Core Laboratories Inc. /DE/

Previous wording

References to “Core Lab”, “Core Laboratories”, the “Company”, “we”, “our” and similar phrases are used throughout this Quarterly Report and relate collectively to Core Laboratories Inc. and its consolidated affiliates.

Current wording

References to “Core Lab”, “Core Laboratories”, the “Company”, “we”, “our” and similar phrases are used throughout this Quarterly Report and relate collectively to Core Laboratories Inc. and its consolidated subsidiaries.

Previous wording

Reservoir Description: Encompasses the characterization of petroleum reservoir rock and reservoir fluids samples to increase production and improve recovery of crude oil and natural gas from our clients’ reservoirs. We provide laboratory-based analytical and field services to characterize properties of crude oil and crude oil-derived products to the oil and gas industry. Services associated with these fluids include determining the quality and measuring the quantity of the reservoir fluids and their derived products, such as gasoline, diesel and biofuels. We also provide proprietary and joint industry studies based on these types of analyses and manufacture associated laboratory equipment. In addition, we provide reservoir description capabilities that support various activities associated with energy transition projects, including services that support carbon capture, utilization and storage, geothermal projects, and the evaluation and appraisal of mining activities around lithium and other elements necessary for energy storage.

Current wording

Reservoir Description: Encompasses the characterization of petroleum reservoir rock and reservoir fluids samples to increase production and improve recovery of crude oil and natural gas from our clients’ reservoirs. We provide laboratory-based analytical and field services to characterize properties of crude oil and crude oil-derived products to the oil and gas industry. Services associated with these fluids include determining the quality and measuring the quantity of the reservoir fluids and their derived products, such as gasoline, diesel and biofuels. We also provide proprietary and joint industry studies based on these types of analyses and manufacture associated laboratory instrumentation. In addition, we provide reservoir description capabilities that support various activities associated with energy transition projects, including services that support carbon capture, utilization and storage, geothermal projects, and the evaluation and appraisal of mining activities around lithium and other elements necessary for energy storage.

Previous 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.

Current wording

The ongoing geopolitical conflicts in the Middle East and between Russia and Ukraine, along with associated and expanded United States, European Union, and United Kingdom sanctions on Iran and Russia, as well as secondary sanctions on buyers of Iranian and Russian crude and derived products continue to cause disruptions to traditional maritime supply chains and the trading of crude oil and derived products, such as fuels. The decline in trading and maritime transport of crude oil has directly impacted, and is expected to continue to impact, demand for the Company’s associated laboratory assay services.

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 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.

Current wording

The Company is monitoring developments with respect to these conflicts, including the impact on global commodity prices and potential shipping and logistics disruptions, which could affect our customers and their activity levels in and outside the region. As of the date of the filing of this Quarterly Report, military activity and hostilities continue in the Middle East, and the situation throughout the region remains volatile, with the potential for continued escalation into a broader and more sustained conflict. Iran and its military proxies continue to target critical infrastructure in the region, including refining and pipeline facilities, maritime ports and civilian airports. 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

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.

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 analysis 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 America and Alaska. Outside the U.S., we continue to work on both 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 underway in the South Atlantic Margin, the Asia-Pacific region, West Africa and the Middle East. Additionally, some of our major international clients continue to invest in carbon capture and sequestration projects.

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. 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 clients continue to focus on capital management, return on invested capital, free cash flow, and returning capital to their shareholders, however there are also indications that replacement of reserves is becoming an important topic. 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 increasing client activity levels in the coming years focused both on expanding oil and gas reserves and improving production volumes.

Previous 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

Current wording

Operating Results for the Three Months Ended September 30, 2026 compared to the Three Months Ended September 30, 2025 and June 30, 2026 and for the Nine Months Ended September 30, 2026 compared to the Nine Months Ended September 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 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.

