
Company's redomestication of the parent company from
the Netherlands to the U.S., and
2) a gain of approximately $2,900,000
associated with proceeds from company owned life insurance policies
and an adjustment to stock compensation expense 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. As previously announced, on
May 1, 2023, the Company completed
the redomestication of its parent company from the Netherlands to the U.S.
Core's CEO, Larry Bruno stated,
"Building on the operational momentum observed in the first quarter
of 2023, the second quarter achieved 6% year-over-year growth in
revenue and, ex-items, 62% growth in operating income with
incremental margins exceeding 85%. Demand for Reservoir Description
services continued to grow in the second quarter of 2023, with
international revenue up nicely, sequentially and up 11%
year-over-year. For the full Company, second quarter 2023 revenue
was flat sequentially. However, we achieved sequential improvement
in: operating income, operating margins, net income, free cash flow
and earnings per share, while simultaneously strengthening our
balance sheet by lowering net debt. Core remains focused on
reducing debt and further strengthening our balance sheet, while at
the same time working to increase our return on invested capital,
which improved for the fourth consecutive quarter."
Reservoir Description
Reservoir Description operations are closely correlated with
trends in international and offshore activity levels, with
approximately 80% of revenue sourced from projects originating
outside the U.S. Revenue in the second quarter of 2023 was
$83,400,000, up 4% sequentially and
up 10% year-over-year. Operating income on a GAAP basis was
$13,300,000, while operating income,
ex-items, was $11,100,000, yielding
operating margins over 13%, up approximately 370 basis points
sequentially and 680 basis points year-over-year. Sequentially,
incremental margins exceeded 100%. The segment's financial
performance was underpinned by improving international client
activity as momentum continues to build.
During the second quarter of 2023, Core Lab's Technology Centers
throughout the Middle East region
experienced an increase in demand for reservoir rock and fluid
testing. As the quarter unfolded, Core Lab was engaged to assist
major National Oil Companies ("NOC's") across the Arabian
Peninsula, with multiple reservoir characterization projects from
Qatar, Saudi Arabia, Kuwait and United
Arab Emirates. These long-term projects include
characterization of both conventional and unconventional oil and
gas reservoirs, as well as primary, secondary and enhanced oil
recovery projects. Assessing and producing hydrocarbons from
low-permeability unconventional reservoir targets has become a
focus for several large NOC's in the region. To support the
evaluation of unconventional hydrocarbon resources in the region,
Core Lab is in the process of introducing a suite of patented and
proprietary unconventional laboratory technologies within key
geographic markets in the region. The expansion of unconventional
lab technologies in the region reflects Core's long-term commitment
to localizing its services and strengthening its partnerships.
Proprietary, reservoir condition, High-Frequency Nuclear Magnetic
Resonance, NanoPerm™, Pulse Decay Permeametry ("PDP™") and
other technologies, all of which were organically developed within
Core Lab, will provide critical parameters for unconventional
reservoir evaluation. By expanding local capabilities in the
region, Core Lab will create closer client collaboration and
optimized turnaround times. This localized approach ensures that
Core Lab can effectively support key client efforts to evaluate and
develop unconventional hydrocarbon resources.
Production Enhancement
Production Enhancement operations, which are focused on complex
completions in unconventional oil and gas reservoirs in the U.S.,
as well as conventional projects across the globe, posted second
quarter 2023 revenue of $44,500,000,
down approximately 8% sequentially, and flat year-over-year.
Operating income on a GAAP basis was $5,500,000, while operating income, ex-items, was
$4,400,000, yielding operating
margins of 10%, down 270 basis points sequentially; however,
year-over-year, operating margins expanded 120 basis points. The
sequential decline was primarily associated with lower
international bulk product sales and a decrease in U.S. land
completion activity.
