Core Laboratories Inc. /DE/

Previous wording

On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation. The Redomestication Transaction has been accounted for as a transaction between entities under common control. There is no difference between the combined separate entities prior to the Redomestication Transaction and the combined separate entities after the Redomestication Transaction with respect to the consolidated financial statements; therefore, comparative information reported in these financial statements do not differ from amounts previously reported under Core Laboratories N.V.’s consolidated financial statements. These financial statements should be read in conjunction with Core Laboratories N.V.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023 and Core Laboratories N.V.’s Annual Report on Form 10-K for the year ended December 31, 2022, including Note 2 - Summary of Significant Accounting Policies.

Current wording

On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation. See Note 1 - Description of Businessof the Notes to the Consolidated Financial Statements.

Previous wording

The following table summarizes the annual average and year-end worldwide and U.S. rig counts for the years ended December 31, 2024, 2023 and 2022, as well as the annual average and year-end spot price of a barrel of WTI crude, Europe Brent crude and a MMBtu of natural gas:

Current wording

The following table summarizes the annual average and year-end worldwide and U.S. rig counts for the years ended December 31, 2025, 2024 and 2023, as well as the annual average and year-end spot price of a barrel of West Texas Intermediate (“WTI”) crude, Europe Brent crude and a MMBtu of natural gas:

Previous wording

In general, activities associated with the exploration of oil and gas in the U.S. onshore market are more sensitive to changes in the crude-oil commodity prices, as opposed to larger international and offshore projects which take multiple years to plan and develop. These international and offshore projects once announced and started, will continue through completion, despite changes in the current price of crude oil. The geopolitical conflict between Russia and Ukraine that began in February 2022, caused disruptions to traditional maritime supply chains associated with the movement of crude oil, initially reducing the level of crude oil sourced from Russia and being imported into various European ports. The disruptions to traditional maritime supply chains of crude oil and derived products, such as diesel fuel, and associated sanctions imposed on maritime exports of these products out of Russia caused significant volatility in both the prices and trading patterns of these products during 2022 and into 2023. As a result, average crude-oil prices were elevated during 2022, but have since decreased, moderating in 2023 and stabilizing in 2024. The maritime supply chains associated with the movement of crude oil have continued to realign and stabilize in 2023 and 2024, which reduced some of the volatility in crude-oil prices, however, expanded sanctions were issued in January 2025, which have resulted in more recent elevated prices and uncertainty.

Current wording

The geopolitical conflict between Russia and Ukraine that began in February 2022, caused disruptions to traditional maritime supply chains associated with the movement of crude oil, initially reducing the level of crude oil sourced from Russia and being imported into various European ports. The disruptions to traditional maritime supply chains of crude oil and derived products, such as diesel fuel, and associated sanctions imposed on maritime exports of these products out of Russia caused significant volatility in both the prices and trading patterns of these products from the inception of the conflict through 2023 before stabilizing in 2024 and throughout 2025. Average crude-oil prices which were elevated at the inception of the conflict, have since moderated in 2023 and continued to stabilize in 2024. However, expanded sanctions were issued in January 2025, which caused temporary disruptions in supply, but did not have any meaningful or extended impact to commodity prices.

Previous wording

The conflict in the Middle East that began in October 2023 has resulted in additional disruptions in the movement and trading of crude oil which continued throughout 2024. The Company's volume of associated laboratory services is commensurate with the trading and movement of crude-oil into Europe, the Middle East, Asia and across the globe. However, the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories. We have no way to predict the progress or outcome of these events, and any resulting government responses are fluid and beyond our control. According to the latest International Energy Agency’s report, the current global demand for crude oil and natural gas remains at a moderate level though the growth momentum is expected to slow down in 2025 due to further weakening of the macroeconomic climate, as Gross Domestic Product (“GDP”) growth stays below trend in major economies, including China.

Current wording

The Company's volume of associated laboratory services is commensurate with the trading and movement of crude-oil into Europe, the Middle East, Asia and across the globe. However, the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories. 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

Information published by the EIA, shows that the inventory of wells drilled but uncompleted (a “DUC” well) in the U.S., was 5,825 as of December 31, 2023, and declined to 5,238 at end of 2024. This data indicates that during the period of higher activity, operators were drilling wells but not completing them as the DUC inventory grew. As activity levels began to decline, operators began to drill fewer new wells and were completing some of the wells that had been previously drilled but not completed. As drilling and completion activity levels continued to decline from 2023 to 2024, the number of wells completed continued to outpace the number of new wells drilled during these periods.

Current wording

Information published recently by the EIA, shows that the inventory of wells drilled but uncompleted (a “DUC” well) in the U.S., was 5,798 as of December 31, 2024, and declined to 5,020, or a 13% reduction, at end of 2025. This data indicates that during the period of higher activity, operators were drilling wells but not completing them as the DUC inventory grew. As activity levels began to decline, operators began to drill fewer new wells and were completing some of the wells that had been previously drilled but not completed. As drilling and completion activity levels continued to decline from 2024 to 2025, the number of wells completed continued to outpace the number of new wells drilled during these periods.

