- FOURTH QUARTER REVENUE OF $128
MILLION; UP SLIGHTLY SEQUENTIALLY
- FOURTH QUARTER OPERATING INCOME OF $16 MILLION; EX-ITEMS OF $15 MILLION, UP 10% SEQUENTIALLY
- FOURTH QUARTER OPERATING MARGIN, EX-ITEMS, OF 12% WITH
SEQUENTIAL INCREMENTAL MARGINS EXCEEDING 80%, DRIVEN BY PRODUCTION
ENHANCEMENT
- FOURTH QUARTER GAAP EPS OF $0.14; EX-ITEMS, $0.20
- FOURTH QUARTER CASH FROM OPERATIONS OF $13.2 MILLION
- FOURTH QUARTER FREE CASH FLOW OF $11.2 MILLION
- FOURTH QUARTER NET DEBT REDUCED BY $11.7 MILLION SEQUENTIALLY
- COMPANY ANNOUNCED DELISTING FROM EURONEXT AND
REDOMESTICATION TO THE U.S.
- COMPANY ANNOUNCES Q1 2023 QUARTERLY DIVIDEND
AMSTERDAM, Feb. 1, 2023
/PRNewswire/ -- Core Laboratories N.V. (NYSE: CLB) ("Core", "Core
Lab", or the "Company") reported fourth quarter 2022 revenue of
$127,600,000. Core's operating income
was $15,600,000, with diluted
earnings per share ("EPS") of $0.14,
all in accordance with U.S. generally accepted accounting
principles ("GAAP"). The financial results for the fourth
quarter of 2022 include a non-cash adjustment of $1,900,000, decreasing stock compensation expense
associated with performance share awards that vested during the
quarter. Operating income, ex-items, a non-GAAP financial
measure, was $14,700,000, yielding
operating margins of 12%, and EPS, ex-items, of $0.20. A full reconciliation of non-GAAP
financial measures is included in the attached financial
tables.
For 2022, Core's revenue of $489,700,000 increased 4% from the prior
year. Core's full-year revenue 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, 2022
revenue would have been approximately $12,800,000 higher. In addition, Core's
2022 revenue was also adversely impacted by the Russia-Ukraine conflict. Across Core's
European, Russian and Ukrainian operations, activity declined due
to disruptions in crude-oil trading patterns, causing the Company's
crude-oil assay and derived product testing revenue and product
sales to decline in excess of $10,000,000 year-over-year. The combined
impact of these currency fluctuations and geopolitical factors
adversely impacted 2022 revenue by approximately $22,800,000 year-over-year, substantially
offsetting international growth in other regions.
Core's CEO, Larry Bruno stated,
"First, our thoughts remain with our Ukrainian employees and their
families during the on-going conflict. Despite the challenges
posed by currency and geopolitical conflict, Core's results during
the fourth quarter of 2022 displayed continued positive momentum,
as we achieved sequential improvement in revenue, operating income,
operating margins and EPS, with strong incremental margins. These
improvements translated into higher free cash flow ("FCF"), which
enabled the Company to decrease net debt by $11,700,000 or 7%, sequentially. Core
remains intently focused on executing against its key financial and
operational strategies, including 1) reducing debt and
strengthening our balance sheet, as well as 2) consistently
pursuing efficiencies and the introduction of new
technologies. For 2023, Core sees the continuation of a
multi-year recovery cycle for the oil and gas industry led by
improvement in both onshore and offshore client activity across our
global operations, although the Russia-Ukraine conflict continues to create
volatility and uncertainties to growth prospects in Europe, Russia and Ukraine."
Voluntary Delisting from Euronext and Redomestication to
the United States
On 4 November 2022, Core Lab
announced its decision to voluntarily delist its shares from
Euronext Amsterdam, and the last trading day for the Company's
shares on the Euronext was 2 December
2022. The Company's shares continue to trade on the New York
Stock Exchange under the symbol "CLB".
