Core Laboratories (NYSE: CLB) outlines global operations, 2025 revenue and key risk exposures
Rhea-AI Filing Summary
Core Laboratories Inc. provides specialized reservoir description and production enhancement services to oil and gas companies worldwide. The company operates in more than 50 countries with about 3,300 employees, and reported consolidated revenue of $526,520,000 for the year ended December 31, 2025, primarily from services rather than products.
Two main segments drive results: Reservoir Description, focused on rock and fluid analysis and digital reservoir characterization, and Production Enhancement, which supplies perforating systems and diagnostics to optimize well completions and enhanced recovery. Core Lab is increasingly involved in carbon capture and storage and other energy transition projects, while remaining heavily exposed to oil and gas spending cycles.
The report highlights extensive risk factors, including industry cyclicality, geopolitical instability in regions such as the Middle East and Russia/Ukraine, evolving sanctions regimes, climate and environmental regulation, cybersecurity threats, supply chain concentration, and challenges in attracting technical talent. A significant portion of revenue is generated outside the United States, adding currency and regulatory risk alongside growth opportunities.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or emerging growth company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes☐ No
As of June 30, 2025, the aggregate market value of common stock held by non-affiliates of the registrant was approximately $
As of February 28, 2026, the number of shares of common stock of the registrant outstanding was
DOCUMENTS INCORPORATED BY REFERENCE
CORE LABORATORIES INC.
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
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PART I |
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Item 1. |
Business |
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Item 1A. |
Risk Factors |
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Item 1B. |
Unresolved Staff Comments |
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Item 1C. |
Cybersecurity |
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Item 2. |
Properties |
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Item 3. |
Legal Proceedings |
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Item 4. |
Mine Safety Disclosures |
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PART II |
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Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
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Item 6. |
[Reserved] |
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Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk |
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Item 8. |
Financial Statements and Supplementary Data |
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Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A. |
Controls and Procedures |
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Item 9B. |
Other Information |
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Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
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PART III |
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Item 10. |
Directors, Executive Officers and Corporate Governance |
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Item 11. |
Executive Compensation |
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Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. |
Certain Relationships and Related Transactions and Director Independence |
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Item 14. |
Principal Accountant Fees and Services |
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PART IV |
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Item 15. |
Exhibits and Financial Statement Schedules |
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Item 16. |
Form 10-K Summary |
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i
PART I
ITEM 1. BUSINESS
General
Core Laboratories Inc. is a Delaware corporation. We were established in 1936 and are one of the world’s leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry, primarily through client relationships with many of the world’s major, national and independent oil companies. These services and products can enable our clients to evaluate and improve reservoir performance and increase oil and gas recovery from their new and existing fields. We make measurements on reservoir rocks, reservoir fluids (crude oil, natural gas and water) and their derived products. In addition, we assist clients in evaluating subsurface targets associated with Carbon Capture and Sequestration (“CCS”) projects or initiatives. We have over 70 offices in more than 50 countries and have approximately 3,300 employees.
On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation. See Note 1 - Description of Business of the Notes to the Consolidated Financial Statements.
References to “Core Laboratories”, “Core Lab”, “the Company”, “we”, “our”, “us” and similar phrases are used throughout this Annual Report on Form 10-K (this “Form 10-K”) and relate collectively to Core Laboratories Inc. and its consolidated affiliates.
Business Strategy
Our business strategy is to provide advanced technologies that improve reservoir performance by (i) continuing the development of proprietary technologies through client-driven research and development, (ii) expanding the services and products offered throughout our global network of offices and (iii) acquiring complementary technologies that add key technologies or market presence and enhance existing services and products.
Development of New Technologies, Services and Products
We conduct research and development to meet the needs of our clients who are continually seeking new services and technologies to lower their costs of finding, developing and producing oil and gas. While the aggregate number of wells being drilled per year fluctuates in response to market conditions, oil and gas producers have, on a proportional basis, increased expenditures on technology services to improve their understanding of the reservoir, increased production of oil and gas from their producing fields, and more recently, CCS projects. We intend to continue concentrating our efforts on services and technologies that help our clients reduce risk by evaluating geologic and engineering aspects of subsurface stratigraphic targets to improve reservoir performance and increase oil and gas recovery, as well as CCS projects and other projects directed at the global objective to reduce carbon emissions.
International Expansion of Services and Products
Another component of our business strategy is to broaden the spectrum of services and products offered to our clients on a global basis. We intend to continue using our worldwide network of offices to offer our services and products that have been developed internally or obtained through acquisitions. This global emphasis allows us to increase our revenue and enhance our profit through efficient utilization of our worldwide network.
Acquisitions
We continually review potential acquisitions to add key services and technologies, enhance market presence or complement existing business.
More information relating to any significant acquisitions is included in Note 3 - Acquisitions and Divestures of the Notes to the Consolidated Financial Statements.
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Operations
We derive our revenue from services and product sales to clients primarily in the oil and gas and associated industries.