Previous wording

In the U.S., the land-based average rig count decreased approximately 5% from 2022 to 2023 primarily due to a significant decline in natural gas prices. Additionally, efficiencies gains in drilling and completing wells allowed operators to complete their drilling programs ahead of their original schedule. Average natural gas prices continued to decline by approximately 13% in 2024 compared to 2023, and as a result the U.S. land-based average rig count decreased by a similar level in 2024. Demand for product sales and associated services will typically change in tandem with the changes in the rig count and associated drilling and completion activity.

Current wording

In the U.S., the land-based average rig count decreased approximately 13% in 2024 from 2023 primarily due to a significant decline in natural gas prices. Additionally, efficiencies gained in drilling and completing wells allowed operators to complete their drilling programs ahead of their original schedule. In 2025, despite the overall U.S. land-based average rig count decrease of 6% from 2024 levels, activity in certain natural gas basins improved as the average natural gas prices increased by 61% in 2025 compared to average prices in 2024. Demand for product sales and associated services will typically change in tandem with the changes in the rig count and associated drilling and completion activity.

Previous wording

Outside of the U.S., international average rig count showed an increase of approximately 6% in 2023 from 2022, however, subsequently remained flat in 2024. Long-term international and offshore projects which are commonly announced through Final Investment Decisions and subsequently initiated are not as susceptible or at-risk to delay or suspension due to short-term volatility in crude-oil commodity prices. The Company has maintained its annual capital expenditures between $10.0 million and $13.0 million during the years 2022, 2023 and 2024, which is significantly reduced from average annual capital expenditures in years prior to the pandemic.

Current wording

Outside of the U.S., international average rig count showed an increase of approximately 20% in 2024 from 2023, however, subsequently decreased by 7% in 2025, which was primarily in the Middle East, Latin America and Asia Pacific regions. Long-term international and offshore projects which are commonly announced through Final Investment Decisions and subsequently initiated are not as susceptible or at-risk to delay or suspension due to short-term volatility in crude-oil commodity prices.

Previous wording

Service revenue is primarily tied to activities associated with the exploration, production, movement and refinement of oil, gas and derived products outside the U.S. Service revenue for the year ended December 31, 2024, was $388.2 million, an increase of 4% compared to 2023. The increase was due to growth in activity levels in both U.S. and international markets. Approximately 70% of service revenue is generated from international markets, and in 2024, growth occurred in several international markets, primarily in Europe, Africa and Asia Pacific, despite the headwinds from the on-going geopolitical conflicts previously discussed. The increase in U.S. service revenue in 2024 compared to 2023, benefited from continued growing client activity from 2023 into 2024, for our reservoir core and reservoir fluids analysis services on projects from across the globe that are often conducted in our advanced technology center located in Houston, Texas, as well as a growing demand for CCS projects. Well completion diagnostic services in the U.S. market also showed strong growth in 2024 compared to 2023 although some well diagnostic projects in the Gulf of Mexico were delayed due to multiple hurricanes during 2024. Service revenue for the year ended December 31, 2023, was $371.9 million, increased by 7% compared to 2022. In 2023, the increase was due to growth in activity levels in both U.S. and international markets. The growth occurred in several international markets including the recovery of services in the European region. The increase in U.S. operations benefited from growing client activity year over year for our reservoir core and reservoir fluids analysis services on projects from across the globe, as well as a growing demand for CCS projects.

Current wording

Service revenue is primarily tied to activities associated with the exploration, production, movement and refinement of oil, gas and derived products outside the U.S. Service revenue for the year ended December 31, 2025, was $399.4 million, an increase of 3% compared to 2024. Approximately 70% of service revenue is generated from international markets. The increase in service revenue was due to growth in both U.S. and international markets. In 2025, growth occurred in several international markets, primarily in Europe and Africa, despite the headwinds from the on-going geopolitical conflicts and expanded sanctions previously discussed. The increase in U.S. service revenue in 2025 compared to 2024, was attributable to increased demand for well completion diagnostic services and growing client activity for our laboratory crude assay services in 2025. Growth in service revenue in 2025 has been negatively impacted by certain projects that were planned and scheduled but were canceled, as the well drilled by our clients were determined to be uneconomical or unsuccessful. Service revenue for the year ended December 31, 2024, was $388.2 million, an increase of 4% compared to 2023. The increase was due to growth in activity levels in both U.S. and international markets. In 2024, growth occurred in several international markets, primarily in

Previous wording

Product sales revenue, which is equally tied to the completion of onshore wells in the U.S. and international activities. Product sales to the U.S. onshore markets are generally delivered more frequently and in smaller quantities, versus product sales to international markets which are typically shipped and delivered in bulk and the timing of delivery can vary from one period to another. Product sales revenue for the year ended December 31, 2024, was $135.6 million, a decrease of 2% compared to 2023. The decline in our product sales revenue is primarily associated with the activity decline in the U.S. onshore market, where the U.S. land-based average rig count decreased 13% in 2024 compared to 2023. Product sales revenue for the year ended December 31, 2023, was $137.9 million, a decrease of 3% compared to 2022. The decrease in product sales, is primarily driven by the decline in the U.S. onshore market, where the U.S. land-based average rig count decreased by 5% in 2023 compared to 2022.

