10-Q 1 clb-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________________ to ______________

 

Commission File Number: 001-14273

 

CORE LABORATORIES N.V.

(Exact name of registrant as specified in its charter)

 

The Netherlands

 

Not Applicable

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer Identification No.)

Van Heuven Goedhartlaan 7 B

 

 

1181 LE Amstelveen

 

 

The Netherlands

 

Not Applicable

(Address of principal executive offices)

 

(Zip Code)

 

(31-20) 420-3191

(Registrant's telephone number, including area code)

 

None

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock (par value EUR 0.02)

 

CLB

 

New York Stock Exchange

Common Stock (par value EUR 0.02)

 

CLB

 

Euronext Amsterdam Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No

 

The number of common shares of the registrant, par value EUR 0.02 per share, outstanding at April 27, 2022 was 46,307,537.


 

CORE LABORATORIES N.V.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022

INDEX

PART I - FINANCIAL INFORMATION

 

 

 

Page

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets at March 31, 2022 (Unaudited) and December 31, 2021

3

 

 

 

 

Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

4

 

 

 

 

Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

5

 

 

 

 

Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

6

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

8

 

 

 

 

Notes to the Interim Consolidated Financial Statements (Unaudited)

9

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

 

 

 

Item 4.

Controls and Procedures

30

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

31

 

 

 

Item 1A.

Risk Factors

31

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

 

 

 

Item 6.

Exhibits

33

 

 

 

 

Signature

34

 

 

 


 


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CORE LABORATORIES N.V.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

March 31,
2022

 

 

December 31,
2021

 

ASSETS

 

(Unaudited)

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,037

 

 

$

17,703

 

Accounts receivable, net of allowance for credit losses of $3,448
   and $
3,225 at 2022 and 2021, respectively

 

 

98,900

 

 

 

96,830

 

Inventories

 

 

48,224

 

 

 

45,443

 

Prepaid expenses

 

 

13,611

 

 

 

14,059

 

Income taxes receivable

 

 

14,640

 

 

 

9,911

 

Other current assets

 

 

4,780

 

 

 

5,109

 

TOTAL CURRENT ASSETS

 

 

202,192

 

 

 

189,055

 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated
    depreciation of $
306,542 and $306,461 at 2022 and 2021, respectively

 

 

109,926

 

 

 

110,952

 

RIGHT OF USE ASSETS

 

 

60,168

 

 

 

61,387

 

INTANGIBLES, net of accumulated amortization of $17,713 and
    $
17,540 at 2022 and 2021, respectively

 

 

7,979

 

 

 

8,139

 

GOODWILL

 

 

99,445

 

 

 

99,445

 

DEFERRED TAX ASSETS, net

 

 

67,698

 

 

 

70,462

 

OTHER ASSETS

 

 

37,510

 

 

 

41,413

 

TOTAL ASSETS

 

$

584,918

 

 

$

580,853

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

34,405

 

 

$

29,726

 

Accrued payroll and related costs

 

 

26,465

 

 

 

20,833

 

Taxes other than payroll and income

 

 

4,795

 

 

 

5,931

 

Unearned revenues

 

 

7,602

 

 

 

7,765

 

Operating lease liabilities

 

 

12,669

 

 

 

12,342

 

Income taxes payable

 

 

5,784

 

 

 

6,502

 

Other current liabilities

 

 

8,042

 

 

 

7,683

 

TOTAL CURRENT LIABILITIES

 

 

99,762

 

 

 

90,782

 

LONG-TERM DEBT, net

 

 

189,807

 

 

 

188,636

 

LONG-TERM OPERATING LEASE LIABILITIES

 

 

46,883

 

 

 

49,286

 

DEFERRED COMPENSATION

 

 

34,527

 

 

 

39,101

 

DEFERRED TAX LIABILITIES, net

 

 

23,270

 

 

 

24,336

 

OTHER LONG-TERM LIABILITIES

 

 

24,283

 

 

 

27,711

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

 

Preference shares, EUR 0.02 par value; 6,000,000 shares authorized,
   
none issued or outstanding

 

 

 

 

 

 

Common shares, EUR 0.02 par value; 200,000,000 shares authorized,
   
46,454,264 issued and 46,283,677 outstanding at 2022 and 46,454,264
   issued and
46,349,397 outstanding at 2021

