AMSTERDAM, July 22 /PRNewswire-FirstCall/ -- Core Laboratories N.V.
(NYSE: CLB) reported second quarter 2009 revenue of $167,262,000,
down 15% from year-earlier totals, and net income of $29,807,000,
down 8% from 2008 second quarter totals. Earnings per diluted share
("EPS") for the second quarter of 2009 were $1.29, including gains
from currency exchange translations and a settlement of a
contingent liability that were partially offset by a quarterly
effective tax rate of 37.4%, which was higher than the expected
rate of 32%. Excluding the gains and the effects of a higher than
expected quarterly effective tax rate, second quarter EPS was
$1.24, compared with EPS of $1.32 for the year-earlier quarter.
Operating income, excluding gains, for the second quarter of 2009
was $46,291,000, down 16% from year-earlier totals; operating
margins (defined as operating income, excluding the effects of
currency exchange translations and tax settlement, divided by
revenue) were 28%. Year-earlier second quarter operating margins
were also 28%. For the second quarter of 2009, Core's Reservoir
Description operations, which focus on international
crude-oil-related projects, posted modestly lower year-over-year
quarterly revenue totals that, due to expense reductions, generated
increased year-over-year quarterly operating income and operating
margins. Reservoir Management operations, also internationally
focused, reported essentially the same quarterly revenue and
increased operating income compared with the second quarter of
2008. As expected, the Company's Production Enhancement segment,
with operations concentrated in North America, posted sharply lower
year-over-year quarterly revenue and operating income totals. The
Company estimates that year-over-year North American oil industry
activity decreased by over 50%, while international oil company
activity was down approximately 10%. For the first six months of
2009, Core's revenue was $346,138,000, down 8% from the
year-earlier six-month period, while net income equaled
$58,999,000, a decrease of 0.2% from the $59,114,000 posted for the
first two quarters of 2008. First-half 2009 EPS totaled $2.54,
compared with $2.44 for the first half of 2008. First-half 2008 net
income and EPS totals were affected by one-time gains and charges
and foreign currency translations, while the 2009 totals were
affected by foreign currency translations, a gain on settlement of
a contingent liability, and a higher than expected effective tax
rate. Cash at the close of the first six months of 2009 totaled a
record high of $103,246,000, or approximately $4.45 per diluted
share. Year-to-date free cash flow, defined as cash from operations
minus capital expenditures, reached $80,900,000, or $3.49 per
diluted share, also a record high for the first six-month period.
The Company recently announced that it planned to pay shareholders
a special third quarter dividend of $0.75 per share in addition to
a regular quarterly dividend of $0.10 per share. Segment Highlights
Core Laboratories reports results under three operating segments:
Reservoir Description, Production Enhancement, and Reservoir
Management. Reservoir Description Reservoir Description operations
reported quarterly revenue of $103,479,000, down 9% from last
year's second quarter total, but up 1% sequentially from the first
quarter of 2009. Operating income reached $31,462,000, an increase
of 8% over year-earlier totals, while quarterly operating margins,
excluding foreign exchange translations, increased 400 basis points
to 29%. Reservoir Description margins continued to benefit from
expense reductions and a de-emphasis of its Russian operations and
downsizing of its Venezuelan and Nigerian operations over the past
three years. The Company has focused on internationally based
development and production-related crude-oil projects almost to the
exclusion of more cyclical exploration-related activities. The
Reservoir Description segment also does not participate directly in
lower-margin, integrated management projects. Most recently, Core
was awarded, but refused to accept, a new $7,000,000 contract with
Petroleos de Venezuela S.A. (PDVSA) because of ongoing currency
convertibility issues facing the industry. The Company plans to
further reduce its presence in Venezuela and shift focus to its
other South American operations until these issues are resolved.
During the quarter, Reservoir Description initiated several
large-scale core analyses and reservoir fluids phase-behavior
studies in the Middle East. The Company has received and is
processing hundreds of feet of carbonate cores, hundreds of
crude-oil samples, and multiple pressurized reservoir fluid samples
from fields in southern Iraq. The results will be utilized to
determine the productive capacity of these fields for upcoming
Iraqi licensing rounds. Crude-oil testing, inspections, and
distillation services also remained in high demand during the
quarter. In addition, the Company continued to be active in
deepwater field development offshore eastern Canada, the Gulf of
Mexico, on both south Atlantic coastal margins, and in the
Asia-Pacific region. Production Enhancement Production Enhancement
operations posted second quarter 2009 revenue of $52,014,000, down
27% from the year-earlier quarter and down 18% sequentially from
the first quarter of 2009. Operating income for the quarter was
$14,419,000, down from $23,169,000 in the year-earlier period.
