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Core Laboratories (CLB) Down 25.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Core Laboratories (CLB - Free Report) . Shares have lost about 25.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Core Laboratories due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Core Laboratories Q2 Earnings Beat & Revenues Lag
Core Laboratories reported second-quarter 2024 adjusted earnings of 22 cents per share, which beat the Zacks Consensus Estimate of 17 cents. The bottom line also marginally improved from the year-ago quarter’s reported figure of 21 cents.
This oilfield service provider’s operating revenues of $130.6 million missed the Zacks Consensus Estimate of $132 million by 1.1% due to underperformance from the Production Enhancement segment. However, the top line increased 2.1% from the year-ago quarter’s level of $127.9 million. This can be attributed to the Reservoir Description segment’s impressive performance.
The company's net debt (calculated as long-term debt minus cash and cash equivalents) stood at $132.3 million, reflecting a reduction of $15.8 million in the quarter. CLB's leverage ratio also improved to 1.66 from the previous quarter's 1.76.
Core Laboratories reported first-quarter 2023 adjusted earnings of 19 cents per share, which beat the Zacks Consensus Estimate of 17 cents. The bottom line also improved from the year-ago quarter’s reported figure of 8 cents. This can be attributed to higher-than-expected revenues from Reservoir Description.
Core Labs’ adjusted revenues of $128.4 million beat the Zacks Consensus Estimate of $126 million by 1.9%. The top line also rose from the year-ago quarter’s recorded figure of $115.3 million. This can be attributed to the Reservoir Description segment’s impressive performance.
Segmental Performance
Reservoir Description: Revenues in this segment increased about 3.5% to $86.3 million from $83.4 million in the second quarter of 2023. However, the top line missed our projection of $88 million. Operating income decreased from $13.3 million in the year-ago period to $11.4 million and missed our estimate of $13 million.
Production Enhancement: This segment’s revenues decreased 0.4% to $44.3 million from $44.5 million in the prior year quarter. Additionally, the top line missed our estimate of $45 million. Operating income of $4.4 million beat our projection of $2.7 million. However, the metric declined from the year-ago quarter’s reported profit of $5.5 million.
Financials and Dividends
As of Jun 30, 2024, This Zacks Rank #3 (Hold) company had cash and cash equivalents of $17.7 million and long-term debt of $147.6 million. CLB’s debt-to-capitalization was 37.5%.
Operating cash totaled $17.1 million, while capital expenditure amounted to $2.9 million. This led to a positive free cash flow of $14.3 million.
CLB’s board of directors approved a regular quarterly dividend of a cent per share on the company's common stock, payable on Aug 26, 2024, to its shareholders of record as of Aug 5.
Outlook
For the third quarter of 2024, CLB expects revenues to range between $131 million and $137 million. Operating income is projected to be between $16.9 million and $19.1 million, with earnings per share expected to be between 23 cents and 27 cents.
Revenues for the Reservoir Description segment are anticipated to be between $86.5 million and $89.5 million, with operating income ranging from $13.4 million to $14 million.
For the Production Enhancement segment, revenues are expected to be between $44.5 million and $47.5 million, with operating income projected in the range of $3.3-$4.9 million.
The company anticipates an effective tax rate of 20% for the third quarter. This guidance is based on projections for underlying operations and excludes any gains or losses from foreign exchange.
Core anticipates to continue generating positive free cash flow in future quarters. The company plans to use this free cash flow to reduce debt until CLB achieves its target leverage ratio of 1.5 times or lower.
Management remains optimistic about robust growth in international upstream projects throughout 2024 and beyond, driven by increasing crude oil demand and global energy security concerns. The company plans to invest in technology and explore new growth opportunities.
However, Core anticipates a sequential decline in the U.S. onshore client activity, which will lead to modest revenue growth for the Reservoir Description segment in the third quarter. In the Production Enhancement segment, a declining U.S. frac spread count suggests a softening market. Despite these domestic challenges, growth in international and offshore diagnostic services, along with strong system product sales, is expected to offset these trends.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months.
VGM Scores
At this time, Core Laboratories has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Core Laboratories has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Core Laboratories (CLB) Down 25.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Core Laboratories (CLB - Free Report) . Shares have lost about 25.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Core Laboratories due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Core Laboratories Q2 Earnings Beat & Revenues Lag
Core Laboratories reported second-quarter 2024 adjusted earnings of 22 cents per share, which beat the Zacks Consensus Estimate of 17 cents. The bottom line also marginally improved from the year-ago quarter’s reported figure of 21 cents.
This oilfield service provider’s operating revenues of $130.6 million missed the Zacks Consensus Estimate of $132 million by 1.1% due to underperformance from the Production Enhancement segment. However, the top line increased 2.1% from the year-ago quarter’s level of $127.9 million. This can be attributed to the Reservoir Description segment’s impressive performance.
The company's net debt (calculated as long-term debt minus cash and cash equivalents) stood at $132.3 million, reflecting a reduction of $15.8 million in the quarter. CLB's leverage ratio also improved to 1.66 from the previous quarter's 1.76.
Segmental Performance
Reservoir Description: Revenues in this segment increased about 3.5% to $86.3 million from $83.4 million in the second quarter of 2023. However, the top line missed our projection of $88 million. Operating income decreased from $13.3 million in the year-ago period to $11.4 million and missed our estimate of $13 million.
Production Enhancement: This segment’s revenues decreased 0.4% to $44.3 million from $44.5 million in the prior year quarter. Additionally, the top line missed our estimate of $45 million. Operating income of $4.4 million beat our projection of $2.7 million. However, the metric declined from the year-ago quarter’s reported profit of $5.5 million.
Financials and Dividends
As of Jun 30, 2024, This Zacks Rank #3 (Hold) company had cash and cash equivalents of $17.7 million and long-term debt of $147.6 million. CLB’s debt-to-capitalization was 37.5%.
Operating cash totaled $17.1 million, while capital expenditure amounted to $2.9 million. This led to a positive free cash flow of $14.3 million.
CLB’s board of directors approved a regular quarterly dividend of a cent per share on the company's common stock, payable on Aug 26, 2024, to its shareholders of record as of Aug 5.
Outlook
For the third quarter of 2024, CLB expects revenues to range between $131 million and $137 million. Operating income is projected to be between $16.9 million and $19.1 million, with earnings per share expected to be between 23 cents and 27 cents.
Revenues for the Reservoir Description segment are anticipated to be between $86.5 million and $89.5 million, with operating income ranging from $13.4 million to $14 million.
For the Production Enhancement segment, revenues are expected to be between $44.5 million and $47.5 million, with operating income projected in the range of $3.3-$4.9 million.
The company anticipates an effective tax rate of 20% for the third quarter. This guidance is based on projections for underlying operations and excludes any gains or losses from foreign exchange.
Core anticipates to continue generating positive free cash flow in future quarters. The company plans to use this free cash flow to reduce debt until CLB achieves its target leverage ratio of 1.5 times or lower.
Management remains optimistic about robust growth in international upstream projects throughout 2024 and beyond, driven by increasing crude oil demand and global energy security concerns. The company plans to invest in technology and explore new growth opportunities.
However, Core anticipates a sequential decline in the U.S. onshore client activity, which will lead to modest revenue growth for the Reservoir Description segment in the third quarter. In the Production Enhancement segment, a declining U.S. frac spread count suggests a softening market. Despite these domestic challenges, growth in international and offshore diagnostic services, along with strong system product sales, is expected to offset these trends.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months.
VGM Scores
At this time, Core Laboratories has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Core Laboratories has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.