- THIRD QUARTER REVENUE OF $126
MILLION; UP 4% SEQUENTIALLY; UP 7% YEAR-OVER-YEAR
- THIRD QUARTER OPERATING INCOME UP OVER 25% SEQUENTIALLY AND,
EX-ITEMS, UP OVER 38% SEQUENTIALLY
- THIRD QUARTER SEQUENTIAL INCREMENTAL MARGINS, EX-ITEMS,
EXCEED 55%, DRIVEN BY RESERVOIR DESCRIPTION
- THIRD QUARTER GAAP EPS OF $0.16; EX-ITEMS, $0.18
- THIRD QUARTER FREE CASH FLOW OF $3.1
MILLION
- COMPANY ANNOUNCES Q4 2022 QUARTERLY DIVIDEND
AMSTERDAM, Oct. 26,
2022 /PRNewswire/ -- Core Laboratories N.V. (NYSE:
"CLB US" and Euronext Amsterdam: "CLB NA") ("Core", "Core Lab", or
the "Company") reported third quarter 2022 revenue of $126,000,000. Revenue for the third quarter of
2022 was adversely impacted by the devaluation of the Euro and
British Pound when translated into U.S. dollars. Using a constant
U.S. dollar exchange rate, revenue would be $1,500,000 higher sequentially and $4,300,000 higher year-over-year. Core's
operating income was $14,600,000,
with diluted earnings per share ("EPS") of $0.16, all in accordance with U.S. generally
accepted accounting principles ("GAAP"). Operating income,
ex-items, a non-GAAP financial measure, was $13,300,000, yielding operating margins of 11%,
and EPS, ex-items, of $0.18.
Sequential incremental margins, excluding the aforementioned
currency devaluation, were over 55%. 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. Core's results during the
third quarter of 2022 displayed continued positive momentum as we
achieved sequential improvement in revenue, operating income,
operating margins, free cash flow ("FCF") and EPS, with strong
incremental margins. This quarter-over-quarter improvement in
financial results was driven by steady U.S. activity and an
increase in international activity, effectively illustrating the
operational leverage that is inherent in our global, asset-light
business model. Looking forward, Core sees continued progress in
both onshore and offshore client activity across our global
operations, although the Russia-Ukraine conflict, and the potential collateral
impact in Europe, create
uncertainties to growth prospects in those specific regions."
Russia-Ukraine Conflict
The on-going geopolitical conflict between Russia and Ukraine, along with the associated sanctions,
continue to present some measure of uncertainty for Core's business
and financial performance in the affected regions. 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. Over the course of the third quarter of 2022,
demand for laboratory assay work showed modest improvement, as
global trading patterns continued to realign.
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. Reservoir Description revenue in the third quarter
of 2022 was $79,000,000, up 4%
sequentially and flat year-over-year. Third quarter international
revenue increased 8% sequentially, driven by project progression
and realignment of global trading patterns. Considering the
devaluation of the Euro and British Pound, and using a constant
U.S. dollar exchange rate, international revenue would be up 11%
sequentially and up 6% year-over-year. Operating income for the
third quarter of 2022 on a GAAP basis was $9,800,000, while operating income, ex-items, was
$8,400,000, yielding operating
margins of 11%. Using the aforementioned currency devaluation,
sequential incremental margins, ex-items, were in excess of
70%.