Operating margins, excluding currency exchange gains, were 26% for
the quarter. Given that North American drilling activity was
estimated to be down over 50% from the second quarter of 2008,
Production Enhancement outperformed its focus market. Increasing
market penetration by the Company's HERO(TM), SuperHERO(TM), and
SuperHERO Plus+(TM) lines of perforating charges and concentrated
focus on the Haynesville, Marcellus, and Eagle Ford Shale
developments were the primary contributors to the segment's
relatively superior performance. Core's recently introduced
SpectraChem Plus+(TM) service also continues to gain market
acceptance. Outside North America, Production Enhancement
operations are providing perforating charges and gun systems to the
Iraqi Southern Oil Company for use in the recompletion of
oil-producing and potential oil-producing zones in the Rumalia
oilfield complex. Core's unique line of perforating charges and gun
systems has proven to be very effective in the various types of
carbonate reservoirs that are prevalent throughout the Middle East.
During the second quarter, Production Enhancement purchased over
$7,000,000 of high-grade, high-quality specialty steel tubulars
used in making perforating gun systems. Core's management was
concerned that limited production of high-quality specialty
tubulars over the next twelve months could lead to industry
shortages. Although this strategic purchase temporarily decreased
quarterly free cash flow by increasing inventory levels, Core
wanted to ensure that its clients would continue to receive the
highest quality perforating gun systems available from the service
industry. Reservoir Management Reservoir Management operations
posted flat second quarter 2009 revenue and increased operating
income compared with 2008 second quarter totals. Revenue was
$11,769,000, and operating income increased 18% to $3,484,000.
Operating margins, excluding currency gains, were 26%. During the
quarter, the Company initiated a joint industry project evaluating
the petrophysical, geochemical, and production characteristics of
the Eagle Ford Shale in south Texas. This study currently has eight
participating companies, including Petrohawk, St. Mary Land &
Exploration, ConocoPhillips, El Paso Corporation, and Murphy Oil.
This project will be very similar to ongoing studies of the
Haynesville and Marcellus gas shale formations, which have 36 and
27 companies participating, respectively. Core's large North
American Gas Shale Study presently has 65 companies participating.
Core will concentrate its personnel, assets, and technology on the
Eagle Ford Shale play just as it has on the Barnett, Fayetteville,
Haynesville, Marcellus, and Muskwa plays. Core believes these shale
plays will yield above-trend opportunities in North America for all
three of its business segments for the next several years.
Reservoir Management operations also initiated a Global Gas Shale
Study to examine gas shale potential in central and southern
Europe, north Africa, India, China, and Australia, among other
regions. Currently eight international oil companies are
participating in the Global Study, and many other companies are
reviewing the technical proposal. Early participants include Esso,
Total, Marathon Oil, Hess Corporation, Statoil, and ConocoPhillips.
Free Cash Flow, Cash, Quarterly Dividend, and Special Dividend For
the second quarter of 2009, Core had approximately $36,200,000 in
cash from operations and $2,700,000 in capital expenditures for a
free cash flow of $33,500,000. Free cash flow for the first six
months of 2009 reached approximately $80,900,000, or $3.49 per
diluted share, both all-time highs for the first two quarters of
any year. In contrast, Core's average outstanding diluted share
count of 23,179,000 is at its lowest level since the third quarter
of 1997. The Company now projects 2009 capital expenditures of
$15,000,000 to $17,000,000, down from prior guidance of
$20,000,000, and down from approximately $31,000,000 in 2008. Cash
balances reached $103,246,000, which was the highest quarter-ending
level ever reported by Core, and it represents $4.45 of cash per
diluted share. In addition, indebtedness, net of cash, was reduced
to $135,000,000 from the year-ago total of $245,000,000, a decrease
of $110,000,000, or nearly 45%. Net debt-to-capitalization now
stands at approximately 23%. On 13 July, Core's Board of
Supervisory Directors announced a quarterly cash dividend for the