During the second quarter of 2023, an Australian operator
utilized Core Laboratories patented X-Span™ technology to address a
critical challenge in a producing well. X-Span™ leverages Core's
expertise in applying material science and energetic technologies
for well completion and well remediation, as well as plug and
abandonment operations. For this project, the casing of a producing
well which had severely corroded over time required immediate
remediation. Without intervention, more expensive options such as a
complete workover or even premature well abandonment would
have been required. The operator successfully installed fifteen
sections of Core Lab's X-Span™ Gas Tight ("GTX™") casing patch
solution over more than 300 feet of compromised casing. By
leveraging the advanced technology of the X-Span™ System the
operator successfully, quickly and cost effectively extended the
life of the well. The versatility of the X-Span™ technologies make
them adaptable to a wide range of well conditions and challenges,
further amplifying their value proposition. Core Laboratories
continues to provide its customers with innovative solutions that
optimize asset performance, mitigate risk and unlock substantial
cost savings.
Also during the second quarter of 2023, Core's expertise in
completion diagnostics were utilized by a deepwater Gulf of Mexico operator that employed Core's
SpectraStim™ proppant tracers, SpectraScan® gamma ray logging, and
PackScan® density logging technologies to evaluate the
effectiveness of a complex, dual-zone, frac pack completion. The
operator was also seeking to confirm oil production from both
zones. Core's technical advisors recommended pumping the Company's
proprietary FlowProfiler™ water and oil diagnostic tracers
with the frac pack treatments. This allowed the operator to
simultaneously assess the integrity of the frac pack completion and
also confirm frac fluid recovery and oil contribution from both
zones. While both frac packs were properly placed,
post-treatment water and oil diagnostic tracer concentrations in
flowback samples revealed water and oil flow back had only been
established from the upper zone. This explained why early oil
production from the well was below expectations. Core's engineering
staff recommended a remedial operation be performed to open the
lower zone. This procedure was successfully performed by the
operator, and subsequent flowback sample analyses confirmed
fluid contribution from both zones, with increased oil
production.
Liquidity, Free Cash Flow and Dividend
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 2023, cash from
operations was approximately $8,800,000 and capital expenditures were
$2,200,000, yielding FCF of
$6,600,000.
Core expects cash from operations to strengthen and the Company
to generate positive free cash in future quarters. The Company will
continue to manage investment in working capital during a period of
growth. 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 June 28, 2023, the Company
issued $50,000,000 of Senior Notes
through a private placement transaction (the "Notes"). $25,000,000 of the Notes are due June 28, 2028, and $25,000,000 of the Notes are due June 28, 2030. The proceeds from the Notes were
used to reduce the outstanding balance on the Company's revolving
credit facility.
At the end of the second quarter of 2023, Core's net debt was
reduced by $7,900,000 from prior
quarter to $158,800,000, and the
Company's leverage ratio decreased to 1.85, which improved from
2.18 at the end of the first quarter of 2023. The Company 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.
On April 26, 2023, Core's Board of
Supervisory Directors ("Board") announced a quarterly cash dividend
of $0.01 per share of common stock,
which was paid on May 30, 2023 to
shareholders of record on May 8,
2023.
On July 26, 2023, the Board
approved a cash dividend of $0.01 per
share of common stock payable on August 28,
2023 to shareholders of record on August 7, 2023.
On July 17, 2023, the Company
terminated the Equity Distribution Agreement dated June 9, 2022 (the "Distribution Agreement"). No
shares of the Company's common stock were sold under the
Distribution Agreement.
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.
The Board has established an internal 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
shareholder return. Using Bloomberg's formula to reflect
Core's financial performance in the second quarter of 2023,
indicates Core Lab's ROIC improved to 13.0%, up from 8.4% at the
end of last quarter.
Industry and Core Lab Outlook and Guidance
Based on conversations with the Company's global client base,
Core Lab maintains its constructive outlook on international
upstream activity for the second half of 2023 and beyond, as a
higher level of investment will be required to maintain and grow
hydrocarbon production. The Company anticipates spending on
long-cycle upstream projects in both onshore and offshore
environments will continue to expand. In the near-term, the global
crude-oil market may remain volatile due to global recession fears
and uncertainty about the extent and timing of China's economic recovery. The recent OPEC+
crude-oil production cuts being implemented to support the current
market are not expected to be maintained or required long-term.