We operate our business in two segments. These complementary operating segments provide different services and products and utilize different technologies for evaluating and improving reservoir performance and increasing oil and gas recovery from new and existing fields. Disclosure relating to the operations and financial information of these operating segments is included in Note 20 - Segment Reporting and Other Disaggregated Information of the Notes to the Consolidated Financial Statements.
We offer our services worldwide through a global network of offices. Services accounted for 76%, 74% and 73% of our revenue for the years ended December 31, 2025, 2024 and 2023, respectively.
We manufacture products primarily in four facilities for distribution on a global basis. Product sales accounted for 24%, 26% and 27% of our revenue for the years ended December 31, 2025, 2024 and 2023, respectively.
Reservoir Description
Commercial oil and gas fields consist of porous and permeable reservoir rocks that contain crude oil, natural gas and formation water. Due to the density differences of the fluids, natural gas typically caps the field and overlies an oil layer, which overlies the water. We provide services that characterize the porous reservoir rock, all three reservoir fluids and their derived products. Services associated with these fluids include determining the quality and measuring the compositional, physical and volumetric properties of the complex reservoir hydrocarbons and their derived products, such as various fuels. Fluid analyses account for approximately two-thirds of Reservoir Description revenue. We also provide more advanced laboratory analyses which measure reservoir hydrocarbons at reservoir conditions to determine the changes in the hydrocarbon’s physical properties with changing pressure and temperature.
We analyze samples of reservoir rocks to determine lithologic, geochemical, and pore system properties. We measure rock properties, such as porosity, which determines reservoir storage capacity, and permeability, which defines the ability of the fluids to flow through the rock. These measurements are used to determine how much oil and gas are present in a reservoir and the rates at which the oil and gas can be produced. Conversely, the properties must also be known for injection projects such as CCS and water disposal. We also use our proprietary services and technologies to correlate the reservoir description data to wireline logs and other subsurface data.
The combined use of both the reservoir rock and fluid data are invaluable inputs for clients in determining the economic viability of hydrocarbon deposits and in identifying the most efficient methods to optimize the recovery, processing and refinement of these hydrocarbons. Early evaluations and key decisions about well performance and viability are important for optimizing a reservoir. This is accomplished by using proprietary and patented laboratory methods, including both traditional physical measurements and more recently introduced new technologies, such as Core Lab’s Non-Invasive Technologies for Reservoir OptimizationSM (“NITROSM”) services. NITROSM services include: Dual Energy Computed Tomography, Micro Computed Tomography, high and low frequency nuclear magnetic resonance, high-resolution gamma logging and continuous high energy x-ray fluorescence, along with pressure-volume-temperature, compositional analysis, and other Core Lab proprietary technologies.
Core Lab conducts a wide variety of physical laboratory tests to measure and evaluate fluid flow through the rock, often at in-situ reservoir temperatures and pressures. These are most commonly applied to conventional reservoirs. We have also
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developed unique analytical processes to understand the flow characteristics and saturation profiles of unconventional reservoir systems.
Core Lab has been at the forefront of digital transformation technologies for more than two decades. Core Lab’s extensive, proprietary databases and analog technologies, coupled with artificial intelligence (“AI”) and machine learning, help our clients improve efficiencies and lower operating costs throughout the upstream value chain. The analysis and integration of these critical datasets is enhanced because of Core Lab’s proprietary RAPIDTM database. Core Lab’s Digital Innovation Group works collaboratively with multiple international and national oil companies on projects that utilize Core Lab’s proprietary digital technologies and services. Core Lab’s proprietary Advanced Rock Typing technology combines Core Lab’s vast, comprehensive database of physical measurements and World Wide Rock Catalog™ with its proprietary image acquisition technology and innovative AI image recognition. Core Lab’s proprietary World Wide Rock Catalog™ provides a database and analog reference set for predicting properties when physical measurements are unavailable. These technologies provide clients with analog datasets in situations where the acquisition of new conventional core may not be possible or where only wellbore drill cuttings are available. High-resolution images of wellbore cuttings and sidewall cores are quickly and efficiently matched with analogs from Core Lab’s proprietary database of samples from around the world. Physically measured data sets from the matching analogs are delivered to our clients in time to make appraisal and development decisions.
Core Lab’s proprietary legacy portfolio of geological studies and rock and fluid property datasets on conventional reservoirs and seals, accessible through Core Lab’s database platform, RAPIDTM, are being leveraged in energy transition projects as well, and are proving invaluable to operators evaluating potential CCS sites.
Core Lab holds various patents, trade secrets, and proprietary designs for laboratory equipment required to analyze reservoir rocks as well as the properties and phase behavior of reservoir fluids and derived products. We manufacture a wide range of ambient and reservoir condition rock and fluid analysis laboratory equipment for our own use throughout our international laboratory network. Among these devices are complex, high-pressure, high-temperature, reservoir condition, multi-phase flow systems and full visualization Pressure-Volume-Temperature cells, along with the ancillary equipment required to support these laboratory programs. We also sell equipment of this type to universities, government institutes, and client company research labs.