 

 

1,188

 

 

 

1,188

 

Additional paid-in capital

 

 

107,088

 

 

 

101,120

 

Retained earnings

 

 

65,998

 

 

 

68,349

 

Accumulated other comprehensive income (loss)

 

 

(6,753

)

 

 

(10,133

)

Treasury shares (at cost), 170,587 at 2022 and 104,867 at 2021

 

 

(5,736

)

 

 

(4,075

)

Total Core Laboratories N.V. shareholders' equity

 

 

161,785

 

 

 

156,449

 

Non-controlling interest

 

 

4,601

 

 

 

4,552

 

TOTAL EQUITY

 

 

166,386

 

 

 

161,001

 

TOTAL LIABILITIES AND EQUITY

 

$

584,918

 

 

$

580,853

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

3

Return to Index


 

CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

REVENUE:

 

 

 

 

 

 

Services

 

$

84,723

 

 

$

83,982

 

Product sales

 

 

30,577

 

 

 

24,401

 

Total revenue

 

 

115,300

 

 

 

108,383

 

OPERATING EXPENSES:

 

 

 

 

 

 

Cost of services, exclusive of depreciation expense shown below

 

 

68,857

 

 

 

63,533

 

Cost of product sales, exclusive of depreciation expense shown below

 

 

28,095

 

 

 

20,617

 

General and administrative expense, exclusive of depreciation expense shown below

 

 

12,545

 

 

 

8,461

 

Depreciation

 

 

4,384

 

 

 

4,633

 

Amortization

 

 

173

 

 

 

238

 

Other (income) expense, net

 

 

1,637

 

 

 

(721

)

OPERATING INCOME (LOSS)

 

 

(391

)

 

 

11,622

 

Interest expense

 

 

2,644

 

 

 

1,363

 

Income (loss) from continuing operations before income taxes

 

 

(3,035

)

 

 

10,259

 

Income tax expense (benefit)

 

 

(1,196

)

 

 

2,052

 

Income (loss) from continuing operations

 

 

(1,839

)

 

 

8,207

 

Net income (loss)

 

 

(1,839

)

 

 

8,207

 

Net income (loss) attributable to non-controlling interest

 

 

49

 

 

 

102

 

Net income (loss) attributable to Core Laboratories N.V.

 

$

(1,888

)

 

$

8,105

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER SHARE INFORMATION:

 

 

 

 

 

 

Basic earnings (loss) per share from continuing operations

 

$

(0.04

)

 

$

0.18

 

Basic earnings (loss) per share attributable to Core Laboratories N.V.

 

$

(0.04

)

 

$

0.18

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share from continuing operations

 

$

(0.04

)

 

$

0.18

 

Diluted earnings (loss) per share attributable to Core Laboratories N.V.

 

$

(0.04

)

 

$

0.18

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

Basic

 

 

46,298

 

 

 

45,177

 

Assuming Dilution

 

 

46,298

 

 

 

45,964

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

4

Return to Index


 

CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

Net income (loss)

 

$

(1,839

)

 

$

8,207

 

Other comprehensive income (loss):

 

 

 

 

 

 

Interest rate swaps:

 

 

 

 

 

 

Gain (loss) on fair value of interest rate swaps

 

 

3,957

 

 

 

(298

)

Interest rate swap amount reclassified to net income (loss)

 

 

254

 

 

 

(341

)

Income tax expense (benefit) on interest rate swaps
   reclassified to net income (loss)

 

 

(831

)

 

 

(22

)

Total interest rate swaps

 

 

3,380

 

 

 

(661

)

Total other comprehensive income (loss)

 

 

3,380

 

 

 

(661

)

Comprehensive income (loss)

 

 

1,541

 

 

 

7,546

 

Comprehensive income (loss) attributable to non-controlling interest

 

 

49

 

 

 

102

 

Comprehensive income (loss) attributable to Core Laboratories N.V.

