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Core Labs' (CLB) Q4 Earnings and Revenues Beat Estimates

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Zacks Equity Research
·4 min read
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Core Laboratories N.V. CLB recently reported fourth-quarter 2020 results wherein adjusted earnings of 18 cents a share came ahead of the Zacks Consensus Estimate of 17 cents. This outperformance is attributable to stronger-than-expected profits from both its divisions and lower year-over-year operating expenses, which declined to $90.3 million from $135.7 million a year ago. However, the bottom line declined from the year-ago quarter’s earnings of 38 cents per share. This downside was caused by a drop in the year-over-year revenues of both reservoir description and production-enhancement segments.

Meanwhile, this oilfield service provider’s adjusted revenues of $113.75 million outpaced the Zacks Consensus Estimate of $110 million. However, the top line fell from the year-ago quarter’s revenues of $157 million.

Segmental Performance

Reservoir Description: Revenues decreased 18.3% to $83.8 million from $102.6 million in fourth-quarter 2019, thanks to operational disturbances related to the coronavirus pandemic. However, operating income rose from $14.2 million in the year-ago period to $19.4 million and also beat the Zacks Consensus Estimate of $12.3 million. These positive comparisons are attributable to an improving U.S. and long-cycle international activity as well as segmental cost-saving measures. Meanwhile, the operating margin of 15% was lower than the prior-year quarter’s 17%.

Production Enhancement: Revenues were $29.9 million compared with $54.2 million a year earlier. Segmental operating income fell to $4.5 million in the quarter from the year-ago period’s income of $6.6 million on lower completion activity. However, the unit operating income surpassed the Zacks Consensus Estimate of $300,000 on higher land product sales.

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 Dec 31, 2020, Core Labs had cash and cash equivalents worth $13.8 million and a long-term debt (including lease obligations) of $259.4 million. The company’s debt-to-capitalization was 77.4%.

In the reported quarter, Core Labs generated $57.9 million in operating cash and its capital expenditure totaled $11.9 million. This, in turn, led to a $46-million free cash flow (FCF) generation. Markedly, this is the 77th consecutive quarter of the company’s FCF recognition.

Core Labs’ board of directors approved a regular quarterly dividend of a cent per share on the company's common stock, payable Feb 16, 2021 to all its shareholders of record as of Jan 25, 2021.

2021 View

With the gradual recovery from the coronavirus-induced economic disruption, Core Labs issues an improving outlook for the current year’s U.S. land activity and international growth opportunities. This, in turn, is expected to sequentially improve revenues from Core Labs’ production enhancement unit in the first quarter of 2021. Further, the rising activity levels are projected to yield higher incremental margins in the second part of the ongoing year.

As Core Labs’ growth prospects are directly associated with expanding client activity and new market penetration, mainly globally, it continues to primarily focus on the ongoing development of new client-driven technologies and geographical exploration along with a deepened concentration on digitization and automation throughout its business.

Performance of Other Energy Players

Among other players in the oilfield services industry that already reported fourth-quarter earnings, the bottom-line results of Schlumberger SLB and Halliburton HAL beat the respective Zacks Consensus Estimate by 22.2% and 20%.

Zacks Rank & Key Pick

Core Labs currently carries a Zacks Rank #3 (Hold). Meanwhile, investors interested in the oilfield services space could look at a better-ranked option like KLX Energy Services Holdings KLXE with 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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