Following the delisting of the shares, on 17 January 2023, Core Lab announced plans to
reorganize the Company's corporate structure, resulting in the
redomestication of the parent company from the Netherlands to the United States (the
"Redomestication"). The Company and its Board believes that
the Redomestication will enhance shareholder value over the
long-term through simplifying the corporate structure, improving
operational efficiencies and reducing administrative costs.
The Redomestication, if approved by the Company's shareholders,
will change the Company's jurisdiction of organization from
the Netherlands to the State of
Delaware.
Benefits of the Redomestication include: (i) a reduction in the
corporate footprint and regulatory requirements associated with
preparing duplicative audited financial statements and other
reporting obligations, (ii) improved efficiencies and opportunities
in the Company's corporate treasury, cash management, risk
management and tax functions, and (iii) a simplified and more
efficient tax structure.
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 fourth
quarter of 2022 was $78,100,000, down
slightly sequentially and year-over-year. Geopolitical
sanctions that became effective during the fourth quarter of 2022,
further disrupted trading patterns of crude oil and derived
products in Europe, Russia and Ukraine. As a result, the
demand for laboratory services in the fourth quarter of 2022 was
adversely impacted, offsetting revenue growth in other
international regions. Operating income for the fourth quarter of
2022 on a GAAP basis was $6,800,000,
while operating income, ex-items, was $6,000,000, yielding operating margins of 8%.
Reservoir Description revenue for 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,
Reservoir Description 2022 revenue would have been approximately
$12,000,000 higher. For 2022,
revenue was also adversely impacted by the Russia-Ukraine conflict, declining over $9,000,000 compared to 2021. Combined,
these two factors adversely impacted Reservoir Description 2022
revenue by approximately $21,000,000,
substantially offsetting international growth in other regions.
During the fourth quarter of 2022, under the direction of a
South American National Oil Company, Core Lab conducted a series of
Enhanced Oil Recovery ("EOR") and flow assurance studies for a
multi-well onshore program using CO2-rich injection
gases. The studies determined the impact of blending these
CO2-rich gases with reservoir fluids and provided the
basis for advanced equation-of-state modelling. While
defining the gas injection parameters for a successful field
application are critical to improving crude oil recoveries,
operators must simultaneously mitigate the flocculation of
asphaltenes that result from CO2 injection, and which,
can erase such gains. CO2 injection projects
reflect a globally expanding interest in EOR and Carbon Capture and
Storage technologies. When properly evaluated with rigorous
laboratory testing, injecting CO2 into
hydrocarbon-bearing subsurface formations can simultaneously
improve oil recovery and reduce CO2 emissions.
Also, during the fourth quarter of 2022, Core received both
reservoir fluid and reservoir rock samples from Talos Energy Inc.'s
Deepwater Gulf of Mexico Lime Rock and Venice prospects. Leveraging Core's experience
with prior successful Gulf of
Mexico drilling campaigns, the Company was able to quickly
implement laboratory analytical protocols to fast-track results and
evaluate reservoir potential within days of receiving the samples.
The analytical results provided key reservoir parameters including:
1) an assessment of the pore system and fluid flow properties of
these high-quality sandstone strata, 2) measurement of the crude
oil and natural gas saturations in the recovered rocks, and 3)
determination of key reservoir fluid properties such as the gas-oil
ratio, and with the composition of the hydrocarbons. Talos'
experts incorporated these parameters into their assessment of the
commercial viability of these prospects. Core's proprietary high
pressure, high temperature, full visualization
Pressure-Volume-Temperature technologies, along with the Company's
extensive database of producing reservoirs in the Gulf of Mexico, helped Talos in this
successful drilling program.
Production Enhancement
Production Enhancement operations, which are focused on complex
completions in unconventional, tight-oil reservoirs in the U.S., as
well as conventional projects across the globe, posted fourth
quarter 2022 revenue of $49,400,000,
increasing over 5% sequentially and 10% year-over-year.
