Core Laboratories Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue was $132.1 million, up 6% sequentially and down 2% year-over-year.
• GAAP operating income was $12.1 million; operating income, ex-items, was $12.6 million, up 35% sequentially and down 24% year-over-year.
• GAAP earnings per share (EPS) were $0.12; EPS, ex-items, were $0.16, up 46% sequentially and down 27% year-over-year.
• Free cash flow was $1.7 million, derived from $5.0 million in cash from operations and $3.3 million in capital expenditures associated with operations.
• Net debt was $93.4 million as of September 30, 2026, representing a reduction of $200,000 from the prior period.
• The leverage ratio (net debt divided by trailing twelve months adjusted EBITDA) was under 1.50.
• Return on Invested Capital (ROIC) for the quarter was 5.9%.
• Cash and cash equivalents were $21.4 million as of September 30, 2026.
• Accounts receivable increased to $115.6 million, and inventories rose to $60.7 million.

Guidance and Future Outlook:

• Q4 2026 revenue is projected to range from $128.5 million to $134.5 million, with operating income between $10.7 million and $15.1 million.
• Q4 2026 EPS is expected to be between $0.12 and $0.20.
• Reservoir Description Q4 revenue guidance is $81.0 million to $85.0 million, with operating income of $5.1 million to $8.3 million.
• Production Enhancement Q4 revenue guidance is $47.5 million to $49.5 million, with operating income of $5.5 million to $6.7 million.
• Guidance assumes an effective tax rate of 25% and excludes gains/losses in foreign exchange.
• The company expects Q4 revenue to remain relatively flat sequentially due to continued disruptions in the Middle East.
• In the U.S., the company anticipates customary year-end seasonal moderation in land completion activity, partially offset by sequential improvement in diagnostic services.
• Long-term outlook cites strong global crude oil demand growth anticipated for 2027 by the IEA, EIA, and OPEC as supply disruptions ease.
• The company views international regions, including Asia-Pacific, as positioned for sustained activity growth in long-cycle offshore exploration and appraisal projects.

Business Segments and Product Lines:

• Reservoir Description: Revenue was $84.3 million, up 7% sequentially and down 4% year-over-year. Operating income, ex-items, was $8.1 million with 10% operating margins and 78% sequential incremental margins.
• Production Enhancement: Revenue was $47.8 million, up 4% sequentially and 3% year-over-year. Operating income, ex-items, was $4.4 million with 9% operating margins.
• Reservoir Description revenue growth was driven by increased international demand in Europe-Africa, Asia-Pacific, Latin America, and the Middle East.
• Production Enhancement product sales rose 14% sequentially, driven by U.S. land and international markets.
• A leading national oil company in the Middle East awarded an expanded analytical program utilizing Core Lab's PRISM workflow and proprietary High Frequency NMR, NANO-k, and SMP-200 technologies.
• Omega Oil and Gas engaged Core Lab for a reservoir characterization program in Queensland's Taroom Trough using Dual Energy Computed Tomography technology.
• A North American oilfield service company expanded adoption of the proprietary AERO product family (AERO FLEX, AERO POINT, AERO SET) following successful field deployment.
• A Brazilian operator expanded use of Core Lab's SpectraFlood technology across more than 50 conventional assets following a successful waterflood optimization project.

Market and Competitive Landscape:

• Approximately 80% of Reservoir Description revenue is sourced from projects originating outside the United States.
• Geopolitical conflicts in the Middle East and Russia-Ukraine continue to weigh on demand, with Middle East assay service demand remaining below pre-conflict levels.
• Cargo traffic through the Strait of Hormuz gradually improved late in the third quarter, though crude oil supply remains significantly disrupted.
• The company maintains a global network with over 70 offices in more than 50 countries.
• The company believes historic disruption to global oil and gas supply will support improved activity in 2027 and a long-term growth cycle for oilfield services.

Risks and Challenges:

• Ongoing geopolitical conflicts in the Middle East and Russia-Ukraine, along with associated sanctions, continue to disrupt transportation and trading of crude oil and refined products.
• Attacks on client operations in the Middle East early in the fourth quarter have resulted in project delays.
• Higher energy prices and constrained availability of certain petroleum products have weighed on crude oil demand in the near term.
• Increased costs of raw materials for perforating systems have increased the cost of carrying inventory.
• Increased activity levels have resulted in a higher level of accounts receivable at the end of the quarter.
• Risks include inflationary pressures, supply chain disruptions, trade policies, international civil unrest, severe weather events, and public health crises.

Management Commentary and Tone:

• CEO Larry Bruno stated that third-quarter results delivered sequential revenue growth across both operating segments.
• Management noted a gradual improvement in activity in the Middle East, particularly late in the quarter.
• Face-to-face meetings with clients in Asia-Pacific reinforced the view that the region is entering a period of sustained activity growth.
• Management expressed encouragement regarding improving demand and project momentum across the global client base despite geopolitical challenges.
• The company remains focused on maximizing free cash flow and return on invested capital (ROIC).

Other Key Points:

• The company repurchased 87,873 shares of common stock for an aggregate purchase price of $1.1 million in the third quarter.
• The Board approved a quarterly cash dividend of $0.01 per share, payable on November 30, 2026, to shareholders of record on November 9, 2026.
• A previous dividend of $0.01 per share was paid on August 31, 2026.
• Capital expenditures of approximately $500,000 were incurred in the third quarter to replace equipment and restore the Aberdeen, Scotland facility following a February 2024 fire.
• Insurance proceeds and capital expenditures related to the Aberdeen fire are reported separately within investing activities and excluded from free cash flow calculations.
• The company's asset-light business model is intended to promote capital efficiency and deliver superior ROIC over the long term.