Core Laboratories Inc. /DE/
For the period ended Mar 31, 2026. Filed May 1, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 1, 2026
CLB$8.84-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-23.
0001193125-25-248736
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-01.
0001193125-26-198109
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 96 previous paragraphs and 90 current paragraphs.
42 unchanged; 22 reworded; 26 added; 30 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
Currently, global oil inventories are low relative to historical levels, and with continued supply restrictions from the Organization of the Petroleum Exporting Countries and other oil producing nations (“OPEC+”) global supply is expected to be managed and maintained at a level to meet or exceed forecasted growth in oil demand for the next few years. During 2023 and 2024, OPEC+ and its key member, Saudi Arabia, announced several mandatory and voluntary reductions in production. 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 of a surplus in supply causing global inventory levels of crude oil to rise. In May 2025, OPEC+ began to gradually increase production and unwind voluntary production cuts through September 2026, which in turn could create a surplus in supply and lead to even lower commodity prices.
Current report
Recent geopolitical developments, including the escalation of armed conflict in the Middle East, have dramatically shifted the crude oil supply-demand balance. On February 28, 2026 the United States and Israel initiated air strikes against Iranian military targets and leadership. Since then, retaliation by Iran against United States and Israeli interests in the Middle East has been widespread. As of the date of the filing of this Quarterly Report, military activity and hostilities continue to escalate in the Middle East, and the situation throughout the region remains volatile, with the potential for continued escalation into a broader and more sustained regional conflict. While the Company believes the fundamentals for energy-related services remain stable, near-term volatility in commodity prices meaningfully raises the level of uncertainty. The Company is monitoring developments with respect to the ongoing military conflict with Iran, including the impact on global commodity prices and potential shipping and logistics disruptions, which could affect our customers and their activity levels in the region.
Current report
“NM” means not meaningful
Current report
*Percentage based on applicable revenue rather than total revenue
Current report
Current ratio is calculated as follows: current assets divided by current liabilities.
Current report
“NM” means not meaningful
Current report
*Percentage based on applicable revenue rather than total revenue
Current report
Current ratio is calculated as follows: current assets divided by current liabilities.
Current report
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 March 31, 2026, service revenue was $94.3 million, a decrease of 1% year-over-year and a decrease of 12% sequentially. Year-over-year, revenues decreased primarily due to lower activity levels in the international markets partially offset by increased activity in the U.S. market. Revenue was negatively impacted by the ongoing geopolitical conflicts in the Middle East, Russia and Ukraine, and expanded sanctions previously discussed, which disrupted our client activity, field access and laboratory operations across certain international markets. The supply-chain disruptions, delays and rerouting of crude oil and derived products through the Strait of Hormuz negatively impacted our laboratory assay services and regional studies. Additionally, severe weather across North America, Europe and the Mediterranean region, negatively impacted certain operations and delayed our client activity.
Current report
Sequentially, the decrease in service revenue was primarily due to lower demand for laboratory assay services in several international regions. As discussed above, revenue has been impacted by the ongoing geopolitical conflicts, particularly the Middle East, expanded sanctions that have caused disruptions to certain energy infrastructure, such as restricted field access, temporary declines in the trading and maritime transportation of crude oil and derived products, as well as the weather events across several regions discussed above.
Current report
Cost of services was $76.1 million for the three months ended March 31, 2026, an increase of 4% year-over-year and a decrease of 5% sequentially. The year-over-year increase in cost of services was primarily due to 1) higher shipping and insurance costs resulting from the geopolitical conflicts; and 2) an unfavorable effect of exchange rates on costs denominated in foreign currency, such as the Euro and British Pound, resulting from the devaluation of the U.S. dollar during these periods, causing higher employee compensation and certain other operating costs in some international regions.
Current report
Sequentially, the decrease in cost of services is primarily due to a decrease in service revenue partially offset by the increase in employee compensation and certain other operating costs discussed above.