Additionally, production growth in areas outside of OPEC+ continue
to face constraints due to prolonged underinvestment, as well as
the loss of production due to natural declines from existing
fields.
Core continues to anticipate a multi-year international recovery
supported by increased spending on exploration in many regions
across the globe and expanded development of existing fields to
fortify crude-oil and natural gas reserves. This underlies Core's
outlook for continued improvement in international onshore and
offshore activity, with on-going projects across the globe, most
notably across the Middle East,
South Atlantic Margin and West
Africa. Turning to the U.S., land activity for the first
half of 2023 was lower than expected as reflected by the declining
U.S. rig and frac spread counts throughout the second quarter.
Core sees U.S. land completion activity for the second half of 2023
to be slightly down compared to the first half of 2023.
As a result, Core projects Reservoir Description's third quarter
2023 revenue to be up sequentially by low-single digits. While Core
expects its international revenue to increase sequentially, the
segment's revenue growth will be slightly softened by a projected
decrease in U.S. activity. Client commitments on international
projects have improved nicely year-over-year, however, the cadence
at which these long-term projects are executed by Core's clients
may vary from quarter to quarter as activity begins to accelerate.
Additionally, the Russia-Ukraine conflict continues to create
uncertainties with respect to trading patterns of crude-oil and
associated crude-oil assay services, which may impact Core's
Reservoir Description segment's operations in Russia, Ukraine and Europe. Core's Production Enhancement segment
third quarter 2023 revenue is estimated to be flat to down by
low-single digits, sequentially. Growth in Production Enhancement
international sales may offset the projected decline in U.S.
revenue.
Core projects third quarter 2023 revenue to range from
$128,000,000 to $132,000,000 and operating income of $15,200,000 to $17,500,000, yielding operating margins of
approximately 13%. EPS for the third quarter of 2023 is expected to
be $0.21 to $0.25.
The Company's third quarter 2023 guidance is based on
projections for underlying operations and excludes gains and losses
in foreign exchange. Third quarter 2023 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 2023 earnings announcement. The call will begin at
7:30 a.m. CDT / 8:30 a.m. EDT on Thursday, July 27, 2023. To
listen to the call, please go to Core's website
at www.corelab.com.
Core Laboratories Inc. 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, including
the Redomestication 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 and general economic conditions, including
inflationary pressures, the ability to achieve the benefits of the
Redomestication, international markets, international political
climates, including the Russia-Ukraine geopolitical conflict, public health
crises, 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
INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
%
Variance
|
|
|
June 30,
2023
|
|
|
March 31,
2023
|
|
|
June 30,
2022
|
|
|
vs.
Q1-23
|
|
vs.
Q2-22
|
REVENUE
|
|
$
|
127,881
|
|
|
$
|
128,356
|
|
|
$
|
120,898
|
|
|
(0.4) %
|
|
5.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
|
100,295
|
|
|
|
101,528
|
|
|
|
97,957
|
|
|
(1.2) %
|
|
2.4 %
|
General and
administrative expense
|
|
|
5,811
|
|
|
|
16,331
|
|
|
|
6,847
|
|
|
(64.4) %
|
|
(15.1) %
|
Depreciation and
amortization
|
|
|
3,937
|
|
|
|
4,044
|
|
|
|
4,360
|
|
|
(2.6) %
|
|
(9.7) %
|
Other (income) expense,
net
|
|
|
(1,068)
|
|
|
|
(28)
|
|
|
|
82
|
|
|
NM
|
|
NM
|
Total operating
expenses
|
|
|
108,975
|
|
|
|
121,875
|
|
|
|
109,246
|
|
|
(10.6) %
|
|
(0.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
18,906
|
|
|
|
6,481
|
|
|
|
11,652
|
|
|
191.7 %
|
|
62.3 %
|
Interest
expense
|
|
|
3,236
|
|
|
|
3,429
|
|
|
|
2,707
|
|
|
(5.6) %
|
|
19.5 %
|
Income before income
taxes
|
|
|
15,670
|
|
|
|
3,052
|
|
|
|
8,945
|
|
|
413.4 %
|
|
75.2 %
|
Income tax expense
(benefit)
|
|
|
(7,259)
|
|
|
|
610
|
|
|
|
1,789
|
|
|
NM
|
|
NM
|
Net income
|
|
|
22,929
|
|
|
|
2,442
|
|
|
|
7,156
|
|
|
838.9 %
|
|
220.4 %
|
Net income attributable
to non-
controlling interest
|
|
|
83
|
|
|
|
69
|
|
|
|
90
|
|
|
NM
|
|
NM
|
Net income attributable
to Core
Laboratories Inc.
