Core Laboratories Inc. /DE/
For the period ended Jun 30, 2026. Filed Jul 30, 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.
Jun 30, 2026 · Filed Jul 30, 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 2026-03-31; filed 2026-05-01.
0001193125-26-198109
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0001193125-26-326345
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 90 previous paragraphs and 96 current paragraphs.
47 unchanged; 22 reworded; 25 added; 20 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 7 previous and 9 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 (25)
Current report
Sequentially, service revenue was flat primarily due to increased activity in several international regions offset by decreased activity in the U.S. markets.
Current report
For the six months ended June 30, 2026, service revenue was $188.5 million, a decrease of 1% compared to the same period in the prior year, primarily driven by a decline in the international markets due to the ongoing geopolitical conflicts in the Middle East and between Russia and Ukraine, and expanded sanctions as previously discussed. Additionally, severe weather events across North America, Europe, and the Mediterranean region occurring in the first quarter of 2026, negatively impacted certain operations and delayed our client activity in 2026.
Current report
Sequentially, the increase was primarily due to a significant increase in product sales for U.S. onshore completion activity, partially offset by lower level of shipments of manufactured laboratory equipment.
Current report
For the six months ended June 30, 2026, product sales revenue was $57.9 million, a decrease of 7% compared to the same period in the prior year, primarily due to lower level of shipments of manufactured laboratory equipment and bulk shipments to international markets, partially offset by increased sales in the U.S. onshore markets in 2026 compared to 2025.
Current report
Cost of services was $75.7 million for the three months ended June 30, 2026, an increase of 2% year-over-year and relatively flat sequentially. Cost of services expressed as a percentage of service revenue was 80% for the three months ended June 30, 2026, compared to 77% for the same period in the prior year and 81% for the prior quarter. The year-over-year increase in cost of services and cost of services expressed as a percentage of service revenue was driven by 1) the impact of the Middle East conflict, as the Company has maintained its cost structure in the region while revenue decreased significantly; and 2) higher laboratory supply costs associated with inflationary pressure.
Current report
Sequentially, changes in cost of services were in line with changes in service revenue. Cost of services as a percentage of service revenue was relatively flat but improved slightly primarily due to a slight decrease in employee compensation costs.
Current report
For the six months ended June 30, 2026, cost of services was $151.9 million, an increase of 3% compared to the same period in the prior year. Cost of services expressed as a percentage of service revenue increased to 81% from 77% when compared to the same period in the prior year. The increases are primarily due to lower service revenue as a result of the conflict in the Middle East and increased employee compensation and other operating costs, as discussed above.
Current report
Cost of product sales was $25.6 million for the three months ended June 30, 2026, a decrease of 14% year-over-year and 1% sequentially. Cost of product sales expressed as a percentage of product sales revenue was 85% for the three months ended June 30, 2026, compared to 87% for the same period in the prior year and compared to 94% in the prior quarter. The year-over-year decrease in cost of product sales was primarily driven by internal initiatives to reduce the costs of goods through manufacturing efficiencies and reducing overhead costs, and 2025 included a write-down of certain assets. Additionally, cost of product sales for the second quarter of 2026 benefited from the partial refund of tariffs previously imposed and paid on the importation of certain materials.
Current report
Sequentially, the decline in cost of product sales and cost of product sales expressed as a percentage of product sales revenue was due to 1) the tariff refunds received in the second quarter of 2026, as discussed above; and 2) improvement in absorption of fixed costs on a higher revenue base.
Current report
For the six months ended June 30, 2026, cost of product sales was $51.6 million, a decrease of 8% compared to the same period in the prior year. Cost of product sales expressed as a percentage of product sales revenue was 89% for the six months ended June 30, 2026, compared to 90% from the same period in the prior year. The decrease in cost of product sales was achieved in 2026 due to the internal initiatives to reduce cost of goods sold, and inventory write-down costs recorded in the prior year that did not recur in the current year, despite the decrease in revenue from the prior year. In addition, cost of product sales was slightly lower due to tariff refunds received in the second quarter of 2026, as discussed above.