Current report
Cost of services expressed as a percentage of service revenue was 81% for the three months ended March 31, 2026, compared to 77% for the same period in the prior year and 75% for the prior quarter and was primarily driven by lower revenue during the three months ended March 31, 2026 as client projects have been delayed or cancelled in the Middle East region as a result of the geopolitical conflict which escalated during the three months ended March 31, 2026. Although service revenue declined, the Company still incurred employee compensation and fixed overhead costs which increased cost of services as a percentage of service revenue. In addition, employee compensation and operating costs were higher due to changes in the exchange rates as discussed above.
Current report
Cost of product sales was $26.0 million for the three months ended March 31, 2026, a decrease of 2% year-over-year and 11% sequentially. The year-over-year and sequential decrease in cost of product sales were in line with changes in product sales revenue.
Current report
Cost of product sales expressed as a percentage of product sales revenue was 94% for the three months ended March 31, 2026, compared to 93% for the same period in the prior year and compared to 94% in the prior quarter. Changes in cost of product sales expressed as a percentage of product sales revenue year over year was affected by absorption of fixed costs on changes in revenue base and continued increase in certain material and logistic costs during the three months ended March 31, 2026.
Current report
G&A expense for the three months ended March 31, 2026, increased $4.1 million compared to the prior quarter primarily due to the acceleration of stock compensation expense for retirement eligible executives of $3.7 million in 2026.
Current report
Interest expense for the three months ended March 31, 2026, was $2.9 million and increased $0.3 million or 11% for both year-over-year and sequentially. The year-over-year and sequential increases are primarily due to borrowings of $50.0 million under the delayed draw term loan at higher variable interest rates used to repay the $45.0 million 2021 Senior Notes Series A at a lower fixed rate. Year over year, this was slightly offset by lower average borrowings and lower rates on our revolving credit facility.
Current report
Revenue from the Reservoir Description operating segment of $81.9 million for the three months ended March 31, 2026 increased 1% year-over-year and decreased 11% sequentially. Year-over-year revenue was slightly higher for reservoir rock and fluid analysis projects in the U.S. and laboratory crude assay services in the Europe region. However, sequentially, the recent conflict in the Middle East, coupled with ongoing geopolitical conflict in Russia and Ukraine, and the expanded sanctions previously discussed, further disrupted client activity and demand for our crude assay work and regional studies in certain international regions in the three months ended March 31, 2026.
Current report
Operating income of $1.1 million for the three months ended March 31, 2026, decreased year-over-year by $1.2 million and decreased $11.7 million sequentially. Operating margins were 1% for the three months ended March 31, 2026, compared to 3% for the same period in the prior year, and 14% sequentially. Year-over-year, despite a slight increase in revenue, the decrease in operating income and operating margins was primarily attributable to 1) increases in employee compensation and operating costs caused by unfavorable effects of exchange rates discussed above; and 2) a higher level of Corporate G&A expenses of $0.7 million absorbed in the segment. See discussion of General and Administrative Expense, above. These cost increases were partially offset by lower facility exit costs and certain asset write-downs totaling $0.6 million recorded during the three months ended March 31, 2026 compared to a total charge of $2.7 million on severance, facility exit costs and asset write-downs recorded for the three months ended March 31, 2025.
Current report
Sequentially, the decrease in operating income and operating margins was primarily due to 1) a decrease in revenue of $10.4 million in the three months ended March 31, 2026; 2) a total charge of $0.6 million associated with facility exit costs and certain asset write-downs recorded during the three months ended March 31, 2026 and no such costs recorded in prior quarter; and 3) a higher level of Corporate G&A expenses of $3.3 million absorbed in the segment. See discussion of General and Administrative Expense, above.
Current report
Revenue from the Production Enhancement operating segment of $39.9 million for the three months ended March 31, 2026, decreased 7% year-over-year and 13% sequentially. Year-over-year, the decrease was primarily due to lower product sales due to the decline in bulk shipments in the international market, while the U.S. land market was relatively flat. Sequentially, the decrease was primarily driven by a decrease in large customer bulk shipment orders in the international markets, as well as a decrease in US land market activity.