Operating income on a GAAP basis was $7,900,000, while operating income, ex-items, was
$7,700,000, yielding operating
margins of 16% and sequential incremental margins, ex-items, in
excess of 100%. In addition, Core's proprietary diagnostic
services grew over 22% sequentially and 17% year-over-year.
During the fourth quarter of 2022, a U.S.-based operating
company expressed the need to overcome injectivity challenges in
their saltwater disposal wells. Cost-effective disposal of
produced frac fluid is critical to the financial success of
unconventional resources. Reservoir modeling determined that
to optimize injection efficiencies, 14 zones dispersed across a
1,700 ft lateral wellbore needed to be perforated simultaneously in
an over-balanced pressure configuration. Core Lab provided a
customized solution for this challenging technical problem by
combining its proprietary Pulse Wave™ Tubular Conveyed System with
its proprietary HERO® Hard Rock energetics. Pulse
Wave™ uses a unique energy transfer technology that can trigger
multiple, unevenly-spaced perforating guns in a single downhole
trip, eliminating the need for inert spacer guns between live guns
to create a continuous communication string. Eliminating the
need for spacer guns reduces material cost and significantly
reduces the rig time required to deploy the system. The
HERO® Hard Rock energetic technology uses an advanced,
patented, liner material technology that yields debris-free
perforations, while also providing deep penetration and more
effective flow efficiencies in hard rock formations. By
employing Pulse Wave™ technology, the client saved over 30% on the
cost of consumables, in addition to reduced rig time. The
HERO® Hard Rock energetics created communication across
each perforating interval, enabling the operator to establish the
desired injection rate, which was double that of similar wells
completed using conventional wireline perforating technologies.
Liquidity, Free Cash Flow and Dividend
Core continues to focus on maximizing FCF, a non-GAAP financial
measure defined as cash from operations less capital
expenditures. For the fourth quarter of 2022, cash from
operations was $13,200,000 and
capital expenditures were $2,000,000,
yielding FCF of $11,200,000.
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.
During the fourth quarter of 2022, Core's net debt was reduced
by $11,700,000, which also reduced
the Company's leverage ratio to 2.29 as of 31 December 2022, down from 2.42 at the end of
third quarter of 2022. 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 26 October 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 28 November
2022 to shareholders of record on 7 November 2022.
Dutch withholding tax was deducted from the dividend at a rate of
15%.
On 1 February 2023, the Board
approved a cash dividend of $0.01 per
share of common stock payable on 6 March
2023 to shareholders of record on 13 February 2023.
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 improved
to 7.2%.
Industry and Core Lab Outlook and Guidance
Looking forward into 2023, Core sees crude-oil macro
fundamentals continuing to support a multi-year recovery cycle for
the oil and gas industry. Crude-oil demand for 2023, as
forecast by the International Energy Agency in January 2023, is projected to increase by 1.9
million barrels per day ("mbpd") to a record 101.7 mbpd as
consumption in China grows along
with the reopening of its economy. As crude-oil demand is
projected to exceed pre-COVID levels, crude-oil supply is projected
to tighten. Production growth continues to face constraints
due to prolonged underinvestment in many regions around the globe
and the natural decline of production from existing fields.
As a result, Core Lab expects operators to expand their upstream
spending plans for 2023 by mid-teens compared to 2022. This
supports Core's outlook for continued improvement in international
onshore and offshore activity, with projects emerging and underway,
most notably across the Middle
East, Latin America and
West Africa regions.
Turning to the U.S., Core sees similar challenges with crude-oil
supply which should require increased spending by operators to grow
and replace production. While operators remain focused on
capital discipline, 2023 forecasts indicate their U.S. upstream
spending will increase approximately 15% year-over-year.
As customary, Core expects typical sequential seasonal industry
patterns will cause activity in the first quarter of 2023 to
decline in some regions. As such, Core anticipates Reservoir
Description first quarter 2023 revenue to be down low to mid-single
digits, sequentially. Continued volatility with crude-oil
trading patterns may impact Core's Reservoir Description segment's
international growth within its Russian, Ukrainian and European
operations. Production Enhancement segment revenue is
estimated to be up mid-single digits as U.S. land activity is
projected to recover from normal seasonal declines experienced at
year-end.
