Core Laboratories Posts In-Line Q3 Earnings, Guides Down
Oilfield service company, Core Laboratories N.V. CLB reported diluted third-quarter 2015 earnings of 83 cents per share, in line with the Zacks Consensus Estimate. Despite challenging market conditions, the company’s cost-management initiatives and technological developments favored the results.
However, the bottom line was substantially below the year-ago quarter earnings of $1.50 per share. Reduced drilling activity levels affected the results.
Total quarterly revenue came at $197.3 million, failing to surpass the Zacks Consensus Estimate of $199 million. The top line also decreased 28.6% from the prior-year quarter revenues of $276.1 million.
Segment Performance
Reservoir Description: Segment revenues were $117.9 million compared with $131.4 million in third-quarter 2014.
Operating income (excluding foreign exchange losses) for the unit was about $32 million and operating margin was 27.1%.
Production Enhancement: Segment revenues were approximately $64.9 million in the reported quarter against $122.2 million in third-quarter 2014. Reduced North American drilling activity affected the results.
Operating income (excluding foreign exchange losses) was $12.6 million and operating margin was 19.3%.
Reservoir Management: Segment revenues of about $14.4 million were down 36.3% year over year.
Operating income (excluding foreign exchange losses) was $4.9 million and operating margin was about 34%.
Balance Sheet & Free Cash Flow
As of Sep 30, 2015, Core Laboratories had cash and cash equivalents of $18.5 million. Capital expenditures for the third quarter were $5.9 million.
The company generated free cash flow of approximately $37.5 million.
Share Repurchase
During the reported quarter, Core Laboratories bought back 269,000 shares, thereby reducing its outstanding share count to a 17-year low.
Guidance
For the fourth quarter, Core Laboratories expects earnings per share of 63–67 cents, lower than the previous guidance of 84–86 cents. Revenues for the fourth quarter are expected to decrease 9% sequentially to $180 million.
Zacks Rank
Currently, Core Laboratories carries a Zacks Rank #5 (Strong Sell). Some better-ranked players in the energy sector are NuStar Energy LP NS, Exterran Partners LP EXLP and Natural Gas Services Group Inc. NGS. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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