Core Laboratories Q1 Earnings Miss Estimates, Expenses Increase YoY

Core Laboratories Inc. CLB reported first-quarter 2025 adjusted earnings of 8 cents per share, which missed the Zacks Consensus Estimate of 15 cents. The bottom line also underperformed the year-ago quarter’s reported figure of 13 cents. This can be attributed to the underperformance of the Reservoir Description segment.

This oil-field service provider reported operating revenues of $124 million, in line with the Zacks Consensus Estimate. However, the top line decreased 4.6% from the year-ago quarter’s $130 million. This can be attributed to the recent imposition of sanctions and operational inefficiencies.

Core Laboratories Inc. Price, Consensus and EPS Surprise

Core Laboratories Inc. price-consensus-eps-surprise-chart | Core Laboratories Inc. Quote

During the first quarter, the company repurchased 131,598 shares of common stock for a total of $2 million. Additionally, CLB continues to maintain its debt leverage ratio at 1.31 and decreased its net debt by $4.9 million.

During the first quarter of 2025, the company's leverage ratio (calculated as total net debt divided by trailing twelve months adjusted EBITDA) remained at the lowest level in eight years.

Segmental Performance of Core Laboratories

Reservoir Description: Revenues in this segment decreased about 4% to $80.9 million from $84.2 million in the first quarter of 2024. However, the top line missed our estimation of $83 million.

Operating income decreased from $11.43 million in the year-ago period to $7.76 million and missed our estimate of $9.64 million. This was due to a combination of multiple factors like a continued seasonal pattern, geopolitical conflicts and recently imposed sanctions and tariffs.

Production Enhancement: This segment’s revenues decreased 6% to $42.7 million from $45.4 million in the prior-year quarter. However, the top line beat our estimate of $41.21 million.

Operating income increased marginally from $3.41 million in the year-ago period to $3.44 million and also beat our estimate of $1.66 million. This was backed by increased demand for diagnostic services in the United States, both onshore and offshore and improved U.S. product sales.

Costs & Expenses of CLB

CLB reported total costs and expenses of $119.2 million in the first quarter, increasing 1.6% from the year-ago quarter’s level. The figure was also higher than our estimation of $113.2 million.

(Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)

CLB’s Financials & Dividends

As of March 31, 2025, the company had cash and cash equivalents of $22.1 million and long-term debt of $124.4 million. CLB’s debt-to-capitalization was 32.4%.

Net cash provided by operating activities totaled $6.7 million, while capital expenditure amounted to $2.8 million. This led to a positive free cash flow of $3.9 million.

Core Laboratories’ board of directors declared a quarterly dividend of 1 cent per share to its common shareholders of record as of May 5. The payout, which remains unchanged from the previous quarter, will be made on May 27.

CLB’s Management Remarks & Outlook

The recent imposition of U.S. tariffs, coupled with OPEC’s decision to ramp up oil production, has led to a drop in crude oil prices. Ongoing trade negotiations have created uncertainty around global crude oil demand, and the increase in OPEC+ production quotas further suggests a potential rise in crude oil inventories. Despite this short-term volatility, Core remains optimistic about the long-term prospects of international upstream oil and gas projects through the end of 2025 and beyond.

For the second quarter of 2025, CLB expects revenues to range from $128 million to $134 million. Operating income is anticipated to be between $13.1 million and $15.7 million, with earnings per share expected to be between 17 cents and 21 cents.

Revenues for the Reservoir Description segment are anticipated to be between $85 million and $89 million, with operating income ranging from $11 million to $13 million.

Revenues for the Production Enhancement segment are expected to be between $43 million and $45 million, with operating income predicted to be between $2 million and $2.6 million.

The company anticipates an effective tax rate of 25% for the second quarter. Its guidance for the second quarter of 2025 is based on estimations for underlying operations and excludes any gains or losses from foreign exchange.

Industry forecasts from the IEA, EIA and OPEC+ project a continued rise in global crude oil demand in 2025, estimated between 0.7 and 1.3 million barrels per day. This growth is expected to be driven primarily by non-OECD countries in Asia, including India, as well as emerging markets in the Middle East and Africa.