Core projects first quarter 2023 revenue to range from
$125,000,000 to $129,000,000 and operating income of $11,500,000 to $14,500,000, yielding operating margins of
approximately 10%. EPS for the first quarter of 2023 is
expected to be $0.14 to $0.19.
The Company's first quarter 2023 guidance is based on
projections for underlying operations and excludes gains and losses
in foreign exchange. First 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
fourth quarter 2022 earnings announcement. The call will
begin at 7:30 a.m. CST / 2:30 p.m. CET on Thursday, 2 February 2023.
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, 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, 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 (In thousands, except
per share data)
(Unaudited)
|
|
|
|
Quarter
Ended
|
|
|
%
Variance
|
|
|
|
December 31,
2022
|
|
|
September 30,
2022
|
|
|
December 31,
2021
|
|
|
vs.
Q3-2022
|
|
vs.
Q4-2021
|
|
REVENUE
|
|
$
|
127,571
|
|
|
$
|
125,966
|
|
|
$
|
125,139
|
|
|
1.3 %
|
|
1.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
|
99,816
|
|
|
|
98,930
|
|
|
|
96,987
|
|
|
0.9 %
|
|
2.9 %
|
|
General and
administrative expense
|
|
|
8,724
|
|
|
|
10,001
|
|
|
|
10,927
|
|
|
(12.8) %
|
|
(20.2) %
|
|
Depreciation and
amortization
|
|
|
4,073
|
|
|
|
4,171
|
|
|
|
4,398
|
|
|
(2.3) %
|
|
(7.4) %
|
|
Other (income) expense,
net
|
|
|
(660)
|
|
|
|
(1,781)
|
|
|
|
(1,373)
|
|
|
NM
|
|
NM
|
|
Total operating
expenses
|
|
|
111,953
|
|
|
|
111,321
|
|
|
|
110,939
|
|
|
0.6 %
|
|
0.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
15,618
|
|
|
|
14,645
|
|
|
|
14,200
|
|
|
6.6 %
|
|
10.0 %
|
|
Interest
expense
|
|
|
3,081
|
|
|
|
3,138
|
|
|
|
2,590
|
|
|
(1.8) %
|
|
19.0 %
|
|
Income (loss) from
continuing operations
before income taxes
|
|
|
12,537
|
|
|
|
11,507
|
|
|
|
11,610
|
|
|
9.0 %
|
|
8.0 %
|
|
Income tax expense
(benefit)
|
|
|
5,847
|
|
|
|
3,856
|
|
|
|
8,823
|
|
|
51.6 %
|
|
(33.7) %
|
|
Income (loss) from
continuing operations
|
|
|
6,690
|
|
|
|
7,651
|
|
|
|
2,787
|
|
|
(12.6) %
|
|
140.0 %
|
|
Net income
(loss)
|
|
|
6,690
|
|
|
|
7,651
|
|
|
|
2,787
|
|
|
(12.6) %
|
|
140.0 %
|
|
Net income (loss)
attributable to non-
controlling interest
|
|
|
(61)
|
|
|
|
127
|
|
|
|
99
|
|
|
NM
|
|
NM
|
|
Net income (loss)
attributable to Core
Laboratories N.V.
|
|
$
|
6,751
|
|
|
$
|
7,524
|
|
|
$
|
2,688
|
|
|
(10.3) %
|
|
151.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from
continuing operations
|
|
$
|
0.14
|
|
|
$
|
0.16
|
|
|
$
|
0.06
|
|
|
(12.5) %
|
|
133.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
attributable to Core Laboratories N.V.
