Executive Summary

Q4 2024 came in mixed: revenue was $129.2M (-3.8% q/q, +0.8% y/y), with GAAP EPS of $0.15; ex-items EPS was $0.22 and operating margin ex-items 12% .
Reservoir Description delivered y/y growth and solid margins (ex-items ~16%), but U.S. onshore softness and expanded sanctions weighed on activity; Production Enhancement saw sequential and y/y declines and a GAAP operating loss due to write-downs .
Free cash flow accelerated to $16.2M (+56% q/q), net debt fell to $108.8M, and leverage dropped to 1.31x (lowest in 8+ years); the company repurchased ~265k shares for $4.9M .
Q1 2025 guide implies seasonal and sanction-driven step down: revenue $121–$127M, OI $10.2–$12.8M (~9% margin), EPS $0.12–$0.16; 2025 ETR raised to ~25% (vs. 20% prior), a headwind to EPS .

What Went Well and What Went Wrong

What Went Well

Reservoir Description resilience: revenue $86.8M (-2% q/q, +3% y/y) with ex-items operating margin “over 16%,” +170 bps y/y as international lab demand remained firm .
Strong cash generation and deleveraging: Q4 FCF $16.2M; net debt reduced by $11.7M to $108.8M; leverage to 1.31x (lowest in 8+ years). Repurchased 264,982 shares for $4.9M .
Strategic wins and technology traction: management highlighted international projects and proprietary tech (e.g., NMR reservoir studies; STIMGUN and FlowProfiler diagnostics) supporting adoption and future growth. “We will remain active in pursuit of growth opportunities and maintain our long-standing practice of returning excess free cash to our shareholders.” — CEO Larry Bruno .

What Went Wrong

Sequential downtick vs. Q3: total revenue -3.8%; operating income -28.4%; GAAP EPS $0.15 (vs. $0.25 in Q3); Production Enhancement revenue -6.8% q/q, GAAP OI swung to a $(2.6)M loss on write-downs .
Macro/sanctions/weather headwinds: expanded sanctions and seasonal weather disruptions reduced assay/lab work and impeded shipments; management quantified Q1 closures at ~2–3 days for key sites and ~$1M revenue impact in early Q1 .
Taxes and non-GAAP adjustments: effective GAAP tax rate rose to 35% in Q4, pressuring reported EPS; ex-items EPS of $0.22 was within prior EPS guide but GAAP EPS ($0.15) fell below the guided $0.20–$0.25 range that assumed a 20% tax rate and excluded FX .

Financial Results

Core financials vs prior periods

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($M)	$128.2	$134.4	$129.2
Operating Income ($M, GAAP)	$14.6	$19.8	$14.2
EPS (GAAP)	$0.05	$0.25	$0.15
EPS (ex-items)	$0.19	$0.25	$0.22
Operating Margin (ex-items)	n/a	14%	12%

Actual vs Company Guidance vs Consensus (Q4 2024)

Metric	Q4 2024 Actual	Q4 2024 Company Guidance (10/23/24)	Wall St. Consensus (S&P Global)
Revenue ($M)	$129.2	$128.5–$135.5	Unavailable via S&P Global (API limit)
Operating Income ($M, GAAP)	$14.2	$14.8–$17.7	Unavailable via S&P Global (API limit)
EPS (GAAP)	$0.15	$0.20–$0.25 (20% tax, excl. FX)	Unavailable via S&P Global (API limit)
EPS (ex-items)	$0.22	Not specified	Unavailable via S&P Global (API limit)

Notes: Company guidance assumed a 20% effective tax rate and excluded FX gains/losses; Q4 GAAP ETR was 35% .

Segment performance

Segment	Q4 2023	Q3 2024	Q4 2024
Reservoir Description Revenue ($M)	$84.6	$88.8	$86.8
Reservoir Description OI ($M, GAAP)	$12.3	$16.5	$16.6
Reservoir Description OI ($M, ex-items)	n/a	$15.4	$14.1
Production Enhancement Revenue ($M)	$43.6	$45.6	$42.4
Production Enhancement OI ($M, GAAP)	$2.2	$3.2	$(2.6)
Production Enhancement OI ($M, ex-items)	n/a	$2.6	$1.5

KPIs and balance sheet

KPI	Q3 2024	Q4 2024
Free Cash Flow ($M)	$10.4	$16.2
Net Debt ($M)	$120.5	$108.8
Leverage Ratio (Net Debt / Adj. EBITDA, LTM)	1.47x	1.31x
DSOs (days)	74	76
Inventory Turns (x)	1.9	2.1
Share Repurchases	—	264,982 shares, $4.9M
Dividend	$0.01 declared 10/23/24	$0.01 declared for 3/3/25 pay date

