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Core Labs Performs as Expected

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Core Laboratories N.V. (CLB - Free Report) has reported sound fourth quarter and full year 2011 results, driven by commendable performances across all the three business units.

Quarterly earnings per share (EPS), excluding special items, came in at $1.09, beating the Zacks Consensus Estimate by a penny. Comparing year over year, EPS increased 29.8% from 84 cents.

For full-year 2011, the company earned $3.75 per share, up 25% from $3.00 in the prior year. The reported results were on par with our projection.

Total revenue for the quarter was $243.8 million, up 17.1% from $208.2 million in the prior-year quarter, aided by strong growth in all business units. The result was also in line with the Zacks Consensus Estimate.

Core Labs generated revenues of $907.6 million in fiscal 2011, compared with $794.6 million in 2010.

The performance was influenced by higher activities in the overseas regions, including the deepwater Gulf of Mexico. The oil-field operations in North and South America also aided the results.

Reservoir Description Segment

Revenues at the Reservoir Description segment (which focuses on international crude oil related projects) upped 13.6% year over year to $123.5 million in the fourth quarter. Operating income for the unit grew 23.3% year over year to $34.4 million, with the operating margin came in at 28%. The improvement was attributable to the start-up of various international projects and deepwater offshore crude-oil-related ventures as well as strong onshore field activity.

Production Enhancement Segment

Core Laboratories’ Production Enhancement revenues leaped 19.4% year over year to $103.2 million in the quarter while operating income improved 22.2% year over year to $34.1 million. Operating margin was an impressive 33%, buoyed by the greater market share of the HTD-Blast perforating system and high demand for advanced technologies. Additionally, several field-flood projects in deepwater offshore Ghana and Equatorial Guinea boosted the performance level.

Reservoir Management Segment

Quarterly revenues from Reservoir Management operations were $17.1 million, up 30.5% year over year while operating income declined 10.2% year over year to $4.4 million. Operating margin for the quarter was 26%.

Balance Sheet, Free Cash Flow & Share Buyback

As of December 31, 2011, Core Laboratories had cash and cash equivalents of $29.3 million. Capital expenditures for the fourth quarter were $11.7 million. The company generated free cash flow of $45.6 million.

Quarterly Dividend

On January 13, 2012, Core’s board announced a cash dividend of 28 cents per share (amounting to an annualized payout of $1.12 per share) of common stock that represents a quarterly hike of 12%. The dividend will be paid on February 24, 2012 to shareholders of record on January 24, 2012.


The company expects first quarter 2012 revenues of approximately $230 million to $240 million and earnings in the range of $1.01 to $1.06 per share.

For 2012, Core Laboratories forecast total revenue in a $1,005 million to $1,045 million range, while earnings will likely be $4.50 to $4.82 per share.

Management remains optimistic that performance in 2012 will likely be fueled by strong international and deepwater offshore activity (aided by arrival of new rigs) along with robust operations in North and South America. Core Laboratories expects its global activity levels to increase 10%, supporting an annual revenue growth of 13%.

Our Take

Amsterdam, Netherlands-based Core Laboratories enjoys a leadership position in the reservoir optimization niche, along with a global footprint and deep portfolio of proprietary products and services.

However, our long-term recommendation on the stock remains Neutral, given the company’s vulnerability to gas/oil price volatility, geo-political risks, competition and the advent of new technologies. Core Laboratories faces competition from peers, such as Baker Hughes Incorporated and Halliburton Company (HAL - Free Report) .

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