|
|
$
|
22,846
|
|
|
$
|
2,373
|
|
|
$
|
7,066
|
|
|
862.7 %
|
|
223.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
0.48
|
|
|
$
|
0.05
|
|
|
$
|
0.15
|
|
|
860.0 %
|
|
220.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
attributable to Core Laboratories Inc.
|
|
$
|
0.48
|
|
|
$
|
0.05
|
|
|
$
|
0.15
|
|
|
860.0 %
|
|
220.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common
shares outstanding
|
|
|
47,497
|
|
|
|
47,481
|
|
|
|
47,143
|
|
|
— %
|
|
0.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
(46)
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
|
NM
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
83,384
|
|
|
$
|
80,188
|
|
|
$
|
75,818
|
|
|
4.0 %
|
|
10.0 %
|
Production
Enhancement
|
|
|
44,497
|
|
|
|
48,168
|
|
|
|
45,080
|
|
|
(7.6) %
|
|
(1.3) %
|
Consolidated
|
|
$
|
127,881
|
|
|
$
|
128,356
|
|
|
$
|
120,898
|
|
|
(0.4) %
|
|
5.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
13,316
|
|
|
$
|
2,471
|
|
|
$
|
5,925
|
|
|
438.9 %
|
|
124.7 %
|
Production
Enhancement
|
|
|
5,498
|
|
|
|
3,281
|
|
|
|
4,949
|
|
|
67.6 %
|
|
11.1 %
|
Corporate and
Other
|
|
|
92
|
|
|
|
729
|
|
|
|
778
|
|
|
NM
|
|
NM
|
Consolidated
|
|
$
|
18,906
|
|
|
$
|
6,481
|
|
|
$
|
11,652
|
|
|
191.7 %
|
|
62.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE LABORATORIES
INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
%
Variance
|
|
|
2023
|
|
2022
|
|
|
REVENUE
|
|
$256,237
|
|
$236,198
|
|
8.5 %
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
201,823
|
|
194,909
|
|
3.5 %
|
General and
administrative expense
|
|
22,142
|
|
19,392
|
|
14.2 %
|
Depreciation and
amortization
|
|
7,981
|
|
8,917
|
|
(10.5) %
|
Other (income) expense,
net
|
|
(1,096)
|
|
1,719
|
|
NM
|
Total operating
expenses
|
|
230,850
|
|
224,937
|
|
2.6 %
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
25,387
|
|
11,261
|
|
125.4 %
|
Interest
expense
|
|
6,665
|
|
5,351
|
|
24.6 %
|
Income before income
taxes
|
|
18,722
|
|
5,910
|
|
216.8 %
|
Income tax expense
(benefit)
|
|
(6,649)
|
|
593
|
|
NM
|
Net income
|
|
25,371
|
|
5,317
|
|
377.2 %
|
Net income attributable
to non-controlling interest
|
|
152
|
|
139
|
|
NM
|
Net income attributable
to Core Laboratories Inc.
|
|
$25,219
|
|
$5,178
|
|
387.0 %
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$0.53
|
|
$0.11
|
|
381.8 %
|
|
|
|
|
|
|
|
Diluted earnings per
share attributable to Core Laboratories Inc.
