UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ________________ to ______________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(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 |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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.
Accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company |
Emerging growth company |
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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 shares of common stock of the registrant, par value $0.01 per share, outstanding at July 19, 2024 was
CORE LABORATORIES INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2024
INDEX
PART I - FINANCIAL INFORMATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CORE LABORATORIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
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June 30, |
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December 31, |
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(Unaudited) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for credit losses |
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Inventories |
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Prepaid expenses |
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Income taxes receivable |
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Other current assets |
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TOTAL CURRENT ASSETS |
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PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation |
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RIGHT OF USE ASSETS |
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INTANGIBLES, net of accumulated amortization and impairment |
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GOODWILL |
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DEFERRED TAX ASSETS, net |
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OTHER ASSETS |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
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$ |
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Accrued payroll and related costs |
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Taxes other than payroll and income |
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Unearned revenues |
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Operating lease liabilities |
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Income taxes payable |
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Other current liabilities |
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TOTAL CURRENT LIABILITIES |
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LONG-TERM DEBT, net |
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LONG-TERM OPERATING LEASE LIABILITIES |
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DEFERRED COMPENSATION |
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DEFERRED TAX LIABILITIES, net |
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OTHER LONG-TERM LIABILITIES |
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EQUITY: |
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Preference stock, |
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Common stock, |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income (loss) |
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( |
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( |
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Treasury stock (at cost), |
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( |
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( |
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Total Core Laboratories Inc. shareholders' equity |
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Non-controlling interest |
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TOTAL EQUITY |
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TOTAL LIABILITIES AND EQUITY |
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$ |
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$ |
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The accompanying notes are an integral part of these interim consolidated financial statements.
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
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Three Months Ended |
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June 30, |
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2024 |
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2023 |
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(Unaudited) |
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REVENUE: |
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Services |
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$ |
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$ |
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Product sales |
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Total revenue |
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OPERATING EXPENSES: |
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Cost of services, exclusive of depreciation expense shown below |
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Cost of product sales, exclusive of depreciation expense shown below |
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General and administrative expense, exclusive of depreciation expense shown below |
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Depreciation |
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Amortization |
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Other (income) expense, net |
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( |
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OPERATING INCOME |
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Interest expense |
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Income before income taxes |
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Income tax expense (benefit) |
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( |
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Net income |
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Net income attributable to non-controlling interest |
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Net income attributable to Core Laboratories Inc. |
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$ |
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$ |
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EARNINGS PER SHARE INFORMATION: |
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Basic earnings per share |
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$ |
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$ |
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Basic earnings per share attributable to Core Laboratories Inc. |
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$ |
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$ |
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Diluted earnings per share |
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$ |
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$ |
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Diluted earnings per share attributable to Core Laboratories Inc. |
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$ |
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$ |
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these interim consolidated financial statements.
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
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Six Months Ended |
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June 30, |
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2024 |
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2023 |
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(Unaudited) |
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REVENUE: |
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Services |
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$ |
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$ |
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Product sales |
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Total revenue |
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OPERATING EXPENSES: |
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Cost of services, exclusive of depreciation expense shown below |
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Cost of product sales, exclusive of depreciation expense shown below |
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General and administrative expense, exclusive of depreciation expense shown below |
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Depreciation |
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Amortization |
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Other (income) expense, net |
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( |
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( |
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OPERATING INCOME |
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Interest expense |
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Income before income taxes |
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Income tax expense (benefit) |
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( |
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Net income |
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Net income attributable to non-controlling interest |
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Net income attributable to Core Laboratories Inc. |
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$ |
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$ |
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EARNINGS PER SHARE INFORMATION: |
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Basic earnings per share |
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$ |
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$ |
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Basic earnings per share attributable to Core Laboratories Inc. |
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$ |
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$ |
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Diluted earnings per share |
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$ |
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$ |
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Diluted earnings per share attributable to Core Laboratories Inc. |
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$ |
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$ |
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these interim consolidated financial statements.