third quarter of 2009 equal to $0.10 per share of common stock. On
an annualized basis, the quarterly cash dividend would equal a
payout of $0.40 per share of common stock. The quarterly cash
dividend will be payable on 24 August 2009 to shareholders of
record on 24 July 2009. Dutch withholding tax will be deducted from
the dividend at a rate of 15%. Core's Board also has declared a
special cash dividend of $0.75 per share of common stock payable on
24 August 2009 to shareholders of record on 24 July 2009. Dutch
withholding tax will be deducted from the special dividend at a
rate of 15%. Any determination to declare a future quarterly or
special cash dividend, as well as the amount of any such cash
dividend which may be declared, will be based on the Company's
financial position, earnings, earnings outlook, capital expenditure
plans, ongoing share repurchases, potential acquisition
opportunities, and other relevant factors at the time. In addition
to dividend payments, Core could use its free cash flow and cash
balances to repurchase shares or debt, fund internal growth, or
make strategic acquisitions. Core intends to allocate cash to those
activities that the Company believes will yield the highest overall
return for its shareholders. Q3 2009 Earnings Guidance For the
third quarter of 2009, Core expects revenue to range between
$160,000,000 and $165,000,000 and EPS to range between $1.10 and
$1.15. The mid-point of this guidance would result in operating
margins of approximately 26%. In general, the Company believes that
activities, work flows, and operating margins outside North America
will remain essentially constant and that North American activity
levels will continue to decline because of lower natural gas
prices. However, recent natural gas production data indicate that
North American supply is now decreasing and will continue to
decrease over the next several quarters. In addition, rig count
would appear to be stabilizing. This third quarter 2009 guidance
excludes any gains or losses that may originate from the repurchase
of outstanding debt, any effects of foreign currency translations,
and assumes an effective tax rate of approximately 32%. The Company
is unable, at this time, to provide 2009 fourth quarter guidance
with a high degree of confidence. Adjustment to Convertible Notes
Exchange Rate The dividends described herein will result in an
adjustment to the Exchange Rate on our Senior Exchangeable Notes.
The new exchange rate will be 10.7904 per $1,000 principal amount
of the outstanding notes and is effective 25 July 2009. The Company
has scheduled a conference call to discuss this quarter's earnings
announcement. The call will begin at 7:30 a.m. CDT on Thursday, 23
July 2009. To listen to the call, please go to Core's website at
http://www.corelab.com/. Core Laboratories N.V.
(http://www.corelab.com/) is a leading provider of proprietary and
patented reservoir description, production enhancement, and
reservoir management services 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 includes forward-looking statements
regarding the future revenues, 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 and other factors as more fully described in the Company's
2008 Form 10-K filed on 20 February 2009, and in other securities
filings. 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 any forward
looking statement to reflect events or circumstances that may arise
after the date of this press release. CORE LABORATORIES N.V. &
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (amounts
in thousands, except per share data) (UNAUDITED) Three Months Ended
Six Months Ended 30 June 30 June 30 June 30 June 2009 2008 2009
2008 ---- ---- ---- ---- REVENUES $167,262 $197,688 $346,138
$377,125 OPERATING EXPENSES: Costs of services and sales 108,997
130,910 225,029 250,383 General and administrative expenses 6,684
7,159 15,958 15,448 Depreciation and amortization 5,906 5,276
11,614 10,515 Other expense (income), net (6,013) (753) (4,770)
1,312 ------ ---- ------ ----- OPERATING INCOME 51,688 55,096
98,307 99,467 Interest expense 3,840 8,000 7,640 12,782 ----- -----
----- ------ INCOME BEFORE INCOME TAX EXPENSE 47,848 47,096 90,667
86,685 Income tax expense 17,884 14,652 31,464 27,391 ------ ------
------ ------ NET INCOME 29,964 32,444 59,203 59,294 NET INCOME
ATTRIBUTABLE TO NON-CONTROLLING INTEREST 157 77 204 180 ----- -----
----- ----- NET INCOME ATTRIBUTABLE TO CORE LABORATORIES N.V.
