Core Laboratories Inc. /DE/ Q3 FY2024 earnings call

• Core continued operational momentum in Q3 2024, with revenue up 3% from Q2 2024 and over 7% from Q3 2023. - Operating income, operating and earnings per share showed solid sequential improvement. - In Reservoir Description, despite geopolitical conflicts and Gulf of Mexico weather events, operating margins improved. In Production Enhancement, revenue growth was offset by Gulf of Mexico hurricane delays and US land completion activity decline. - Operational highlights included Reservoir Description's Brazil lab work on post-drill analysis and core analysis for a reservoir, and Production Enhancement's work on pulverizer technology for offshore plug-and-abandonment and completion diagnostics for a deepwater Gulf of Mexico operator.

Reservoir Description: In the third quarter of 2024, revenue was $88.8 million, up 3% compared to Q2 2024. Operating income ex items was $15.4 million, up from $11.8 million in Q2, and operating margins were 17% in Q3, up from 14% in Q2. Production Enhancement: Revenue was $45.6 million, up nearly 3% compared to Q2 and over 13% year-over-year. Operating income ex items was $2.6 million, yielding operating margins of 6%.

• Fourth quarter 2024 revenue projected to range from $128.5 million to $135.5 million with operating income of $14.8 million to $17.7 million, yielding operating margins of 12%. - EPS for Q4 2024 expected to range from $0.20 to $0.25. - Reservoir Description's Q4 2024 revenue projected flat to up slightly. Production Enhancement's Q4 2024 revenue estimated to range from $41 million to $45 million with operating income of $1.3 million to $2.7 million.

• Geopolitical conflicts negatively impact demand for laboratory services tied to crude oil assay. - Weather events in the Gulf of Mexico negatively impact revenue and operating margins. - Volatility in the US onshore completion activity affects production enhancement revenue and margins.

Q: Sean Mitchell asked about CCS opportunity and pulverizer technology.

A: Larry Bruno responded that CCS projects likely have shorter life engagement with Core Lab compared to hydrocarbon fields, and pulverizer technology has big offshore application opportunities with potential for onshore variance in the future.

Q: Stephen Gengaro asked about international growth rates next year and the perf gun business.

A: Larry Bruno discussed international growth tied to rig availability and lucrative projects for Reservoir Description, and Gwen Gresham commented on completion activity decline and seasonal trends, while Larry Bruno talked about the crowded perf gun market and Core Lab's position in it