Current report
Sequentially, the decrease in operating income and margins was primarily driven by 1) a decrease in revenue of $6.1 million for the reasons discussed above; 2) increased materials and operational cost discussed above; and 3) a higher level of Corporate G&A expenses of $1.5 million absorbed in the segment. See discussion of General and Administrative Expense, above.
Current report
As of March 31, 2026, we had $22.8 million of cash and cash equivalents, compared to $22.7 million of cash and cash equivalents at December 31, 2025. As of March 31, 2026, $22.1 million of our $22.8 million of cash was held by our foreign subsidiaries.
Current report
Cash flows from operating activities were $4.0 million for the three months ended March 31, 2026. The decrease compared to the same period in the prior year was primarily due to lower operating activity and higher operating costs, as discussed above.
Current report
Other sources of cash during the three months ended March 31, 2026 include receipt of $1.2 million from the sale of property in Tulsa, Oklahoma. See “Credit Facility, Senior Notes and Available Future Liquidity” below regarding a net increase in our debt of $4.0 million.
Current report
Uses of cash during the three months ended March 31, 2026 include: 1) total capital expenditures of $4.9 million, which includes $1.4 million related to the replacement of assets damaged in the Aberdeen, U.K. fire incident which have been covered by insurance proceeds; 2) share repurchases of $4.0 million, which includes payments related to personal tax liabilities of participants in our stock-based compensation plan; and 3) quarterly dividend paid of $0.5 million.
Removed paragraphs (30)
Previous report
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 report
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 report
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 report
For the nine months ended September 30, 2025, service revenue was $292.4 million, relatively flat compared to the same period in the prior year. Year-over-year, the demand for laboratory crude-assay services and well completion diagnostic services continued to grow in the international markets. Additionally, reservoir rock and fluid analysis services have been negatively impacted due to the decline in international offshore commercial success rates for exploration and appraisal well projects, as discussed above.
Previous report
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 report
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 report
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 report
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 report
Sequentially, cost of product sales as a percentage of product sales increased due to higher absorption of fixed costs on a lower revenue base.
Previous report
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 report
G&A expense for the three months ended September 30, 2025, was comparable to the prior quarter and increased $0.2 million or less than 2%.
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
Revenue from the Reservoir Description operating segment of $255.4 million for the nine months ended September 30, 2025 decreased 2% from the same period in the prior year. The decreased revenue in 2025 is primarily due to lower revenue in reservoir rock and fluid analysis in the U.S., as discussed above. The decrease is partially offset by higher revenue in international laboratory crude-assay services and higher laboratory instrument sales in 2025.
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
The Company maintains the quarterly dividend of $0.01 per share.
Previous report
The following table summarizes cash flows (in thousands):
Previous report
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 report
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 report
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 report
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.
Reworded paragraphs (22)
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. 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.
Current wording
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 which could directly affect demand for our well completion services and products. 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 client projects will continue to 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 supply shortages and 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 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.
Current wording
The ongoing geopolitical conflicts between Russia and Ukraine and between the United States, Israel and Iran, 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. The effective closure of the Strait of Hormuz with the onset of military conflict in Iran has further exacerbated maritime trade flows of crude oil and derived products. Approximately 20% of global crude oil production passes through the Strait of Hormuz and a substantial portion of that crude oil remains stranded. These disruptions to the trading and maritime transport of crude oil directly impact demand for the Company’s associated laboratory assay services. Although demand for the Company’s laboratory assay services continued to increase during 2025, geopolitical conflict 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, 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.
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 in many of the onshore unconventional basins and offshore projects in the Gulf of Mexico. Outside the U.S. we continue to work on many smaller and large-scale projects analyzing crude oil and derived products in every major producing region of the world. Notable larger projects are in locations such as Guyana and Suriname located offshore South America, Australia, West Africa and the Middle East. Analysis and measurement of crude oil derived products 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.