$29,807 $32,367 $58,999 $59,114 ======= ======= ======= =======
Diluted Earnings Per Share: $1.29 $1.32 $2.54 $2.44 ===== =====
===== ===== WEIGHTED AVERAGE DILUTED COMMON SHARES OUTSTANDING
23,179 24,452 23,192 24,206 ====== ====== ====== ====== SEGMENT
INFORMATION: Revenues: Reservoir Description $103,479 $114,157
$206,002 $214,658 Production Enhancement 52,014 71,706 115,114
138,730 Reservoir Management 11,769 11,825 25,022 23,737 ------
------ ------ ------ Total $167,262 $197,688 $346,138 $377,125
======== ======== ======== ======== Operating income (loss):
Reservoir Description $31,462 $29,059 $56,214 $52,077 Production
Enhancement 14,419 23,169 32,743 45,109 Reservoir Management 3,484
2,962 6,962 7,189 ----- ----- ----- ----- Subtotal 49,365 55,190
95,919 104,375 Corporate and other 2,323 (94) 2,388 (4,908) -----
------ ------ ------- Total $51,688 $55,096 $98,307 $99,467 =======
======= ======= ======= CORE LABORATORIES N.V. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) 30
June 31 December ASSETS: 2009 2008 ---- ---- (Unaudited) Cash and
Cash Equivalents $103,246 $36,138 Accounts Receivable, net 123,946
144,293 Inventories, net 36,858 34,838 Other Current Assets 24,490
20,376 ------ ------ Total Current Assets 288,540 235,645 Property,
Plant and Equipment, net 100,289 103,463 Intangibles, Goodwill and
Other Long Term Assets, net 187,045 182,427 ------- ------- Total
Assets $575,874 $521,535 ======== ======== LIABILITIES AND
SHAREHOLDERS' EQUITY: Accounts Payable $26,840 $41,588 Other
Current Liabilities 58,016 54,102 ------ ------ Total Current
Liabilities 84,856 95,690 Long-Term Debt and Lease Obligations
201,709 194,568 Other Long-Term Liabilities 52,383 42,992
Shareholders' Equity 236,926 188,285 ------- ------- Total
Liabilities and Shareholders' Equity $575,874 $521,535 ========
======== CORE LABORATORIES N.V. & SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOW (amounts in thousands)
(Unaudited) Six Months Ended 30 June 2009 ------------ CASH FLOWS
FROM OPERATING ACTIVITIES $86,267 CASH FLOWS FROM INVESTING
ACTIVITIES $(5,856) CASH FLOWS FROM FINANCING ACTIVITIES $(13,303)
-------- NET CHANGE IN CASH AND CASH EQUIVALENTS 67,108 CASH AND
CASH EQUIVALENTS, beginning of period 36,138 ------ CASH AND CASH
EQUIVALENTS, end of period $103,246 ======== Non-GAAP Information
Management believes that the exclusion of certain income and
expenses enables it to evaluate more effectively the Company's
operations period-over-period and to identify operating trends that
could otherwise be masked by the excluded items. For this reason,
we used certain non-GAAP measures that exclude these items; we felt
that presentation provides the public a clearer comparison with the
numbers reported in prior periods. Reconciliation of Operating
Income (amounts in thousands) Three Months Ended 30 June 2009
Reservoir Production Reservoir Description Enhancement Management
Consolidated Operating income $31,462 $14,419 $3,484 $51,688
Foreign exchange gain (1,878) (667) (416) (2,897) Gain on
settlement of a contingent liability - - - (2,500) ------- -------
------- ------- Operating income excluding specific items $29,584
$13,752 $3,068 $46,291 ======= ======= ====== =======
Reconciliation of Diluted Earnings Per Share Three Months Ended 30
June 2009 ------------ Diluted earnings per share $1.29 Foreign
exchange gain (net of tax) (0.08) Gain on settlement of a
Contingent liability (0.11) Effect of change in tax rate 0.14 ----
Diluted earnings per share Excluding specific items $1.24 =====
Free Cash Flow Core uses the non-GAAP measure of free cash flow and
free cash flow per diluted share to evaluate its cash flows and
results of operations. Free cash flow and free cash flow per
diluted share are important measurements 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 and free cash flow per diluted share are not
measures of operating performance under GAAP, and should not be
considered in isolation nor construed as an alternative to
operating income, net income, earnings per share, or cash flows
from operating, investing, or financing activities, each as
determined in accordance with GAAP. You should also not consider
free cash flow and free cash flow per diluted share as a measure of
liquidity. Moreover, since free cash flow and free cash flow per
diluted share are not measures determined in accordance with GAAP
and thus are susceptible to varying interpretations and
calculations, free cash flow and free cash flow per diluted share
as presented may not be comparable to similarly titled measures
presented by other companies. Computation of Free Cash Flow
(amounts in thousands, except per share data) (Unaudited) Three
Months Six Months Ended Ended 30 June 2009 30 June 2009
------------ ------------ Net cash provided by operating activities
$36,149 $86,267 Less: capital expenditures 2,665 5,320 ----- -----
Free cash flow $33,484 $80,947 ======= ======= Weighted Average
Diluted Common Shares 23,179 23,192 ====== ====== Free cash flow
per Diluted Share $1.44 $3.49 ===== ===== Computation of Cash per
Diluted Share (amounts in thousands, except per share data)
(Unaudited) 30 June 2009 ------------ Cash and Cash Equivalents
$103,246 ======== Weighted Average Diluted Common Shares 23,179
====== Cash per Diluted Share $4.45 ===== DATASOURCE: Core
Laboratories N.V. CONTACT: Richard L. Bergmark, +1-713-328-2101,
Fax, +1-713-328-2151, for Core Laboratories N.V. Web Site:
http://www.corelab.com/
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