|
|
$0.53
|
|
$0.11
|
|
381.8 %
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
|
47,476
|
|
47,133
|
|
0.7 %
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
(36) %
|
|
10 %
|
|
NM
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Reservoir
Description
|
|
$163,572
|
|
$150,572
|
|
8.6 %
|
Production
Enhancement
|
|
92,665
|
|
85,626
|
|
8.2 %
|
Total
|
|
$256,237
|
|
$236,198
|
|
8.5 %
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
Reservoir
Description
|
|
$15,787
|
|
$6,287
|
|
151.1 %
|
Production
Enhancement
|
|
8,779
|
|
4,030
|
|
117.8 %
|
Corporate and
Other
|
|
821
|
|
944
|
|
NM
|
Total
|
|
$25,387
|
|
$11,261
|
|
125.4 %
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
CORE LABORATORIES
INC. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
ASSETS:
|
|
June 30,
2023
|
|
|
March 31,
2023
|
|
|
December 31,
2022
|
|
|
vs.
Q1-23
|
|
vs.
Q4-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
26,204
|
|
|
$
|
16,285
|
|
|
$
|
15,428
|
|
|
60.9 %
|
|
69.8 %
|
Accounts receivable,
net
|
|
|
106,816
|
|
|
|
110,699
|
|
|
|
106,913
|
|
|
(3.5) %
|
|
(0.1) %
|
Inventories
|
|
|
71,658
|
|
|
|
67,342
|
|
|
|
60,445
|
|
|
6.4 %
|
|
18.6 %
|
Other current
assets
|
|
|
31,446
|
|
|
|
33,601
|
|
|
|
28,916
|
|
|
(6.4) %
|
|
8.7 %
|
Total current
assets
|
|
|
236,124
|
|
|
|
227,927
|
|
|
|
211,702
|
|
|
3.6 %
|
|
11.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
101,662
|
|
|
|
102,341
|
|
|
|
105,028
|
|
|
(0.7) %
|
|
(3.2) %
|
Right of use
assets
|
|
|
55,456
|
|
|
|
56,663
|
|
|
|
52,379
|
|
|
(2.1) %
|
|
5.9 %
|
Intangibles, goodwill
and other long-
term assets, net
|
|
|
208,606
|
|
|
|
206,686
|
|
|
|
209,245
|
|
|
0.9 %
|
|
(0.3) %
|
Total assets
|
|
$
|
601,848
|
|
|
$
|
593,617
|
|
|
$
|
578,354
|
|
|
1.4 %
|
|
4.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
39,145
|
|
|
$
|
38,366
|
|
|
$
|
45,847
|
|
|
2.0 %
|
|
(14.6) %
|
Short-term operating
lease liabilities
|
|
|
10,731
|
|
|
|
11,073
|
|
|
|
11,699
|
|
|
(3.1) %
|
|
(8.3) %
|
Other current
liabilities
|
|
|
46,318
|
|
|
|
46,185
|
|
|
|
45,589
|
|
|
0.3 %
|
|
1.6 %
|
Total current
liabilities
|
|
|
96,194
|
|
|
|
95,624
|
|
|
|
103,135
|
|
|
0.6 %
|
|
(6.7) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
182,583
|
|
|
|
180,440
|
|
|
|
172,386
|
|
|
1.2 %
|
|
5.9 %
|
Long-term operating
lease liabilities
|
|
|
42,376
|
|
|
|
43,793
|
|
|
|
38,305
|
|
|
(3.2) %
|
|
10.6 %
|
Other long-term
liabilities
|
|
|
61,091
|
|
|
|
73,609
|
|
|
|
75,574
|
|
|
(17.0) %
|
|
(19.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
219,604
|
|
|
|
200,151
|
|
|
|
188,954
|
|
|
9.7 %
|
|
16.2 %
|
Total liabilities and
equity
|
|
$
|
601,848
|
|
|
$
|
593,617
|
|
|
$
|
578,354
|
|
|
1.4 %
|
|
4.1 %
|
CORE LABORATORIES
INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (In thousands)
(Unaudited)
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$
|
25,371
|
|
|
$
|
5,317
|
|
Adjustments to
reconcile net income to net cash provided by (used in)
operating
activities:
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
10,337
|
|
