Revised Financial Information
On January 31, 2024, Core Laboratories, Inc. (the “Company”) issued a press release that reported the Company’s financial results of the Company for the quarter and year ended December 31, 2023 (the “Earnings Release”). A copy of the Earnings Release was attached as Exhibit 99.1 to the Company’s Current Report on Form 8-K that was furnished to the Securities and Exchange Commission (the “SEC”) on January 31, 2024.
Revised versions of the condensed consolidated balance sheets, condensed consolidated statement of operations and condensed consolidated statements of cash flows, as well as the non-GAAP reconciliation of net income and diluted earnings per share attributable to Core Laboratories Inc. appearing in the Earnings Release are provided below (with the revised information identified by a “^”):
CORE LABORATORIES INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | Quarter Ended | | | % Variance | |
| | December 31, 2023 | | | September 30, 2023 | | | December 31, 2022 | | | vs. Q3-2023 | | vs. Q4-2022 | |
REVENUE | | $ | 128,210 | | | $ | 125,343 | | | $ | 127,571 | | | 2.3% | | 0.5% | |
| | | | | | | | | | | | | | |
OPERATING EXPENSES: | | | | | | | | | | | | | | |
Costs of services and product sales | | | 101,517 | | | | 96,617 | | | | 99,816 | | | 5.1% | | 1.7% | |
General and administrative expense | | | 8,665 | | | | 9,452 | | | | 8,724 | | | (8.3)% | | (0.7)% | |
Depreciation and amortization | | | 3,874 | | | | 3,929 | | | | 4,073 | | | (1.4)% | | (4.9)% | |
Other (income) expense, net | | | (427 | ) | | | 673 | | | | (660 | ) | | NM | | NM | |
Total operating expenses | | | 113,629 | | | | 110,671 | | | | 111,953 | | | 2.7% | | 1.5% | |
| | | | | | | | | | | | | | |
OPERATING INCOME | | | 14,581 | | | | 14,672 | | | | 15,618 | | | (0.6)% | | (6.6)% | |
Interest expense | | | 3,618 | | | | 3,147 | | | | 3,081 | | | 15.0% | | 17.4% | |
Income before income taxes | | | 10,963 | | | | 11,525 | | | | 12,537 | | | (4.9)% | | (12.6)% | |
Income tax expense | | | 8,529 | | ^ | | 2,305 | | | | 5,847 | | | 270.0% | | 45.9% | |
Net income | | | 2,434 | | ^ | | 9,220 | | | | 6,690 | | | (73.6)% | | (63.6)% | |
Net income (loss) attributable to non- controlling interest | | | 235 | | | | (37 | ) | | | (61 | ) | | NM | | NM | |
Net income attributable to Core Laboratories Inc. | | $ | 2,199 | | ^ | $ | 9,257 | | | $ | 6,751 | | | (76.2)% | | (67.4)% | |
| | | | | | | | | | | | | | |
Diluted earnings per share | | $ | 0.05 | | ^ | $ | 0.19 | | | $ | 0.14 | | | (73.7)% | | (64.3)% | |
| | | | | | | | | | | | | | |
Diluted earnings per share attributable to Core Laboratories Inc. | | $ | 0.05 | | ^ | $ | 0.19 | | | $ | 0.14 | | | (73.7)% | | (64.3)% | |
| | | | | | | | | | | | | | |
Diluted weighted average common shares outstanding | | | 47,557 | | | | 47,604 | | | | 46,826 | | | (0.1)% | | 1.6% | |
| | | | | | | | | | | | | | |
Effective tax rate | | | 78 | % | ^ | | 20 | % | | | 47 | % | | NM | | NM | |
| | | | | | | | | | | | | | |
SEGMENT INFORMATION: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Revenue: | | | | | | | | | | | | | | |
Reservoir Description | | $ | 84,628 | | | $ | 85,145 | | | $ | 78,124 | | | (0.6)% | | 8.3% | |
Production Enhancement | | | 43,582 | | | | 40,198 | | | | 49,447 | | | 8.4% | | (11.9)% | |
Total | | $ | 128,210 | | | $ | 125,343 | | | $ | 127,571 | | | 2.3% | | 0.5% | |
| | | | | | | | | | | | | | |
Operating income: | | | | | | | | | | | | | | |
Reservoir Description | | $ | 12,259 | | | $ | 12,992 | | | $ | 6,817 | | | (5.6)% | | 79.8% | |