Current wording

Service revenue is primarily tied to activities associated with the exploration, appraisal, development and production of oil, gas and derived products outside the U.S. For the three months ended September 30, 2026, service revenue was $96.0 million, a decrease of 5% year-over-year and an increase of 2% sequentially. Year-over-year, revenue decreased primarily due to lower activity levels in the international markets. International revenue was negatively impacted by the Middle East Conflict that began in the first quarter of 2026 and the ongoing geopolitical conflict between Russia and Ukraine. The limited transit of crude oil through the Strait of Hormuz since the Middle East Conflict began has 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. 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. Additionally, demand for our well completion diagnostic services declined during the third quarter of 2026 due to delays in certain client projects in the Gulf of America. These effects were partially offset by higher revenue from reservoir rock and fluid analysis projects in the U.S. and South America during the three months ended September 30, 2026.

Previous wording

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 wording

For the nine months ended September 30, 2026, service revenue was $284.5 million, a decrease of 3% compared to the same period in the prior year, primarily driven by a decline in the international markets due to the Middle East Conflict and the ongoing geopolitical conflict 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.

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 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.

Current wording

Product sales are tied to both 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, 2026, product sales revenue was $36.1 million, an increase of 8% year-over-year and 19% sequentially. Year-over-year, revenue increased primarily due to the increased U.S. onshore drilling and completion activity and continued market penetration of our proprietary perforating products. The increase was partially offset by a lower level of bulk product sales to international markets in 2026.

Previous wording

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 wording

For the nine months ended September 30, 2026, product sales revenue was $93.9 million, a decrease of 2% compared to the same period in the prior year, primarily due to large shipments of manufactured laboratory instrumentation sales and bulk product sales to international markets that occurred in 2025, which did not repeat in 2026. These declines in instrumentation and international product sales were partially offset by increased product sales in the U.S. onshore markets in 2026 compared to 2025, as previously discussed.

Previous wording

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 wording

For the nine months ended September 30, 2026, cost of services was $226.9 million, an increase of 2% compared to the same period in the prior year. Cost of services expressed as a percentage of service revenue increased to 80% from 76% when compared to the same period in the prior year. The increases are primarily due to lower revenue as a result of the geopolitical conflicts and associated sanctions, as discussed above.

Previous wording

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 wording

Sequentially, the increase in cost of product sales is in line with the increase in product sales. Cost of product sales expressed as a percentage of product sales revenue improved due to absorption of fixed costs on a higher revenue base and benefited from continued internal initiatives to improve manufacturing efficiencies, as discussed above.

Previous wording

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 wording

For the nine months ended September 30, 2026, cost of product sales was $81.7 million, a decrease of 5% compared to the same period in the prior year. Cost of product sales expressed as a percentage of product sales revenue was 87% for the nine months ended September 30, 2026, compared to 90% for the same period in the prior year. The decrease in cost of product sales and improvement on cost of product sales as a percentage of product sales revenue was achieved in 2026 due to the internal initiatives to improve manufacturing efficiencies and an inventory write-down recorded in the prior year that did not recur in the current year. Additionally, cost of product sales was lower due to tariff refunds received in 2026 associated with tariff cost on certain imported material incurred in 2025.

Previous 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.

Current wording

G&A expense for the three months ended September 30, 2026, was $11.3 million, which increased $0.6 million year-over-year and $0.3 million sequentially. The year-over-year increase was primarily due to changes in employee compensation and contract labor costs in these periods. Sequentially, the increase was primarily due to a higher loss of $0.3 million associated with changes in market value on the Company’s investment in corporate life insurance policies.

Previous wording

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 wording

Depreciation and amortization expense for the three months ended September 30, 2026, was $3.7 million, compared to $3.6 million in 2025 and $3.8 million in the prior quarter. Depreciation and amortization expense for the nine months ended September 30, 2026, was $11.3 million, compared to $11.0 million in 2025. The increases in depreciation and amortization expense for the three and nine months ended September 30, 2026, compared to the prior year periods were primarily due to higher spending in capital expenditures to replace fully depreciated assets. Sequentially, the slight decrease was primarily due to fixed asset disposals during the second quarter of 2026.

Previous 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.

