Core Labs Matches EPS, Lags Rev - Analyst Blog
April 19 2012 - 4:45AM
Zacks
Core Laboratories
N.V. (CLB) has reported mixed first quarter 2012 results,
reflecting impressive performances across all the three business
units, partially offset by steeper cost of sales.
Quarterly earnings per share (EPS),
excluding special items, came in at $1.06, in line with the Zacks
Consensus Estimate. Comparing year over year, EPS increased 37.7%
from 77 cents.
The performance was influenced by
higher activities in the unconventional oil-field in North America
and strong contributions from global projects. The focused
deepwater operations in North Sea and Middle East also aided the
results.
Total revenue for the quarter was
$234.2 million, up 13.3% from $206.7 million in the prior-year
quarter, aided by strong growth in all business units. However, the
result was below the Zacks Consensus Estimate of $238.0
million.
Reservoir Description
Segment
Revenues at the Reservoir
Description segment (which focuses on international crude oil
related projects) upped 7.9% year over year to $116.1 million in
the first quarter. Operating income for the unit grew 22.6% year
over year to $32.4 million, with the operating margin coming in at
28%. The improvement was attributable to several well performing
international projects and deepwater offshore crude-oil-related
ventures as well initiation of new studies.
Production Enhancement
Segment
Core Laboratories’ Production
Enhancement revenues leaped 17.8% year over year to $96.7 million
in the quarter while operating income improved 44.1% year over year
to $33.5 million. Operating margin was an impressive 31%, buoyed by
the greater market share of the HTD-Blast perforating system and
high demand for advanced technologies. Additionally, several
field-flood projects in the Middle East boosted the performance
level.
Reservoir Management
Segment
Quarterly revenues from Reservoir
Management operations were $21.4 million, up 25.5% year over year
while operating income moved up 18.8% year over year to $7.9
million. Operating margin for the quarter was 37%. The results were
driven by expansion of operations across the globe.
Balance Sheet, Free Cash
Flow & Share Buyback
As of March 31, 2012, Core
Laboratories had cash and cash equivalents of $23.5 million.
Capital expenditures for the first quarter were $7.3 million. The
company generated free cash flow of $46.5 million.
Quarterly
Dividend
On April 16, 2012, Core’s board
announced a cash dividend of 28 cents per share (amounting to an
annualized payout of $1.12 per share) of common stock. The dividend
will be paid on May 25, 2012 to shareholders of record on April 27,
2012.
Dual Listing
In an attempt to support the
expanding overseas operations and bring in more international
institutional investors within the company’s ownership, Core Labs
plans to list its shares on the NYSE Euronext Exchange in Amsterdam
in mid-May.
Outlook
The company has refrained from
providing definite quarterly and annual earnings guidance until the
listing procedure is complete.
However, Core Labs expects to
witness strong international project growth, aided by the on-time
arrival of additional deepwater rigs throughout the remainder of
the year. 2012 will likely see greater pre-salt activities in the
Kwanza basin offshore Angola as well as in Iraq and Asia
Pacific.
Core Labs aims to improve its
activities in the deepwater Gulf of Mexico and emphasize on
unconventional oil-shale reservoirs operations in North America,
South America and North Africa.
Our Take
Amsterdam, Netherlands-based Core
Laboratories, with market capitalization of over $6 billion, enjoys
a deep portfolio of proprietary products and services. The
company’s strong presence in the emerging shale plays and its
global footprint –including markets in the Middle East, Asia
Pacific, and East and West Africa – would facilitate steady growth
rates going forward.
However, the company’s business is
not immune to gas/oil price volatility, exploration and production
spending patterns, costs, geo-political risks, competition and the
advent of new technologies.
Hence, we expect Core Labs to
perform in line with other players such as Baker Hughes
Incorporated (BHI) and Halliburton
Company (HAL) and maintain a long-term Neutral
recommendation on the stock.
BAKER-HUGHES (BHI): Free Stock Analysis Report
CORE LABS NV (CLB): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
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