Current wording

Product sales revenue is equally tied to the completion of onshore wells in North America and international activities. Product sales to the U.S. onshore markets are generally delivered more frequently and in smaller quantities, versus product sales to international markets which are typically shipped and delivered in bulk and the timing of delivery can vary from one period to another. Product sales revenue for the year ended December 31, 2025, was $127.1 million, a decrease of 6% compared to 2024. The decline in our product sales revenue was in line with the 6% decline in U.S. land-based average rig count in 2025 compared to 2024. Product sales revenue for the year ended December 31, 2024, was $135.6 million, a decrease of 2% compared to 2023. The decline in our product sales revenue was primarily associated with the activity decline in the U.S. onshore market, where the U.S. land-based average rig count decreased 13% in 2024 compared to 2023. The decrease in product sales to the U.S. market was partially offset by a higher level of product sales to international markets in 2024.

Previous wording

Cost of services for the year ended December 31, 2024 was $297.3 million, an increase of 5% compared to 2023, which is slightly higher than the change in service revenue. Cost of services for the year ended December 31, 2023 was $282.1 million, an increase of 3% compared to 2022. Cost of services expressed as a percentage of service revenue increased to 77% in 2024 compared to 76% in 2023. The slight increase in cost of services as a percentage of service revenue in 2024, was primarily associated with higher employee compensation and higher operating costs as a result of additional costs incurred due to the fire incident at one of our U.K. facilities. The additional costs and loss of income from business interruption were substantially covered by insurance proceeds recorded in Other (income) expense, net. Cost of services expressed as a percentage of service revenue improved to 76% in 2023 from 79% in 2022. Improvement in cost of services as a percentage of service revenue in 2023, was primarily associated with improved utilization of our global laboratory network on higher revenue.

Current wording

Cost of services for the year ended December 31, 2025 was $302.2 million, an increase of 2% compared to 2024, which is lower than the change in service revenue. Cost of services expressed as a percentage of service revenue decreased to 76% in 2025 compared to 77% in 2024. The improvement in cost of services as a percentage of service revenue in 2025 compared to 2024, was primarily due to increased efficiencies and the benefits of lower compensation costs as a result of cost reduction initiatives implemented during 2025. Cost of services for the year ended December 31, 2024 was $297.3 million, an increase of 5% compared to 2023, which is slightly higher than the change in service revenue. Cost of services expressed as a percentage of service revenue increased to 77% in 2024 compared to 76% in 2023. The slight increase in cost of services as a percentage of service revenue in 2024, was primarily associated with higher employee compensation and higher operating costs incurred due to the fire incident at our Aberdeen, U.K. facility. The fire related costs and loss of income from business interruption were substantially covered by insurance proceeds recorded in Other (income) expense, net.

Previous wording

Cost of product sales for the year ended December 31, 2024 was $123.2 million, an increase of 5% compared to 2023 and cost of product sales as a percentage of sales revenue increased to 91% in 2024 from 86% in 2023. Both were driven primarily by certain inventory and other related asset write-downs of approximately $3.3 million in 2024. Cost of product sales for the year ended December 31, 2023 was $117.8 million, a decrease of 1% compared to 2022 and cost of product sales expressed as a percentage of product sales revenue increased to approximately 86% in 2023 from 84% in 2022. Both were primarily due to inflation in material costs throughout 2023 and higher absorption of fixed costs on a lower revenue base.

Current wording

Cost of product sales for the year ended December 31, 2025 was $115.4 million, a decrease of 6% compared to 2024, which was in line with the changes in product sales revenue. Cost of product sales as a percentage of sales revenue remained flat between 2025 and 2024. In 2025, cost of product sales as a percentage of product sales was affected by higher absorption of fixed costs on a lower revenue base; but was offset by improved manufacturing efficiency and cost reduction initiatives implemented and lower inventory and asset write-downs of $1.8 million in 2025 compared to $3.3 million in 2024. Cost of product sales for the year ended December 31, 2024 was $123.2 million, an increase of 5% compared to 2023. Cost of product sales expressed as a percentage of product sales revenue increased to 91% in 2024 from 86% in 2023 primarily due to certain inventory and asset write-downs in 2024 as discussed above, with no such write-downs in 2023.

Previous wording

General and administrative (“G&A”) expense includes corporate management and centralized administrative services that benefit our operations. G&A expense was $39.8 million in 2024, a decrease of 1% or $0.5 million. The decrease is associated with lower employee compensation costs, which were substantially offset by increases in costs associated with the implementation of a global human capital management system and a third-party assessment of the Company’s IT cybersecurity environment. G&A expense was $40.3 million in 2023, an increase of 6% or $2.1 million compared to 2022. The increase is primarily due to changes in value of company owned life insurance and stock compensation expense during the period. See Note 17 - Stock-Based Compensation of the Notes to the Consolidated Financial Statements for further details.

Current wording

General and administrative (“G&A”) expense includes corporate management and centralized administrative services that benefit our operations. G&A expense was $45.4 million in 2025, an increase of 14% or $5.7 million. The increase was primarily associated with: 1) a higher stock compensation cost of $3.4 million that aligned with achievement of certain performance conditions; 2) unfavorable changes in mark-to-market value of company-owned life insurance of $1.9 million; and 3) increased license fees and implementation costs of $0.7 million associated with a new global human capital management system. G&A expense was $39.8 million in 2024, a decrease of 1% or $0.5 million compared to 2023. The decrease is associated with lower employee compensation costs, which were substantially offset by increases in costs associated with the implementation of a global human capital management system and a third-party assessment of the Company’s IT cybersecurity environment. See Note 16 - Stock-Based Compensation of the Notes to the Consolidated Financial Statements for further details.

