Core Laboratories (CLB, Financial) has issued its revenue forecast for the second quarter, estimating between $128 million and $134 million, with analysts' consensus at approximately $128.9 million. Recent developments, including U.S. tariff announcements and OPEC's decision to boost oil production, have contributed to declining crude oil prices. This environment, characterized by trade negotiation uncertainties and OPEC+ production increases, suggests a potential rise in crude oil inventories.
Despite these challenges, Core Lab maintains an optimistic view on international upstream projects through 2025. The company references forecasts from the IEA, EIA, and OPEC+, predicting global crude oil demand growth of 0.7 to 1.3 million barrels per day for 2025, driven primarily by non-OECD countries in Asia, India, and emerging markets in the Middle East and Africa.
Larger-scale international oil and gas projects are expected to withstand short-term price fluctuations. Core Lab foresees stability in international project activities, with significant commitments from regions such as the South Atlantic Margin, North and West Africa, Norway, the Middle East, and parts of the Asia-Pacific. Conversely, U.S. onshore market activities are anticipated to be more vulnerable to ongoing crude oil price volatility.
Core Lab has assessed the potential impact of proposed tariffs, noting that over 75% of its revenue, generated from services, remains unaffected. While product sales comprise less than 25% of revenue, half are not subject to tariffs as they are consumed domestically. Products exported could face tariffs based on trade negotiation outcomes, and imported raw materials used in U.S. manufacturing might also attract tariffs. The company is proactive in implementing strategies to mitigate tariff impacts.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Core Laboratories Inc (CLB, Financial) is $16.80 with a high estimate of $24.00 and a low estimate of $11.00. The average target implies an upside of 39.19% from the current price of $12.07. More detailed estimate data can be found on the Core Laboratories Inc (CLB) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Core Laboratories Inc's (CLB, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Core Laboratories Inc (CLB, Financial) in one year is $21.47, suggesting a upside of 77.88% from the current price of $12.07. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Core Laboratories Inc (CLB) Summary page.
CLB Key Business Developments
Release Date: January 30, 2025
- Revenue: $129.2 million in Q4, down 4% sequentially; $523.8 million for full-year 2024, up 3% year over year.
- Reservoir Description Revenue: $86.8 million in Q4, down 2% sequentially.
- Production Enhancement Revenue: $42.4 million in Q4, down 7% sequentially and 3% year over year.
- Operating Income: $14.2 million for Q4 on a GAAP basis; $65.3 million for full-year 2024 ex-items, up 7% from 2023.
- Net Income: $10.4 million ex-items for Q4; $41.6 million for full-year 2024, up 10% from 2023.
- Earnings Per Share (EPS): $0.22 ex-items for Q4; $0.87 for full-year 2024, up 9% from 2023.
- Operating Margins: 16% for Reservoir Description in Q4; 4% for Production Enhancement in Q4.
- Free Cash Flow: $16.2 million for Q4; $43.4 million for full-year 2024, up from $14.2 million in 2023.
- Net Debt: Reduced by $11.7 million in Q4; $108.8 million at year-end 2024.
- Leverage Ratio: Improved to 1.31 at year-end 2024, lowest in over eight years.
- Interest Expense: $2.6 million for Q4, decreased 15% sequentially and 27% year over year.
- Capital Expenditures: $4.4 million for Q4; $13 million for full-year 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Core Laboratories Inc (CLB, Financial) reported a 9% increase in earnings per share for the full year 2024 compared to 2023.
- The company successfully reduced its net debt by nearly $12 million in the fourth quarter, lowering its leverage ratio to 1.31, the lowest in eight years.
- Core Laboratories Inc (CLB) returned excess free cash to shareholders by repurchasing nearly 265,000 shares of company stock during the fourth quarter.
- The company experienced a higher level of international product sales in 2024 compared to 2023, despite challenges in the US market.
- Core Laboratories Inc (CLB) generated a significant improvement in free cash flow, reaching $43.4 million for the full year 2024, up from $14.2 million in 2023.
Negative Points
- Revenue for the fourth quarter was down 4% compared to the prior quarter, primarily due to a decrease in US onshore activity.
- Geopolitical conflicts and trade sanctions in regions like Russia, Ukraine, and the Middle East negatively impacted demand for laboratory services.
- The company's operating margins in Production Enhancement were low at 4% for the fourth quarter.
- Completion diagnostic services in the Gulf of Mexico were delayed due to hurricanes, affecting the company's schedule and revenue.
- Core Laboratories Inc (CLB) faced challenges with reduced manufacturing efficiencies due to lower US onshore sales, impacting cost of sales.