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 nine months ended September 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 nine months ended September 30, 2026 and 2025, respectively.

Previous wording

In February 2024, we had a fire incident at our Aberdeen, U.K. facility, and we have recorded insurance recovery associated with business interruption and increase in cost of work of $1.0 million during the three and six months ended June 30, 2025.

Current wording

In February 2024, we had a fire incident at our Aberdeen, U.K. facility, and we have recorded insurance recovery associated with business interruption and other associated costs of $0.1 million and $1.0 million during the three and nine months ended September 30, 2025, respectively.

Previous wording

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 wording

Additionally, we recorded a net insurance recovery associated with loss on property and assets of $5.3 million and $6.8 million during the three and nine months ended September 30, 2025, respectively. Core Lab reached final settlement with the insurance company in September 2025.

Previous wording

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 wording

In January 2026, we had storm damage at one of our laboratory facilities in Europe, and we have recorded a partial insurance settlement associated with business interruption and other associated costs of $0.2 million and $0.4 million during the three and nine months ended September 30, 2026, respectively.

Previous wording

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 wording

Interest expense for the three months ended September 30, 2026, was $2.8 million compared to $2.7 million in 2025 and $2.8 million in the prior quarter. For the nine months ended September 30, 2026, interest expense increased to $8.5 million compared to $8.0 million in 2025. For the three and nine months ended September 30, 2026, the year-over-year increase in interest expense is primarily due to higher variable interest rates on the $50.0 million delayed draw 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 and interest rates on our revolving credit facility.

Previous wording

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 wording

Sequentially, the slight decrease in interest expense was primarily due to lower average borrowings on our revolving credit facility and delayed draw term loan in the third quarter of 2026.

Previous 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.

Current wording

The Company recorded an income tax expense of $3.8 million and $4.1 million for the three and nine months ended September 30, 2026, compared to income tax expense of $3.8 million and $7.4 million for the three and nine months ended September 30, 2025, respectively. The effective tax rate for the three and nine months ended September 30, 2026, was 41.1% and 27.9%, 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, 2026 was primarily impacted by the jurisdictional earnings mix subject to tax for the period. The effective tax rate for the three and nine months ended September 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 $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.

Current wording

Revenue from the Reservoir Description operating segment of $84.3 million for the three months ended September 30, 2026 decreased 4% year-over-year and increased 7% sequentially. Year-over-year, revenue decreased in several international regions as a result of the continued conflicts in the Middle East, and between Russia and Ukraine, as well as the expanded sanctions previously discussed which have disrupted client activity and demand for our laboratory assay work and regional studies. These effects were partially offset by higher revenue from reservoir rock and fluid analysis projects in the U.S. and South America during the three months ended September 30, 2026.

Previous wording

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 wording

Revenue from the Reservoir Description operating segment of $245.0 million for the nine months ended September 30, 2026, decreased 4% from the same period in the prior year. The decrease in revenue was primarily due to 1) the Middle East Conflict that began in the first quarter of 2026; 2) the ongoing geopolitical conflict in Russia and Ukraine, including sanctions that were expanded significantly in the fourth quarter of 2025; and 3) the shipments of manufactured laboratory instrumentation sales that occurred in 2025 which did not repeat in 2026. The decreases in 2026, described above, were partially offset by higher reservoir rock and fluid analysis projects in the U.S.

Previous wording

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 wording

Operating income of $7.7 million for the three months ended September 30, 2026, decreased year-over-year by $8.9 million and increased $4.0 million sequentially. Operating margins were 9% for the three months ended September 30, 2026, compared to 19% for the same period in the prior year, and 5% sequentially. Year-over-year, the decrease in operating income and operating margins was primarily attributable to 1) decremental revenue of $3.9 million with high decremental margins primarily caused by the geopolitical conflicts mentioned above; and 2) a gain on insurance recovery in prior year of $5.3 million recorded in 2025, compared to $0.2 million gain on insurance recovery in 2026.

