Core Laboratories N.V. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strategic Execution: Core continued to execute its strategic plan of technology investments, with sequential improvement in revenue, operating income, margins, and EPS.
• Reservoir Description Highlights: Completed phase 1 of a major reservoir fluid study in the Middle East, using proprietary PVT lab technologies and Core flood experiments to address asphaltene precipitation issues.
• Production Enhancement Highlights: Helped a national oil company recover a stuck drill pipe in offshore West Africa using a proprietary dual-end severing tool. Assisted a Canadian heavy oil operator in optimizing completions using FLOWPROFILER EDS oil tracers.

Segment Performance

• Reservoir Description: In Q3 2025, revenue was $88.2 million, up over 2% compared to Q2. Ex items, operating margins were 13%. Revenue contribution: Approximately 65.6% of total revenue ($134.5 million).
• Production Enhancement: Q3 revenue was $46.3 million, up 6% from Q2. Ex items, operating margins were 11%. Revenue contribution: Approximately 34.4% of total revenue ($134.5 million).

Guidance

• Fourth Quarter Projections:
  • Reservoir Description: Revenue projected to range from $88 million to $90 million, with operating income of $11 million to $12.3 million.
  • Production Enhancement: Revenue estimated to range from $44 million to $46 million, with operating income of $2.9 million to $3.7 million.
  • Total Core Lab: Revenue projected $132 million to $136 million, operating income $14 million to $16.1 million, EPS $0.18 to $0.22.
• Long-Term Outlook: IEA, EIA, and OPEC+ forecast growth in crude oil demand, requiring significant investment in oil and gas resource development to offset natural decline in existing fields.

Risks

• Geopolitical Uncertainties: Ongoing international geopolitical conflicts, evolving sanctions, and trade/tariff dynamics create uncertainty in demand for laboratory services tied to crude oil trade.
• Commodity Price Volatility: Pending tariffs and supply-demand balance concerns generate volatility in commodity prices, affecting demand for certain services and product sales.

Question and Answer

Q: Elaborate on opportunities for similar M&A transactions and details on the Solintec acquisition.

A: Core Lab has a history of tuck-in acquisitions. The Solintec acquisition has an earnout structure, which is a win-win if the earnout is paid. Solintec has a long history in Brazil.

Q: Outlook for activity levels in Asia Pac and other regions 2-3-4 years from now.

A: Higher activity across the board, with Middle East leading, followed by South Atlantic margin, West Africa, and Asia Pac. Activity levels expected to increase over the next few years.