Oilfield service company, Core Laboratories N.V. CLB reported first-quarter 2015 adjusted diluted earnings of 85 cents per share, which failed to meet the Zacks Consensus Estimate of 88 cents. The bottom line was also substantially below the year-ago quarter earnings of $1.45 per share. Reduced drilling activity levels, primarily in North America, affected the results.
Total quarterly revenue of $213.6 million surpassed the Zacks Consensus Estimate of $212 million but was nearly 19% below the prior-year quarter revenue $262.9 million. Revenues were negatively impacted by foreign currency exchange rate changes.
Segment Performance
Reservoir Description: Segment revenues were $121.8 million compared with $125.3 million in first-quarter 2014.
Operating income (excluding foreign exchange losses) for the unit was about $32.4 million in the reported quarter. Operating margin for the quarter was 27%.
Production Enhancement: Segment revenues were approximately $75.2 million in the reported quarter as against $110.3 million in first-quarter 2014. Reduced North American drilling activity affected the results.
Operating income (excluding foreign exchange losses) fell 65% year over year to $13.4 million. Operating margin for the quarter was 18%.
Reservoir Management: Segment revenues of about $16.7 million were down nearly 39% year over year.
Operating income (excluding foreign exchange losses) was $4.3 million. Operating margin for the quarter was about 25%.
Balance Sheet & Free Cash Flow
As of Mar 31, 2014, Core Laboratories had cash and cash equivalents of $19.1 million. Capital expenditures for the fourth quarter were $6.9 million.
The company generated free cash flow of approximately $72.7 million, a historical quarterly high for the company.
Quarterly Dividend & Share Repurchase
On Apr 13, 2015, the company’s board of directors announced its second-quarter dividend payment. Core Laboratories will pay a cash dividend of 55 cents per share, which in line with the previous payout. The dividend was will be paid on May 22 to shareholders on record as of Apr 24.
During the reported quarter, Core Laboratories bought back 683,000 shares, thereby reducing the company’s share outstanding to a 17-year low.
Guidance
The company foresees a sharp fall in North American rig count in the second quarter owing to weak commodity pricing.
For the second quarter, Core Laboratories expects earnings per share in the $0.76–$0.81 range, down about 40% from the year-ago level. The company expects second-quarter revenues to be in the $192–$202 million range.
Zacks Rank
Currently, Core Laboratories carries a Zacks Rank #4 (Sell).
Better-ranked players from the broader energy sector include Marathon Petroleum Corporation MPC, Valero Energy Partners LP VLP and Cheniere Energy Partners LP. CQP. All these stocks sport a Zacks Rank #1 (Strong Buy).
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