 

$

1,492

 

 

$

7,444

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

5

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CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Common Shares

 

(Unaudited)

 

Balance at Beginning of Period

 

 

1,188

 

 

 

1,148

 

New share issuance

 

 

 

 

 

40

 

Balance at End of Period

 

 

1,188

 

 

 

1,188

 

 

 

 

 

 

 

 

Additional Paid-In Capital

 

 

 

 

 

 

Balance at Beginning of Period

 

 

101,120

 

 

 

41,184

 

Stock-based compensation

 

 

5,968

 

 

 

3,075

 

New share issuance

 

 

 

 

 

59,099

 

Balance at End of Period

 

 

107,088

 

 

 

103,358

 

 

 

 

 

 

 

 

Retained Earnings

 

 

 

 

 

 

Balance at Beginning of Period

 

 

68,349

 

 

 

50,456

 

Dividends paid

 

 

(463

)

 

 

(446

)

Net income (loss) attributable to Core Laboratories N.V.

 

 

(1,888

)

 

 

8,105

 

Balance at End of Period

 

 

65,998

 

 

 

58,115

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

 

 

 

 

Balance at Beginning of Period

 

$

(10,133

)

 

$

(7,200

)

Interest rate swaps, net of income taxes

 

 

3,380

 

 

 

(661

)

Balance at End of Period

 

$

(6,753

)

 

$

(7,861

)

 

 

 

 

 

 

 

Treasury Shares

 

 

 

 

 

 

Balance at Beginning of Period

 

$

(4,075

)

 

$

(14,075

)

Stock-based compensation

 

 

259

 

 

 

1,330

 

Repurchase of common shares

 

 

(1,920

)

 

 

(171

)

Balance at End of Period

 

$

(5,736

)

 

$

(12,916

)

 

 

 

 

 

 

 

Non-Controlling Interest

 

 

 

 

 

 

Balance at Beginning of Period

 

$

4,552

 

 

$

4,060

 

Net income (loss) attributable to non-controlling interest

 

 

49

 

 

 

102

 

Balance at End of Period

 

$

4,601

 

 

$

4,162

 

 

 

 

 

 

 

 

Total Equity

 

 

 

 

 

 

Balance at Beginning of Period

 

$

161,001

 

 

$

75,573

 

Stock-based compensation

 

 

6,227

 

 

 

4,405

 

Repurchase of common shares

 

 

(1,920

)

 

 

(171

)

Dividends paid

 

 

(463

)

 

 

(446

)

New share issuance

 

 

 

 

 

59,139

 

Interest rate swaps, net of income taxes

 

 

3,380

 

 

 

(661

)

Net income (loss)

 

 

(1,839

)

 

 

8,207

 

Balance at End of Period

 

$

166,386

 

 

$

146,046

 

 

 

 

 

 

 

 

Cash Dividends per Share

 

$

0.01

 

 

$

0.01

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

6

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CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)

(In thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Common Shares - Number of shares issued

 

(Unaudited)

 

Balance at Beginning of Period

 

 

46,454,264

 

 

 

44,796,252

 

New share issuance

 

 

 

 

 

1,658,012

 

Balance at End of Period

 

 

46,454,264

 

 

 

46,454,264

 

 

 

 

 

 

 

 

Treasury Shares - Number of shares

 

 

 

 

 

 

Balance at Beginning of Period

 

 

(104,866

)

 

 

(223,451

)

Stock-based compensation

 

 

9,299

 

 

 

14,449

 

Repurchase of common shares

 

 

(75,020

)

 

 

(4,781

)

Balance at End of Period

 

 

(170,587

)

 

 

(213,783

)

 

 

 

 

 

 

 

Common Shares - Number of shares outstanding

 

 

 

 

 

 

Balance at Beginning of Period

 

 

46,349,397

 

 

 

44,572,801

 

New share issuance

 

 

 

 

 

1,658,012

 

Stock-based compensation

 

 

9,299

 

 

 

14,449

 

Repurchase of common shares

 

 

(75,020

)

 

 

(4,781

)

Balance at End of Period

 

 

46,283,676

 

 

 

46,240,481

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

7

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CORE LABORATORIES N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

 

(1,839

)

 

 

8,207

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

Stock-based compensation

 

 

6,227

 

 

 

4,405

 

Depreciation and amortization

 

 

4,557

 

 

 

4,871

 

Changes in value of life insurance policies

 

 

1,911

 

 

 

496

 

Deferred income taxes

 

 

1,698

 

 

 

