Core Laboratories Inc. /DE/

Previous wording

According to the latest reports from the U.S. Energy Information Administration, the International Energy Agency and the Organization of the Petroleum Exporting Countries and other oil producing nations (“OPEC+”), global demand for crude oil and natural gas is expected to continue increasing in 2025 and beyond. Beginning in April 2025, the announcement of new tariffs by the U.S. has triggered global trade negotiations and has raised the level of uncertainty for global economies. Additionally, OPEC+ affirmed their decision to proceed with a gradual return of 2.2 million barrels of daily production by removing the voluntary production restrictions established in 2023. The gradual increase in production from OPEC+ began in May 2025 with incremental increases in production expected through September 2026. OPEC also published an updated “compensation plan” which shows committed reductions in production for countries that produced volumes over their committed quotas since January 2024, which if complied with, should partially offset the scheduled increases to production quotas. In each announcement from OPEC+ regarding the production increases, they have also stated they will continue to hold monthly meetings to review market conditions, conformity, and compensation.

Current wording

According to the latest reports from the U.S. Energy Information Administration, the International Energy Agency (“IEA”) and the Organization of the Petroleum Exporting Countries and other oil producing nations (“OPEC+”), global demand for crude oil and natural gas is expected to continue increasing in 2025 and beyond. New tariffs announced by the U.S. during the year have triggered global trade negotiations and have raised the level of uncertainty for global economies. Additionally, OPEC+ affirmed their decision to proceed with a gradual return of 2.2 million barrels of daily production by removing the voluntary production restrictions established in 2023. The gradual increase in production from OPEC+ began in May 2025 with incremental increases in production expected through September 2026, which could create a surplus in supply and lead to lower commodity prices. OPEC also published an updated “compensation plan” which shows committed reductions in production for countries that produced volumes over their committed quotas since January 2024, which if complied with, should partially offset the scheduled increases to production quotas. In each announcement from OPEC+ regarding the production increases, they have also stated they will continue to hold monthly meetings to review market conditions, conformity, and compensation.

Previous wording

The uncertainty around the impact global trade negotiations may have on global economies combined with OPEC+’s announcement of increased production quotas has also increased the likelihood that global inventory levels of crude oil will rise, thereby contributing to weaker crude oil prices. The Company believes that activity levels associated with smaller-scale, short-cycle crude oil development projects will be more sensitive to a decrease and/or continued volatility of crude-oil prices. As such, we expect changes in crude oil prices will have a greater impact on drilling and completion activity levels in the U.S. onshore market. Outside the U.S., large-scale international oil and gas projects are expected to be more resilient to the near-term volatility of crude-oil prices, and the Company anticipates current client projects to continue as planned and additional projects scheduled this year to also be executed as planned.

Current wording

The uncertainty around the impact global trade negotiations may have on global economies combined with OPEC+’s announcement of increased production quotas has also increased the likelihood that global inventory levels of crude oil will rise, thereby contributing to weaker crude oil prices. The Company believes that activity levels associated with smaller-scale, short-cycle crude oil development projects will be more sensitive to a decrease and/or continued volatility of crude-oil prices. As such, we expect changes in crude oil prices will have a greater impact on drilling and completion activity levels in the U.S. onshore market. Outside the U.S., large-scale international oil and gas projects are expected to be more resilient to the near-term volatility of crude-oil prices, and the Company anticipates current client projects to continue as planned and additional projects scheduled this year to also be executed as planned. Recently, revised IEA field data showed that a steeper natural decline rate may represent a dominant long-term supply risk, where the agency projected a sustained upstream investment of approximately $540 to $570 billion per year is required to prevent disruptive declines and to avoid price volatility.

Previous wording

The ongoing geopolitical conflicts between Russia and Ukraine and in the Middle East, along with associated and expanded sanctions in the United States, the European Union, the United Kingdom and other countries continue to cause disruptions to traditional maritime supply chains and the trading of crude oil and derived products, such as diesel fuel. These disruptions to the trading and maritime transportation of crude oil, also impact the demand for the Company's associated laboratory assay services. Although demand for the Company’s laboratory assay analysis services increased in the second quarter compared to the first quarter of 2025, these geopolitical conflicts and associated sanctions continue to create a higher level of uncertainty. We have no way to predict the progress or outcome of these events, and any resulting government responses are fluid and beyond our control.

Current wording

The ongoing geopolitical conflicts between Russia and Ukraine and in the Middle East, along with associated and expanded sanctions in the United States, the European Union, the United Kingdom and other countries continue to cause disruptions to traditional maritime supply chains and the trading of crude oil and derived products, such as diesel fuel. These disruptions to the trading and maritime transportation of crude oil, also impact the demand for the Company's associated laboratory assay services. Although demand for the Company’s laboratory assay analysis services continued to increase during the first nine months of 2025, these geopolitical conflicts and associated sanctions continue to create a higher level of uncertainty. We have no way to predict the progress or outcome of these events, and any resulting government responses are fluid and beyond our control.

