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Core Labs' (CLB) Q2 Earnings and Sales Surpass Estimates

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  • CLB

Core Laboratories N.V. CLB recently reported second-quarter 2020 results wherein adjusted earnings of 14 cents a share came ahead of the Zacks Consensus Estimate of 9 cents, attributable to better-than-expected operating income from the Reservoir Description segment. Precisely, the adjusted operating income rose 14.8% year over year to $13.5 million and also surpassed the Zacks Consensus Estimate of $9.6 million. However, the profit declined from the year-ago quarter’s earnings of 46 cents per share. This downside was caused by a steep ramp-down in U.S. onshore activity during the quarter. 

This oilfield service provider delivered adjusted revenues of $115.74 million, marginally beating the Zacks Consensus Estimate of $115 million. But the top line fell from the year-ago quarter’s revenues of $169.04 million.

Segmental Performance

Reservoir Description: Revenues decreased 16.3% to $88.44 million from $105.65 million in second-quarter 2019, thanks to operational disturbances related to the coronavirus pandemic. However, adjusted operating income rose 14.8% year over year to $13.5 million as demand for Core Labs’ highly-specialized reservoir fluids services was stable despite the depressed commodity price environment. Further, operating margin of 17% was in line with the prior-year quarter.

Production Enhancement: Revenues were $27.3 million compared with $63.4 million in second-quarter 2019. Segmental operating loss was $16.3 million in the quarter against the year-ago quarter’s income of $10.4 million. This segmental underperformance is due to a sharp fall in U.S. onshore well-completion activity.

Core Laboratories N.V. Price, Consensus and EPS Surprise

Core Laboratories N.V. Price, Consensus and EPS Surprise
Core Laboratories N.V. Price, Consensus and EPS Surprise

Core Laboratories N.V. price-consensus-eps-surprise-chart | Core Laboratories N.V. Quote

Financials and Dividend

As of Jun 30, 2020, Core Labs had cash and cash equivalents worth $20.96 million and long-term debt (including lease obligations) of $286.6 million. The company’s debt-to-capitalization was 81.25%.

In the reported quarter, Core Labs generated $27 million in operating cash and its capital expenditure totaled $3.1 million. This, in turn, led to a $23.9-million free cash flow (FCF) generation. Markedly, this is the 75th consecutive quarter of the company’s FCF recognition.

With an aim to preserve its solid balance sheet and reduce the debt burden, the company’s board of directors cleared a quarterly cash dividend of a cent per share in April, down from the previous dividend of 25 cents. This dividend cut has been effective since the second quarter.


Considering the prevalent business uncertainty emanating from the coronavirus outbreak, the company was unable to provide a quantitative guidance for the upcoming quarters but sees an improving outlook for project work and international products shipment in the second half of this year. Core Labs expects factors associated with the global crude oil market to create a tighter space in the remainder of 2020.

Zacks Rank & Key Picks

Core Labs carries a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are Royal Dutch Shell PLC RDS.A, Diamondback Energy, Inc. FANG and Magellan Midstream Partners, L.P. MMP, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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