Previous wording
Our major clients continue to focus on capital management, return on invested capital, free cash flow and returning capital to their shareholders, as opposed to a focus on production growth. The companies adopting value versus volume metrics tend to be the more technologically sophisticated operators and form the foundation of Core Lab’s worldwide client base. As oil and gas commodity prices stabilize in the mid-to-long-term, the Company expects our clients’ activities associated with increasing oil and gas reserves and production levels will continue to increase in the coming years.
Current wording
Our major clients continue to focus on capital management, return on invested capital, free cash flow, and returning capital to their shareholders, as opposed to a focus on production growth. The companies adopting value versus volume metrics tend to be the more technologically sophisticated operators and form the foundation of Core Lab’s worldwide client base. The Company expects our clients’ activities associated with increasing oil and gas reserves and production levels will continue to increase in the coming years.
Previous 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
Current wording
Operating Results for the Three Months Ended March 31, 2026 compared to the Three Months Ended March 31, 2025 and December 31, 2025
Previous 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.
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 March 31, 2026, product sales revenue of $27.5 million decreased 3% year-over-year and 12% sequentially. Year-over-year, the decrease was primarily due to the lower level of U.S. onshore drilling and completion activity and lower bulk shipments to international markets primarily due to delayed product shipments into the region impacted by the geopolitical conflicts discussed above.
Previous wording
Sequentially, the slight decrease was due to the lower level of U.S. onshore drilling and completion activity but was substantially offset by higher levels of bulk shipments to international markets.
Current wording
Sequentially, the decrease was due to the lower levels of bulk sales in the international markets but partially offset by increased product sales in the U.S.
Previous wording
G&A expense for the three months ended September 30, 2025, was $10.7 million, which increased $2.0 million, compared to the same period in 2024. The year-over-year increase was primarily due to higher stock compensation expense recorded in 2025. In 2024, a portion of stock compensation expense that was previously recognized was reversed to align with the expectations of vesting levels for certain performance share awards.
Current wording
G&A expense for the three months ended March 31, 2026, was $14.7 million, which increased $1.0 million, compared to the same period in 2025. The year-over-year increase was primarily due to higher stock compensation expense recorded in 2026 along with increased outside service costs.
Previous 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.
Current wording
Depreciation and amortization expense for the three months ended March 31, 2026, was $3.8 million, an increase of 1% year-over-year and 3% sequentially. The increase in depreciation and amortization expense compared to the prior year period and sequentially is primarily due to business acquisitions in 2025.
Previous 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.
Current wording
During the three months ended March 31, 2026 and 2025, 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 sold property in Tulsa, Oklahoma for a net gain of $0.9 million. In addition, 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 $0.6 million and $0.7 million, respectively.
Previous wording
Foreign exchange (gain) loss, net by currency 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
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.
Current wording
The Company recorded an income tax benefit of $(0.3) million for the three months ended March 31, 2026 compared to income tax expense of $1.7 million for the three months ended March 31, 2025. The effective tax rate for the three months ended March 31, 2026 and 2025, was 25.0% and 96.2%, respectively. The effective tax rate for the three months ended March 31, 2026, was primarily impacted by the earnings mix of jurisdictions subject to tax for the period and items discrete to the quarter. The effective tax rate for the three months ended March 31, 2025, was impacted by approximately $1.4 million of additional tax expense recorded for items discrete to the quarter. These discrete items are primarily associated with the finalization of certain tax jurisdictions’ return to provision assessments due to changes in estimates.
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 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.
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 March 31, 2026, was down by 7% year-over-year but was relatively flat sequentially. International rig count was down 1% year-over-year but increased by 2% sequentially.