Previous wording

We continue to focus on large-scale core analyses and reservoir fluids characterization studies in most oil-producing regions across the globe, which include both newly developed fields and brownfield extensions in many offshore developments in both the U.S. and internationally. In the U.S., we are involved in projects with many of the onshore unconventional basins and offshore projects in the Gulf of Mexico. Outside the U.S., we continue to work on many small and large-scale projects analyzing reservoir rock and fluid samples in every major producing region of the world. Notable larger projects are in locations such as offshore South America, Australia, West Africa and the Middle East. Analysis and measurement services also occur in every major producing region of the world. Additionally, some of our major clients have increased their investment in projects to capture and sequester carbon dioxide in recent years that has expanded the Company’s activities on these projects beginning in 2024 and into 2025.

Current wording

We continue to focus on large-scale core analyses and reservoir fluids characterization studies in most oil-producing regions across the globe, which include both newly developed fields and brownfield extensions in many offshore developments in both the U.S. and internationally. In the U.S., we are involved in projects with many of the onshore unconventional basins, as well as offshore projects in the Gulf of Mexico. Outside the U.S., we continue to work on many small and large-scale projects analyzing reservoir rock and fluid samples in every major producing region of the world. Notable larger projects are in locations such as offshore South America, Australia, West Africa and the Middle East. Analysis and measurement services also occur in every major producing region of the world. Additionally, some of our major clients have increased their investment in projects to capture and sequester carbon dioxide in recent years that has expanded the Company’s activities on these projects beginning in 2024 and into 2025.

Previous wording

Operating Results for the Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024 and March 31, 2025 and for the Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024

Current wording

Operating Results for the Three Months Ended September 30, 2025 compared to the Three Months Ended September 30, 2024 and June 30, 2025 and for the Nine Months Ended September 30, 2025 compared to the Nine Months Ended September 30, 2024

Previous wording

Service revenue is primarily tied to activities associated with the exploration, appraisal, development and production of oil, gas and derived products outside the U.S. For the three months ended June 30, 2025, service revenue was $96.2 million, flat year-over-year and an increase of 1% sequentially. Year-over-year, revenues remained relatively flat due to an increase in international markets offset by a reduction in the U.S. market. Despite disruptions from the ongoing geopolitical conflicts and expanded sanctions in January 2025, we had some recovery in demand for our laboratory assay services during the second quarter of 2025 and continued growth in well completion diagnostic services in certain international markets when compared to the same period in 2024. Service revenue in 2025 has been negatively impacted by certain projects that were planned and scheduled but were canceled, as the wells drilled by our clients were determined to be uneconomical or unsuccessful.

Current wording

Service revenue is primarily tied to activities associated with the exploration, appraisal, development and production of oil, gas and derived products outside the U.S. For the three months ended September 30, 2025, service revenue was $101.1 million, an increase of 2% year-over-year and an increase of 5% sequentially. Year-over-year, revenues increased primarily due to the increase in international markets partially offset by lower activity level in the U.S. market. Despite disruptions from the ongoing geopolitical conflicts and expanded sanctions throughout the first nine months of 2025, we continue to see recovery in demand for our laboratory crude-assay services during the third quarter of 2025 and continued growth in well completion diagnostic services in certain international markets when compared to the same period in 2024. Service revenue in 2025 has been negatively impacted by certain projects that were planned and scheduled but were canceled, as the wells drilled by our clients were determined to be uneconomical or unsuccessful.

Previous wording

Sequentially, the increase in service revenue was primarily due to a recovery in demand for laboratory assay services in international markets partially offset by a decrease in the U.S. market. As discussed above, the expanded sanctions announced in January 2025 had caused a temporary disruption in the trading and maritime transportation of crude oil and derived products, and demand for the associated laboratory assay services declined during the first quarter of 2025. These activities re-stabilized in the second quarter of 2025 and demand for our associated crude assay services also increased during the three months ended June 30, 2025.

Current wording

Sequentially, the increase in service revenue was primarily due to an increase in demand for laboratory crude-assay services in international markets while the U.S. market remained relatively flat. As discussed above, the expanded sanctions imposed throughout the year have caused a temporary disruption in the trading and maritime transportation of crude oil and derived products that slowed the growth of laboratory crude-assay revenue during 2025.

Previous wording

Product sales are primarily tied to supporting the U.S. onshore drilling and completion activities and bulk product sales to international markets. Product sales to international markets are typically sold and shipped in bulk, and revenue can vary from one quarter to another. For the three months ended June 30, 2025, product sales revenue of $33.9 million decreased 1% year-over-year and increased 19% sequentially. The decrease was driven by lower drilling and completion activity onshore in the U.S. for the three months ended June 30, 2025 when compared to the same period in 2024, resulting in a lower level of product sales in the U.S. onshore market.