4,704

 

Other non-cash items

 

 

391

 

 

 

(632

)

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(2,831

)

 

 

(3,180

)

Inventories

 

 

(2,498

)

 

 

(400

)

Prepaid expenses and other current assets

 

 

(3,952

)

 

 

(1,628

)

Other assets

 

 

(571

)

 

 

(850

)

Accounts payable

 

 

3,693

 

 

 

2,265

 

Accrued expenses

 

 

4,136

 

 

 

(8,012

)

Unearned revenues

 

 

(163

)

 

 

407

 

Other liabilities

 

 

(5,469

)

 

 

(2,666

)

Net cash provided by operating activities

 

 

5,290

 

 

 

7,987

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Capital expenditures

 

 

(2,297

)

 

 

(2,772

)

Patents and other intangibles

 

 

(13

)

 

 

(78

)

Proceeds from sale of assets

 

 

81

 

 

 

218

 

Proceeds from insurance recovery

 

 

583

 

 

 

 

Net proceeds (premiums) on life insurance policies

 

 

2,074

 

 

 

1,562

 

Net cash provided by (used in) investing activities

 

 

428

 

 

 

(1,070

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Repayment of long-term debt

 

 

(14,000

)

 

 

(119,000

)

Proceeds from long-term debt

 

 

15,000

 

 

 

68,000

 

Proceeds from issuance of common shares

 

 

 

 

 

60,000

 

Transaction costs on the issuance of common shares

 

 

 

 

 

(861

)

Dividends paid

 

 

(463

)

 

 

(446

)

Repurchase of common shares

 

 

(1,920

)

 

 

(171

)

Other financing activities

 

 

(1

)

 

 

(439

)

Net cash provided by (used in) financing activities

 

 

(1,384

)

 

 

7,083

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

4,334

 

 

 

14,000

 

CASH AND CASH EQUIVALENTS, beginning of period

 

 

17,703

 

 

 

13,806

 

CASH AND CASH EQUIVALENTS, end of period

 

$

22,037

 

 

$

27,806

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash payments for interest

 

$

2,508

 

 

$

3,739

 

Cash payments for income taxes

 

$

2,691

 

 

$

1,429

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

8

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CORE LABORATORIES N.V.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements include the accounts of Core Laboratories N.V. and its subsidiaries for which we have a controlling voting interest and/or a controlling financial interest. These financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information using the instructions to Form 10-Q and Article 10 of Regulation S-X. Core Laboratories N.V.'s balance sheet information for the year ended December 31, 2021 was derived from the 2021 audited consolidated financial statements. Accordingly, these financial statements do not include all of the information and footnote disclosures required by U.S. GAAP for the annual financial statements, and should be read in conjunction with the audited financial statements and the summary of significant accounting policies and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Annual Report").

Core Laboratories N.V. uses the equity method of accounting for investments in which it has less than a majority interest and does not exercise control but does exert significant influence. Non-controlling interests have been recorded to reflect outside ownership attributable to consolidated subsidiaries that are less than 100% owned. All inter-company transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included in these financial statements. Furthermore, the operating results presented for the three months ended March 31, 2022 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2022.

References to “Core Lab”, "Core Laboratories", the "Company", "we", "our" and similar phrases are used throughout this Quarterly Report on Form 10-Q and relate collectively to Core Laboratories N.V. and its consolidated subsidiaries.

We operate our business in two reportable segments: (1) Reservoir Description and (2) Production Enhancement. These complementary segments provide different services and products and utilize different technologies for evaluating and improving reservoir performance and increasing oil and gas recovery from new and existing fields. For a description of product types and services offered by these business segments, see Note 16, Segment Reporting.

Certain reclassifications were made to prior period amounts in order to conform to the current period presentation. These reclassifications had no impact on the reported net income or cash flows for the three months ended March 31, 2021.

2. SIGNIFICANT ACCOUNTING POLICIES UPDATE

Our significant accounting policies are detailed in "Note 2, Summary of Significant Accounting Policies" of our 2021 Annual Report.

3. CONTRACT ASSETS AND LIABILITIES

The balance of contract assets and liabilities consisted of the following (in thousands):

 

 

March 31,
2022

 

 

December 31,
2021

 

Contract assets