Core Laboratories N.V. Q1 FY2026 earnings call

Key Managerial Messages - High-level comments: Military conflict in Middle East caused geopolitical uncertainties, disrupting operations. Other factors like Russia-Ukraine conflict, North American cold weather, and Mediterranean Storm Harry also impacted. - Strategies: Introduce new product and service offerings in key geographic markets, maintain lean and focused organization, return excess free cash to shareholders and strengthen balance sheet. - Operational highlights: Reservoir description advanced integrated digital data strategy via RAPID platform. Production enhancement: Core Lab engaged by national oil company in Middle East to address excess water production issue using GTX X-band technology; independent operator in Permian Basin used flow profiler solid oil tracers to optimize well performance.

Reservoir Description: First quarter revenue was down 11% from Q4 2025 and flat compared to Q1 last year. Operating margins were 6%, down sequentially by nearly 800 basis points and year over year. Revenue was $82 million. Production Enhancement: First quarter revenue was down 13% compared to Q4 2025. Operating margins were 5%, down from 7% in Q4 2025. Revenue was $40 million. Revenue contribution: Reservoir description and production enhancement are the two operating segments.

Guidance - Second quarter 2026 revenue projection: Range from $123 million to $131 million, with operating income of $6.4 million to $10.2 million and operating margins of 7%. - Reservoir Description: Revenue range $77.5 million to $82.5 million, operating income $3.5 million to $5.4 million. - Production Enhancement: Revenue range $45.5 million to $48.5 million, operating income $2.8 million to $4.7 million. - EPS range for second quarter 2026: $0.06 to $0.12

Risks - Military conflict in Middle East caused disruptions to hydrocarbon transportation routes, affecting reservoir description and service side of production enhancement. - Geopolitical instability in Middle East, sanctions, evolving trade policies, and OPEC Plus production decisions contribute to market volatility. - Costs for certain imported raw materials used in production enhancement continue to increase and are subject to tariffs and supply chain volatility. - Severe weather events in North America and Europe negatively impacted laboratory operations and client activity.

Question and Answer - Q: Concern about worldwide supply disconnect between physical and paper market and its influence on NOCs and IOCs.

A: Worldwide supply is burning through inventory, driving people to think about longer term energy security, leading to more urgent development of resources closer to home. - Q: Thoughts on recovery timelines in Middle East and incremental demand for reservoir diagnostics.

A: Recovery has potential complexity and prolongation, but there are prior disruptions; clients may want to make up for lost time, creating opportunities for reservoir diagnostics