During the third quarter of 2022, Core continued to leverage its
global network, expertise and proprietary technologies to evaluate
core and reservoir fluid samples acquired from a multi-well
exploration program in the deepwater, Orange Basin, located
offshore Namibia. Conventional
core recovered from targeted stratigraphic intervals were scanned
using Core's Non-Invasive Technologies for Reservoir Optimization
("NITRO™"). A wide range of critical petrophysical parameters for
pay delineation were generated using Core Lab's innovative
measurement and modeling techniques, allowing for early-time
assessment of the recovered strata. Selected samples are now
progressing through the traditional, time-honored program of
physical laboratory measurements. Core's proprietary, full
visualization, high-pressure, high-temperature,
pressure-volume-temperature ("PVT") cells and other proprietary
technologies were utilized to determine the chemical and physical
properties of recovered reservoir fluids. Recent successes in
Namibia have generated renewed
interest in Core Lab's "Reservoirs and Seals of Offshore Namibia
Basins, South Atlantic Margin" regional study. This study,
conducted in collaboration with the National Oil Company of
Namibia, includes geological
analysis of samples from more than 20 wells. The study assessed
depositional and diagenetic controls on porosity and provides a
regional evaluation of prospective reservoir targets. This study is
just one of 22 multi-well, multi-company studies that Core Lab has
conducted on offshore Africa
sedimentary basins.
Core Lab is pleased to announce that during the third quarter of
2022, Quantum Energy Partners, LLC and Trace Midstream Management
II, LLC joined Core's Carbon Capture and Sequestration ("CCS")
Consortium, bringing total membership to eight participants. These
new members enhance the Consortium's exposure to private equity
engagement and midstream operations expertise in the emerging CCS
marketplace. Earlier in 2022, Core announced the launch of its CCS
Consortium in collaboration with Dr. Birol Dindoruk of the
University of Houston. The objective of
the Consortium is to analyze geologic risks and challenges
associated with subsurface carbon sequestration. This consortium
project leverages Core's expertise in subsurface characterization,
with a focus on reservoir capacity, subsurface injection and
containment integrity, as well as rock-fluid and fluid-fluid
compatibility. Regulatory entities that govern carbon sequestration
projects require extensive site evaluation. Core's technologies
ensure that models for simulation and monitoring of CO2
injection and sequestration are both representative and applicable
for the permitting process.
Production Enhancement
Production Enhancement operations, which are focused on complex
completions in unconventional, tight-oil reservoirs in the U.S., as
well as conventional offshore projects across the globe, posted
third quarter 2022 revenue of $47,000,000, up 4% sequentially and up 20%
year-over-year. Operating income on a GAAP basis was $4,400,000, while operating income, ex-items, was
$4,700,000, yielding operating
margins of 10% and sequential incremental margins, ex-items, of
44%. During the quarter, Core's proprietary energetic product sales
grew over 20% sequentially and over 30% year-over-year, driven by
both organic growth from new product sales and market penetration
in U.S. and international markets.
During the third quarter of 2022, Core Lab continued to build on
the success of its proprietary Plug and Abandonment Perforating
System ("PAC™") in applications for oil and gas well abandonment
programs. Core provides solutions that leverage its expertise in
energetics as an alternative to traditional section milling, which
is slower and more costly. Thus far in 2022, Core has successfully
deployed its PAC™ technologies in over 30 wells in the North Sea.
Core's PAC™ energetic solutions are commonly used in
Perf-Wash-Cement ("PWC") applications. This technique enables the
operator to selectively establish circulation in the annular space
between casing strings, thereby creating pathways for setting the
permanent cement barriers that comply with stringent requirements
for well abandonment in the North Sea. Core's Production
Enhancement team offers an industry-leading portfolio of plug and
abandonment energetic solutions.
Operators continued to leverage Core's expertise in completion
diagnostics for offshore wells during the third quarter of 2022.
Core's SpectraStim™, SpectraScan®, and PackScan® downhole imaging
technologies were utilized in deepwater Gulf of Mexico Miocene
wells to evaluate single and dual zone frac pack completions. In
addition to those technologies, Core's FLOWPROFILER™ oil tracers
were used to assess production in ultra-deepwater Gulf of Mexico reservoirs involving multi-zone
completions. The costs associated with completing multiple zones in
these high-stakes wells necessitates confirmation that each frac
pack is properly configured, and that each targeted zone is
contributing oil production as per the completion plan. Recently,
Core's Production Enhancement team was tasked to deploy a unique
FLOWPROFILER™ diagnostic tracer in each of four frac pack
completion zones. Core's proprietary laboratory analytical
techniques confirmed that all four zones were contributing to
production. FLOWPROFILER™ also helped the operator understand how
the reservoir was responding, allowing them to adjust flowback
procedures to achieve drawdown pressure that optimized production
without damaging the reservoir. Core's Completion diagnostics are a
critical tool for determining whether planned completion programs
were successfully executed downhole, many thousands, or even tens
of thousands of feet away from the wellhead.