Production Enhancement | | | 2,195 | | | | 1,544 | | | | 7,904 | | | 42.2% | | (72.2)% | |
Corporate and Other | | | 127 | | | | 136 | | | | 897 | | | NM | | NM | |
Total | | $ | 14,581 | | | $ | 14,672 | | | $ | 15,618 | | | (0.6)% | | (6.6)% | |
| | | | | | | | | | | | | | |
"NM" means not meaningful | | | | | | | | | | | | | | |
| |
CORE LABORATORIES INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| | | | | | | |
| | Year Ended December 31, | | % Variance | |
| | 2023 | | 2022 | | | |
REVENUE | | $509,790 | | $489,735 | | 4.1% | |
| | | | | | | |
OPERATING EXPENSES: | | | | | | | |
Costs of services and product sales | | 399,957 | | 393,655 | | 1.6% | |
General and administrative expense | | 40,259 | | 38,117 | | 5.6% | |
Depreciation and amortization | | 15,784 | | 17,161 | | (8.0)% | |
Other (income) expense, net | | (850) | | (722) | | NM | |
Total operating expenses | | 455,150 | | 448,211 | | 1.5% | |
| | | | | | | |
OPERATING INCOME | | 54,640 | | 41,524 | | 31.6% | |
Interest expense | | 13,430 | | 11,570 | | 16.1% | |
Income before income taxes | | 41,210 | | 29,954 | | 37.6% | |
Income tax expense | | 4,185 | ^ | 10,296 | | (59.4)% | |
Net income | | 37,025 | ^ | 19,658 | | 88.3% | |
Net income attributable to non-controlling interest | | 350 | | 205 | | NM | |
Net income attributable to Core Laboratories Inc. | | $36,675 | ^ | $19,453 | | 88.5% | |
| | | | | | | |
Diluted earnings per share | | $0.78 | ^ | $0.42 | | 85.7% | |
| | | | | | | |
Diluted earnings per share attributable to Core Laboratories Inc. | | $0.77 | ^ | $0.42 | | 83.3% | |
| | | | | | | |
Diluted weighted average common shares outstanding | | 47,523 | | 46,813 | | 1.5% | |
| | | | | | | |
Effective tax rate | | 10% | ^ | 34% | | NM | |
| | | | | | | |
SEGMENT INFORMATION: | | | | | | | |
| | | | | | | |
Revenue: | | | | | | | |
Reservoir Description | | $333,345 | | $307,691 | | 8.3% | |
Production Enhancement | | 176,445 | | 182,044 | | (3.1)% | |
Total | | $509,790 | | $489,735 | | 4.1% | |
| | | | | | | |
Operating income: | | | | | | | |
Reservoir Description | | $41,039 | | $22,902 | | 79.2% | |
Production Enhancement | | 12,519 | | 16,351 | | (23.4)% | |
Corporate and Other | | 1,082 | | 2,271 | | (52.4)% | |
Total | | $54,640 | | $41,524 | | 31.6% | |
| | | | | | | |
"NM" means not meaningful | | | | | | | |
CORE LABORATORIES INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | % Variance | |
ASSETS: | | December 31, 2023 | | | September 30, 2023 | | | December 31, 2022 | | | vs. Q3-2023 | | vs. Q4-2022 | |
| | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 15,120 | | | $ | 16,616 | | | $ | 15,428 | | | (9.0)% | | (2.0)% | |
Accounts receivable, net | | | 109,352 | | | | 104,053 | | | | 106,913 | | | 5.1% | | 2.3% | |
Inventories | | | 71,702 | | | | 75,060 | | | | 60,445 | | | (4.5)% | | 18.6% | |
Other current assets | | | 26,962 | | ^ | | 32,815 | | | | 28,916 | | | (17.8)% | | (6.8)% | |
Total current assets | | | 223,136 | | ^ | | 228,544 | | | | 211,702 | | | (2.4)% | | 5.4% | |
| | | | | | | | | | | | | | |
Property, plant and equipment, net | | | 99,626 | | | | 99,499 | | | | 105,028 | | | 0.1% | | (5.1)% | |
Right of use assets | | | 53,842 | | | | 53,101 | | | | 52,379 | | | 1.4% | | 2.8% | |
Intangibles, goodwill and other long-term assets, net | | | 209,791 | | ^ | | 211,270 | | | | 209,245 | | | (0.7)% | | 0.3% | |
Total assets | | $ | 586,395 | | ^ | $ | 592,414 | | | $ | 578,354 | | | (1.0)% | | 1.4% | |
| | | | | | | | | | | | | | |