Current report
For the six months ended June 30, 2026, G&A expense was $25.7 million which increased $1.6 million, compared to the six months ended June 30, 2025. The year-over-year increase was primarily due to an increase in stock compensation expense and contract labor costs, partially offset by lower other employee compensation costs.
Current report
Depreciation and amortization expense for the three months ended June 30, 2026, was $3.8 million, an increase of 4% year-over-year and 2% sequentially. Depreciation and amortization expense for the six months ended June 30, 2026, was $7.6 million, an increase of 3% year-over-year. The increases in depreciation and amortization expense for the three and six months ended June 30, 2026, compared to the prior year periods were primarily due to 1) additional amortization costs associated with business acquisitions in the fourth quarter of 2025; and 2) higher spending in capital expenditures in 2026. Sequentially, the slight increase was primarily due to higher spending in capital expenditures during the three months ended June 30, 2026.
Current report
In February 2024, we had a fire incident at our Aberdeen, U.K. facility, and we have recorded insurance recovery associated with business interruption and increase in cost of work of $1.0 million during the three and six months ended June 30, 2025.
Current report
Additionally, we recorded insurance recovery associated with loss on property and assets of $1.6 million during the three and six months ended June 30, 2025. Core Lab reached final settlement with the insurance company in September 2025.
Current report
In January 2026, we had storm damage at our Malta facility, and we have recorded a partial insurance settlement associated with business interruption and increase in cost of work of $0.2 million during the three and six months ended June 30, 2026.
Current report
Interest expense for the three months ended June 30, 2026, was $2.8 million an increase of 5% year-over-year and a decrease of 2% sequentially. For the six months ended June 30, 2026, interest expense increased $0.4 million or 8%. For the three and six months ended June 30, 2026, the year-over-year increase in interest expense is primarily due to higher variable interest rates on the $50.0 million term loan that was used to retire the fixed rate $45.0 million 2021 Senior Notes Series A in the first quarter of 2026. This was partially offset by lower average borrowings on our revolving credit facility.
Current report
Sequentially, the slight decrease in interest expense was primarily due to lower average borrowings on our revolving credit facility in the three months ended June 30, 2026.
Current report
Income Tax Expense
Current report
Revenue from the Reservoir Description operating segment of $160.7 million for the six months ended June 30, 2026, decreased 4% from the same period in the prior year. The decrease in revenue was primarily due to 1) the recent Middle East conflict that began in the first quarter of 2026; 2) decrease in manufactured laboratory equipment sales; and 3) the ongoing geopolitical conflict in Russia and Ukraine, as well as expanded sanctions as previously discussed.
Current report
Operating income of $3.7 million for the three months ended June 30, 2026, decreased year-over-year by $8.5 million and increased $2.5 million sequentially. Operating margins were 5% for the three months ended June 30, 2026, compared to 14% for the same period in the prior year, and 1% sequentially. Year-over-year, the decrease in operating income and operating margins was primarily attributable to 1) decremental revenue of $7.5 million primarily caused by the geopolitical conflicts mentioned above; 2) increases in employee compensation and other operating costs as discussed above; and 3) a gain on insurance recovery in prior year associated with the fire at the Aberdeen, U.K. facility of $2.5 million recorded in 2025, compared to $0.2 million gain on insurance recovery in 2026.
Current report
Operating income of $4.8 million for the six months ended June 30, 2026, decreased $9.7 million from the same period in the prior year. Operating margins were 3% for the six months ended June 30, 2026, compared to 9% for the same period in the prior year. The decreases in operating income and operating margins were primarily attributable to 1) decremental revenue of $6.5 million in 2026 primarily caused by the geopolitical conflicts mentioned above; and 2) a prior year insurance recovery associated with the fire at the Aberdeen, U.K. facility of $2.5 million recorded in the three months ended June 30, 2025.