Current wording

Product sales are primarily tied to U.S. onshore drilling and completion activities and product sales to international markets. Product sales to international markets are typically sold and shipped in bulk, and revenue can vary from one quarter to another. For the three months ended September 30, 2025, product sales revenue of $33.4 million decreased 6% year-over-year and 2% sequentially. The decrease was driven by lower drilling and completion activity onshore in the U.S. for the three months ended September 30, 2025 when compared to the same period in 2024.

Previous wording

For the six months ended June 30, 2025, product sales revenue was $62.4 million and decreased 7% compared to the same period in the prior year, primarily due to decreased sales in the U.S. onshore markets as a result of lower average drilling and completion activity in 2025 compared to 2024, which was partially offset by increased international bulk product sales.

Current wording

For the nine months ended September 30, 2025, product sales revenue was $95.8 million and decreased 7% compared to the same period in the prior year, primarily due to lower average U.S. onshore drilling and completion activity in 2025 compared to 2024, but was partially offset by an increase of laboratory instrument sales to international markets in 2025.

Previous wording

Cost of services was $74.1 million for the three months ended June 30, 2025, a decrease of 1% year-over-year and an increase of 1% sequentially. The year-over-year and sequential changes in cost of services was in line with changes in service revenue. Cost of services expressed as a percentage of service revenue was 77% for the three months ended June 30, 2025, compared to 78% for the same period in the prior year. Cost of services as a percentage of service revenue remained relatively flat sequentially.

Current wording

Cost of services was $74.9 million for the three months ended September 30, 2025, a decrease of 1% year-over-year and an increase of 1% sequentially. The year-over-year decrease in cost of services was primarily due to increased efficiencies and the benefits of lower compensation costs as a result of cost reduction initiatives implemented during the first half of 2025. Sequentially, the slight increase in cost of services is primarily due to an increase in service revenue partially offset by the increased efficiencies and lower compensation cost as discussed above. Cost of services expressed as a percentage of service revenue was 74% for the three months ended September 30, 2025, compared to 77% for the prior quarter and 76% for the same period in the prior year. Cost of services as a percentage of service revenue improved primarily driven by the efficiencies and cost reduction initiatives as discussed above.

Previous wording

For the six months ended June 30, 2025, cost of services was $147.0 million, a decrease of 1% compared to the same period in the prior year. The year-over-year changes in cost of services was in line with changes in service revenue. Cost of services expressed as a percentage of service revenue remained relatively flat compared to the same period in the prior year.

Current wording

For the nine months ended September 30, 2025, cost of services was $221.9 million, a decrease of 1% compared to the same period in the prior year. Cost of services expressed as a percentage of service revenue improved to 76% from 77% when compared to the same period in the prior year. The year-over-year decrease in cost of services while service revenue remained relatively flat was primarily due to increased efficiencies and cost reduction initiatives as discussed above.

Previous wording

Cost of product sales was $29.6 million for the three months ended June 30, 2025, an increase of 5% year-over-year and 12% sequentially. Cost of product sales expressed as a percentage of product sales revenue was 87% for the three months ended June 30, 2025, compared to 82% for the same period in the prior year and compared to 93% in the prior quarter. The year-over-year changes in cost of product sales as a percentage of product sales increased primarily due to higher absorption of fixed costs on a lower revenue base, along with a write-down of certain inventory of approximately $0.8 million in the three months ended June 30, 2025.

Current wording

Cost of product sales was $30.0 million for the three months ended September 30, 2025, a decrease of 4% year-over-year and an increase of 1% sequentially. Cost of product sales expressed as a percentage of product sales revenue was 90% for the three months ended September 30, 2025, compared to 88% for the same period in the prior year and compared to 87% in the prior quarter. The year-over-year changes in cost of product sales as a percentage of product sales increased primarily due to higher absorption of fixed costs on a lower revenue base that is partially associated with increased tariff cost on certain imported materials, along with a write-down of certain inventory of approximately $0.6 million in the three months ended September 30, 2025.

Previous wording

For the six months ended June 30, 2025, cost of product sales was $56.1 million, a decrease of 5% compared to the same period in the prior year. Cost of product sales expressed as a percentage of product sales revenue was 90% for the six months ended June 30, 2025, compared to 87% from the same period in the prior year. The increase in cost of product sales as a percentage of product sales revenue was due to higher absorption of fixed costs on a lower revenue base and the write-down of certain inventory as discussed above.