Previous wording

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 wording

Operating income of $12.5 million for the nine months ended September 30, 2026, decreased $18.6 million from the same period in the prior year. Operating margins were 5% for the nine months ended September 30, 2026, compared to 12% for the same period in the prior year. The decreases in operating income and operating margins were primarily attributable to 1) decremental revenue of $10.4 million primarily caused by the conflicts discussed above; and 2) a prior year insurance recovery of $7.9 million recorded in the nine months ended September 30, 2025 compared to $0.4 million recorded in 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 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.

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. onshore market for the three months ended September 30, 2026, increased by approximately 10% year-over-year and 7% sequentially. International average rig count increased by 3% year-over-year and 5% sequentially.

Previous 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.

Current wording

Revenue from the Production Enhancement operating segment of $47.8 million for the three months ended September 30, 2026, increased 3% year-over-year and 4% sequentially. Year-over-year, the increase was primarily driven by continued growth in completion and proprietary perforating product sales in the U.S. onshore market, however this was partially offset by lower revenue from our well diagnostic services in 2026 compared to the same period in 2025. The decrease in well diagnostic services during the third quarter of 2026 was primarily the result of delays in certain client projects in the Gulf of America.

Previous wording

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 wording

Revenue from the Production Enhancement operating segment of $133.5 million for the nine months ended September 30, 2026, remained relatively flat compared to the same period in the prior year. The increase in completion and proprietary perforating product sales revenue was substantially offset by a lower level of product sales to international markets and a decline in well completion diagnostic services in 2026 as discussed above.

Previous wording

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 wording

Operating income of $10.4 million for the nine months ended September 30, 2026, increased $1.3 million compared to the same period in the prior year. Operating margins for the nine months ended September 30, 2026 of 8% improved from 7% in the same period in the prior year. The increase in operating income and margins was primarily due to 1) refund of tariffs received in 2026; and 2) charges associated with employee severance, facility consolidation and inventory write-downs recorded in 2025 and no similar transactions in 2026. These improvements were partially offset by an increase in the cost of raw materials and supplies in 2026 when compared to 2025.

Previous 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.

Current wording

As of September 30, 2026, we had $21.4 million of cash and cash equivalents, compared to $22.7 million of cash and cash equivalents at December 31, 2025. As of September 30, 2026, $20.4 million of our $21.4 million of cash was held by our foreign subsidiaries.

Previous wording

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.

Current wording

Cash flows from operating activities were $16.7 million for the nine months ended September 30, 2026, compared to $29.1 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 and expanded sanctions on Russia, as discussed above. In 2026, the cost of certain raw materials used in the manufacturing of completion and perforating products increased, resulting in higher levels of inventory.

Previous 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.

Current wording

Other sources of cash during the nine months ended September 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 machinery of $1.4 million. See also “Credit Facility, Senior Notes and Available Future Liquidity” below regarding a net increase in our debt of $1.8 million.

Previous 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.

Current wording

Uses of cash during the nine months ended September 30, 2026 primarily include: 1) total capital expenditures of $14.4 million, which includes $3.0 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 $7.7 million, which includes payments related to personal tax liabilities of participants in our stock-based compensation plan; and 3) quarterly dividends paid of $1.4 million.

Previous 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.

Current wording

Free cash flow for the nine months ended September 30, 2026 was $5.3 million compared to $20.8 million for the same period in 2025. The net cash provided by operating activities of $16.7 million during the nine months ended September 30, 2026 compared to $29.1 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 $3.0 million associated with the Aberdeen, U.K. fire incident that are covered by insurance, increased by $3.1 million during the nine months ended September 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 June 30, 2026, the Credit Facility has an available borrowing capacity of approximately $85.6 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 September 30, 2026, the Credit Facility has an available borrowing capacity of approximately $81.6 million.

Previous 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.

Current wording

In accordance with the terms of the Credit Facility, our interest coverage ratio is 5.608 and our leverage ratio is 1.496 each for the period ended September 30, 2026. We are in compliance with all covenants contained in our Credit Facility and Senior Notes as of September 30, 2026. Certain of our material, wholly owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes.