Core Laboratories N.V.
(
CLB
) has reported mixed first quarter 2012 results, reflecting
impressive performances across all the three business units,
partially offset by steeper cost of sales.
Quarterly earnings per share (
EPS
), excluding special items, came in at $1.06, in line with the
Zacks Consensus Estimate. Comparing year over year, EPS increased
37.7% from 77 cents.
The performance was influenced by higher activities in the
unconventional oil-field in North America and strong contributions
from global projects. The focused deepwater operations in North Sea
and Middle East also aided the results.
Total revenue for the quarter was $234.2 million, up 13.3% from
$206.7 million in the prior-year quarter, aided by strong growth in
all business units. However, the result was below the Zacks
Consensus Estimate of $238.0 million.
Reservoir Description Segment
Revenues at the Reservoir Description segment (which focuses on
international crude oil related projects) upped 7.9% year over year
to $116.1 million in the first quarter. Operating income for the
unit grew 22.6% year over year to $32.4 million, with the operating
margin coming in at 28%. The improvement was attributable to
several well performing international projects and deepwater
offshore crude-oil-related ventures as well initiation of new
studies.
Production Enhancement Segment
Core Laboratories' Production Enhancement revenues leaped 17.8%
year over year to $96.7 million in the quarter while operating
income improved 44.1% year over year to $33.5 million. Operating
margin was an impressive 31%, buoyed by the greater market share of
the HTD-Blast perforating system and high demand for advanced
technologies. Additionally, several field-flood projects in the
Middle East boosted the performance level.
Reservoir Management Segment
Quarterly revenues from Reservoir Management operations were
$21.4 million, up 25.5% year over year while operating income moved
up 18.8% year over year to $7.9 million. Operating margin for the
quarter was 37%. The results were driven by expansion of operations
across the globe.
Balance Sheet, Free Cash Flow & Share
Buyback
As of March 31, 2012, Core Laboratories had cash and cash
equivalents of $23.5 million. Capital expenditures for the first
quarter were $7.3 million. The company generated free cash flow of
$46.5 million.
Quarterly Dividend
On April 16, 2012, Core's board announced a cash dividend of 28
cents per share (amounting to an annualized payout of $1.12 per
share) of common stock. The dividend will be paid on May 25, 2012
to shareholders of record on April 27, 2012.
Dual Listing
In an attempt to support the expanding overseas operations and
bring in more international institutional investors within the
company's ownership, Core Labs plans to list its shares on the NYSE
Euronext Exchange in Amsterdam in mid-May.
Outlook
The company has refrained from providing definite quarterly and
annual earnings guidance until the listing procedure is
complete.
However, Core Labs expects to witness strong international
project growth, aided by the on-time arrival of additional
deepwater rigs throughout the remainder of the year. 2012 will
likely see greater pre-salt activities in the Kwanza basin offshore
Angola as well as in Iraq and Asia Pacific.
Core Labs aims to improve its activities in the deepwater Gulf
of Mexico and emphasize on unconventional oil-shale reservoirs
operations in North America, South America and North Africa.
Our Take
Amsterdam, Netherlands-based Core Laboratories, with market
capitalization of over $6 billion, enjoys a deep portfolio of
proprietary products and services. The company's strong presence in
the emerging shale plays and its global footprint -including
markets in the Middle East, Asia Pacific, and East and West Africa
- would facilitate steady growth rates going forward.
However, the company's business is not immune to gas/oil price
volatility, exploration and production spending patterns, costs,
geo-political risks, competition and the advent of new
technologies.
Hence, we expect Core Labs to perform in line with other players
such as
Baker Hughes Incorporated
(
BHI
) and
Halliburton Company
(
HAL
) and maintain a long-term Neutral recommendation on the stock.
BAKER-HUGHES (
BHI
): Free Stock Analysis Report
CORE LABS NV (
CLB
): Free Stock Analysis Report
HALLIBURTON CO (
HAL
): Free Stock Analysis Report
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