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(Unaudited) |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Interest rate swaps: |
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Interest rate swap amount reclassified to net income |
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( |
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( |
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( |
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Income tax (expense) benefit on interest rate swaps |
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( |
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Total interest rate swaps |
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( |
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( |
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( |
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Pension and other postretirement benefit plans: |
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Amortization of actuarial gain (loss) reclassified to net income |
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Income tax (expense) benefit on pension and other postretirement benefit plans reclassified to net income |
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( |
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( |
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( |
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( |
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Total pension and other postretirement benefit plans |
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Total other comprehensive income (loss) |
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( |
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( |
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( |
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Comprehensive income |
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Comprehensive income attributable to non-controlling interest |
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Comprehensive income attributable to Core Laboratories Inc. |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these interim consolidated financial statements.
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except share and per share data)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(Unaudited) |
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Common Stock |
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Balance at Beginning of Period |
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$ |
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$ |
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$ |
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$ |
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New share issuance |
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Change in par value |
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( |
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( |
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Balance at End of Period |
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$ |
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$ |
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$ |
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$ |
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Additional Paid-In Capital |
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Balance at Beginning of Period |
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$ |
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$ |
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$ |
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$ |
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New share issuance |
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Change in par value and equity related transactions |
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( |
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( |
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Stock-based compensation |
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( |
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Balance at End of Period |
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$ |
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$ |
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$ |
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$ |
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Retained Earnings |
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Balance at Beginning of Period |
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$ |
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$ |
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$ |
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$ |
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Dividends paid |
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( |
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( |
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( |
) |
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( |
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Net income attributable to Core Laboratories Inc. |
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Balance at End of Period |
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$ |
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$ |
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$ |
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$ |
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Accumulated Other Comprehensive Income (Loss) |
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Balance at Beginning of Period |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Interest rate swaps, net of income taxes |
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( |
) |
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( |
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( |
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Pension and other postretirement benefit plans, net of income taxes |
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Balance at End of Period |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Treasury Stock |
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Balance at Beginning of Period |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Stock-based compensation |
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Repurchase of common stock |
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( |
) |
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( |
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( |
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( |
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Balance at End of Period |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Non-Controlling Interest |
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Balance at Beginning of Period |
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$ |
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$ |
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$ |
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$ |
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Net income attributable to non-controlling interest |
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Balance at End of Period |
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$ |
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$ |
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$ |
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$ |
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Total Equity |
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Balance at Beginning of Period |
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$ |
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$ |
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$ |
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$ |
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New share issuance |
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Change in par value and equity related transactions |
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( |
) |
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( |
) |
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Stock-based compensation |
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( |
) |
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Dividends paid |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income |
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Interest rate swaps, net of income taxes |
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( |
) |
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( |
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( |
) |
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Pension and other postretirement benefit plans, net of income taxes |
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Repurchase of common stock |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Balance at End of Period |
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$ |
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$ |
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$ |
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$ |
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Cash Dividends per Share |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these interim consolidated financial statements.
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)
(In thousands, except share and per share data)
|
|
Three Months Ended |
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Six Months Ended |
|
||||||||||
|
|
June 30, |
|
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June 30, |
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||||||||||
|
|
2024 |
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2023 |
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2024 |
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2023 |
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||||
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(Unaudited) |
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|||||||||||||
Common Stock - Number of shares issued |
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Balance at Beginning of Period |
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New share issuance |
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Balance at End of Period |
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Treasury Stock - Number of shares |
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||||
Balance at Beginning of Period |
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|
( |
) |
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|
( |
) |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
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|
||||
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at End of Period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
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||||
Common Stock - Number of shares outstanding |
|
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||||
Balance at Beginning of Period |
|
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||||
New share issuance |
|
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|
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||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
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|
||||
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at End of Period |
|
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|
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The accompanying notes are an integral part of these interim consolidated financial statements.