Current report
Revenue from the Production Enhancement operating segment of $85.7 million for the six months ended June 30, 2026, decreased 1% from the same period in the prior year. The slight decrease in revenue was primarily driven by lower product sales to the international markets, partially offset by higher revenue in well completion diagnostic services in the U.S. in 2026.
Current report
Sequentially, the increase in operating income and margins was primarily driven by 1) incremental revenue of $6.0 million; 2) partial refund of tariffs received in 2026 as previously discussed; and 3) $1.3 million higher stock compensation expense allocation associated with the acceleration of stock compensation expense for retirement eligible employees that recorded in the first quarter of 2026.
Current report
Operating income of $6.0 million for the six months ended June 30, 2026, increased $1.4 million compared to the same period in the prior year. Operating margins for the six months ended June 30, 2026 of 7% increased compared to 5% from the same period in the prior year. The increase in operating income and margins was primarily due to 1) partial refund of tariffs received in 2026; and 2) a total charge of $1.3 million associated with employee severance, facility consolidation and inventory write-downs recorded in 2025 and no similar transactions in 2026.
Current report
Cash flows from operating activities were $11.8 million for the six months ended June 30, 2026, compared to $20.6 million for the same period in the prior year. The decrease compared to the same period in the prior year was primarily due to lower profitability during 2026, which has been primarily impacted by the Middle East conflict which began in the first quarter of 2026, as discussed above. These unfavorable factors were partially offset by improved efficiency in operational working capital management in 2026.
Removed paragraphs (20)
Previous 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.
Previous report
“NM” means not meaningful
Previous report
*Percentage based on applicable revenue rather than total revenue
Previous report
Current ratio is calculated as follows: current assets divided by current liabilities.
Previous report
“NM” means not meaningful
Previous report
*Percentage based on applicable revenue rather than total revenue
Previous report
Current ratio is calculated as follows: current assets divided by current liabilities.
Previous 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.
Previous report
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 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 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.
Previous report
Income Tax Expense (Benefit)
Previous 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.
Previous 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.
Previous 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.
Reworded paragraphs (22)
Previous wording
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 wording
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 and action by other military groups against United States and Israeli interests, including merchant vessels, 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.
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 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.
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 marginally improve 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, unless directly impacted by the conflicts mentioned above. 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 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 and Alaska. Outside the U.S., we continue to work on many small and large-scale projects analyzing rock, reservoir fluids, and crude oil and derived products and sell perforating systems and well diagnostic services in every major producing region of the world. Notable larger projects are in locations such as Guyana, Suriname located offshore South America, Australia, West Africa and the Middle East. Additionally, some of our major clients have increased their investment in projects to capture and sequester carbon dioxide.
Previous 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.
Current wording
The ongoing geopolitical conflicts between Russia and Ukraine and between the United States 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 fuels. The uncertainty related to the Strait of Hormuz and more recently the Red Sea 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 resulted in a reduction of 15% to 20% in the global cargo movement of crude oil and derived products during the second quarter of 2026 compared to the same period in the prior year. The decline in trading and maritime transport of crude oil directly impacts demand for the Company’s associated laboratory assay services. We have no way to predict the progress or outcome of these events, and any resulting government responses are fluid and beyond our control. Accordingly, the full impact of these events on our business is not known at this time.
