A month has gone by since the last earnings report for Core Laboratories (CLB Quick QuoteCLB - Free Report) . Shares have lost about 21.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Core Laboratories due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Core Laboratories Inc. before we dive into how investors and analysts have reacted as of late.

Core Laboratories Q2 Earnings Beat Estimates, Expenses Increase Y/Y

Core Laboratories reported second-quarter 2025 adjusted earnings of 19 cents per share, which beat the Zacks Consensus Estimate of 18 cents. However, the bottom line decreased from the year-ago quarter’s reported figure of 22 cents due to the underperformance of the Reservoir Description segment.

This oil-field service provider reported operating revenues of $130.2 million, beating the Zacks Consensus Estimate of $128 million. This can be attributed to the rebound of the maritime movement and trading of crude oil and the company’s associated laboratory assay services. However, the top line decreased marginally by 0.3% from the year-ago quarter’s $130.6 million due to decreased revenues from the Production Enhancement segment.

During the second quarter, the company repurchased 237,632 shares of common stock for a total of $2.7 million. Additionally, CLB reduced its debt leverage ratio to 1.27 and net debt by $9.1 million.

During the second 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

Reservoir Description: Revenues in this segment remained flat in comparison to the year-ago quarter at $86.3 million. However, the top line beat our estimation of $85 million.

Operating income decreased from $11.79 million in the year-ago period to $10.84 million and missed our estimate of $11.18 million. This was due to a combination of multiple factors, like geopolitical conflicts and sanctions, and tariffs imposed in the month of January that resulted in volatility in commodity prices.

Production Enhancement: This segment’s revenues decreased marginally by 1% to $43.9 million from $44.3 million in the prior-year quarter. However, the top line beat our estimate of $43.4 million.

Operating income decreased from $4.52 million in the year-ago period to $3.77 million. However, the operating income from this segment beat our estimate of $2.24 million due to high-margin diagnostic services in the United States, both onshore and offshore, and improved international and domestic completion product sales.

Costs & Expenses

CLB reported total costs and expenses of $114.9 million in the second quarter, increasing marginally by 0.3% from the year-ago quarter’s level of $114.6 million. The figure was below our estimation of $115.1 million.

Financials & Dividends

As of June 30, 2025, the company had cash and cash equivalents of $31.2 million and long-term debt of $124.6 million. CLB’s debt-to-capitalization was 31.8%.

Net cash provided by operating activities in the second quarter totaled $13.9 million, while capital expenditure amounted to $3.5 million. This led to a positive free cash flow of $10.4 million.

Core Laboratories’ board of directors approved a quarterly dividend of 1 cent per share to its common shareholders of record as of Aug. 4, 2025. The payout, which remains unchanged from the previous quarter, will be made on Aug. 25.

Management Remarks & Outlook

Recent and upcoming U.S. tariffs, combined with OPEC+’s decision to raise oil production levels, have added to the volatility and uncertainty surrounding crude oil prices. Ongoing global trade negotiations and broader economic concerns continue to cloud the outlook for oil demand. In response, oil and gas companies are reassessing their short-term upstream investment strategies.

For the third quarter of 2025, CLB expects revenues to range from $127.5 million to $134.5 million. Operating income is anticipated to be between $13.6 million and $16.2 million, with earnings per share expected to be between 18 cents and 22 cents.

Revenues for the Reservoir Description segment are anticipated to be between $84 million and $88 million, with operating income ranging from $10.6 million to $12.4 million.

Revenues for the Production Enhancement segment are expected to be between $43.5 million and $46.5 million, with operating income predicted to be between $2.9 million and $3.7 million.

The company anticipates an effective tax rate of 25% for the third quarter. Its guidance for the third 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 in the range of 0.7-1.3 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 with domestic ventures. Core Laboratories 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.

Key Projects & Technology Advancements

Core Laboratories opened a new Unconventional Core Analysis Laboratory in Dammam, Saudi Arabia, in second-quarter 2025, supporting its strategy to expand globally and enhance services in key markets. The facility reinforces Core Laboratories’ leadership in reservoir optimization in the Middle East and features proprietary technologies like full visualization PVT cells, high-frequency reservoir-condition NMR and the PRISM workflow. These tools enable advanced rock and fluid analysis to support faster, data-driven client decisions.

Core Laboratories also completed an analytical program for a major IOC in Brazil’s Campos Basin, delivering geological and petrophysical insights. A technical workshop enhanced stratigraphic modeling, reducing subsurface risk and aiding well planning.

During the same period, Core Laboratories completed a challenging deepwater Plug and Abandonment project in the North Sea, addressing a well with 400 meters of stuck casing and barite buildup. Using its proprietary PAC system, Core Laboratories enabled precise annular access without harming the outer casing. The system’s controlled energetic design allowed safer, more efficient operations, avoiding costly pipe-cutting. This approach cut more than 10 days of rig time, saving the client an estimated $4 million.

Additionally, a West Texas operator used Core Laboratories’ 3AB tracer tech to compare proppant designs within a single well. The technology revealed production gains from the new design within 90 days, enabling faster, data-driven completion decisions.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Core Laboratories has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Core Laboratories has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.