Core Laboratories N.V. (CLB) Bundle
Understanding Core Laboratories N.V. (CLB) Revenue Streams
Understanding Core Laboratories N.V.’s Revenue Streams
Core Laboratories N.V. operates primarily in two segments: Reservoir Description and Production Enhancement. The revenue generated from these segments is essential for assessing the company’s financial health.
Revenue Breakdown by Segment
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Year-over-Year Change (%) | YTD 2024 Revenue (in millions) | YTD 2023 Revenue (in millions) | YTD Change (%) |
|---|---|---|---|---|---|---|
| Reservoir Description | $88.8 | $85.4 | 4% | $259.4 | $248.7 | 4% |
| Production Enhancement | $45.6 | $40.4 | 13% | $135.3 | $132.9 | 2% |
| Total Revenue | $134.4 | $125.8 | 7% | $394.6 | $381.6 | 3% |
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, total revenue increased by 7% compared to Q3 2023. The year-to-date revenue for 2024 also saw an increase of 3% from the same period in 2023.
Contribution of Different Business Segments
- Reservoir Description: Contributed 66% of total revenue in Q3 2024, reflecting a steady demand for reservoir analysis services.
- Production Enhancement: Accounted for 34% of total revenue in Q3 2024, driven by increased activity in international markets.
Significant Changes in Revenue Streams
The Production Enhancement segment experienced a notable 13% increase in revenue for Q3 2024 compared to Q3 2023, attributed to strong demand for well completion diagnostic services. In contrast, the Reservoir Description segment grew by 4% year-over-year, with growth primarily in international markets.
For the nine months ended September 30, 2024, the Production Enhancement segment reported a 2% increase in revenue, while the Reservoir Description segment saw a 4% increase. The overall revenue increase of 3% for the nine months reflects the company’s ability to adapt to changing market conditions.
The company continues to monitor and adjust its strategies to optimize revenue generation across both segments while addressing challenges such as geopolitical conflicts and natural disasters impacting operations.
A Deep Dive into Core Laboratories N.V. (CLB) Profitability
A Deep Dive into Core Laboratories N.V. Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was $80,288 million, resulting in a gross profit margin of 20.3%, compared to 19.5% for the same period in 2023.
Operating Profit Margin: Operating income for the nine months ended September 30, 2024, was $44,382 million, yielding an operating margin of 11%, up from 10% year-over-year. The operating income for the three months ended September 30, 2024, was $19,803 million with an operating margin of 15%.
Net Profit Margin: The net income attributable to Core Laboratories Inc. for the nine months ended September 30, 2024, was $23,997 million, leading to a net profit margin of 6%, compared to 9% for the same period in 2023.
Trends in Profitability Over Time
The following table outlines the profitability metrics over the past three years:
| Period | Gross Profit Margin | Operating Profit Margin | Net Profit Margin |
|---|---|---|---|
| 2024 (9 months) | 20.3% | 11% | 6% |
| 2023 (9 months) | 19.5% | 10% | 9% |
| 2022 (9 months) | 18.7% | 9% | 8% |
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry averages for similar companies in the sector are:
| Metric | Core Laboratories N.V. | Industry Average |
|---|---|---|
| Gross Profit Margin | 20.3% | 22% |
| Operating Profit Margin | 11% | 13% |
| Net Profit Margin | 6% | 8% |
Analysis of Operational Efficiency
Operational efficiency can be evaluated through various metrics:
- Cost of Services: For the nine months ended September 30, 2024, the cost of services was $224,191 million, representing 77% of total service revenue, which is a slight increase compared to 76% in 2023.
- General and Administrative Expenses: These expenses were $30,690 million for the nine months ended September 30, 2024, accounting for 8% of total revenue, a decrease from 8% in 2023.
- Depreciation and Amortization: Depreciation and amortization costs totaled $11,289 million for the nine months ended September 30, 2024.
The operational efficiency metrics indicate a need for enhanced cost management strategies as the company navigates through increased operational costs while aiming to maintain profitability.
Debt vs. Equity: How Core Laboratories N.V. (CLB) Finances Its Growth
Debt vs. Equity: How Core Laboratories N.V. Finances Its Growth
As of September 30, 2024, the total long-term debt for Core Laboratories N.V. stood at $85 million, which includes $45 million in 2021 Senior Notes Series A maturing in January 2026, $15 million in 2021 Senior Notes Series B maturing in January 2028, and $25 million in 2023 Senior Notes Series A maturing in June 2028. The company had a total debt outstanding of $85 million against cash and cash equivalents of $21.5 million.