Current wording

For the nine months ended September 30, 2025, cost of product sales was $86.2 million, a decrease of 4% compared to the same period in the prior year. Cost of product sales expressed as a percentage of product sales revenue was 90% for the nine months ended September 30, 2025, compared to 88% from the same period in the prior year. The increase in cost of product sales as a percentage of product sales revenue was due to higher absorption of fixed costs on a lower revenue base as discussed above, along with a write-down of certain inventory totaled $1.8 million in 2025, with no such write-down in the same period in the prior year.

Previous wording

G&A expense for the three months ended June 30, 2025, was $10.5 million, which increased 2% or $0.2 million, compared to the same period in 2024. The slight year-over-year increase was primarily due to increased consulting and license fees associated with implementation costs of a global human capital management system partially offset by gains on our company owned life insurance policies in 2025 compared to 2024.

Current wording

For the nine months ended September 30, 2025, G&A expense was $34.8 million which increased $4.1 million, compared to the nine months ended September 30, 2024. The year-over-year increase was primarily due to (1) a higher total stock compensation cost of $1.8 million; (2) a lower gain from mark-to-market adjustments on Company-owned life insurance policies of $1.3 million; and (3) increased license fees and implementation costs associated with a new global human capital management system.

Previous wording

Depreciation and amortization expense for the three months ended June 30, 2025, was $3.7 million, a decrease of 3% year-over-year and 1% sequentially. Depreciation and amortization expense for the six months ended June 30, 2025, was $7.4 million, a decrease of 3% year-over-year. The decrease in depreciation and amortization expense compared to the prior year periods and sequentially is primarily due to assets which became fully depreciated.

Current wording

Depreciation and amortization expense for the three months ended September 30, 2025, was $3.6 million, a decrease of 2% year-over-year and sequentially. Depreciation and amortization expense for the nine months ended September 30, 2025, was $11.0 million, a decrease of 3% year-over-year. The decrease in depreciation and amortization expense compared to the prior year periods and sequentially is primarily due to assets that had become fully depreciated.

Previous wording

During the six months ended June 30, 2025 and 2024, as a result of consolidating and exiting certain facilities in the U.S. and other international locations, we recognized a write-down of the associated leasehold improvements, right of use assets and other assets and incurred lease abandonment and other exit costs of $0.7 million and $1.8 million, respectively.

Current wording

During the nine months ended September 30, 2025 and 2024, as a result of consolidating and exiting certain facilities in the U.S. and other international locations, we recognized a write-down of the associated leasehold improvements, right of use assets and other assets and incurred lease abandonment and other exit costs of $0.7 million and $1.8 million, respectively.

Previous wording

In February 2024, we had a fire incident at our Aberdeen, U.K. facility and we have recorded insurance recovery associated with business interruptions, increase in cost of work, and loss on property and assets during the three and six months ended June 30, 2025 and 2024.

Current wording

In February 2024, we had a fire incident at our Aberdeen, U.K. facility and we have recorded insurance recovery associated with business interruptions, increase in cost of work, and loss on property and assets during the three and nine months ended September 30, 2025 and 2024. During the three months ended September 30, 2025, Core Lab reached final settlement with the insurance company and recorded a gain of approximately $5.3 million on the insurance recovery.

Previous wording

Interest expense for the three months ended June 30, 2025, was $2.7 million and decreased $0.5 million or 16% year-over-year and slightly increased compared to the prior quarter. For the six months ended June 30, 2025, interest expense decreased $1.3 million or 20%.

Current wording

Interest expense for the three months ended September 30, 2025, was $2.7 million and decreased $0.5 million or 15% year-over-year and 2% compared to the prior quarter. For the nine months ended September 30, 2025, interest expense decreased $1.8 million or 18%.

Previous wording

The year-over-year decreases are primarily due to lower average borrowings on our bank revolving credit facility during the three and six months ended June 30, 2025. Slight increase sequentially is primarily due to changes in blended variable interest rates on our bank revolving credit facility during these periods.

Current wording

The year-over-year and sequential decreases are primarily due to lower variable interest rates and average borrowings on our bank revolving credit facility during the three and nine months ended September 30, 2025.

Previous wording

The Company recorded an income tax expense of $1.9 million and $3.7 million for the three and six months ended June 30, 2025, respectively compared to income tax expense of $3.6 million and $5.3 million for the three and six months ended June 30, 2024, respectively. The effective tax rate for the three and six months ended June 30, 2025, was 15.2% and 25.4%, respectively. The effective tax rate for the three and six months ended June 30, 2024, was 28.2% and 29.3%, respectively. The effective tax rate for the three and six months ended June 30, 2025, was impacted by the earnings mix of jurisdictions, changes in uncertain tax position in certain jurisdictions and the finalization of certain tax jurisdictions’ return to provision assessments due to changes in estimates. These items are discrete to these periods. The tax rate for the three and six months ended June 30, 2024 was impacted by the earnings mix of jurisdictions subject to tax for the period and items discrete to the quarter.