LIABILITIES AND EQUITY: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Accounts payable | | $ | 33,506 | | | $ | 34,097 | | | $ | 45,847 | | | (1.7)% | | (26.9)% | |
Operating lease liabilities | | | 10,175 | | | | 9,794 | | | | 11,699 | | | 3.9% | | (13.0)% | |
Other current liabilities | | | 44,416 | | ^ | | 40,359 | | | | 45,589 | | | 10.1% | | (2.6)% | |
Total current liabilities | | | 88,097 | | ^ | | 84,250 | | | | 103,135 | | | 4.6% | | (14.6)% | |
| | | | | | | | | | | | | | |
Long-term debt, net | | | 163,134 | | | | 177,863 | | | | 172,386 | | | (8.3)% | | (5.4)% | |
Long-term operating lease liabilities | | | 42,076 | | | | 40,903 | | | | 38,305 | | | 2.9% | | 9.8% | |
Other long-term liabilities | | | 63,281 | | ^ | | 59,948 | | | | 75,574 | | | 5.6% | | (16.3)% | |
| | | | | | | | | | | | | | |
Total equity | | | 229,807 | | ^ | | 229,450 | | | | 188,954 | | | 0.2% | | 21.6% | |
Total liabilities and equity | | $ | 586,395 | | ^ | $ | 592,414 | | | $ | 578,354 | | | (1.0)% | | 1.4% | |
CORE LABORATORIES INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | | | | | | | |
| | Year Ended December 31, | |
| | 2023 | | | 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | |
Net income | | $ | 37,025 | | ^ | $ | 19,658 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
Stock-based compensation | | | 13,971 | | | | 7,756 | |
Depreciation and amortization | | | 15,784 | | | | 17,161 | |
Deferred income taxes | | | (10,811 | ) | ^ | | 433 | |
Accounts receivable | | | (2,618 | ) | | | (10,078 | ) |
Inventories | | | (12,976 | ) | | | (14,860 | ) |
Accounts payable | | | (12,878 | ) | | | 15,374 | |
Other adjustments to net income | | | (2,708 | ) | ^ | | (10,488 | ) |
Net cash provided by operating activities | | | 24,789 | | | | 24,956 | |
| | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | |
Capital expenditures | | | (10,579 | ) | | | (10,216 | ) |
Net proceeds from life insurance policies and from insurance recovery | | | 3,375 | | | | 4,260 | |
Other investing activities | | | 552 | | | | 2,100 | |
Net cash used in investing activities | | | (6,652 | ) | | | (3,856 | ) |
| | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | |
Repayment of long-term debt | | | (211,000 | ) | | | (131,000 | ) |
Proceeds from long-term debt | | | 202,000 | | | | 116,000 | |
Equity related transaction costs | | | (4,068 | ) | | | (411 | ) |
Dividends paid | | | (1,868 | ) | | | (1,853 | ) |
Repurchase of common stock | | | (2,202 | ) | | | (3,903 | ) |
Other financing activities | | | (1,307 | ) | | | (2,208 | ) |
Net cash used in financing activities | | | (18,445 | ) | | | (23,375 | ) |
| | | | | | |
NET CHANGE IN CASH AND CASH EQUIVALENTS | | | (308 | ) | | | (2,275 | ) |
CASH AND CASH EQUIVALENTS, beginning of year | | | 15,428 | | | | 17,703 | |
CASH AND CASH EQUIVALENTS, end of year | | $ | 15,120 | | | $ | 15,428 | |
Non-GAAP Information
Management believes that the exclusion of certain income and expenses enables it to evaluate more effectively the Company's operations period-over-period and to identify operating trends that could otherwise be masked by the excluded Items. For this reason, management uses certain non-GAAP measures that exclude these Items and believes that this presentation provides a clearer comparison with the results reported in prior periods. The non-GAAP financial measures should be considered in addition to, and not as a substitute for, the financial results prepared in accordance with GAAP, as more fully discussed in the Company's financial statements and filings with the Securities and Exchange Commission.