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 30 September
2022, the Company had not sold any shares under the ATM
program.
Core continues to focus on maximizing FCF, a non-GAAP financial
measure defined as cash from operations less capital expenditures.
For the third quarter of 2022, cash from operations was
$5,800,000 and capital expenditures
were $2,700,000, yielding FCF of
$3,100,000. 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 through the
Company's regular quarterly dividend as well as being focused
towards reducing long-term debt.
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.
On 27 July 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 29 August 2022 to
shareholders of record on 8 August
2022. Dutch withholding tax was deducted from the dividend
at a rate of 15%.
On 26 October 2022, the Board
approved a cash dividend of $0.01 per
share of common stock payable in the fourth quarter of 2022. The
fourth quarter dividend will be payable on 28 November 2022, to shareholders of record on
7 November 2022. 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 promotes capital
efficiency and is 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
5.8%.
Industry and Core Lab Outlook and Guidance
As the fourth quarter of 2022 unfolds, Core anticipates the
crude-oil commodity price will remain near current levels but may
fluctuate in response to the crude-oil supply and demand
uncertainties related to slowing global economic growth,
inflationary pressures and government-imposed COVID-19 lockdowns in
China. Over the longer term,
crude-oil supply is projected to tighten as production growth faces
limitations due to prolonged underinvestment in many regions around
the globe. As a result, Core Lab expects operators to expand their
upstream spending plans into 2023, supporting Core's outlook for
continued improvement in international onshore and offshore
activity, with projects emerging across most regions. These
crude-oil market fundamentals are leading indicators for what Core
sees as a strengthening multi-year international recovery.
Turning to the U.S., Core expects U.S. onshore activity to
remain steady and modestly grow in 2023, as operators remain
focused on capital discipline and availability of additional frac
crews and drilling rigs may constrain growth.
As a result, for the fourth quarter of 2022, Core's Reservoir
Description segment revenue is projected to be flat to up slightly.
While momentum in international activity continues to build,
near-term growth may be affected by two factors: 1) volatility
associated with the Russia-Ukraine geopolitical conflict, and 2)
client-driven project delays. Production Enhancement segment
revenue is estimated to increase by mid to high single digits as
U.S. land activity is projected to remain steady and international
growth continues.
For the fourth quarter of 2022, Core projects U.S. activity to
remain stable and the recent improvement trends in international,
offshore and deepwater markets to continue. Core projects fourth
quarter 2022 revenue to range from $126,000,000 to $131,000,000 and operating income of $13,000,000 to $15,000,000, yielding operating margins of
approximately 11%. EPS for the fourth quarter of 2022 is expected
to be $0.17 to $0.21.
The Company's fourth quarter 2022 guidance is based on
projections for underlying operations and excludes gains and losses
in foreign exchange. Fourth 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
third quarter 2022 earnings announcement. The call will begin at
7:30 a.m. CDT / 2:30 p.m. CEST on Thursday, 27 October 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 and general
economic conditions, including inflationary pressures,
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
|
|
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
|
vs.
Q2-22
|
|
vs.