Current wording

The Company recorded an income tax expense of $3.8 million and $7.4 million for the three and nine months ended September 30, 2025, respectively compared to income tax expense of $4.7 million and $10.0 million for the three and nine months ended September 30, 2024, respectively. The effective tax rate for the three and nine months ended September 30, 2025, was 20.5% and 22.7%, respectively. The effective tax rate for the three and nine months ended September 30, 2024, was 28.1% and 28.8%, respectively. The effective tax rate for the three and nine months ended September 30, 2025, was primarily impacted by the earnings mix of jurisdictions subject to tax for the period and changes in uncertain tax position in certain jurisdictions which is discrete to the quarter. The tax rate for the three and nine months ended September 30, 2024 was impacted by the earnings mix of jurisdictions subject to tax for the period and items discrete to the quarter.

Previous wording

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes significant provisions, including tax cut extensions and modifications to the U.S. and international tax frameworks. We are evaluating the impact of these legislative changes as additional guidance becomes available, and uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. These legislative changes could have an adverse impact on our future effective tax rate, tax assets and liabilities, including our deferred tax assets and liabilities, and cash payments for tax.

Current wording

On July 4, 2025, the Act was enacted into law. The Act includes significant provisions, including tax cut extensions and modifications to the U.S. and international tax frameworks. We are evaluating the impact of these legislative changes as additional guidance becomes available, and uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. These legislative changes could have an adverse impact on our future effective tax rate, tax assets and liabilities, including our deferred tax assets and liabilities, and cash payments for tax.

Previous wording

Revenue from the Reservoir Description operating segment of $86.3 million for the three months ended June 30, 2025 relatively flat year-over-year and increased 7% sequentially. The year-over-year revenue growth in the Company’s international projects and crude-assay services was substantially offset by lower revenue in the U.S. market. Sequentially, the increase in revenue was primarily due to higher revenue in laboratory crude-assay services, as the trading and maritime transportation of crude oil and derived products re-stabilized in the second quarter of 2025, after the expanded sanctions were announced in January of 2025. Additionally, revenue associated with manufactured laboratory instrumentation sales increased sequentially. Revenue in 2025 has been negatively impacted by the decrease in the success rate for international offshore exploration and appraisal wells, which reached a 20-year low for the six-month period ending March 31, 2025. The decrease in international offshore commercial success rates has resulted in the cancellation of several reservoir rock and fluid analysis projects that were originally planned for late 2024 and 2025.

Current wording

Revenue from the Reservoir Description operating segment of $88.2 million for the three months ended September 30, 2025 decreased 1% year-over-year and increased 2% sequentially. Revenue in 2025 has been negatively impacted by the decrease in the success rate for international offshore exploration and appraisal wells, which reached a 20-year low for the six-month period ending March 31, 2025. The decrease in international offshore commercial success rates has resulted in the cancellation of several reservoir rock and fluid analysis projects that were originally planned for late 2024 and 2025. The slight decrease in year-over-year revenue was primarily due to lower revenue in reservoir rock and fluid analysis projects in the U.S. but was substantially offset by higher revenue from international projects and crude-assay services. Sequentially, the increase in revenue was primarily due to higher revenue in laboratory crude-assay services.

Previous wording

Operating income of $12.2 million for the three months ended June 30, 2025, increased $0.8 million, year-over-year and $9.9 million sequentially. Operating margins were 14% for the three months ended June 30, 2025, compared to 13% year-over-year, and 3% sequentially. Year-over-year, the increase in operating income and operating margins was primarily attributable to insurance recovery associated with the fire at the Aberdeen, U.K. facility of $2.6 million recorded in the three months ended June 30, 2025, compared to a $1.3 million gain in the same period in prior year.

Current wording

Operating income of $16.6 million for the three months ended September 30, 2025, was relatively flat year-over-year and increased $4.4 million sequentially. Operating margins were 19% for the three months ended September 30, 2025, comparable for the same period in the prior year, and 14% sequentially. Year-over-year, the changes in operating income and operating margins was primarily attributable to gains on insurance recovery associated with the fire at the Aberdeen, U.K. facility of $5.3 million recorded in the three months ended September 30, 2025, compared to a $3.2 million gain in the same period in prior year. The additional gain on insurance recovery was substantially offset by a different mix of revenue with a higher level of laboratory instrument sales in 2025, which yield a lower margin.

Previous wording

Sequentially, the increase in operating income and operating margins was primarily due to 1) incremental revenue of $5.4 million in the three months ended June 30, 2025; 2) insurance recovery associated with the fire at the Aberdeen, U.K. facility of $2.6 million recorded in the three months ended June 30, 2025, and no such gain in the prior quarter; 3) a $2.4 million increase in the first quarter of 2025, associated with to the acceleration of stock compensation expense for retirement eligible executives; and 4) a total charge of $2.9 million associated with employee severance, facility consolidation and asset write-down recorded in the three months ended March 31, 2025, and no such transactions in the current quarter.

