Oilfield service company, Core Laboratories N.V. (CLB) reported strong earnings for the fourth quarter, which in fact turned out the most profitable in its history. Use of superior quality technology and new projects were the primary drivers of this record performance.
Quarterly adjusted diluted earnings of $1.54 per share beat the Zacks Consensus Estimate by a penny. The bottom line was also up about 8% from the year-ago quarter.
Total quarterly revenue of $278.6 million was higher than the prior-year quarter level of $276.3 million. However, it failed to meet the Zacks Consensus Estimate of $280 million due to lower contribution from the Reservoir Description and Reservoir Management segments.
For 2014, Core Lab reported per share profits of $5.85, which came in above the Zacks Consensus Estimate of $5.80 and higher than the 2013 earnings of $5.32 per share. Revenues of $1,085.2 million improved 1.1% from the prior-year figure.
Core Labs maintained the oilfield services industry’s earnings surprise streak following its larger rivals like Baker Hughes Inc. (BHI), Schlumberger Ltd. (SLB) and Halliburton Co. (HAL) which gave impressive performances. However, shares of Core Laboratories fell over 13% in the afterhours trading session owing to weak first-quarter 2015 guidance.
Segment Performance
Reservoir Description: Segment revenues were $131.8 million compared with $136.3 million in fourth-quarter 2013.
Operating income (excluding foreign exchange losses) for the unit was about $37.3 million in the reported quarter. Operating margin was 28%.
Production Enhancement: Segment revenues were approximately $124.1 million in the reported quarter against $115.3 million in fourth-quarter 2013. Increased sales of higher-margin technology and services backed the growth.
Operating income (excluding foreign exchange losses) increased 10% year over year to $45.7 million. Operating margin for the quarter was 37%.
Reservoir Management: Segment revenues of about $22.7 million were down 8.2% year over year.
Operating income (excluding foreign exchange losses) increased 20% year over year to $9.6 million, resulting in the most profitable quarter for the company. Operating margin for the quarter was about 42%.
Balance Sheet & Free Cash Flow
As of Dec 31, 2014, Core Laboratories had cash and cash equivalents of $23.4 million. Capital expenditures for the fourth quarter were $9 million. The company generated free cash flow of almost $88.8 million.
Quarterly Dividend & Share Repurchase
On Jan 12, 2015, the company’s board of directors declared an increase in its quarterly dividend payment. Core Laboratories would pay first-quarter 2015 cash dividend of 55 cents per share, which represents a 10% increase over the previous payout of 50 cents. The dividend will be paid on Feb 20 to shareholders of record as of Jan 23.
During the reported quarter, Core Laboratories bought back 400,000 shares. The company bought back a total of 1,681,000 shares in 2014.
Guidance
For the first quarter of 2015, the company expects earnings per share in the $1.05–$1.10 range, down about 20% from the year-ago level. Expected weaker North American activity reflects on the projections.
Core Laboratories expects first-quarter revenues to be down about 12% to approximately $230 million.
The company foresees a sharp fall in North American rig count in the second quarter owing to weak commodity pricing. While Gulf of Mexico activities are expected to be around the fourth-quarter level. International activity is expected to see a slight decline.
Core Laboratories expects the Production Enhancement segment to be affected by the downturn in North American activity.
Zacks Rank
Currently, Core Laboratories carries a Zacks Rank #4 (Sell).
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