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(Unaudited) |
|
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
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||||
Stock-based compensation |
|
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|
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|
||
Depreciation and amortization |
|
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|
||
Assets write-down |
|
|
|
|
|
|
||
Changes in value of life insurance policies |
|
|
( |
) |
|
|
( |
) |
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Other non-cash items |
|
|
|
|
|
( |
) |
|
Changes in assets and liabilities: |
|
|
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|
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|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
|
|
|
( |
) |
|
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
|
|
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|
||
Accounts payable |
|
|
|
|
|
( |
) |
|
Accrued expenses |
|
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|
||
Unearned revenues |
|
|
|
|
|
( |
) |
|
Other liabilities |
|
|
|
|
|
( |
) |
|
Net cash provided by (used in) operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Patents and other intangibles |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of assets |
|
|
|
|
|
|
||
Net proceeds on life insurance policies |
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Repayment of long-term debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from long-term debt |
|
|
|
|
|
|
||
Dividends paid |
|
|
( |
) |
|
|
( |
) |
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
Equity related transaction costs |
|
|
( |
) |
|
|
( |
) |
Other financing activities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
( |
) |
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
||
CASH AND CASH EQUIVALENTS, beginning of period |
|
|
|
|
|
|
||
CASH AND CASH EQUIVALENTS, end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
||
Cash payments for interest |
|
$ |
|
|
$ |
|
||
Cash payments for income taxes |
|
$ |
|
|
$ |
|
||
Non-cash investing and financing activities: |
|
|
|
|
|
|
||
Capital expenditures incurred but not paid for as of the end of the period |
|
$ |
|
|
$ |
|
||
Equity related transaction costs incurred but not paid for as of the end of the period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these interim consolidated financial statements.
CORE LABORATORIES INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. DESCRIPTION OF BUSINESS
References to “Core Lab”, “Core Laboratories”, the “Company”, “we”, “our” and similar phrases are used throughout this Quarterly Report on Form 10-Q (“Quarterly Report”) and relate collectively to Core Laboratories Inc. and its consolidated subsidiaries.
We operate our business in
2. SIGNIFICANT ACCOUNTING POLICIES UPDATE
Basis of Presentation and Principles of Consolidation
On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”) which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation. The Redomestication Transaction has been accounted for as a transaction between entities under common control. There is no difference between the combined separate entities prior to the Redomestication Transaction and the combined separate entities after the Redomestication Transaction, therefore, comparative information reported in these financial statements do not differ from amounts previously reported under Core Laboratories N.V.’s consolidated financial statements. These financial statements should be read in conjunction with Core Laboratories N.V.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023 and Core Laboratories N.V.’s Annual Report on Form 10-K for the year ended December 31, 2022, including Note 2 - Summary of Significant Accounting Policies.
The accompanying unaudited interim consolidated financial statements include the accounts of Core Laboratories Inc. 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 Inc.’s balance sheet information for the year ended December 31, 2023, was derived from the 2023 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 Core Laboratories Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023, including Note 2 - Summary of Significant Accounting Policies. There have been no changes to the accounting policies of the combined entities during the six months ended June 30, 2024.
Core Laboratories Inc. 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 and six months ended June 30, 2024, may not necessarily be indicative of the results that may be expected for the year ending December 31, 2024.
Certain reclassifications were made to prior period amounts in order to conform to the current period presentations. These reclassifications had no impact on the reported net income or cash flows for the three and six months ended June 30, 2023.
Property, Plant and Equipment
We review our long-lived assets (“LLA”) for impairment when events or changes in circumstances indicate that their net book value may not be recovered over their remaining service lives. Indicators of possible impairment may include significant declines in activity levels in regions where specific assets or groups of assets are located, extended periods of idle use, declining revenue or cash flow or overall changes in general market conditions.
The geopolitical conflict between Russia and Ukraine, which began in February 2022 and has continued through June 30, 2024, has resulted in disruptions to our operations in Russia and Ukraine. As of June 30, 2024, all laboratory facilities, offices, and locations in Russia and Ukraine continued to operate with no significant impact to local business operations. Therefore, we determined there was no triggering event for LLA in Russia and Ukraine, and no impairment assessments have been performed as of June 30, 2024.
Recent Accounting Pronouncements
Issued But Not Yet Effective
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023- 07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis. The amendment is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendment should be applied retrospectively to all prior periods presented in the financial statements. Upon adoption, our disclosures regarding segment reporting will be expanded accordingly.
3. ACQUISITIONS AND DIVESTURES
We had
4. CONTRACT ASSETS AND LIABILITIES
The balance of contract assets and liabilities consisted of the following (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
Contract assets: |
|
|
|
|
|
|
||
Current |
|
$ |
|
|
$ |
|||