Previous wording

Depreciation and amortization expense for the year ended December 31, 2024 was $15.0 million, a decrease from $15.8 million and $17.2 million in 2023 and 2022, respectively. The decrease in 2024 and 2023 is associated with assets which became fully depreciated and lower levels of capital expenditures.

Current wording

Depreciation and amortization expense for the year ended December 31, 2025 was $14.6 million, a decrease from $15.0 million and $15.8 million in 2024 and 2023, respectively. The decrease in 2025 and 2024 is primarily associated with assets which became fully depreciated.

Previous wording

In 2024 and 2022, we sold certain ownership interest in mineral rights of certain properties for a net gain of $1.4 million and $0.7 million, respectively, which is included in gain on sale of assets.

Current wording

In 2024, we sold certain ownership interest in mineral rights of certain properties for a net gain of $1.4 million, which is included in gain on sale of assets.

Previous wording

During the year ended December 31, 2023, the State of Louisiana expropriated the access road to one of our facilities and paid us a settlement of $0.6 million. During the year ended December 31, 2022, we received insurance settlements of $0.7 million associated with business interruptions and property losses to certain facilities caused by the North America mid-continent winter storm in February 2021.

Current wording

During the year ended December 31, 2023, the State of Louisiana expropriated the access road to one of our facilities and paid us a settlement of $0.6 million.

Previous wording

During the years ended December 31, 2024 and 2023, we abandoned certain leases in the U.S. and Canada and incurred lease abandonment and other exit costs of $0.7 million and $1.1 million, respectively. As a result of consolidating and exiting these facilities, the associated leasehold improvements, right of use assets and other assets of $1.1 million and $1.1 million were abandoned and expensed during the years ended December 31, 2024 and 2023, respectively.

Current wording

During the years ended December 31, 2025, 2024 and 2023, as a result of our continuous efforts in consolidating and exiting certain facilities in the U.S and other international locations for operational efficiency, 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, $1.8 million and $2.3 million, respectively.

Previous wording

During the year ended December 31, 2023, we wrote off previously deferred costs of $0.5 million upon termination of our 2022 at-the-market offering (“ATM Program”). See Note 14 - Equity for additional information.

Current wording

During the year ended December 31, 2023, we wrote off previously deferred costs of $0.5 million upon termination of our 2022 at-the-market Offering (“ATM Program”).

Previous wording

Foreign exchange (gain) loss, net is summarized in the following table (in thousands):

Current wording

Foreign exchange (gain) loss, net for the primary currencies in which we operate and those with a material effect for the period presented is summarized in the following table (in thousands):

Previous wording

Interest expense for the year ended December 31, 2024 was $12.4 million compared to $13.4 million and $11.6 million in 2023 and 2022, respectively. In 2024, the Company reduced its total outstanding debt by $38.0 million or 23% from end of 2023. The decrease in interest expense associated with lower outstanding debt was partially offset by a higher average blended interest rates in 2024 compared to 2023. In September 2023, the 2011 Senior Notes of $75 million with a fixed rate of 4.11% matured and were partially refinanced with the 2023 Senior Notes of $50 million with higher fixed rates of 7.25% and 7.50%. In 2023, the Company reduced its outstanding debt from end of 2022, however, the interest expense was higher in 2023 primarily due to: 1) rising interest rates on our variable rate debt during these periods, and 2) partial refinancing of the 2011 Senior Notes of $75 million with the 2023 Senior Notes of $50 million, as discussed above. See Note 11 - Long-term Debt, net of the Notes to the Consolidated Financial Statements for further detail. Interest expense was also affected by changes associated with our interest rate swap agreements, as described in Note 15 - Derivative Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements.

Current wording

The decrease in interest expense is associated with lower outstanding debt and lower average blended interest rates in 2025 compared to 2024. In 2024, the Company reduced its total outstanding debt by $38.0 million or 23% from end of 2023. The decrease in interest expense associated with lower outstanding debt was partially offset by a higher average blended interest rate in 2024 compared to 2023. In September 2023, the 2011 Senior Notes of $75 million with a fixed rate of 4.11% matured and were partially refinanced with the 2023 Senior Notes of $50 million with higher fixed rates of 7.25% and 7.50%. See Note 10 - Long-term Debt, net of the Notes to the Consolidated Financial Statements for further detail. Interest expense was also affected by changes associated with our interest rate swap agreements, as described in Note 14 - Derivative Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements.

Previous wording

Income tax expense was $14.0 million in 2024 and resulted in an effective tax rate of 30.4%. The 2024 tax expense was primarily impacted by the geographic mix of earnings. Income tax expense was $4.2 million in 2023 and resulted in an effective tax rate of 10.2%. The 2023 tax expense was primarily impacted by the reversal of deferred tax liabilities of $11.6 million associated with the Redomestication Transaction, partially offset by the geographic mix of earnings.

Current wording

Income tax expense was $15.5 million in 2025 and resulted in an effective tax rate of 33.8%. The 2025 tax expense was primarily impacted by our geographic mix of earnings, non-deductible expenses, unrecoverable tax receivable, and valuation allowance on deferred tax assets. Income tax expense was $14.0 million in 2024 and resulted in an effective tax rate of 30.4%. The 2024 tax expense was primarily impacted by the geographic mix of earnings. Income tax expense was $4.2 million in 2023 and resulted in an effective tax rate of 10.2%. The 2023 tax expense was primarily impacted by the reversal of deferred tax liabilities of $11.6 million associated with the Redomestication Transaction, partially offset by the geographic mix of earnings.