|
|
$
|
0.14
|
|
|
$
|
0.16
|
|
|
$
|
0.06
|
|
|
(12.5) %
|
|
133.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares
outstanding
|
|
|
46,826
|
|
|
|
47,012
|
|
|
|
46,927
|
|
|
(0.4) %
|
|
(0.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
47
|
%
|
|
|
34
|
%
|
|
|
76
|
%
|
|
NM
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
78,124
|
|
|
$
|
78,996
|
|
|
$
|
80,097
|
|
|
(1.1) %
|
|
(2.5) %
|
|
Production
Enhancement
|
|
|
49,447
|
|
|
|
46,970
|
|
|
|
45,042
|
|
|
5.3 %
|
|
9.8 %
|
|
Total
|
|
$
|
127,571
|
|
|
$
|
125,966
|
|
|
$
|
125,139
|
|
|
1.3 %
|
|
1.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
6,817
|
|
|
$
|
9,798
|
|
|
$
|
7,216
|
|
|
(30.4) %
|
|
(5.5) %
|
|
Production
Enhancement
|
|
|
7,904
|
|
|
|
4,417
|
|
|
|
6,993
|
|
|
78.9 %
|
|
13.0 %
|
|
Corporate and
Other
|
|
|
897
|
|
|
|
430
|
|
|
|
(9)
|
|
|
NM
|
|
NM
|
|
Total
|
|
$
|
15,618
|
|
|
$
|
14,645
|
|
|
$
|
14,200
|
|
|
6.6 %
|
|
10.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE
LABORATORIES N.V.
& SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
data)
(Unaudited)
|
|
|
|
Year Ended December
31,
|
|
|
%
Variance
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
REVENUE
|
|
$
|
489,735
|
|
|
$
|
470,252
|
|
|
4.1 %
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Costs of services and
product sales
|
|
|
393,655
|
|
|
|
367,896
|
|
|
7.0 %
|
|
General and
administrative expense
|
|
|
38,117
|
|
|
|
44,173
|
|
|
(13.7) %
|
|
Depreciation and
amortization
|
|
|
17,161
|
|
|
|
18,516
|
|
|
(7.3) %
|
|
Other (income) expense,
net
|
|
|
(722)
|
|
|
|
(5,595)
|
|
|
NM
|
|
Total operating
expenses
|
|
|
448,211
|
|
|
|
424,990
|
|
|
5.5 %
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
|
|
41,524
|
|
|
|
45,262
|
|
|
(8.3) %
|
|
Interest
expense
|
|
|
11,570
|
|
|
|
9,152
|
|
|
26.4 %
|
|
Income (loss) from
continuing operations before income taxes
|
|
|
29,954
|
|
|
|
36,110
|
|
|
(17.0) %
|
|
Income tax expense
(benefit)
|
|
|
10,296
|
|
|
|
15,891
|
|
|
(35.2) %
|
|
Income (loss) from
continuing operations
|
|
|
19,658
|
|
|
|
20,219
|
|
|
(2.8) %
|
|
Net income
(loss)
|
|
|
19,658
|
|
|
|
20,219
|
|
|
(2.8) %
|
|
Net income (loss)
attributable to non-controlling interest
|
|
|
205
|
|
|
|
492
|
|
|
NM
|
|
Net income (loss)
attributable to Core Laboratories N.V.
|
|
$
|
19,453
|
|
|
$
|
19,727
|
|
|
(1.4) %
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
|
$
|
0.42
|
|
|
$
|
0.43
|
|
|
(2.3) %
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share attributable to Core Laboratories
N.V.