International oil and gas developments — especially large-scale projects — are expected to show greater resilience to fluctuations in oil prices compared to domestic ventures. Core anticipates stable activity in global upstream markets, particularly in the South Atlantic Margin, North and West Africa, Norway, the Middle East and parts of Asia Pacific. However, smaller, short-term oil projects are expected to be more vulnerable to declining or volatile crude oil prices, especially within the U.S. onshore market, where drilling and completion activities may be more heavily impacted.

Looking forward, Core Laboratories expects minimal disruption from the proposed tariffs, as more than 75% of its revenues come from services that are not currently subject to tariffs. Its product sales — accounting for less than 25% of total revenues — are largely manufactured in the United States, with about half consumed domestically in drilling and completion operations, and thus not affected by import duties. Products exported to international customers may face tariffs, depending on the outcome of trade agreements. Additionally, some raw materials imported for U.S.-based manufacturing may be subject to U.S. tariffs. The company is proactively working on strategies to reduce the potential effects of these import duties.

CLB’s Key Projects & Technology Advancements

Emerging unconventional reservoirs in the Middle East are becoming strategically vital, with estimates suggesting over 300 billion barrels of oil and 750 trillion cubic feet of natural gas in proven reserves. In early 2025, Core Lab partnered with a major national oil company to conduct a detailed multi-well study, analyzing reservoir rock and fluids using its proprietary PRISM™ workflow. This advanced analysis provided key insights into fluid saturation and hydrocarbon mobility, supporting reservoir modeling and development strategies. Data was securely shared via Core’s RAPID™ platform for seamless client access.

During the same period, Core’s Production Enhancement segment addressed stuck pipe risks in a Middle Eastern offshore project. With no mechanical cutting options available, the company tested its DCST™ drill collar severing tool under simulated downhole conditions. The ballistic solution proved effective, allowing the operator to maintain existing materials and mitigate risk cost-effectively.

Additionally, Core’s Diagnostics team supported a U.S. geothermal project by deploying HT Profiler™ tracers in a high-temperature well exceeding 570??F. The month-long shut-in and subsequent analysis confirmed tracer stability and helped map subsurface flow paths — vital for optimizing geothermal performance.

Core Laboratoriescurrently has Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Important Earnings at a Glance

While we have discussed CLB’s first-quarter results in detail, let us take a look at three other key reports.

Oil and gas equipment and services provider Liberty Energy LBRT reported a first-quarter 2025 adjusted net income of 4 cents per share, which marginally beat the Zacks Consensus Estimate of 3 cents. The Denver, CO-based oil and gas equipment company's outperformance indicated operational efficiencies as well as increased utilization of frac and wireline fleets. However, the bottom line underperformed the year-ago quarter’s reported figure of 48 cents due to a decline in service activity.

As of March 31, Liberty had approximately $24.1 million in cash and cash equivalents. The pressure pumper’s long-term debt of $210 million represented a debt-to-capitalization of 9.6%.

Another oil and gas equipment and services provider, Halliburton Company HAL, reported first-quarter 2025 adjusted net income per share of 60 cents, the same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 76 cents (adjusted). The numbers reflect softer activity in the North American region, partly offset by international growth. Meanwhile, revenues of $5.4 billion were 6.7% lower year over year but beat the Zacks Consensus Estimate of $5.3 billion.

As of March 31, 2025, the company had approximately $1.8 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.8. HAL bought back $250 million worth of its stock during the January-March period. The company generated $377 million of cash flow from operations in the first quarter, leading to a free cash flow of $124 million.

Energy infrastructure provider Kinder Morgan KMI reported first-quarter 2025 adjusted earnings per share of 34 cents, which missed the Zacks Consensus Estimate of 35 cents. The bottom line remained flat year over year. Total quarterly revenues of $4.24 billion beat the Zacks Consensus Estimate of $4.14 billion. The top line increased from $3.84 billion in the prior-year quarter.

As of March 31, 2025, KMI reported $80 million in cash and cash equivalents. At the quarter's end, its long-term debt amounted to $29.8 billion.

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