Previous wording

Reservoir Description operations are closely correlated with trends in international and offshore activity levels, with approximately 80% of its revenue sourced from producing fields, development projects and movement of crude oil and derived products outside the U.S. The Company continues to see growth in international projects across several international regions and disruptions in the maritime movement and logistical trading patterns for crude oil and derived products, caused by the Russia-Ukraine and Middle East geopolitical conflicts have begun to stabilize.

Current wording

Reservoir Description operations are closely correlated with trends in international and offshore activity levels, with approximately 80% of its revenue sourced from producing fields, development projects and movement of crude oil and derived products outside the U.S. The Company continues to see growth in international projects across several international regions. Additionally, despite expanded sanctions imposed in early 2025, the temporary disruptions in the maritime movement and logistical trading patterns for crude oil and derived products, caused by the Russia-Ukraine and Middle East geopolitical conflicts stabilized somewhat the remainder of 2025.

Previous wording

Revenue from the Reservoir Description operating segment for the year ended December 31, 2024 was $346.1 million, an increase of 4% compared to 2023. The increased revenue in 2024 is primarily due to growing client activity for our reservoir core and reservoir fluids analysis services on projects in several regions across the globe, as well as continued momentum of growing demand for CCS projects in the last couple of years. Additionally, crude assay services associated with the maritime movement of crude oil and derived products which were impacted by the Russia-Ukraine conflict continued to improve in 2024. The growth in revenue was partially offset by delayed project revenue caused by the fire incident at one of our U.K. facilities. The Company holds insurance policies for both property damage and business interruption, which has minimized the loss to the Company associated with the fire. Revenue from the Reservoir Description operating segment was $333.3 million in 2023, an increase of 8% when compared to $307.7 million in 2022. The increased revenue in 2023 is primarily due to growing client activity for our reservoir core and reservoir fluids analysis services on projects in several regions across the globe, as well as growing demand for CCS projects. Additionally, crude assay services associated with the maritime movement of crude oil and derived products improved in 2023, which were negatively impacted by the Russia-Ukraine conflict that began in 2022.

Current wording

Revenue from the Reservoir Description operating segment for the year ended December 31, 2024 was $346.1 million, an increase of 4% compared to 2023. The increased revenue in 2024 was primarily due to growing client activity for our reservoir core and reservoir fluids analysis services on projects in several regions across the globe, as well as continued momentum of growing demand for CCS projects in the last couple of years. Additionally, crude assay services associated with the maritime movement of crude oil and derived products which were impacted by the Russia-Ukraine conflict continued to improve in 2024. The growth in revenue was partially offset by delayed project revenue caused by the fire incident at one of our U.K. facilities. The Company holds insurance policies for both property damage and business interruption, which has minimized the loss to the Company associated with the fire.

Previous wording

Operating income for the year ended December 31, 2024 was $51.5 million, an increase of 25% compared to 2023. Operating margins increased to 14.9% in 2024 from 12.3% in 2023. The increase in operating income and operating margins in 2024 was primarily due to high operating margins associated with the incremental revenue of $12.8 million in 2024 and continued improvement in utilization of our global laboratory network. Operating income in 2023 was $41.0 million, an increase of 79% compared to 2022. Operating margins increased to 12.3% in 2023 compared to 7.4% in 2022. The increase in operating income and operating margin in 2023, correlates to the incremental revenue and the improved utilization of our global laboratory network, as well as the negative impact from the beginning of the Russia-Ukraine conflict in 2022.

Current wording

Operating income for the year ended December 31, 2024 was $51.5 million, an increase of 25% compared to 2023. Operating margins increased to 15% in 2024 from 12% in 2023. The increase in operating income and operating margins in 2024 was primarily due to high operating margins associated with the incremental revenue of $12.8 million in 2024 and continued improvement in utilization of our global laboratory network.

Previous wording

Production Enhancement’s operations are largely focused on complex completions in unconventional, tight-oil reservoirs in the U.S. as well as conventional projects across the globe. U.S. onshore drilling and completion activities peaked in 2022, after the COVID-19 pandemic, but declined in 2023 and declined further in 2024. The decline in drilling and completion activity was primarily due to the weakening of both crude oil and natural gas commodity prices in 2023, and oil and gas producing companies remain focused on return of investment versus growing production, and were more disciplined with their annual production growth plans. As a result, average rig count in the U.S. onshore market declined by 13% in 2024 compared to 2023.

Current wording

Production Enhancement’s operations are largely focused on complex completions in unconventional, tight-oil reservoirs in the U.S. as well as conventional projects across the globe. U.S. onshore drilling and completion activities peaked in 2022, after the COVID-19 pandemic, but declined in 2023 through 2025. The decline in drilling and completion activity was primarily due to the weakening of both crude oil and natural gas commodity prices in 2023. Oil and gas operators continue to remain focused on return of investment versus growing production, and as a result have continued to remain more disciplined with their annual production growth plans. In 2025, the U.S. land based average rig count decreased by 6% from 2024’s level, as a result of lower crude oil prices in 2025. However, the average natural gas prices rebounded in 2025 by approximately 61% from 2024, which resulted in some growth in rig count working in natural gas basins and helped offset some of the overall decline in total land-based rig count. The average rig count in the U.S. onshore market declined by 13% in 2024 compared to 2023.