Current wording

Sequentially, the increase in operating income and operating margins was primarily due to 1) incremental revenue of $2.0 million in the three months ended September 30, 2025; and 2) insurance recovery associated with the fire at the Aberdeen, U.K. facility of $5.3 million recorded in the three months ended September 30, 2025, compared to a $2.6 million recorded in the prior quarter.

Previous wording

Operating income of $14.5 million for the six months ended June 30, 2025, decreased $3.8 million from the same period in the prior year. Operating margins were 9% for the six months ended June 30, 2025, compared to 11% for the same period in the prior year. The decrease in operating income and operating margins was primarily attributable to 1) decremental revenue of $3.3 million in 2025; 2) a different mix of revenue with a higher level of manufactured equipment sales that yield lower margin compared to service revenue; and 3) a total charge of $2.9 million associated with employee severance, facility consolidation and asset write-down recorded in 2025 compared to $1.5 million recorded in the same period in prior year.

Current wording

Operating income of $31.1 million for the nine months ended September 30, 2025, decreased $3.7 million from the same period in the prior year. Operating margins were 12% for the nine months ended September 30, 2025, compared to 13% for the same period in the prior year. The decrease in operating income and operating margins was primarily attributable to 1) a lower level of revenue in 2025; 2) a different mix of revenue with a higher level of laboratory instrument sales that yield lower margin compared to service revenue; and 3) a total charge of $2.7 million associated with employee severance, facility consolidation and asset write-down recorded in 2025 compared to $1.5 million recorded in the same period in prior year. The decrease in operating income and operating margins was partially offset by a higher insurance recovery associated with the fire at the Aberdeen, U.K. facility in the nine months ended September 30, 2025, compared to the same period in prior year.

Previous wording

Production Enhancement operations are largely focused on complex completions in unconventional oil and gas reservoirs in the U.S. as well as conventional projects across the globe. U.S. onshore drilling and completion activities typically experience a seasonal decline at end of the year with activity levels increasing at the beginning of the year. Average rig count in the U.S. land market for the three months ended June 30, 2025, was down by 4% year-over-year and 3% sequentially. International rig count was down 7% year-over-year and relatively flat sequentially.

Current wording

Production Enhancement operations are largely focused on complex completions in unconventional oil and gas reservoirs in the U.S. as well as conventional projects across the globe. U.S. onshore drilling and completion activities typically experience a seasonal decline at end of the year with activity levels increasing at the beginning of the year. Average rig count in the U.S. land market for the three months ended September 30, 2025, was down by 7% year-over-year and 6% sequentially. International rig count was down 6% year-over-year and relatively flat sequentially.

Previous wording

Revenue from the Production Enhancement operating segment of $43.9 million for the three months ended June 30, 2025, decreased 1% year-over-year and increased 3% sequentially. Year-over-year, the decrease was primarily due to lower product sales in the U.S. land market. This decrease was substantially offset by increased revenue in bulk shipments in the international market and a growth in well completion diagnostic services in the U.S. and international markets. Sequentially, the increase was primarily driven by increased product sales in international markets, however this was partially offset by a lower revenue in well completion diagnostic services for projects in the Gulf of Mexico.

Current wording

Revenue from the Production Enhancement operating segment of $46.3 million for the three months ended September 30, 2025, increased 2% year-over-year and 6% sequentially. Year-over-year, the increase was primarily driven by a strong growth in well completion diagnostic services in the U.S. and international markets. Sequentially, the increase was primarily driven by increased product sales in bulk shipment in the international markets, and continued growth in well completion diagnostic services for projects in the Gulf of Mexico.

Previous wording

Revenue from the Production Enhancement operating segment of $86.6 million for the six months ended June 30, 2025, decreased 3% from the same period in the prior year. The decrease in revenue primarily driven by lower product sales in the U.S. land and international markets in 2025, partially offset by higher revenue in well completion diagnostic services in the U.S. and international markets.

Current wording

Revenue from the Production Enhancement operating segment of $132.9 million for the nine months ended September 30, 2025, decreased 2% from the same period in the prior year. The decrease in revenue is primarily due to lower product sales in the U.S. land market in 2025, partially offset by higher revenue in well completion diagnostic services in the U.S. and international markets.

Previous wording

Operating income of $4.7 million for the six months ended June 30, 2025, decreased $1.3 million compared to the same period in the prior year. Operating margins for the six months ended June 30, 2025, were 5% compared to operating margins of 7% in the same period of the prior year. The decrease in operating income and margins was primarily due to a higher absorption of fixed costs on a lower revenue base and a higher severance and inventory write-down as discussed above.