Previous wording
Operating income of $4.4 million for the three months ended September 30, 2025, increased $1.1 million year-over-year, and increased $1.2 million sequentially. Operating margins for the three months ended September 30, 2025, were 9%, compared to operating margins of 7% year-over-year and sequentially. Year-over-year, the increase in operating income and margins was primarily driven by a different mix of revenue with higher well completion diagnostic service revenue that yields a higher margin. Sequentially, the increase in operating income and margins was primarily driven by incremental revenue of $2.4 million in the three months ended September 30, 2025.
Current wording
Operating income of $0.8 million for the three months ended March 31, 2026, decreased $0.7 million year-over-year, and decreased $2.2 million sequentially. Operating margins for the three months ended March 31, 2026, were 2%, compared to operating margins of 4% year-over-year and 7% sequentially. Year-over-year, the decrease in operating income and margins was primarily due to 1) a decrease in revenue of $2.8 million; and 2) continued increase in certain material and logistic costs during the three months ended March 31, 2026.
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 capital in the 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 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, capital expenditures, working capital, dividends, discretionary share repurchases 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 September 30, 2025, $22.2 million of our $25.6 million of cash was held by our foreign subsidiaries.
Current wording
We are a holding company incorporated in Delaware and 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.
Previous 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.
Current wording
Free cash flow for the three months ended March 31, 2026 was $0.5 million compared to $3.9 million for the same period in 2025. The net cash provided by operating activities of $4.0 million during the three months ended March 31, 2026 compared to $6.7 million for the same period in 2025 was primarily due to the factors as discussed in cash flow from operating activities above. Capital expenditures-operations, which exclude capital expenditures of $1.4 million associated with the Aberdeen, U.K. fire incident that are covered by insurance, increased by $0.7 million during the three months ended March 31, 2026 compared to the same period in the prior year.
Previous 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.
Current wording
We, along with our direct subsidiary Core Laboratories (U.S.) Interests Holdings, Inc. (“CLIH”), have a secured credit facility for an aggregate borrowing commitment of $150.0 million with a $50.0 million “accordion” feature (“Credit Facility”). Draws up to $100.0 million are available in the form of a revolving credit facility, and a single draw of $50.0 million was made in the form of a delayed draw term loan on January 12, 2026. The $50.0 million proceeds from the delayed draw term loan were primarily used to retire $45 million of the senior notes which matured on January 12, 2026, as discussed below. As of March 31, 2026, the Credit Facility has an available borrowing capacity of approximately $85.5 million.
Previous wording
Additionally, we along with CLIH as issuer, have senior notes outstanding that were issued through private placement transactions.
Current wording
Additionally, we along with CLIH as issuer, have senior notes outstanding that were issued through private placement transactions (“Senior Notes”). On January 12, 2026, we repaid the 2021 Senior Notes Series A with aggregate principal amount of $45.0 million upon the maturity date with the single draw of $50.0 million from the delayed draw term loan.
Previous wording
See Note 7 –Long-term debt, net of the Notes to the Interim Consolidated Financial Statements, for additional information regarding the Credit Facility.
Current wording
See Note 6 -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.
Previous 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.
Current wording
In accordance with the terms of the Credit Facility, our leverage ratio is 1.20, and our interest coverage ratio is 7.20, each for the period ended March 31, 2026. We are in compliance with all covenants contained in our Credit Facility and Senior Notes as of March 31, 2026. Certain of our material, wholly owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes.
Previous wording
See Note 11 -Derivative Instruments and Hedging Activities of the Notes to the Interim 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 10 -Derivative Instruments and Hedging Activities of the Notes to the Interim Consolidated Financial Statements, for additional information regarding interest rate swap agreements we have entered to fix the underlying risk-free rate on our 2023 Senior Notes Series A and B.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation and amortization and certain non-cash adjustments.
Previous report — wording carried elsewhere
Debt to Adjusted EBITDA ratio (as defined in our Credit Facility) is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, amortization, impairments, severance and certain non-cash adjustments.