Previous wording

Revenue from the Production Enhancement operating segment for the year ended December 31, 2024 was $177.7 million, a slight increase of 1% compared to 2023, primarily due to a higher level of service revenue associated with strong growth in well completion diagnostic services in 2024. This increase was substantially offset by lower activity and product sales into the U.S. onshore market. Revenue from the Production Enhancement operating segment was $176.4 million in 2023, a decrease of 3% compared to 2022. In 2023, the decrease in drilling and completion activities in the U.S. land market is primarily due to operating companies reduced activity in 2023 as they were ahead of schedule in their annual drilling programs due to efficiencies gained in drilling and completing wells. Operators continue to remain focused on return of investment versus growing production, as discussed above.

Current wording

Revenue from the Production Enhancement operating segment of $178.8 million for the year ended December 31, 2025, increased 1% compared to 2024. The increase in revenue is primarily due to a higher level of service revenue associated with strong growth in well completion diagnostic services in 2025 as natural gas prices rebounded, substantially offset by lower product sales in the U.S. land market and certain international markets in 2025.

Previous wording

Operating income for the year ended December 31, 2024 was $6.6 million, a decrease of 47%. Operating margins decreased to 3.7% in 2024 from 7.1% in 2023. The decrease in operating income and operating margin in 2024, was primarily due to 1) a charge of $3.3 million recorded in 2024 associated with inventory and other related asset write-downs, 2) a loss on sales of $0.6 million associated with the disposal of a building, and 3) severance and other charges of $0.5 million incurred in 2024, and no similar transactions in 2023. Operating income was $12.5 million in 2023 compared to $16.4 million in 2022. Operating margin of 7.1% in 2023 decreased from 9.0% in 2022. The decrease in operating income and operating margins in 2023, correlates to the decrease in revenue and higher absorption of fixed costs on a lower revenue base, as well as increased cost associated with inflation on materials and shipping costs.

Current wording

Operating income for the year ended December 31, 2024 was $6.6 million, a decrease of 47% when compared to 2023. Operating margins decreased to 4% in 2024 from 7% in 2023. The decrease in operating income and operating margin in 2024, was primarily due to inventory and other related asset write-downs, loss on the sale of a building, and severance and other charges as discussed above incurred in 2024, and no similar transactions in 2023.

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 our operating needs, capital expenditures, dividends and 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, working capital, capital expenditures, 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 our operating needs, capital expenditures, dividends and discretionary share repurchases. 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, working capital, capital expenditures, dividends, discretionary share repurchases and future acquisitions. The Company will continue to monitor and evaluate the availability of debt and equity markets.

Previous wording

We were a holding company incorporated in the Netherlands, and after the Redomestication Transaction completed in May 2023, 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 December 31, 2024, $18.4 million of our $19.2 million of cash balances was held by our foreign subsidiaries.

Current wording

We are a holding company incorporated in Delaware and 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 December 31, 2025, $22.2 million of our $22.7 million of cash balances was held by our foreign subsidiaries.

Previous wording

The Company continues to maintain a quarterly dividend of $0.01 per share.

Current wording

The Company maintains a quarterly dividend program of $0.01 per share.

Previous wording

Comparing the year ended December 31, 2024, to the year ended December 31, 2023, net income decreased $4.9 million, however, cash provided by operating activities increased $31.6 million. In 2024, improvement in cash provided by operating activities was primarily driven by improved operational working capital of $34.7 million compared to 2023, partially offset by higher cash used in prepaid expenses and other assets in 2024 versus 2023. Comparing the year ended December 31, 2023 to the year ended December 31, 2022, net income increased $17.4 million, however, cash provided by operating activities was relatively flat between these periods. Net income for the year ended December 31, 2023 includes a non-cash tax benefit of approximately $11.6 million associated with the Company’s Redomestication Transaction, partially offset by a decrease of $3.3 million in net deferred tax assets, and non-cash investment gains of $5.0 million in 2023 compared to non-cash losses of $5.1 million in 2022.

Current wording

Comparing the year ended December 31, 2025, to the year ended December 31, 2024, net income decreased $1.8 million while cash provided by operating activities decreased $19.4 million. The decrease in cash provided by operating activities was primarily due to: 1) higher levels of operational working capital utilization as accounts receivable increased $5.0 million in 2025 compared to an increase of $3.6 million in 2024; 2) the Company’s efforts in inventory management continued in 2025, as a result inventory was further reduced by $2.6 million in 2025 after a larger reduction of $9.4 million in 2024; and 3) higher net cash used in unearned revenues of $3.8 million in 2025 compared to net cash provided of $4.6 million in 2024. Comparing the year ended December 31, 2024, to the year ended December 31, 2023, net income decreased $4.9 million, however, cash provided by operating activities increased $31.6 million. In 2024, improvement in cash provided by operating activities was primarily driven by a decrease in operational working capital which increased cash flow by $34.7 million compared to 2023. The improvements in working capital and associated cash flow in 2024 was partially offset by higher cash used in prepaid expenses and other assets in 2024 versus 2023.