|
|
$
|
0.42
|
|
|
$
|
0.42
|
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
|
|
46,813
|
|
|
|
46,690
|
|
|
0.3 %
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
34
|
%
|
|
|
44
|
%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
307,691
|
|
|
$
|
313,609
|
|
|
(1.9) %
|
|
Production
Enhancement
|
|
|
182,044
|
|
|
|
156,643
|
|
|
16.2 %
|
|
Total
|
|
$
|
489,735
|
|
|
$
|
470,252
|
|
|
4.1 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
Reservoir
Description
|
|
$
|
22,902
|
|
|
$
|
28,958
|
|
|
(20.9) %
|
|
Production
Enhancement
|
|
|
16,351
|
|
|
|
15,163
|
|
|
7.8 %
|
|
Corporate and
Other
|
|
|
2,271
|
|
|
|
1,141
|
|
|
99.0 %
|
|
Total
|
|
$
|
41,524
|
|
|
$
|
45,262
|
|
|
(8.3) %
|
|
|
|
|
|
|
|
|
|
|
|
"NM" means not
meaningful
|
|
|
|
|
|
|
|
|
|
CORE
LABORATORIES N.V.
& SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Variance
|
|
ASSETS:
|
|
December 31,
2022
|
|
|
September 30,
2022
|
|
|
December 31,
2021
|
|
|
vs.
Q3-2022
|
|
vs.
Q4-2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
15,428
|
|
|
$
|
13,732
|
|
|
$
|
17,703
|
|
|
12.4 %
|
|
(12.9) %
|
|
Accounts receivable,
net
|
|
|
106,913
|
|
|
|
100,195
|
|
|
|
96,830
|
|
|
6.7 %
|
|
10.4 %
|
|
Inventories
|
|
|
60,445
|
|
|
|
54,795
|
|
|
|
45,443
|
|
|
10.3 %
|
|
33.0 %
|
|
Other current
assets
|
|
|
28,916
|
|
|
|
26,493
|
|
|
|
29,079
|
|
|
9.1 %
|
|
(0.6) %
|
|
Total current
assets
|
|
|
211,702
|
|
|
|
195,215
|
|
|
|
189,055
|
|
|
8.4 %
|
|
12.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
105,028
|
|
|
|
107,252
|
|
|
|
110,952
|
|
|
(2.1) %
|
|
(5.3) %
|
|
Right of use
assets
|
|
|
52,379
|
|
|
|
56,589
|
|
|
|
61,387
|
|
|
(7.4) %
|
|
(14.7) %
|
|
Intangibles, goodwill
and other long-term assets, net
|
|
|
209,245
|
|
|
|
211,134
|
|
|
|
219,459
|
|
|
(0.9) %
|
|
(4.7) %
|
|
Total assets
|
|
$
|
578,354
|
|
|
$
|
570,190
|
|
|
$
|
580,853
|
|
|
1.4 %
|
|
(0.4) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
45,847
|
|
|
$
|
34,343
|
|
|
$
|
29,726
|
|
|
33.5 %
|
|
54.2 %
|
|
Operating lease
liabilities
|
|
|
11,699
|
|
|
|
11,472
|
|
|
|
12,342
|
|
|
2.0 %
|
|
(5.2) %
|
|
Other current
liabilities
|
|
|
45,589
|
|
|
|
41,544
|
|
|
|
48,714
|
|
|
9.7 %
|
|
(6.4) %
|
|
Total current
liabilities
|
|
|
103,135
|
|
|
|
87,359
|
|
|
|
90,782
|
|
|
18.1 %
|
|
13.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
|
172,386
|
|
|
|
182,677
|
|
|
|
188,636
|
|
|
(5.6) %
|
|
(8.6) %
|
|
Long-term operating
lease liabilities
|
|
|
38,305
|
|
|
|
41,975
|
|
|
|
49,286
|
|
|
(8.7) %
|
|
(22.3) %
|
|
Other long-term
liabilities
|
|
|
75,574
|
|
|
|
74,886
|
|
|
|
91,148
|
|
|
0.9 %
|
|
(17.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
188,954
|
|
|
|
183,293
|
|
|
|
161,001
|
|
|
3.1 %
|
|
17.4 %
|
|
Total liabilities and
equity
|
|
$
|
578,354
|
|
|
$
|
570,190
|
|
|
$
|
580,853
|
|
|
1.4 %
|
|
(0.4) %
|
|
CORE
LABORATORIES N.V. & SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
|
|
|