Current wording

Operating income of $9.0 million for the nine months ended September 30, 2025, decreased $0.2 million compared to the same period in the prior year. Operating margins for the nine months ended September 30, 2025 of 7% were comparable to the same period of the prior year. The slight decrease in operating income and margins was primarily due to a higher absorption of fixed costs on lower product sales that is partially associated with increased tariff cost on certain imported materials, substantially offset by higher margin yield from well completion diagnostic service revenue as discussed above.

Previous wording

We have historically financed our activities through cash on hand, cash flows from operations, bank credit facilities, equity financing and the issuance of debt. Cash flows from operating activities provide the primary source of funds to finance operating needs, capital expenditures, dividends and our share repurchase program. Our ability to maintain and grow our operating income and cash flow depends, to a large extent, on continued investing activities. We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity and debt, should be sufficient to fund our debt requirements, capital expenditures, working capital, dividends, share repurchase program and future acquisitions. The Company will continue to monitor and evaluate the availability of debt and equity markets.

Current wording

We have historically financed our activities through cash on hand, cash flows from operations, bank credit facilities, equity financing and the issuance of debt. Cash flows from operating activities provide the primary source of funds to finance operating needs, capital expenditures, dividends and our share repurchase program. Our ability to maintain and grow our operating income and cash flow depends, to a large extent, on continued investing activities. We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity and debt, should be sufficient to fund our debt requirements, capital expenditures, working capital, dividends, share repurchase program and future acquisitions. The Company will continue to monitor and evaluate the availability of capital in the debt and equity markets.

Previous wording

We are a holding company incorporated in Delaware. Therefore, we conduct substantially all of our operations through our subsidiaries. Our cash availability is largely dependent upon the ability of our subsidiaries to pay cash dividends or otherwise distribute or advance funds to us and on the terms and conditions of our existing and future credit arrangements. There are no restrictions preventing any of our subsidiaries from repatriating earnings, except for the unrepatriated earnings of our Russian subsidiary which are not expected to be distributed in the foreseeable future, and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances. As of June 30, 2025, $21.9 million of our $31.2 million of cash was held by our foreign subsidiaries.

Current wording

We are a holding company incorporated in Delaware. Therefore, we conduct substantially all of our operations through our subsidiaries. Our cash availability is largely dependent upon the ability of our subsidiaries to pay cash dividends or otherwise distribute or advance funds to us and on the terms and conditions of our existing and future credit arrangements. There are no restrictions preventing any of our subsidiaries from repatriating earnings, except for the unrepatriated earnings of our Russian subsidiary which are not expected to be distributed in the foreseeable future, and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances. As of September 30, 2025, $22.2 million of our $25.6 million of cash was held by our foreign subsidiaries.

Previous wording

Comparing the six months ended June 30, 2025 to the same period in the prior year, cash flows provided by operating activities decreased to $20.6 million in 2025 compared to $22.7 million in the same period 2024. Net income generated from operations was lower in 2025, but was partially offset by more efficient utilization in operational working capital in 2025.

Current wording

Comparing the nine months ended September 30, 2025 to the same period in the prior year, cash flows provided by operating activities decreased to $29.1 million in 2025 compared to $35.8 million in 2024. Net income for the nine months ended September 30, 2025 includes gain on insurance proceeds associated with assets of $6.8 million compared to $2.1 million in the same period in the prior year. Additionally, cash from operating activities was impacted by a decrease in working capital in 2025 compared to the same period in the prior year.

Previous wording

Cash flows used in investing activities for the six months ended June 30, 2025 of $0.9 million include proceeds on the sale of assets of $2.2 million, proceeds from insurance recovery associated with the fire incident at the Aberdeen, U.K. facility of $4.7 million and proceeds on company owned life insurance policies of $0.8 million, offset by total capital expenditures of $7.9 million, which includes $1.6 million related to the replacement of assets and the facility which were damaged in the 2024 fire incident, and a business acquisition, net of cash acquired of $0.6 million. Cash flows used in investing activities for the six months ended June 30, 2024 of $2.3 million include the funding of $5.9 million for capital expenditures, partially offset by $0.8 million of proceeds from the sale of assets and $2.8 million of net proceeds received from company owned life insurance policies.

Current wording

Cash flows provided by investing activities for the nine months ended September 30, 2025 of $1.5 million include proceeds on the sale of assets of $2.4 million, proceeds from insurance recovery associated with the fire incident at the Aberdeen, U.K. facility of $10.0 million, and proceeds on company owned life insurance policies of $0.8 million, offset by total capital expenditures of $10.9 million and a business acquisition, net of cash acquired of $0.6 million. Cash flows used in investing activities for the nine months ended September 30, 2024 of $2.8 million include the funding of $8.6 million for capital expenditures, partially offset by $2.1 million of proceeds from insurance recovery associated with the 2024 fire incident, $0.9 million of proceeds from the sale of assets and $2.8 million of net proceeds received from company owned life insurance policies.