Previous wording

Cash used in investing activities for the year ended December 31, 2024 of $6.4 million was driven primarily by funding capital expenditures of $13.0 million offset by: 1) $1.7 million of proceeds from sale of assets, 2) $2.1 million of insurance recovery proceeds on property, plant and equipment associated with the fire incident in one of our facilities in the U.K., and 3) $2.8 million received on company owned life insurance policies. Cash used in investing activities for the year ended December 31, 2023 of $6.7 million was driven primarily by funding capital expenditures of $10.6 million offset by $3.4 million of net proceeds received on company owned life insurance policies and $0.5 million of proceeds from sales of assets. Cash used by investing activities for the year ended December 31, 2022 of $3.9 million was primarily due to funding capital expenditures of $10.2 million, offset by $2.1 million of proceeds received from sale of assets and net proceeds of $4.2 million received from insurance and company-owned life insurance policies.

Current wording

Cash used in investing activities for the year ended December 31, 2025 of $2.2 million was driven by $14.6 million of capital expenditures for normal operations and rebuilding of the Aberdeen, U.K. facility, and $1.2 million of net cash used for business acquisitions in 2025. The cash used in investing activities was substantially offset by: 1) $3.0 million of proceeds from sale of assets; and 2) $10.0 million of proceeds recovered through insurance associated with the fire incident at the Aberdeen, U.K. facility. Cash used in investing activities for the year ended December 31, 2024 of $6.4 million was driven primarily by funding capital expenditures of $13.0 million offset by: 1) $1.7 million of proceeds from sale of assets; 2) $2.1 million of proceeds recovered through insurance associated with the fire incident as previously discussed.; and 3) $2.8 million received on company owned life insurance policies. Cash used in investing activities for the year ended December 31, 2023 of $6.7 million was driven primarily by funding capital expenditures of $10.6 million offset by $3.4 million of net proceeds received on company owned life insurance policies and $0.5 million of proceeds from sales of assets.

Previous wording

Cash used in financing activities in 2024 of $46.0 million was primarily due to: 1) a net reduction in debt of $38 million, 2) dividends paid of $1.9 million, and 3) repurchase of common stock of $5.3 million. Cash used in financing activities in 2023 of $18.4 million was primarily due to: 1) a net reduction in debt of $9.0 million, 2) debt issuance costs of $1.3 million primarily associated with the issuance of the 2023 Senior Notes, 3) cash paid for costs incurred in the Redomestication Transaction of $4.1 million, 4) dividends paid of $1.9 million, and 5) repurchase of common stock of $2.2 million. Cash used in financing activities in 2022 of $23.4 million was primarily due to: 1) a net reduction in debt of $15.0 million, 2) debt issuance costs incurred of $2.2 million associated with renewing our credit facility in 2022, 3) dividends paid of $1.9 million, and 4) repurchase of common stock of $3.9 million.

Current wording

Cash used in financing activities for the year ended December 31, 2025 of $31.3 million was driven primarily by: 1) net reduction in debt of $15.0 million; 2) debt issuance cost of $1.7 million in renewing the Company’s credit facility; 3) dividends paid of $1.9 million; and 4) repurchase of common stock of $12.4 million. Cash used in financing activities in 2024 of $46.0 million was primarily due to: 1) a net reduction in debt of $38.0 million, 2) dividends paid of $1.9 million, and 3) repurchase of common stock of $5.3 million. Cash used in financing activities in 2023 of $18.4 million was primarily due to: 1) a net reduction in debt of $9.0 million, 2) debt issuance costs of $1.3 million primarily associated with the issuance of the 2023 Senior Notes, 3) $4.1 million for costs incurred in the Redomestication Transaction, 4) dividends paid of $1.9 million, and 5) repurchase of common stock of $2.2 million.

Previous wording

During 2024, we repurchased 286,440 shares of our common stock for an aggregate amount of $5.3 million, or an average price of $18.52 per share. See Note 14 - Equity of the Notes to the Consolidated Financial Statements for additional information. We believe our share repurchase program has been beneficial to our shareholders over the longer term. Our share price has increased from $4.03 per share in 2002, when we began to repurchase shares, to $17.31 per share on December 31, 2024, an increase exceeding 300%. The 1% stock buyback excise tax may apply to the shares repurchased under our share purchase program. The amount subject to the excise tax generally is the fair market value of stock repurchased by us net of the fair market value of any stock issued by us during such taxable year.

Current wording

During 2025, we made discretionary repurchases of 1,194,685 shares of our common stock for an aggregate amount of $15.5 million, or an average price of $12.96 per share. See Note 13 - Equity of the Notes to the Consolidated Financial Statements for additional information. We believe our discretionary share repurchases have been beneficial to our shareholders over the longer term. Our share price has increased from $4.03 per share in 2002, when we began to repurchase shares, to $16.03 per share on December 31, 2025, an increase of approximately 300%. The 1% stock buyback excise tax may apply to our discretionary shares repurchases. The amount subject to the excise tax generally is the fair market value of stock repurchased by us net of the fair market value of any stock issued by us during such taxable year.

