Core Laboratories (CLB) Q2 Earnings Top Estimates, Sales Lag

Oilfield services company Core Laboratories N.V. CLB reported second-quarter 2017 adjusted diluted earnings of 52 cents per share, surpassing the Zacks Consensus Estimate of 50 cents. Further, this compares favorably with the prior-year quarter adjusted earnings of 35 cents.

The better-than-expected results were primarily driven by improvement in the top line and a significant rise in the operating income from the product enhancement operations.

Total revenue of $163.9 million missed the Zacks Consensus Estimate of $168 million. Industry shortages of completion crews and equipment led to fewer-than-expected completions, resulting into lower revenues. However, revenues were up compared to the prior-year quarter level of $148.1 million.

Core Laboratories N.V. Price, Consensus and EPS Surprise

 

Core Laboratories N.V. Price, Consensus and EPS Surprise | Core Laboratories N.V. Quote

Segment Performance

Reservoir Description: Segment revenues were $104.3 million compared with $108.3 million in second-quarter 2016. Lower activity levels in the international and offshore markets affected results negatively.

Operating income (excluding foreign exchange losses) for the segment was about $18.7 million in the reported quarter compared with $20.1 million in the prior-year quarter. Operating margin for the reported quarter was around 18%.

Production Enhancement: Segment revenues were approximately $59.6 million in the reported quarter as against $39.8 million in second-quarter 2016. Increased U.S. land activity levels helped in generating better revenues.

Operating income (excluding foreign exchange losses) for the segment was about $10.8 million in the reported quarter compared with $247,000 in the prior-year quarter, reflecting a significant rise of 4258.3%. Usage of technologically advanced products and enhancement of their stimulation programs contributed to increased margins.

Balance Sheet and Free Cash Flow

As of Jun 30, 2017, Core Laboratories had cash and cash equivalents of $14.3 million and long-term debt of around $233.7 million. The debt-to-capitalization ratio of the company in the reported quarter is 60%. Capital Expenditures for the second quarter were $2.9 million.

The company generated free cash flow of approximately $15.8 million in second-quarter 2017.

Quarterly Dividend

On Jul 6, board of directors announced to pay a cash dividend of 55 cents per share. Notably, this is same as the previous payout. The dividend will be paid on Aug 14 to shareholders on record as of Jul 17.

Guidance

For the third quarter, Core Laboratories expects earnings to lie between 54–56 cents per share. The company expects third-quarter revenues to lie between $165.5 and $170 million.

Zacks Rank & Key Picks

Amsterdam, Netherlands-based Core Laboratories is an oilfield services company that provides reservoir description and production enhancement services to the oil and gas industry across the globe. The company currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked players from the broader energy space include McDermott International, Inc. MDR, Petróleo Brasileiro S.A. or Petrobras PBR and SeaDrill Limited SDRL. While McDermott and Petrobras sport a Zacks Rank #1 (Strong Buy), SeaDrill carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

McDermott delivered an average positive earnings surprise of 387.5% in the last four quarters.

Petrobras posted an average positive earnings surprise of 59.58% in the last four quarters.

SeaDrill reported an average positive earnings surprise of 97.13% in the last four quarters.

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