Previous wording
Operating Results for the Three Months Ended March 31, 2026 compared to the Three Months Ended March 31, 2025 and December 31, 2025
Current wording
Operating Results for the Three Months Ended June 30, 2026 compared to the Three Months Ended June 30, 2025 and March 31, 2026 and for the Six Months Ended June 30, 2026 compared to the Six Months Ended June 30, 2025
Previous wording
Service revenue is primarily tied to activities associated with the exploration, appraisal, development and production of oil, gas and derived products outside the U.S. For the three months ended 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 wording
Service revenue is primarily tied to activities associated with the exploration, appraisal, development and production of oil, gas and derived products outside the U.S. For the three months ended June 30, 2026, service revenue was $94.3 million, a decrease of 2% year-over-year and flat 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. International revenue was negatively impacted by the Middle East conflict that began in the first quarter of 2026 and other ongoing geopolitical conflicts in the Middle East and between Russia and Ukraine. Sanctions previously discussed have disrupted the movement and trading patterns of crude oil and derived products as well as restricted our ability to perform services in certain international markets, primarily Russia. The limited transit through the Strait of Hormuz since the conflict began resulted in temporary supply-chain disruptions, delays and rerouting of crude oil and derived products, which has negatively impacted our laboratory assay services and regional studies.
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 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.
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 June 30, 2026, product sales revenue of $30.3 million decreased 11% year-over-year and increased 10% sequentially. Year-over-year, the decrease was primarily due to the non-recurrence of large shipments of manufactured laboratory equipment sales that occurred in the prior year quarter, as well as lower bulk shipments to certain international markets impacted by the geopolitical conflicts, as discussed above. The decrease in sales revenue was partially offset by increased U.S. onshore drilling and completion activity during the three months ended June 30, 2026.
Previous 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.
Current wording
G&A expense for the three months ended June 30, 2026, was $11.0 million, which increased $0.5 million, compared to the same period in 2025. The year-over-year increase was primarily due to changes in employee compensation and contract labor costs in these periods.
Previous wording
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 wording
G&A expense for the three months ended June 30, 2026, decreased $3.8 million compared to the prior quarter primarily due to the acceleration of stock compensation expense for retirement eligible employees of $3.7 million recorded in the first quarter of 2026.
Previous 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.
Current wording
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 during the six months ended June 30, 2026. In addition, we recognized write-downs of leasehold improvements, right of use assets and other assets and incurred lease termination and other exit costs of $0.6 million and $0.7 million during the six months ended June 30, 2026 and 2025, respectively.
Previous 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.
Current wording
The Company recorded an income tax expense of $0.5 million and $0.3 million for the three and six months ended June 30, 2026, compared to income tax expense of $1.9 million and $3.7 million for the three and six months ended June 30, 2025, respectively. The effective tax rate for the three and six months ended June 30, 2026, was 8.0% and 4.8%, respectively. The effective tax rate for the three and six months ended June 30, 2025, was 15.2% and 25.4%, respectively. The effective tax rate for three and six months ended June 30, 2026 was primarily impacted by the jurisdictional earnings mix subject to tax for the period and discrete benefits to the period. The effective tax rate for the three and six months ended June 30, 2025, was primarily impacted by the jurisdictional earnings mix subject to tax for the period, changes in uncertain tax positions in certain jurisdictions and discrete expenses in the period.
Previous wording
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 wording
Revenue from the Reservoir Description operating segment of $78.7 million for the three months ended June 30, 2026 decreased 9% year-over-year and 4% sequentially. Year-over-year, the decrease in revenue was primarily due to 1) a lower international revenue as a result of the continued conflicts in the Middle East, and in Russia and Ukraine, as well as the expanded sanctions previously discussed have disrupted client activity and demand for our laboratory assay work and regional studies; and 2) the non-recurrence of large shipments of manufactured laboratory equipment sales that occurred in the second quarter of 2025, partially offset by higher reservoir rock and fluid analysis projects in the U.S. during the three months ended June 30, 2026. Sequentially, the decrease in revenue was primarily due to the impact associated with the Middle East conflict and a lower level of manufactured laboratory equipment sales in the current quarter.