Q3-21
|
REVENUE
|
|
$125,966
|
|
$120,898
|
|
$117,985
|
|
4.2 %
|
|
6.8 %
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
98,930
|
|
97,957
|
|
92,918
|
|
1.0 %
|
|
6.5 %
|
General and
administrative expense
|
|
10,001
|
|
6,847
|
|
15,115
|
|
46.1 %
|
|
(33.8) %
|
Depreciation and
amortization
|
|
4,171
|
|
4,360
|
|
4,496
|
|
(4.3) %
|
|
(7.2) %
|
Other (income) expense,
net
|
|
(1,781)
|
|
82
|
|
(1,184)
|
|
NM
|
|
NM
|
Total operating
expenses
|
|
111,321
|
|
109,246
|
|
111,345
|
|
1.9 %
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
14,645
|
|
11,652
|
|
6,640
|
|
25.7 %
|
|
120.6 %
|
Interest
expense
|
|
3,138
|
|
2,707
|
|
2,669
|
|
15.9 %
|
|
17.6 %
|
Income (loss) from
continuing operations
before income taxes
|
|
11,507
|
|
8,945
|
|
3,971
|
|
28.6 %
|
|
189.8 %
|
Income tax expense
(benefit)
|
|
3,856
|
|
1,789
|
|
2,962
|
|
115.5 %
|
|
30.2 %
|
Income (loss) from
continuing operations
|
|
7,651
|
|
7,156
|
|
1,009
|
|
6.9 %
|
|
658.3 %
|
Net income
(loss)
|
|
7,651
|
|
7,156
|
|
1,009
|
|
6.9 %
|
|
658.3 %
|
Net income (loss)
attributable to non-
controlling interest
|
|
127
|
|
90
|
|
135
|
|
NM
|
|
NM
|
Net income (loss)
attributable to Core
Laboratories N.V.
|
|
$7,524
|
|
$7,066
|
|
$874
|
|
6.5 %
|
|
760.9 %
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from
continuing operations
|
|
$0.16
|
|
$0.15
|
|
$0.02
|
|
6.7 %
|
|
700.0 %
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
attributable to Core Laboratories N.V.
|
|
$0.16
|
|
$0.15
|
|
$0.02
|
|
6.7 %
|
|
700.0 %
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common
shares outstanding
|
|
47,012
|
|
47,143
|
|
47,125
|
|
(0.3) %
|
|
(0.2) %
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
34 %
|
|
20 %
|
|
75 %
|
|
NM
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$78,996
|
|
$75,818
|
|
$78,775
|
|
4.2 %
|
|
0.3 %
|
Production
Enhancement
|
|
46,970
|
|
45,080
|
|
39,210
|
|
4.2 %
|
|
19.8 %
|
Total
|
|
$125,966
|
|
$120,898
|
|
$117,985
|
|
4.2 %
|
|
6.8 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$9,798
|
|
$5,925
|
|
$4,425
|
|
65.4 %
|
|
121.4 %
|
Production
Enhancement
|
|
4,417
|
|
4,949
|
|
2,779
|
|
(10.7) %
|
|
58.9 %
|
Corporate and
Other
|
|
430
|
|
778
|
|
(564)
|
|
NM
|
|
NM
|
Total
|
|
$14,645
|
|
$11,652
|
|
$6,640
|
|
25.7 %
|
|
120.6 %
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands,
except per share data)
(Unaudited)
|
|
|
|
Nine Months
Ended
September 30,
|
|
%
Variance
|
|
|
2022
|
|
2021
|
|
|
REVENUE
|
|
$362,164
|
|
$345,113
|
|
4.9 %
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
293,839
|
|
270,909
|
|
8.5 %
|
General and
administrative expense
|
|
29,393
|
|
33,246
|
|
(11.6) %
|
Depreciation and
amortization
|
|
13,088
|
|
14,118
|
|
(7.3) %
|
Other (income) expense,
net
|
|
(62)
|
|
(4,222)
|
|
NM
|
Total operating
expenses
|
|
336,258
|
|
314,051
|
|
7.1 %
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
25,906
|
|
31,062
|
|
(16.6) %
|
Interest
expense
|
|
8,489
|
|
6,562
|
|
29.4 %
|
Income (loss) from
continuing operations before income taxes
|
|
17,417
|
|
24,500
|
|
(28.9) %
|
Income tax expense
(benefit)
|
|
4,449
|
|
7,068
|
|
(37.1) %
|
Income (loss) from
continuing operations
|
|
12,968
|
|
17,432
|
|
(25.6) %
|
Net income
(loss)
|
|
12,968
|
|
17,432
|
|
(25.6) %
|
Net income (loss)
attributable to non-controlling interest
|
|
266
|
|
393
|
|
NM
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$12,702
|
|
$17,039
|
|
(25.5) %
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
|
$0.28
|
|
$0.37
|
|
(24.3) %
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share attributable to Core Laboratories
N.V.
