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Core Laboratories (CLB) Q3 Earnings & Revenues Top Estimates

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Oilfield services company Core Laboratories N.V. (CLB - Free Report) reported third-quarter 2017 adjusted earnings of 48 cents per share, surpassing the Zacks Consensus Estimate of 44 cents. The figure also compared favorably with the prior-year quarter adjusted earnings of 38 cents.

Total revenue of $166 million surpassed the Zacks Consensus Estimate of $161 million. Revenues were up from the prior-year quarter level of $143 million. The better-than-expected results were driven by improved performance of the Product Enhancement segment.

Although the company’s operations in the third quarter were affected by Harvey, Irma and Maria, it surpassed its updated guidance. Damages to the company’s facilities were minor. Despite the unfavorable situations faced by the company and its clients due to flooding, power outages and wind damages caused by the hurricanes, its results were better than the year-ago quarter, thanks to the rising demand for the company’s products.

Segment Performance

Reservoir Description: Segment revenues were $101.4 million compared with $105.4 million in third-quarter 2016. Client workflow disruptions by the hurricanes affected the results.

Operating income for the segment was about $14.6 million in the reported quarter compared with $21.3 million in the prior-year quarter. Operating margin for the reported quarter was 14%.

Production Enhancement: Segment revenues were approximately $64.8 million in the reported quarter compared with $38.1 million in third-quarter 2016. Increased demand for the company’s advanced technology solutions helped in generating better revenues.

Operating income for the segment was about $13 million in the reported quarter compared with $118,000 in the prior-year quarter, reflecting a significant rise%.

Balance Sheet and Free Cash Flow

As of Sep 30, 2017, Core Laboratories had cash and cash equivalents of $13.8 million and long-term debt (including lease obligations) of around $233.9 million. The debt-to-capitalization ratio of the company was 60.4%. Capital expenditures for the third quarter were $4.9 million.

The company generated free cash flow of approximately $25 million in third-quarter 2017.

Quarterly Dividend

On Oct 10, the board of directors announced a cash dividend of 55 cents per share. Notably, this is same as the previous payout. The dividend will be paid on Nov 21 to shareholders of record on Oct 20.

Q3 Price Performance

Core Laboratories has lost 2.5% of its value in the third quarter against 1.7% growth of its industry.

Guidance

For the fourth quarter, Core Laboratories expects earnings to be around 58 cents per share. The company expects fourth-quarter revenues to be around $171.5 million. The expected sequential increase is based on a shift in the company’s focus from production oriented growth to the deployment of advanced technological solutions. Moreover, oil companies trying to maximize their recovery from the existing producing fields are also expected to create additional demand for its technological solutions.

Zacks Rank and Stocks to Consider

Core Laboratories currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the oil and energy sector are Par Pacific Holdings, Inc. (PARR - Free Report) , Braskem S.A. (BAK - Free Report) and Denbury Resources Inc. . All these sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Par Pacific’s sales for the third quarter of 2017 are expected to increase 28.5% year over year. The company delivered an average positive earnings surprise of 9.1% in the last four quarters.

Braskem’s sales for the third quarter of 2017 are expected to increase 4.1% year over year. The company delivered a positive earnings surprise of 68.5% in the second quarter of 2017.

Denbury Resources’ sales for 2017 are expected to increase 5.8% year over year. The company delivered a positive earnings surprise of 100% in the second quarter of 2017.

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