The debt-to-equity ratio is calculated to be 0.46 based on total equity of $185 million. This ratio is significantly lower than the industry average of approximately 1.0, indicating a conservative approach to leveraging.
In recent activity, the company executed a $75 million retirement of senior notes on September 30, 2023, which was partially replaced by $50 million of new senior notes with higher interest rates of 7.25% and 7.50%. The interest expense for the three months ended September 30, 2024, was reported at $3.1 million, reflecting a slight decrease compared to previous quarters.
Core Laboratories maintains a balanced strategy between debt and equity financing. The company primarily relies on cash flows from operations, supplemented by its credit facilities, which include a secured credit facility with a borrowing capacity of $135 million, of which approximately $92.1 million was available as of September 30, 2024.
| Debt Instrument | Interest Rate | Maturity Date | Amount (in millions) |
|---|---|---|---|
| 2021 Senior Notes Series A | 4.09% | January 12, 2026 | 45 |
| 2021 Senior Notes Series B | 4.38% | January 12, 2028 | 15 |
| 2023 Senior Notes Series A | 7.25% | June 28, 2028 | 25 |
The company’s current ratio is 2.48:1, indicating strong liquidity and the ability to cover short-term liabilities. The debt-to-EBITDA ratio is reported at 1.58, which has improved from 2.26 in the previous year, showcasing enhanced operational efficiency and profitability.
Overall, the financial structure of Core Laboratories N.V. reflects a prudent mix of debt and equity, with a focus on leveraging operational cash flows to support growth while maintaining manageable debt levels.
Assessing Core Laboratories N.V. (CLB) Liquidity
Assessing Core Laboratories N.V. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 2.48:1, a decrease from 2.71:1 reported in 2023.
Quick Ratio: The quick ratio is not directly provided, but it is generally calculated as (Current Assets - Inventories) / Current Liabilities.
Working Capital Trends
Working capital has improved significantly, driven by a reduction in inventory levels. As of September 30, 2024, the working capital position shows a stronger liquidity buffer compared to the previous year.
Cash Flow Statements Overview
The following table summarizes the cash flows for the nine months ended September 30, 2024, compared to the same period in 2023:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | % Change |
|---|---|---|---|
| Operating Activities | $35,773 | $5,360 | 567% |
| Investing Activities | ($2,835) | ($4,206) | (33%) |
| Financing Activities | ($26,584) | $34 | NM |
| Net Change in Cash | $6,354 | $1,188 | 435% |
Potential Liquidity Concerns or Strengths
Liquidity strengths include a solid current ratio and significant cash flow from operating activities, amounting to $35.8 million for the nine months ended September 30, 2024. However, the financing activities indicate a net cash outflow of $26.6 million, primarily due to a $24.0 million reduction in long-term debt, which may raise concerns about future liquidity if cash flows do not sustain.
As of September 30, 2024, total cash available is $21.5 million, with $20.0 million held by foreign subsidiaries. This indicates a strong position to cover operational needs while managing debt obligations effectively.
Is Core Laboratories N.V. (CLB) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, key valuation ratios such as the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios are crucial.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 12.2, calculated from the trailing twelve months earnings per share (EPS) of $0.50 and the current stock price of approximately $6.10.
Price-to-Book (P/B) Ratio
The P/B ratio is 1.2, derived from a book value per share of $5.08 and the current share price of $6.10.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 7.5, with an enterprise value of $460 million and EBITDA of $61 million for the last twelve months.
Stock Price Trends
Over the last 12 months, the stock has experienced a trend as follows:
| Month | Stock Price (USD) |
|---|---|
| October 2023 | 6.10 |
| July 2023 | 5.80 |
| April 2023 | 5.25 |
| January 2023 | 5.00 |
| October 2022 | 4.50 |
Dividend Yield and Payout Ratios
The current dividend yield is 0.16% based on an annual dividend of $0.01 per share. The payout ratio is approximately 20%, reflecting a sustainable dividend policy while maintaining growth.
Analyst Consensus on Stock Valuation
The consensus among analysts currently stands as follows:
| Analyst Rating | Count |
|---|---|
| Buy | 4 |
| Hold | 3 |
| Sell | 1 |
Analysts suggest that the stock is fairly valued based on its current earnings potential and market conditions.
Key Risks Facing Core Laboratories N.V. (CLB)
Key Risks Facing Core Laboratories N.V.
Core Laboratories N.V. faces a variety of internal and external risks that could significantly impact its financial health and operational performance. Below is an analysis of the key risk factors affecting the company.
Industry Competition
The competitive landscape in the oil and gas services industry remains intense. The average U.S. land rig count for the three months ended September 30, 2024, was 10% lower year-over-year, indicating a decline in drilling activity that may impact demand for services.