|
|
$0.27
|
|
$0.36
|
|
(25.0) %
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
|
47,117
|
|
46,833
|
|
0.6 %
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
26 %
|
|
29 %
|
|
NM
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Reservoir
Description
|
|
$229,567
|
|
$233,512
|
|
(1.7) %
|
Production
Enhancement
|
|
132,597
|
|
111,601
|
|
18.8 %
|
Total
|
|
$362,164
|
|
$345,113
|
|
4.9 %
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
Reservoir
Description
|
|
$16,085
|
|
$21,742
|
|
(26.0) %
|
Production
Enhancement
|
|
8,447
|
|
8,170
|
|
3.4 %
|
Corporate and
Other
|
|
1,374
|
|
1,150
|
|
NM
|
Total
|
|
$25,906
|
|
$31,062
|
|
(16.6) %
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(amounts in
thousands)
(Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
ASSETS:
|
|
September 30,
2022
|
|
|
June 30,
2022
|
|
|
December 31,
2021
|
|
|
vs.
Q2-22
|
|
vs.
Q4-21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
13,732
|
|
|
$
|
16,148
|
|
|
$
|
17,703
|
|
|
(15.0) %
|
|
(22.4) %
|
Accounts receivable,
net
|
|
|
100,195
|
|
|
|
99,180
|
|
|
|
96,830
|
|
|
1.0 %
|
|
3.5 %
|
Inventories
|
|
|
54,795
|
|
|
|
52,551
|
|
|
|
45,443
|
|
|
4.3 %
|
|
20.6 %
|
Other current
assets
|
|
|
26,493
|
|
|
|
31,742
|
|
|
|
29,079
|
|
|
(16.5) %
|
|
(8.9) %
|
Total current
assets
|
|
|
195,215
|
|
|
|
199,621
|
|
|
|
189,055
|
|
|
(2.2) %
|
|
3.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
107,252
|
|
|
|
109,176
|
|
|
|
110,952
|
|
|
(1.8) %
|
|
(3.3) %
|
Right of use
assets
|
|
|
56,589
|
|
|
|
57,964
|
|
|
|
61,387
|
|
|
(2.4) %
|
|
(7.8) %
|
Intangibles, goodwill
and other long-term
assets, net
|
|
|
211,134
|
|
|
|
210,779
|
|
|
|
219,459
|
|
|
0.2 %
|
|
(3.8) %
|
Total assets
|
|
$
|
570,190
|
|
|
$
|
577,540
|
|
|
$
|
580,853
|
|
|
(1.3) %
|
|
(1.8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
34,343
|
|
|
$
|
36,106
|
|
|
$
|
29,726
|
|
|
(4.9) %
|
|
15.5 %
|
Short-term operating
lease liabilities
|
|
|
11,472
|
|
|
|
13,008
|
|
|
|
12,342
|
|
|
(11.8) %
|
|
(7.0) %
|
Other current
liabilities
|
|
|
41,544
|
|
|
|
46,795
|
|
|
|
48,714
|
|
|
(11.2) %
|
|
(14.7) %
|
Total current
liabilities
|
|
|
87,359
|
|
|
|
95,909
|
|
|
|
90,782
|
|
|
(8.9) %
|
|
(3.8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
182,677
|
|
|
|
186,979
|
|
|
|
188,636
|
|
|
(2.3) %
|
|
(3.2) %
|
Long-term operating
lease liabilities
|
|
|
41,975
|
|
|
|
44,231
|
|
|
|
49,286
|
|
|
(5.1) %
|
|
(14.8) %
|
Other long-term
liabilities
|
|
|
74,886
|
|
|
|
76,654
|
|
|
|
91,148
|
|
|
(2.3) %
|
|
(17.8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
183,293
|
|
|
|
173,767
|
|
|
|
161,001
|
|
|
5.5 %
|
|
13.8 %
|
Total liabilities and
equity
|
|
$
|
570,190
|
|
|
$
|
577,540
|
|
|
$
|
580,853
|
|
|
(1.3) %
|
|
(1.8) %
|
|
"NM" means not
meaningful
|
CORE LABORATORIES
N.V. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in
thousands)