Previous wording

Cash flows used in financing activities for the six months ended June 30, 2025 of $7.7 million include a $2.0 million net reduction in long-term debt, quarterly dividends of $0.9 million, and $4.8 million used to repurchase the Company’s common stock. Cash flows used in financing activities for the six months ended June 30, 2024 of $17.8 million include a $16.0 million net reduction in long-term debt, quarterly dividends of $0.9 million, and $0.6 million in costs associated with equity transactions.

Current wording

Cash flows used in financing activities for the nine months ended September 30, 2025 of $24.1 million include an $11.0 million net reduction in long-term debt, $1.7 million of debt issuance costs associated with the renewal of our credit facility, $1.4 million for quarterly dividends, and $9.8 million used to repurchase the Company’s common stock. Cash flows used in financing activities for the nine months ended September 30, 2024 of $26.6 million include a $24.0 million net reduction in long-term debt, $1.4 million for quarterly dividends, $0.4 million used to repurchase the Company’s common stock and $0.8 million in costs associated with equity transactions.

Previous wording

During the six months ended June 30, 2025, we repurchased 369,230 shares of our common stock for $4.8 million, including rights to 12,454 shares of our common stock to satisfy personal tax liabilities of participants in our stock-based compensation plan for an aggregate purchase price of $168 thousand.

Current wording

During the nine months ended September 30, 2025, we repurchased 831,478 shares of our common stock for $9.8 million, including rights to 16,915 shares of our common stock to satisfy personal tax liabilities of participants in our stock-based compensation plan for an aggregate purchase price of $211 thousand.

Previous wording

Free cash flow for the six months ended June 30, 2025, decreased $2.5 million from $16.8 million for the same period in 2024. The net cash provided by operating activities of $20.6 million during the six months ended June 30, 2025, was derived from a lower level of net income, but is partially offset by more efficient utilization in operational working capital in 2025. Capital expenditures-operations, which exclude capital expenditures of $1.6 million associated with the Aberdeen, U.K. fire incident and are covered by insurance, increased slightly by $0.3 million during the six months ended June 30, 2025 compared to the same period in the prior year.

Current wording

Free cash flow for the nine months ended September 30, 2025, decreased $6.3 million from $27.1 million for the same period in 2024. The net cash provided by operating activities of $29.1 million during the nine months ended September 30, 2025, decreased $6.7 million primarily due to the factors as discussed in the cash flow from operating activities above. Capital expenditures-operations, which exclude capital expenditures of $2.7 million associated with the Aberdeen, U.K. fire incident and are covered by insurance, decreased slightly by $0.4 million during the nine months ended September 30, 2025 compared to the same period in the prior year.

Previous wording

We, along with our wholly owned subsidiary Core Laboratories (U.S.) Interests Holdings, Inc. (“CLIH”), have a secured credit facility, the Eighth Amended and Restated Credit Agreement (as amended, the “Credit Facility”) for an aggregate borrowing commitment of $135.0 million with a $50.0 million “accordion” feature. As of June 30, 2025, the Credit Facility has an available borrowing capacity of approximately $108.0 million.

Current wording

We, along with CLIH, have a secured the Credit Facility for an aggregate borrowing commitment of $150.0 million with a $50.0 million “accordion” feature. As of September 30, 2025, the Credit Facility has an available borrowing capacity of approximately $131.9 million.

Previous wording

See Note 7 –Long-term debt, net of the Notes to the Interim Consolidated Financial Statements, for additional information regarding the renewal of the Credit Facility on July 22, 2025.

Current wording

See Note 7 –Long-term debt, net of the Notes to the Interim Consolidated Financial Statements, for additional information regarding the Credit Facility.

Previous wording

In accordance with the terms of the Credit Facility, our leverage ratio is 1.27, and our interest coverage ratio is 7.22, each for the period ended June 30, 2025. We are in compliance with all covenants contained in our Credit Facility and Senior Notes as of June 30, 2025. Certain of our material, wholly owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes. See Note 7 -Long-term Debt, net of the Notes to the Interim Consolidated Financial Statements for additional information regarding the terms and financial covenants of the Senior Notes and the Credit Facility.

Current wording

In accordance with the terms of the Credit Facility, our leverage ratio is 1.10, and our interest coverage ratio is 7.86, each for the period ended September 30, 2025. We are in compliance with all covenants contained in our Credit Facility and Senior Notes as of September 30, 2025. Certain of our material, wholly owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes. See Note 7 -Long-term Debt, net of the Notes to the Interim Consolidated Financial Statements for additional information regarding the terms and financial covenants of the Credit Facility and the Senior Notes.