Non-GAAP reconciliations provided in the company’s press release and exhibits .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Revenue ($M)	Q1 2025	—	$121–$127	New guide; seasonal down; sanctions headwind
Operating Income ($M)	Q1 2025	—	$10.2–$12.8 (~9% margin)	New; lower on seasonality, weather/sanctions
EPS (GAAP)	Q1 2025	—	$0.12–$0.16	New; reflects ETR up to ~25%
Effective Tax Rate	FY 2025	~20% (prior framework)	~25%	Raised; increases tax expense
Reservoir Description Revenue ($M)	Q1 2025	—	$82–$85; OI $9.0–$10.7	New; seasonal, sanctions effects
Production Enhancement Revenue ($M)	Q1 2025	—	$39–$42; OI $1.1–$2.0	New; weather-impacted start to quarter
Dividend / share	Q4 2024	$0.01 (announced 10/23/24)	$0.01 (announced 1/29/25)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
International/offshore outlook	Multi-year international recovery; Middle East, Americas opportunity	Continued growth; projects in Middle East, South Atlantic, APAC; CCS awards	Constructive long-term outlook; steady 2025 activity; key regions: S. Atlantic margin, N/West Africa, Norway, Middle East, APAC	Positive, sustained
U.S. onshore activity	Softening into Q3; completion focus vs drilling	Lower frac spread; seasonal Q4 decline; consolidation impact	Flat-to-slightly down in 2025; January freeze hurt Q1 start	Sluggish/volatile
Geopolitics/sanctions	Conflicts impacting assay lab services	Continued headwinds; Gulf weather delays	Expanded sanctions in Jan 2025 impacted assay demand and product sales; RD decrementals pressured	Worsened near term
Technology/innovation	HERO Oriented FRAC; diagnostics, EOR workflows	Pulverizor P&A tech deployed; diagnostics in GoM	STIMGUN deployment (+55% expected gas output); FlowProfiler oil/water tracers; advanced NMR studies	Broadening adoption
Balance sheet/FCF focus	Deleveraging to 1.66x; FCF up	Leverage 1.47x; FCF $10.4M	Leverage 1.31x; FCF $16.2M; buybacks	Strengthening
Taxes	Guided ~20% ETR	Guided ~20% ETR	Projecting ~25% ETR in 2025; Q4 GAAP ETR 35%	Headwind emerging
Weather/operational delays	Hurricane Beryl impacted GoM	Multiple hurricanes delayed diagnostics to Q1’25	Gulf Coast freeze closures in Q1 (~$1M revenue impact)	Continues episodically

Management Commentary

“Our performance was driven by resilient demand for our Reservoir Description services… Core’s investments to expand capabilities in the Middle East are now yielding returns… our debt leverage ratio was reduced to 1.31, the lowest it has been in over eight years.” — CEO Larry Bruno .
“The sequential and year-over-year decrease in [Production Enhancement] product sales was primarily due to a decline in the U.S. onshore activity… however, improved demand for completion diagnostic services and international product sales somewhat offset the soft U.S. onshore market.” — Press release segment detail .
“Expanded sanctions… impacted the maritime movement and trading of crude oil and derived products, along with the demand for necessary laboratory assay work, and prohibited product sales and services to a broader group of entities.” — Outlook .
“Our leverage ratio… decreased from 1.76 last year-end to 1.31 at December 31, 2024… the lowest our leverage ratio has been in over 8 years.” — CFO Chris Hill .

Q&A Highlights

U.S. perforating competitive dynamics and pricing: market remains crowded; pricing stable but not rewarding differentiated tech sufficiently; Core aims at technology-advantaged offerings .
Sanctions and decremental margins: management expects outsized impact on RD decrementals in Q1 due to expanded sanctions; potential to recover if sanctions unwind .
Regional activity drivers: strongest momentum in the Middle East, South Atlantic margin, parts of APAC (Australia/Indonesia), and Norway; exited Mexico operations earlier .
Weather impact detail: ~2–3 days of closures across key U.S. facilities; ~$1M revenue impact early in Q1 with high incremental margin loss .
RD incrementals framework: ~60% incrementals remain a good framework beyond Q1 disruptions, potentially higher with volume through fixed-cost lab network .

Estimates Context

S&P Global consensus EPS and revenue for Q4 2024 were unavailable due to API limit; unable to retrieve consensus at this time (we will update when accessible).*
As a proxy, company’s Q4 guidance (issued 10/23/24) called for EPS of $0.20–$0.25 (20% tax, excl. FX) and revenue of $128.5–$135.5M; actual GAAP EPS was $0.15 (below range), while ex-items EPS was $0.22 (in-range), and revenue was $129.2M (in-range) .
2025 ETR shift to ~25% implies a lower EPS conversion on similar pre-tax income vs 2024 assumption of ~20% .

*Values would be retrieved from S&P Global when available.

Key Takeaways for Investors

RD strength and international mix continue to underpin margins; mid-single-digit growth expected in 2025 despite near-term sanctions and seasonality .
Production Enhancement remains levered to U.S. onshore and faces capacity-driven pricing pressure; international sales and diagnostics partially offset, but mix and utilization matter for margins .
Cash discipline and deleveraging are clear positives: FCF momentum, buybacks, and leverage at 1.31x create optionality for capital allocation through cycles .
Near-term setup: Q1 guide down on weather/sanctions; raised tax rate to 25% is a structural EPS headwind vs prior 20% assumption .
Narrative to watch: sanctions trajectory, U.S. onshore completion activity stabilization, and conversion of long-cycle international project pipeline to revenue; RD incrementals (~60%) can accelerate EBIT if volumes normalize post-Q1 .
Technology catalysts (STIMGUN, FlowProfiler oil/water tracers, Pulverizor P&A) support differentiation and potential international growth lanes beyond U.S. onshore cyclicality .
Trading lens: results were mixed vs company guidance (GAAP EPS light, ex-items in-line; revenue in-range); Q1 guide reset and higher ETR may weigh near term, while deleveraging and international exposure support the medium-term thesis .

Core Laboratories Inc. /DE/ (CLB)·Q4 2024 Earnings Summary