Executive Summary

Q3 delivered sequential improvement: revenue $134.5M (+3.4% q/q, flat y/y), GAAP EPS $0.30, and EPS ex-items $0.22; operating income ex-items rose to $16.6M as operating margin ex-items expanded versus Q2 .
Results beat S&P Global consensus on revenue ($134.5M vs $131.3M) and normalized EPS ($0.22 vs $0.19); EBITDA also topped expectations; strength came from international laboratory assay services and completion diagnostics, partially offset by tariff-driven input costs in products (imported steel) . Q3 consensus numbers from S&P Global: see Estimates Context.
Guidance: Q4 revenue $132–136M, operating income $14.0–16.1M, EPS $0.18–0.22; RD guided up q/q while PE expected down slightly on typical year-end U.S. onshore seasonality; tax rate assumption 25% .
Cash discipline and capital returns: FCF $6.5M, net debt reduced by $3.4M to $91.4M, leverage ratio improved to 1.10 (lowest in nine years), and 462k shares repurchased for $5.0M; $0.01 dividend declared .
Strategic: Closed Brazil Solintec acquisition to strengthen in-country geology/reservoir services; management highlights multi-year international and offshore cycle, with committed projects across South Atlantic Margin, Africa, Middle East, and APAC .

What Went Well and What Went Wrong

What Went Well
- International demand drove sequential gains: service revenue +5% q/q, with higher international assay and completion diagnostics activity; consolidated revenue +3.4% q/q .
- Margin expansion on ex-items basis: EBIT ex-items rose to $16.6M with ~12% operating margin ex-items and 48% incremental margins q/q; segment ex-items margins expanded in both RD and PE .
- Balance sheet/returns: Leverage ratio improved to 1.10; FCF $6.5M; buybacks of 462k shares ($5.0M) and $0.01 dividend maintained .
- Strategic positioning: Acquisition of Brazil-based Solintec expands regional capability and should be accretive to earnings/ROIC; management sees multi-year international cycle .
What Went Wrong
- Product cost headwinds: Cost of sales rose to 88% of product revenue (ex-items) vs 85% in Q2, reflecting lower absorption and higher imported steel costs due to tariffs .
- Ongoing macro/geopolitical risk: Sanctions/tariff volatility and commodity price softness sustain uncertainty for maritime assay services; management expects typical year-end decline in U.S. onshore PE activity .
- Non-GAAP adjustments impacted comparability: GAAP operating income benefited from a ~$5.2M insurance recovery (excluded from ex-items); inventory write-downs and FX also adjusted out .

Financial Results

Core metrics by quarter

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	123.6	130.2	134.5
Diluted EPS (GAAP)	0.00	0.22	0.30
EPS ex-items ($)	0.14	0.19	0.22
Operating Income ex-items ($M)	11.8	14.5	16.6

Q3 2025 vs S&P Global consensus

Metric	Actual	Consensus	Beat/Miss
Revenue ($M)	134.5	131.3*	Beat (approx +2.5%)
EPS (Normalized, $)	0.22	0.19*	Beat (approx +$0.03)
EBITDA ($M)	19.6*	18.5*	Beat

*Values retrieved from S&P Global.

Segment performance (Q3 2025)

Segment	Revenue ($M)	Op Inc (GAAP, $M)	Op Inc ex-items ($M)	ex-items Margin
Reservoir Description	88.2	16.6	11.6	~13%
Production Enhancement	46.3	4.4	4.9	~11%
Total	134.5	20.9	16.6	~12%

KPIs and operating drivers

KPI	Q1 2025	Q2 2025	Q3 2025
Service Revenue ($M)	95.1	96.2	101.1
Product Sales ($M)	28.5	33.9	33.4
Cash from Operations ($M)	6.7	13.9	8.5
Capex – operations ($M)	2.8	3.5	2.0
Free Cash Flow ($M)	3.9	10.4	6.5
Net Debt ($M)	103.9	94.8	91.4
Leverage Ratio	1.31	1.27	1.10
DSOs (days)	79	75	71
Inventory Turns	1.8	1.9	2.0
Shares Repurchased (000) / $	131.6 / $2.0M	237.0 / $2.7M	462.2 / $5.0M
Dividend ($/sh)	0.01	0.01	0.01

Non-GAAP adjustments (Q3): GAAP OI includes ~$5.2M insurance recovery related to Aberdeen facility fire (excluded in ex-items); also inventory write-downs and FX adjustments excluded; tax normalized for comparison .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q4 2025	N/A	132–136	New
Operating Income ($M)	Q4 2025	N/A	14.0–16.1	New
EPS ($)	Q4 2025	N/A	0.18–0.22	New
Effective Tax Rate	Q4 2025	25% assumption (Q3 guide)	25% assumption	Maintained
Reservoir Description Revenue ($M)	Q4 2025	N/A	88–90	New
Reservoir Description OI ($M)	Q4 2025	N/A	11.0–12.3	New
Production Enhancement Revenue ($M)	Q4 2025	N/A	44–46	New
Production Enhancement OI ($M)	Q4 2025	N/A	2.9–3.7	New
Dividend ($/sh)	Q4 timing	0.01 (prior quarter)	0.01 (declared Oct 22)	Maintained