(Unaudited)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net Income
(loss)
|
|
$
|
12,968
|
|
|
$
|
17,432
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
7,452
|
|
|
|
16,646
|
|
Depreciation and
amortization
|
|
|
13,088
|
|
|
|
14,118
|
|
Deferred income
taxes
|
|
|
(1,807)
|
|
|
|
3,058
|
|
Accounts
receivable
|
|
|
(3,390)
|
|
|
|
(12,135)
|
|
Inventories
|
|
|
(9,188)
|
|
|
|
(3,599)
|
|
Accounts
payable
|
|
|
4,288
|
|
|
|
9,661
|
|
Other adjustments to
net income (loss)
|
|
|
(11,666)
|
|
|
|
(15,756)
|
|
Net cash provided
by operating activities
|
|
|
11,745
|
|
|
|
29,425
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(8,195)
|
|
|
|
(8,789)
|
|
Proceeds from insurance
recovery
|
|
|
583
|
|
|
|
—
|
|
Other investing
activities
|
|
|
2,698
|
|
|
|
2,260
|
|
Net cash used in
investing activities
|
|
|
(4,914)
|
|
|
|
(6,529)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Repayment of long-term
debt
|
|
|
(49,000)
|
|
|
|
(194,000)
|
|
Proceeds from long-term
debt
|
|
|
44,000
|
|
|
|
123,000
|
|
Proceeds from issuance
of common shares
|
|
|
—
|
|
|
|
60,000
|
|
Transaction costs on
equity distribution program
|
|
|
(411)
|
|
|
|
(861)
|
|
Dividends
paid
|
|
|
(1,389)
|
|
|
|
(1,372)
|
|
Repurchase of common
shares
|
|
|
(2,311)
|
|
|
|
(3,911)
|
|
Other financing
activities
|
|
|
(1,691)
|
|
|
|
(508)
|
|
Net cash used in
financing activities
|
|
|
(10,802)
|
|
|
|
(17,652)
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS
|
|
|
(3,971)
|
|
|
|
5,244
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
|
17,703
|
|
|
|
13,806
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$
|
13,732
|
|
|
$
|
19,050
|
|
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)
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2022
|
|
|
June 30,
2022
|
|
|
September 30,
2021
|
|
GAAP
reported
|
|
$
|
14,645
|
|
|
$
|
11,652
|
|
|
$
|
6,640
|
|
Stock compensation
(1)
|
|
|
—
|
|
|
|
(3,303)
|
|
|
|
6,506
|
|
Foreign exchange losses
(gains)
|
|
|
(1,303)
|
|
|
|
1,258
|
|
|
|
(140)
|
|
Excluding specific
items
|
|
$
|
13,342
|
|
|
$
|
9,607
|
|
|
$
|
13,006
|
|
|
|
|
|
|
|
|
|
Income (Loss) from
Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2022
|
|
|
June 30,
2022
|
|
|
September 30,
2021
|
|
GAAP
reported
|
|
$
|
7,651
|
|
|
$
|
7,156
|
|
|
$
|
1,009
|
|
Stock compensation
(1)
|
|
|
—
|
|
|
|
(2,642)
|
|
|
|
6,506
|
|
Foreign exchange losses
(gains)
|
|
|
(1,043)
|
|
|
|
1,007
|
|
|
|
(111)
|
|
Debt issuance costs
write off (2)
|
|
|
171
|
|
|
|
—
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate (3)
|
|
|
1,553
|
|
|
|
—
|
|
|
|
867
|
|
Excluding specific
items
|
|
$
|
8,332
|
|
|
$
|
5,521
|
|
|
$
|
8,271
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share from Continuing Operations
|
|
|
|
Three Months
Ended
|
|
|
|
September 30,
2022
|
|
|
June 30,
2022
|
|
|
September 30,
2021
|
|
GAAP
reported
|
|
$
|
0.16
|
|
|
$
|