|
|
5,218
|
|
Depreciation and
amortization
|
|
|
7,981
|
|
|
|
8,917
|
|
Deferred income
taxes
|
|
|
(10,949)
|
|
|
|
530
|
|
Accounts
receivable
|
|
|
(103)
|
|
|
|
(2,202)
|
|
Inventories
|
|
|
(11,618)
|
|
|
|
(6,827)
|
|
Accounts
payable
|
|
|
(8,685)
|
|
|
|
5,062
|
|
Other adjustments to
net income
|
|
|
(6,762)
|
|
|
|
(10,120)
|
|
Net cash provided
by (used in) operating activities
|
|
|
5,572
|
|
|
|
5,895
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(4,382)
|
|
|
|
(5,493)
|
|
Net proceeds on life
insurance policies and from insurance recovery
|
|
|
3,375
|
|
|
|
2,657
|
|
Other investing
activities
|
|
|
189
|
|
|
|
479
|
|
Net cash provided
by (used in) investing activities
|
|
|
(818)
|
|
|
|
(2,357)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Repayment of long-term
debt
|
|
|
(101,000)
|
|
|
|
(31,000)
|
|
Proceeds from long-term
debt
|
|
|
111,000
|
|
|
|
29,000
|
|
Dividends
paid
|
|
|
(934)
|
|
|
|
(926)
|
|
Repurchase of common
shares
|
|
|
(200)
|
|
|
|
(2,166)
|
|
Equity related
transaction costs
|
|
|
(2,553)
|
|
|
|
—
|
|
Other financing
activities
|
|
|
(291)
|
|
|
|
(1)
|
|
Net cash provided
by (used in) financing activities
|
|
|
6,022
|
|
|
|
(5,093)
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS
|
|
|
10,776
|
|
|
|
(1,555)
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
15,428
|
|
|
|
17,703
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
26,204
|
|
|
$
|
16,148
|
|
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, Net Income and Diluted Earnings Per Share
Attributable to Core Laboratories Inc. (In thousands, except
per share data)
(Unaudited)
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2023
|
|
|
March 31,
2023
|
|
|
June 30,
2022
|
|
GAAP
reported
|
|
$
|
18,906
|
|
|
$
|
6,481
|
|
|
$
|
11,652
|
|
Stock compensation
(1)
|
|
|
(934)
|
|
|
|
6,515
|
|
|
|
(3,303)
|
|
Loss on lease
abandonment and other exit costs (2)
|
|
|
—
|
|
|
|
641
|
|
|
|
—
|
|
Assets write-down
(2)
|
|
|
—
|
|
|
|
1,015
|
|
|
|
—
|
|
Gain on life insurance
policies (3)
|
|
|
(1,965)
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
(386)
|
|
|
|
(144)
|
|
|
|
1,258
|
|
Excluding specific
items
|
|
$
|
15,621
|
|
|
$
|
14,508
|
|
|
$
|
9,607
|
|
|
|
|
|
Net Income
Attributable to Core Laboratories Inc.
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2023
|
|
|
March 31,
2023
|
|
|
June 30,
2022
|
|
GAAP
reported
|
|
$
|
22,846
|
|
|
$
|
2,373
|
|
|
$
|
7,066
|
|
Stock compensation
(1)
|
|
|
(747)
|
|
|
|
5,212
|
|
|
|
(2,642)
|
|
Loss on lease
abandonment and other exit costs (2)
|
|
|
—
|
|
|
|
513
|
|
|
|
—
|
|
Assets write-down
(2)
|
|
|
—
|
|
|
|
812
|
|
|
|
—
|
|
Gain on life insurance
policies (3)
|
|
|
(1,572)
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
(309)
|
|
|
|
(114)
|
|
|
|
1,007
|
|
Reversal of net
deferred tax liabilities and effect of
higher (lower) tax rate (4)
|
|
|
(10,394)
|
|
|
|
—
|
|
|
|
—
|
|
Excluding specific
items
|
|
$
|
9,824
|
|
|
$
|
8,796
|
|
|
$
|
5,431
|
|
|
|
|
|
Diluted Earnings Per
Share Attributable to Core Laboratories Inc.