Earnings Call Themes & Trends

Topic	Q1 2025 (prior)	Q2 2025 (prior)	Q3 2025 (current)	Trend
Tariffs/sanctions and assay demand	Expanded sanctions and tariffs hit assay services and some product deliveries; seasonality compounded impact	Assay services rebounded; tariffs elevated but mitigated; product absorption improved	Imported steel tariffs pressured product CoGS; majority of services not subject to tariffs; continued mitigation	Improving normalization with ongoing caution
International/offshore long-cycle	Constructive multi-year outlook; regions: South Atlantic, N/W Africa, Middle East, APAC	Steady activity across committed long-cycle projects	Multi-year cycle reiterated; projects committed across South Atlantic Margin, Africa, Norway, Middle East, APAC	Strengthening
U.S. onshore and diagnostics	Complex completions driving diagnostics demand	Diagnostics strong; product mix variable	Diagnostics and intl/offshore demand solid; expect typical year-end U.S. onshore decline in PE	Stable to modestly softer in Q4 seasonally
Balance sheet/FCF/capital returns	Leverage 1.31; repurchases and dividend	Leverage 1.27; continued repurchases	Leverage 1.10; FCF positive; repurchases increased	Improving

Management Commentary

“Core Lab delivered another quarter of sequential revenue growth… with sequential improvement in operating income, operating margins, and earnings per share.”
“Face-to-face meetings with clients throughout the Asia-Pacific region confirmed that several large exploration and development programs have been committed to the Company.”
On Solintec (Brazil): Acquisition “expands Core Lab’s in-country capabilities and improves Core’s position in the region… expected to be immediately accretive to future earnings and ROIC.”
CFO on drivers: “Service revenue… was $101.1 million for the quarter, up 5% sequentially… Product sales… were $33.4 million… Higher absorption of fixed costs on a slightly lower revenue base… as well as an increase in the cost of imported steel due to tariffs.”
Outlook: RD revenue projected up sequentially in Q4; PE down slightly on U.S. year-end seasonality; consolidated Q4 EPS $0.18–0.22 .

Q&A Highlights

M&A pipeline and structure: Management favors tuck-ins with earnouts to align outcomes; sees opportunities similar to Solintec; emphasizes win-win if earnout is paid .
Activity outlook: “Higher activity… across the board,” with Middle East leading; South Atlantic Margin/West Africa second; APAC programs moving toward execution; expectation that global supply growth must increasingly come from outside U.S. .
Capital allocation: Continued focus on using FCF for dividend, opportunistic buybacks, and balance sheet strength .

Estimates Context

Q3 2025 comparison vs S&P Global consensus: revenue $134.5M vs $131.3M*, normalized EPS $0.22 vs $0.19*, EBITDA $19.6M* vs $18.5M*; EPS estimates (3) and revenue estimates (2) in the quarter* .
Implication: Modest top-line and EPS beats driven by international services and diagnostics offsetting tariffs/cost absorption; Q4 guidance ($132–136M revenue; $0.18–0.22 EPS) aligns with a seasonally softer U.S. onshore backdrop while maintaining margins near ~11% OI guidance .
*Values retrieved from S&P Global.

Key Takeaways for Investors

Sequential fundamentals improved with ex-items margin expansion and beats on revenue/EPS/EBITDA vs consensus—driven by international services strength; watch for continued assay normalization and diagnostics demand .
Guidance frames Q4 as seasonally softer in U.S. onshore PE but with RD up sequentially; consolidated guidance brackets consensus-like outcomes, reducing downside surprises absent macro shocks .
Capital returns and deleveraging are tangible: FCF positive, leverage at 1.10, accelerated buybacks, and consistent dividend—supportive to equity value .
Strategic Brazil footprint via Solintec bolsters South Atlantic capabilities ahead of a multi-year international/offshore cycle—potential medium-term growth lever .
Non-GAAP adjustments matter: Q3 GAAP OI includes ~$5.2M insurance recovery; ex-items trends better reflect underlying momentum (OI ex-items +14% q/q) .
Watch tariffs/costs mix: Imported steel tariffs pressured product CoGS; company mitigating, but product margins remain sensitive to mix and tariffs .
Near-term trading lens: Stock catalysts include continued international awards, RD sequential growth confirmation in Q4, tariff mitigation progress, and sustained buybacks; risks are macro/price volatility impacting assay activity and U.S. onshore seasonality .

Sources

Q3 2025 8-K earnings release and financials .
Q3 2025 earnings call transcript .
Prior quarters: Q2 2025 8-K and call ; Q1 2025 8-K and call .
Press release: Solintec acquisition (Sept 30, 2025) .

Core Laboratories Inc. /DE/ (CLB)·Q3 2025 Earnings Summary