0.15
|
|
|
$
|
0.02
|
|
Stock compensation
(1)
|
|
|
—
|
|
|
|
(0.06)
|
|
|
|
0.14
|
|
Foreign exchange losses
(gains)
|
|
|
(0.01)
|
|
|
|
0.03
|
|
|
|
—
|
|
Debt issuance costs
write off (2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate (3)
|
|
|
0.03
|
|
|
|
—
|
|
|
|
0.02
|
|
Excluding specific
items
|
|
$
|
0.18
|
|
|
$
|
0.12
|
|
|
$
|
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 executives' share awards. Three months ended September
30, 2021 includes
stock compensation expense
recognized pursuant to FASB ASC 718 "Stock Compensation" associated
with employees reaching
eligible retirement age, which is
nondeductible for tax purposes.
|
|
(2) Three months
ended September 30, 2022 includes debt issuance costs written off
upon renewal of the Credit Facility.
|
|
(3) Three months
ended September 30, 2022 and 2021 includes adjustments to reflect
tax expense at a normalized rate of 20%.
|
|
Segment
Information
(amounts in
thousands)
(Unaudited)
|
|
|
|
Operating Income
(Loss)
|
|
|
|
Three Months Ended
September 30, 2022
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
9,798
|
|
|
$
|
4,417
|
|
|
$
|
430
|
|
Foreign exchange losses
(gains)
|
|
|
(1,381)
|
|
|
|
296
|
|
|
|
(218)
|
|
Excluding specific
items
|
|
$
|
8,417
|
|
|
$
|
4,713
|
|
|
$
|
212
|
|
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 5.8% is defined by Bloomberg as Net Operating Profit
After Tax ("NOPAT") of $21.8 million
divided by Average Total Invested Capital ("Average TIC") of
$375.9 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 measure of free cash flow to evaluate its
cash flows and results of operations. Free cash flow is an
important measurement because it represents the cash from
operations, in excess of capital expenditures, available to operate
the business and fund non-discretionary obligations. Free cash flow
is not a measure of operating performance under GAAP and should not
be considered in isolation nor construed as an alternative
consideration to operating income, net income, earnings per share,
or cash flows from operating, investing, or financing activities,
each as determined in accordance with GAAP. Free cash flow should
not be considered a measure of liquidity. Moreover, since free cash
flow is not a measure determined in accordance with GAAP and thus
is susceptible to varying interpretations and calculations, free
cash flow as presented may not be comparable to similarly titled
measures presented by other companies.
Computation of Free
Cash Flow
(amounts in
thousands)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
|
September 30,
2022
|
|
|
September 30,
2022
|
|
|
Net cash provided by
operating activities
|
|
$
|
5,850
|
|
|
$
|
11,745
|
|
|
Capital
expenditures
|
|
|
(2,702)
|
|
|
|
(8,195)
|
|
|
Free cash
flow
|
|
$
|
3,148
|
|
|
$
|
3,550
|
|
|
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SOURCE Core Laboratories N.V.