Regulatory Changes
Changes in environmental regulations and governmental policies can pose risks. Compliance with evolving regulations can lead to increased operational costs and potential penalties. The geopolitical conflicts affecting oil prices and supply chains also pose significant external risks.
Market Conditions
Market volatility, particularly in oil prices, can significantly affect revenue. For example, revenue from the Production Enhancement segment was $45.6 million for the three months ended September 30, 2024, reflecting a 13% increase year-over-year. However, the overall market conditions remain uncertain, influenced by global economic factors and demand fluctuations.
Operational Risks
Operational risks include challenges related to project execution, particularly in international markets. Delays in well completion diagnostic projects due to hurricanes in the Gulf of Mexico during the three months ended September 30, 2024, have been noted. These disruptions can lead to lost revenue opportunities and increased costs.
Financial Risks
Financial risks include liquidity challenges and debt management. As of September 30, 2024, the company reported a current ratio of 2.48:1 and a debt-to-EBITDA ratio of 1.58:1. While these ratios indicate a manageable level of debt, any adverse changes in cash flow could impact the company's ability to meet its obligations.
Strategic Risks
Strategic risks involve the company's ability to adapt to market changes and effectively implement its business strategy. The company reported an operating income of $44.4 million for the nine months ended September 30, 2024, a 11% increase year-over-year. However, strategic missteps or failure to capitalize on growth opportunities could hinder future performance.
Mitigation Strategies
Mitigation strategies include diversifying service offerings and geographic presence to reduce reliance on specific markets. The company has also secured insurance policies to cover potential losses from operational disruptions.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Intense competition in oil and gas services | Reduced market share | Diversification of services |
| Regulatory Changes | Changes in environmental regulations | Increased operational costs | Compliance monitoring |
| Market Conditions | Volatility in oil prices | Revenue fluctuations | Hedging strategies |
| Operational Risks | Delays in project execution | Lost revenue opportunities | Robust project management |
| Financial Risks | Liquidity challenges | Inability to meet obligations | Active cash flow management |
| Strategic Risks | Failure to adapt to market changes | Hindered performance | Regular strategic reviews |
Future Growth Prospects for Core Laboratories N.V. (CLB)
Future Growth Prospects for Core Laboratories N.V.
Key Growth Drivers
The major growth drivers for the company include:
- Product Innovations: The company has focused on enhancing its reservoir description and production enhancement services, which have shown a year-over-year revenue increase.
- Market Expansions: International projects, particularly in the Middle East and Asia Pacific, have been a significant focus, contributing to a 4% increase in revenue for the Reservoir Description segment for the nine months ended September 30, 2024.
- Acquisitions: Recent strategic acquisitions have allowed the company to broaden its service offerings and market reach.
Future Revenue Growth Projections
For the nine months ended September 30, 2024, the company reported:
| Segment | Revenue (in millions) | Percentage Change |
|---|---|---|
| Reservoir Description | $259.4 | 4% |
| Production Enhancement | $135.3 | 2% |
| Consolidated Total | $394.6 | 3% |
Operating income for the same period was reported at $44.4 million, an increase of 11% year-over-year.
Strategic Initiatives and Partnerships
The company continues to pursue strategic partnerships that enhance its capabilities in service delivery. Notably, the focus on well completion diagnostic services has led to a 6% increase in service revenue year-over-year.
Competitive Advantages
Core Laboratories holds several competitive advantages that position it favorably for future growth:
- Global Laboratory Network: Improved utilization of its global laboratory network has enhanced revenue generation.
- Insurance Proceeds: Insurance recoveries from operational setbacks have provided financial cushioning, allowing continued investment in growth initiatives.
- Strong Balance Sheet: As of September 30, 2024, the company reported a current ratio of 2.48:1 and a debt to EBITDA ratio of 1.58:1, indicating solid liquidity and manageable debt levels.
Cash Flow Analysis
For the nine months ended September 30, 2024, cash flows provided by operating activities were reported at $35.8 million, a significant improvement from $5.4 million in the same period of the prior year.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | % Change |
|---|---|---|---|
| Operating Activities | $35,773 | $5,360 | 567% |
| Investing Activities | ($2,835) | ($4,206) | (33%) |
| Financing Activities | ($26,584) | $34 | NM |
| Net Change in Cash | $6,354 | $1,188 | 435% |
Core Laboratories N.V. (CLB) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Core Laboratories N.V. (CLB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Core Laboratories N.V. (CLB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Core Laboratories N.V. (CLB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.