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2023
|
|
|
March 31,
2023
|
|
|
June 30,
2022
|
|
GAAP
reported
|
|
$
|
0.48
|
|
|
$
|
0.05
|
|
|
$
|
0.15
|
|
Stock compensation
(1)
|
|
|
(0.02)
|
|
|
|
0.11
|
|
|
|
(0.06)
|
|
Loss on lease
abandonment and other exit costs (2)
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
Assets write-down
(2)
|
|
|
—
|
|
|
|
0.02
|
|
|
|
—
|
|
Gain on life insurance
policies (3)
|
|
|
(0.03)
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
—
|
|
|
|
—
|
|
|
|
0.03
|
|
Reversal of net
deferred tax liabilities and effect of
higher (lower) tax rate (4)
|
|
|
(0.22)
|
|
|
|
—
|
|
|
|
—
|
|
Excluding specific
items
|
|
$
|
0.21
|
|
|
$
|
0.19
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
(1) Three months
ended March 31, 2023 includes stock compensation expense recognized
pursuant to FASB ASC 718 "Stock
Compensation" associated with employees reaching eligible
retirement age. Three months ended June 30, 2023 and 2022 include
reversals
of stock compensation expense previously recognized due to a change
in probability of performance condition for certain executive's
share
awards.
|
|
(2) Three months
ended March 31, 2023 includes the write-down of right of use assets
and leasehold improvements and other exit costs
associated with consolidation of certain facilities.
|
|
(3) Three months
ended June 30, 2023 includes gain on life insurance policies death
benefit proceeds.
|
|
(4) Three months
ended June 30, 2023 includes the reversal of certain net deferred
tax liabilities which will not be realized as a result of the
Redomestication Transaction and the effect to reflect tax expense
at a normalized rate of 20%.
|
|
Segment
Information (In thousands)
(Unaudited)
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
Three Months Ended
June 30, 2023
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
13,316
|
|
|
$
|
5,498
|
|
|
$
|
92
|
|
Stock compensation
(1)
|
|
|
(596)
|
|
|
|
(338)
|
|
|
|
—
|
|
Gain on life insurance
policies (2)
|
|
|
(1,253)
|
|
|
|
(712)
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
(323)
|
|
|
|
(81)
|
|
|
|
18
|
|
Excluding specific
items
|
|
$
|
11,144
|
|
|
$
|
4,367
|
|
|
$
|
110
|
|
(1) Reversals of
stock compensation expense previously recognized due to a change in
probability of performance condition for certain
executive's share awards.
|
|
(2) Three months
ended June 30, 2023 includes gain on life insurance policies death
benefit proceed.
|
|
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 to demonstrate 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 13.0% is defined by Bloomberg as Net Operating Profit
After Tax ("NOPAT") of $51.0 million
divided by Average Total Invested Capital ("Average TIC") of
$393.0 million where NOPAT is defined
as GAAP net income before non-controlling 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 the average of beginning and
ending periods' GAAP stockholders' equity plus the sum of net
long-term debt, lease liabilities, allowance for credit losses, net
of deferred taxes, and income taxes payable.
Free Cash Flow
Core uses the non-GAAP financial 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, 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 (In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
2023
|
|
|
June 30,
2023
|
|
|
Net cash provided by
operating activities
|
|
$
|
8,741
|
|
|
$
|
5,572
|
|
|
Capital
expenditures
|
|
|
(2,175)
|
|
|
|
(4,382)
|
|
|
Free cash
flow
|
|
$
|
6,566
|
|
|
$
|
1,190
|
|
|
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SOURCE Core Laboratories Inc