• Revenue: $129.2 million in Q4, down 4% sequentially; $523.8 million for full-year 2024, up 3% year over year.
• Reservoir Description Revenue: $86.8 million in Q4, down 2% sequentially.
• Production Enhancement Revenue: $42.4 million in Q4, down 7% sequentially and 3% year over year.
• Operating Income: $14.2 million for Q4 on a GAAP basis; $65.3 million for full-year 2024 ex-items, up 7% from 2023.
• Net Income: $10.4 million ex-items for Q4; $41.6 million for full-year 2024, up 10% from 2023.
• Earnings Per Share (EPS): $0.22 ex-items for Q4; $0.87 for full-year 2024, up 9% from 2023.
• Operating Margins: 16% for Reservoir Description in Q4; 4% for Production Enhancement in Q4.
• Free Cash Flow: $16.2 million for Q4; $43.4 million for full-year 2024, up from $14.2 million in 2023.
• Net Debt: Reduced by $11.7 million in Q4; $108.8 million at year-end 2024.
• Leverage Ratio: Improved to 1.31 at year-end 2024, lowest in over eight years.
• Interest Expense: $2.6 million for Q4, decreased 15% sequentially and 27% year over year.
• Capital Expenditures: $4.4 million for Q4; $13 million for full-year 2024.

• Warning! GuruFocus has detected 4 Warning Signs with CLB.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Core Laboratories Inc (NYSE:CLB) reported a 9% increase in earnings per share for the full year 2024 compared to 2023.
• The company successfully reduced its net debt by nearly $12 million in the fourth quarter, lowering its leverage ratio to 1.31, the lowest in eight years.
• Core Laboratories Inc (NYSE:CLB) returned excess free cash to shareholders by repurchasing nearly 265,000 shares of company stock during the fourth quarter.
• The company experienced a higher level of international product sales in 2024 compared to 2023, despite challenges in the US market.
• Core Laboratories Inc (NYSE:CLB) generated a significant improvement in free cash flow, reaching $43.4 million for the full year 2024, up from $14.2 million in 2023.

Negative Points

• Revenue for the fourth quarter was down 4% compared to the prior quarter, primarily due to a decrease in US onshore activity.
• Geopolitical conflicts and trade sanctions in regions like Russia, Ukraine, and the Middle East negatively impacted demand for laboratory services.
• The company's operating margins in Production Enhancement were low at 4% for the fourth quarter.
• Completion diagnostic services in the Gulf of Mexico were delayed due to hurricanes, affecting the company's schedule and revenue.
• Core Laboratories Inc (NYSE:CLB) faced challenges with reduced manufacturing efficiencies due to lower US onshore sales, impacting cost of sales.

Q & A Highlights

Q: How do you view the competitive dynamics and pricing environment for Production Enhancement in the US market? A: Lawrence Bruno, CEO, stated that the market is crowded with a lot of competition. Some buyers are willing to pay for technology and performance, while others prefer commodity products. Core Labs aims to differentiate its products through technology advantages. Pricing has been stable, but there is a desire for higher rewards for their technology due to the market's capacity.

Q: What are the expectations for the Reservoir Description (RD) business internationally in 2025, and what will be the biggest drivers? A: Lawrence Bruno, CEO, mentioned that they expect a seasonal decline from Q4 to Q1 due to weather and sanctions affecting product sales and laboratory work. Despite these challenges, they anticipate mid-single-digit growth for Reservoir Description, driven by strong international activity and project progression.

Q: Can you provide more detail on the international markets where you see the most growth in 2025? A: Lawrence Bruno, CEO, highlighted growth in the Middle East, South Atlantic Margin, Asia-Pacific, and the North Sea. They are optimistic about projects in Australia, Indonesia, and Norway. However, they have exited the Mexican market, which they believe will be beneficial in the near term.

Q: How did the Q1 weather impact operations, and where were the largest effects felt? A: Lawrence Bruno, CEO, explained that freeze-related closures affected their main product manufacturing facility in Godley, Texas, and their largest laboratory in Houston. Other facilities along the Texas-Louisiana border and in South Louisiana also experienced closures. These disruptions resulted in approximately $1 million in lost revenue.

Q: How are geopolitical disruptions affecting Reservoir Description margins in Q1? A: Lawrence Bruno, CEO, confirmed that geopolitical disruptions, particularly sanctions, have a significant impact on margins. These sanctions affected both product sales and crude assay work, impacting profitability. If sanctions are lifted, there may be opportunities to recover some of the lost business later in the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.