|
Year Ended December
31,
|
|
|
|
2022
|
|
|
2021
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
$
|
19,658
|
|
|
$
|
20,219
|
|
Income (loss) from
discontinued operations, net of income taxes
|
|
|
—
|
|
|
|
—
|
|
Net income
(loss)
|
|
|
19,658
|
|
|
|
20,219
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
7,756
|
|
|
|
19,093
|
|
Depreciation and
amortization
|
|
|
17,161
|
|
|
|
18,516
|
|
Deferred income
taxes
|
|
|
433
|
|
|
|
6,012
|
|
Gain on sale of
business
|
|
|
—
|
|
|
|
(1,012)
|
|
Accounts
receivable
|
|
|
(10,078)
|
|
|
|
(13,522)
|
|
Inventories
|
|
|
(14,860)
|
|
|
|
(4,547)
|
|
Accounts
payable
|
|
|
15,374
|
|
|
|
6,568
|
|
Other adjustments to
net income (loss)
|
|
|
(10,488)
|
|
|
|
(14,748)
|
|
Net cash provided by
operating activities
|
|
|
24,956
|
|
|
|
36,579
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(10,216)
|
|
|
|
(13,539)
|
|
Proceeds from insurance
recovery
|
|
|
583
|
|
|
|
726
|
|
Other investing
activities
|
|
|
5,777
|
|
|
|
2,590
|
|
Net cash used in
investing activities
|
|
|
(3,856)
|
|
|
|
(10,223)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Repayment of long-term
debt
|
|
|
(131,000)
|
|
|
|
(226,000)
|
|
Proceeds from long-term
debt
|
|
|
116,000
|
|
|
|
155,000
|
|
Proceeds from issuance
of common shares
|
|
|
—
|
|
|
|
60,000
|
|
Transaction costs on
equity distribution program
|
|
|
(411)
|
|
|
|
(861)
|
|
Dividends
paid
|
|
|
(1,853)
|
|
|
|
(1,834)
|
|
Repurchase of common
shares
|
|
|
(3,903)
|
|
|
|
(8,256)
|
|
Other financing
activities
|
|
|
(2,208)
|
|
|
|
(508)
|
|
Net cash used in
financing activities
|
|
|
(23,375)
|
|
|
|
(22,459)
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS
|
|
|
(2,275)
|
|
|
|
3,897
|
|
CASH AND CASH
EQUIVALENTS, beginning of year
|
|
|
17,703
|
|
|
|
13,806
|
|
CASH AND CASH
EQUIVALENTS, end of year
|
|
$
|
15,428
|
|
|
$
|
17,703
|
|
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 (In thousands, except per share data)
(Unaudited)
|
|
|
|
Operating Income
(Loss)
|
|
|
|
Quarter
Ended
|
|
|
|
December 31,
2022
|
|
|
September 30,
2022
|
|
|
December 31,
2021
|
|
GAAP
reported
|
|
$
|
15,618
|
|
|
$
|
14,645
|
|
|
$
|
14,200
|
|
Stock compensation
(1)
|
|
|
(1,868)
|
|
|
|
—
|
|
|
|
—
|
|
Redomestication
costs
|
|
|
246
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
691
|
|
|
|
(1,303)
|
|
|
|
(32)
|
|
Excluding specific
items
|
|
$
|
14,687
|
|
|
$
|
13,342
|
|
|
$
|
14,168
|
|
|
|
|
Income (Loss) from
Continuing Operations
|
|
|
|
Quarter
Ended
|
|
|
|
December 31,
2022
|
|
|
September 30,
2022
|
|
|
December 31,
2021
|
|
GAAP
reported
|
|
$
|
6,690
|
|
|
$
|
7,651
|
|
|
$
|
2,787
|
|
Stock compensation
(1)
|
|
|
(1,494)
|
|
|
|
—
|
|
|
|
—
|
|
Redomestication
costs
|
|
|
197
|
|
|
|
—
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
552
|
|
|
|
(1,043)
|
|
|
|
(26)
|
|
Debt issuance costs
write off (3)
|
|
|
—
|
|
|
|
171
|
|
|
|
—
|
|
Impact of higher
(lower) tax rate (4)
|