Reconciliation of Net Income and Diluted Earnings Per Share Attributable to Core Laboratories Inc.
(In thousands, except per share data)
(Unaudited)
| | | | | | |
| | Net Income Attributable to Core Laboratories Inc. |
| | Quarter Ended |
| | December 31, 2023 | | September 30, 2023 | | December 31, 2022 |
GAAP reported | | $2,199 | ^ | $9,257 | | $6,751 |
Stock compensation (1) | | — | | — | | (1,494) |
Loss on lease abandonment and assets write-down (2) | | — | | 505 | | — |
ATM termination costs (3) | | — | | 364 | | — |
Redomestication costs | | — | | — | | 197 |
Foreign exchange losses (gains) | | 374 | | 190 | | 552 |
Reversal of net deferred tax liabilities and effect of higher (lower) tax rate (5) | | 6,336 | ^ | — | | 3,341 |
Excluding specific items | | $8,909 | | $10,316 | | $9,347 |
|
| | | | | | | | | |
| | Diluted Earnings Per Share Attributable to Core Laboratories Inc. | |
| | Quarter Ended | | Year ended | |
| | December 31, 2023 | | September 30, 2023 | | December 31, 2022 | | December 31, 2023 | |
GAAP reported | | $0.05 | ^ | $0.19 | | $0.14 | | $0.77 | ^ |
Stock compensation (1) | | — | | — | | (0.03) | | 0.09 | |
Loss on lease abandonment and assets write-down (2) | | — | | 0.01 | | — | | 0.04 | |
ATM termination costs (3) | | — | | 0.01 | | — | | 0.01 | |
Gain on life insurance policies (4) | | — | | — | | — | | (0.03) | |
Redomestication costs | | — | | — | | — | | — | |
Foreign exchange losses (gains) | | 0.01 | | 0.01 | | 0.02 | | — | |
Reversal of net deferred tax liabilities and effect of higher (lower) tax rate (5) | | 0.13 | ^ | — | | 0.07 | | (0.08) | ^ |
Excluding specific items | | $0.19 | | $0.22 | | $0.20 | | $0.80 | |
| | | | | | | | | |
(1) The year ended December 31, 2023 includes reversals of stock compensation expense previously recognized due to a change in probability of performance condition for certain executive's share awards and the acceleration of stock compensation expense associated with employees reaching eligible retirement age. The quarter ended December 31, 2022 includes adjustments associated with certain performance share awards that vested during the quarter. | |
(2) Includes the write-down of right of use assets and leasehold improvements and other exit costs associated with consolidation of certain facilities. | |
(3) Includes the write off of previously deferred costs upon termination of our "at-the-market offering" program ("ATM Program"). | |
(4) Includes gain on life insurance policies death benefit proceeds. | |
(5) The quarter and year ended December 31, 2023 includes the reversal of certain net deferred tax liabilities which will not be realized as a result of the Redomestication Transaction and the effect to reflect tax expense at a normalized rate of 20%. The quarter ended December 31, 2022 includes the effect to reflect tax expense at a normalized rate of 20%. | |