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Core Labs' (CLB) Q3 Earnings Beat Estimates, Revenues Miss Mark

Core Laboratories N.V. CLB recently reported third-quarter 2020 results wherein adjusted earnings of 16 cents a share came ahead of the Zacks Consensus Estimate of 14 cents. This outperformance is attributable to lower year-over-year operating expenses, which declined to $94.1 million in the third quarter from $142 million in the year-ago period. However, the bottom line declined from the year-ago quarter’s earnings of 50 cents per share. This downside was caused by a drop in both international product sales and lower activity on international projects.

The oilfield service provider’s adjusted revenues of $105.38 million missed the Zacks Consensus Estimate of $109 million. Moreover, the top line fell from the year-ago quarter’s revenues of $173.2 million.

Segmental Performance

Reservoir Description: Revenues decreased 26.7% to $80.1 million from $109.3 million in third-quarter 2019, thanks to operational disturbances related to the coronavirus pandemic. Moreover, adjusted operating income fell from $18.8 million in the year-ago period to $11 million. Further, operating margin of 15% was lower than the prior-year quarter’s 18%

Production Enhancement: Revenues were $25.3 million compared with $63.9 million in third-quarter 2019. Segmental operating loss was $0.3 million in the quarter against the year-ago quarter’s income of $115 million. This segmental underperformance was due to reduced international product shipments resulting from coronavirus-induced adversities and weather events in the Gulf of Mexico.

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

As of Sep 30, 2020, Core Labs had cash and cash equivalents worth $15.1 million and long-term debt (including lease obligations) of $189.6 million. The company’s debt-to-capitalization was 72.55%.

In the reported quarter, Core Labs generated $20.7 million in operating cash and its capital expenditure totaled $2.2 million. This, in turn, led to an $18.5-million free cash flow (FCF) generation. Markedly, this is the 76th consecutive quarter of the company’s FCF recognition.

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Considering the prevalent business uncertainty emanating from the coronavirus outbreak, the company was unable to provide a quantitative guidance for the upcoming quarters but issues an improving outlook for fourth-quarter U.S. land activity and international product shipments. Core Labs anticipates generate a positive FCF in the December quarter of 2020.

Performance of Other Energy Players

Among other players in the oilfield services industry that already reported third-quarter earnings, the bottom-line results of Schlumberger SLB and Halliburton HAL beat the respective Zacks Consensus Estimate by 23.1% and 37.5% while that of TechnipFMC FTI missed the mark by 20%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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