|
|
3,341
|
|
|
|
1,553
|
|
|
|
6,501
|
|
Excluding specific
items
|
|
$
|
9,286
|
|
|
$
|
8,332
|
|
|
$
|
9,262
|
|
|
|
|
Diluted Earnings
(Loss) Per Share from Continuing Operations
|
|
|
|
Quarter
Ended
|
|
|
Year
ended
|
|
|
|
December 31,
2022
|
|
|
September 30,
2022
|
|
|
December 31,
2021
|
|
|
December 31,
2022
|
|
GAAP
reported
|
|
$
|
0.14
|
|
|
$
|
0.16
|
|
|
$
|
0.06
|
|
|
$
|
0.42
|
|
Stock compensation
(1), (2)
|
|
|
(0.03)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.01)
|
|
Severance and other
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.06
|
|
Bad debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Foreign exchange losses
(gains)
|
|
|
0.02
|
|
|
|
(0.01)
|
|
|
|
—
|
|
|
|
0.01
|
|
Impact of higher
(lower) tax rate (4)
|
|
|
0.07
|
|
|
|
0.03
|
|
|
|
0.14
|
|
|
|
0.08
|
|
Excluding specific
items
|
|
$
|
0.20
|
|
|
$
|
0.18
|
|
|
$
|
0.20
|
|
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Quarter ended
December 31, 2022 includes non-cash adjustment of stock
compensation expense associated with certain performance
share awards that vested during the
quarter.
|
|
(2) The year ended
December 31, 2022 includes non-cash adjustment of stock
compensation expense for shares that were granted but did
not vest. The period also includes
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.
|
|
(3) Quarter ended
September 30, 2022 includes debt issuance costs written off upon
renewal of the credit facility.
|
|
(4) Includes
adjustments to reflect tax expense at a normalized rate of
20%.
|
|
Segment
Information (In thousands)
(Unaudited)
|
|
|
|
Operating Income
(Loss) from Continuing Operations
|
|
|
|
Quarter Ended
December 31, 2022
|
|
|
|
Reservoir
Description
|
|
|
Production
Enhancement
|
|
|
Corporate and
Other
|
|
GAAP
reported
|
|
$
|
6,817
|
|
|
$
|
7,904
|
|
|
$
|
897
|
|
Stock compensation
(1)
|
|
|
(1,250)
|
|
|
|
(618)
|
|
|
|
—
|
|
Redomestication
costs
|
|
|
156
|
|
|
|
90
|
|
|
|
—
|
|
Foreign exchange losses
(gains)
|
|
|
321
|
|
|
|
309
|
|
|
|
61
|
|
Excluding specific
items
|
|
$
|
6,044
|
|
|
$
|
7,685
|
|
|
$
|
958
|
|
|
|
|
|
|
|
|
|
|
|
(1) Quarter ended
December 31, 2022 includes non-cash adjustment of stock
compensation expense associated with certain performance
share awards that vested during the
quarter.
|
|
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 7.2% is defined by Bloomberg as Net Operating Profit
After Tax ("NOPAT") of $26.8 million
divided by Average Total Invested Capital ("Average TIC") of
$372.9 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 (In thousands)
(Unaudited)
|
|
|
|
Quarter
Ended
|
|
|
Year
Ended
|
|
|
|
December 31,
2022
|
|
|
December 31,
2022
|
|
Net cash provided by
operating activities
|
|
$
|
13,211
|
|
|
$
|
24,956
|
|
Capital
expenditures
|
|
|
(2,021)
|
|
|
|
(10,216)
|
|
Free cash
flow
|
|
$
|
11,190
|
|
|
$
|
14,740
|
|
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SOURCE Core Laboratories N.V.