Previous wording
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 wording
Sequentially, despite lower revenues for the three months ended June 30, 2026, operating income and operating margins were increased primarily due to 1) $2.4 million recorded in the prior quarter associated with the acceleration of stock compensation expense for retirement eligible employees; and 2) a charge of $0.6 million recorded in the prior quarter associated with facility exit costs and certain asset write-downs and no similar transactions in the second quarter of 2026.
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 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.
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 June 30, 2026, declined by 3.1% year-over-year but was higher by 1.5% sequentially. International average rig count was down 2.0% year-over-year and 2.5% sequentially.
Previous wording
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 wording
Revenue from the Production Enhancement operating segment of $45.9 million for the three months ended June 30, 2026, increased 5% year-over-year and 15% sequentially. Year-over-year, the increase was primarily driven by continued growth in well diagnostic services in the U.S. and completion product sales in the U.S. land market, despite a lower average rig count in the U.S. land market. Sequentially, the increase was primarily driven by increased product sales associated with large customer bulk shipment orders in the international markets which were delayed from prior quarter and higher demand in U.S. land market activity. Additionally, the demand for our well diagnostic services continued to grow during the second quarter of 2026.
Previous 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.
Current wording
Operating income of $5.2 million for the three months ended June 30, 2026, increased $2.1 million year-over-year, and $4.4 million sequentially. Operating margins for the three months ended June 30, 2026, were 11%, compared to operating margins of 7% year-over-year and 2% sequentially. Year-over-year, the increase in operating income and margins was primarily due to 1) incremental revenue of $2.0 million; 2) partial refund of tariffs received in 2026 as previously discussed; and 3) improved absorption of fixed costs on a higher revenue base during the three months ended June 30, 2026.
Previous wording
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 wording
As of June 30, 2026, we had $22.7 million of cash and cash equivalents, compared to $22.7 million of cash and cash equivalents at December 31, 2025. As of June 30, 2026, $21.8 million of our $22.7 million of cash was held by our foreign subsidiaries.
Previous wording
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 wording
Other sources of cash during the six months ended June 30, 2026, include receipt of $3.1 million from the sale of assets, primarily associated with sales of property in Tulsa, Oklahoma of $1.2 million and $0.3 million proceeds from life insurance policies. See also “Credit Facility, Senior Notes and Available Future Liquidity” below regarding a net increase in our debt of $3.4 million.
Previous wording
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.
Current wording
Uses of cash during the six months ended June 30, 2026 include: 1) total capital expenditures of $10.7 million, which includes $2.5 million related to the rebuilding of the facility and replacement of assets damaged in the Aberdeen, U.K. fire incident which have been covered by insurance proceeds received in 2025; 2) share repurchases of $6.7 million, which includes payments related to personal tax liabilities of participants in our stock-based compensation plan; and 3) quarterly dividends paid of $0.9 million.
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 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 GAAP and should not be considered in isolation nor construed as an alternative to operating income, net income (loss) or cash flows from operating, investing or financing activities, each as determined in accordance with 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 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 GAAP (in thousands):
Current 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 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 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 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 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 GAAP (in thousands):
Previous 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.
Current wording
Free cash flow for the six months ended June 30, 2026 was $3.6 million compared to $14.3 million for the same period in 2025. The net cash provided by operating activities of $11.8 million during the six months ended June 30, 2026 compared to $20.6 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 $2.5 million associated with the Aberdeen, U.K. fire incident that are covered by insurance, increased by $1.9 million during the six months ended June 30, 2026 compared to the same period in the prior year.
Previous 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.
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 June 30, 2026, the Credit Facility has an available borrowing capacity of approximately $85.6 million.
Previous 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.
Current wording
In accordance with the terms of the Credit Facility, our interest coverage ratio is 6.53 and our leverage ratio is 1.30 each for the period ended June 30, 2026. We are in compliance with all covenants contained in our Credit Facility and Senior Notes as of June 30, 2026. Certain of our material, wholly owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes.
Rearranged current paragraphs (2)
Current report — wording carried from 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.
Current report — wording carried from 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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.