Previous wording

We utilize the non-GAAP financial measure of free cash flow to evaluate our cash flows and results of operations. Free cash flow is defined as net cash provided by operating activities (which is the most directly comparable U.S. GAAP measure) less cash paid for capital expenditures. Management believes that free cash flow provides useful information to investors regarding the cash available in the period that was in excess of our needs to fund our capital expenditures and operating activities. Free cash flow is not a measure of operating performance under U.S. GAAP and should not be considered in isolation nor construed as an alternative to operating income, net income or cash flows from operating, investing or financing activities, each as determined in accordance with U.S. GAAP. Free cash flow does not represent residual cash available for distribution because we may have other non-discretionary expenditures that are not deducted from the measure. Moreover, since free cash flow is not a measure determined in accordance with U.S. GAAP and thus is susceptible to varying interpretations and calculations, free cash flow, as presented, may not be comparable to similarly titled measures presented by other companies. The following table reconciles this non-GAAP financial measure to the most directly comparable measure calculated and presented in accordance with U.S. GAAP (in thousands):

Current wording

We utilize the non-generally accepted accounting principles (“GAAP”) financial measure of free cash flow to evaluate our cash flows and results of operations. Free cash flow is defined as net cash provided by operating activities (which is the most directly comparable U.S. GAAP measure) less cash paid for capital expenditures. Management believes that free cash flow provides useful information to investors regarding the cash available in the period that was in excess of our needs to fund our capital expenditures and operating activities. Free cash flow is not a measure of operating performance under U.S. GAAP and should not be considered in isolation nor construed as an alternative to operating income, net income or cash flows from operating, investing or financing activities, each as determined in accordance with U.S. GAAP. Free cash flow does not represent residual cash available for distribution because we may have other non-discretionary expenditures that are not deducted from the measure. Moreover, since free cash flow is not a measure determined in accordance with U.S. GAAP and thus is susceptible to varying interpretations and calculations, free cash flow, as presented, may not be comparable to similarly titled measures presented by other companies. The following table reconciles this non-GAAP financial measure to the most directly comparable measure calculated and presented in accordance with U.S. GAAP (in thousands):

Previous wording

Free cash flow increased significantly by $29.2 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to improvement in our operational working capital as discussed above, offset by a slightly higher level of capital spending associated with replacing equipment and restoring the facility that were damaged in the fire at one of our facilities in the U.K. that occurred in 2024.

Current wording

Free cash flow decreased by $18.7 million for the year ended December 31, 2025 compared to 2024, primarily due to higher cash used in our working capital as discussed above, offset by slightly lower capital expenditures for operations in 2025. Free cash flow increased significantly by $30.3 million for the year ended December 31, 2024 compared to 2023, primarily due to improvement in our operational working capital as discussed above. Capital expenditures for operations excludes capital expenditures of $3.4 million and $1.1 million for the years ended December 31, 2025 and 2024, respectively, associated with the rebuilding of the Aberdeen, U.K. facility that was impacted by a fire incident and is covered by insurance.

Previous wording

Senior Notes, Credit Facility and Available Future Liquidity

Current wording

Credit Facility, Senior Notes and Available Future Liquidity

Previous wording

We, along with our wholly owned subsidiary Core Laboratories (U.S.) Interests Holdings, Inc. (“CLIH”) as issuer, have senior notes that were issued through private placement transactions. Additionally, we, along with 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 December 31, 2024, the Credit Facility has an available borrowing capacity of approximately $106.1 million.

Current wording

We, along with our wholly owned subsidiary Core Laboratories (U.S.) Interests Holdings, Inc. (“CLIH”), have a secured credit facility, which we renewed on July 22, 2025 as the Ninth Amended and Restated Credit Agreement (as amended, the “Credit Facility”) for an aggregate borrowing commitment of $150.0 million with a $50.0 million “accordion” feature. Draws up to $100.0 million are available in the form of a revolving credit facility, and a single draw of $50.0 million is available in the form of a delayed draw term loan (“DDTL”) through January 12, 2026. As of December 31, 2025, the Credit Facility has an available borrowing capacity of approximately $136.0 million. Additionally, we, along with CLIH as issuer, have senior notes that were issued through private placement transactions (“Senior Notes”). On January 12, 2026, we made a draw of $50.0 million on the DDTL to repay the 2021 Senior Notes Series A in the amount of $45.0 million, which matured on that date.

Previous wording

Our debt instruments are summarized in the following table (in thousands):

Current wording

These debt instruments are summarized in the following table (in thousands):

Previous wording

In accordance with the terms of the Credit Facility, our leverage ratio is 1.31, and our interest coverage ratio is 6.74, each for the period ended December 31, 2024. We are in compliance with all covenants contained in our Credit Facility and Senior Notes. Certain of our material, wholly owned subsidiaries, are guarantors or co-borrowers under the Credit Facility and Senior Notes. See Note 11 - Long-Term Debt, net of the Notes to the 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 7.79, each for the period ended December 31, 2025. We are in compliance with all covenants contained in our Credit Facility and Senior Notes as of December 31, 2025. Certain of our material, wholly owned subsidiaries, are guarantors or co-borrowers under the Credit Facility and Senior Notes. The Company determined certain prior period corrections, as disclosed in Note 2 - Summary of Significant Accounting Policies-Prior Period Immaterial Correctionsof the Notes to the Consolidated Financial Statements, did not impact any financial covenants under the terms of the Company’s Credit Facility or Senior Notes.

Previous wording

See Note 15 - Derivative Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements for additional information regarding interest rate swap agreements we have entered to fix the underlying risk-free rate on our Credit Facility and the 2023 Senior Notes.

Current wording

See Note 14 - Derivative Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements for additional information regarding interest rate swap agreements we have entered to fix the underlying risk-free rate on the 2023 Senior Notes.