While recognizing the need to optimize the full value chain of our clients, from producing well to retail sales of hydrocarbon products, a state-of-the-art information technology (“IT”) platform, CONNECT: was launched to efficiently acquire and optimize workflows of field data, laboratory results, and other observations relevant to our client base. The system is designed for single data entry, and that data can be used for further analysis and, more importantly, be shared with our clients by process flow dashboards with key performance indicators. The system can also share real-time data on mobile devices, enabling our clients to make quick decisions.
We continue to add new modules to our suite of data management platforms that enhance customer experience and improve access to project results.
We conduct numerous large-scale, multi-company reservoir description projects, applying proprietary and state-of-the-art techniques from the earliest phases of a field development program until the last economic barrel of oil is recovered. We initiate and deliver a group of international and U.S. based consortium studies to evaluate both conventional and unconventional reservoirs. These projects, which often run more than a year, are of increasing importance to oil companies as the incremental barrel is often the lowest cost and most profitable barrel in the reservoir. Producing incremental barrels increases our clients’ cash flows which we believe will result in additional capital expenditures by our clients, and ultimately further opportunities for us. Core Lab retains rights of ownership to complete joint industry project studies, which can be resold at a later date.
Our databases, technology and analytical methods also allow us to assist our clients in other ways. Many of our clients have begun investing in and developing other sources of energy, including renewables. Some of these initiatives include deployment of technologies associated with the assessment of strata to establish strategies tied to subsurface gas storage and mining of elements such as lithium, which are critical components of batteries for energy storage. Measurement and analytical techniques are also used to assist our clients with reporting requirements associated with carbon sequestration.
Production Enhancement
Core Lab's Production Enhancement group provides products and diagnostic services to help optimize well completions, reservoir operations and field development strategies, in order to increase recoverable reserves in the most efficient way. These product offerings include perforating technologies to establish communication between the wellbore and the reservoir. Diagnostic services are used to assess well completions and field floods. Two commonly used production enhancement methods are (i) hydraulic fracturing of the reservoir rock to improve flow and (ii) flooding a reservoir with water, carbon
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dioxide, nitrogen or hydrocarbon gases to drive more oil and gas to the producing wellbores. Many oilfields today are hydraulically fractured and/or flooded to maximize oil and gas recovery. Although Core Lab is not a hydraulic fracturing company, Core Lab does provide services that are used by operators to develop and optimize hydraulic fracturing and field flood projects and to evaluate the success of those projects. These services, products and expertise play a key role in the success of stimulation and enhanced oil recovery programs.
The hydraulic fracturing of a producing formation is achieved by pumping a fluid slurry containing a proppant material into the reservoir zone at extremely high pressures. This fractures the rock and the proppant material “props” or holds the fracture open after the pressure pumping is complete, so that reservoir fluids can flow through a highly conductive fracture network into the production wellbore. Data on rock type and strength generated in the Reservoir Description operating segment are critical for determining the proper design of the hydraulic fracturing treatment. In addition, further testing indicates whether the fluid slurry is compatible with the reservoir rock so that damage does not occur that would otherwise restrict production. Core Lab also provides testing of various propping agents and software to help select the best propping agent based on net present value calculations of client investments. Clients leverage our diagnostic services and the associated proprietary and patented technologies in the Permian, Eagle Ford, Wolfcamp, Bakken, Haynesville and other plays to assist them in the following areas;
In addition to Core Lab’s many patented reservoir diagnostic technologies, Production Enhancement has established itself as a global leader in the manufacturing and distribution of high-performance perforating products. Core Lab’s manufacturing operations in the United States and Canada continue to meet the global demand for our perforating systems while gaining in efficiency and productivity. Core Lab’s unique understanding of complex reservoirs supports our ability to supply perforating systems engineered to maximize well productivity by reducing, eliminating and overcoming formation damage caused during the drilling and completion of oil and gas wells. This “systems” approach to the perforation of an oil or gas well has resulted in numerous patented products which are aimed at assisting clients with the following:
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Additionally, Core Lab’s Production Enhancement operating segment offers services to assist clients in determining the best energetic solutions for a specific rock type, to maximize productivity of an operator’s reservoir through our Reservoir Optimized Completions Lab (“ROC Lab™”). The ROC Lab™ features an industry-leading, Ultra High Pressure/High Temperature perforation test vessel. The test vessel is paired with a proprietary flow system that uses highly specialized, internally developed and manufactured pumps and flow controllers. Combined, these technologies create a proprietary flow loop capable of dynamically displacing oil, brine and gas through rock samples that have been perforated with preselected energetics. Core Lab leverages its multi-decade expertise in conducting multi-phase fluid flow tests through porous medium to optimize this technological investment.
Core Lab’s proprietary downhole energetic solutions and instrumentation are designed to systemize, simplify, automate, and de-risk the deployment of perforating systems, which are utilized by international oil and gas operators for well completions. These technologies provide a unique range of perforating tools and equipment, which have been developed to provide a number of advantages over existing technology. Core Lab’s Production Enhancement team has experienced technical services personnel to support clients through our global network of offices for the everyday use of our perforating systems and the rapid introduction of new products. Our personnel are capable of providing client training and on-site services in the completion of oil and gas wells.
Marketing and Sales
We market and sell our services and products through a combination of sales representatives, technical seminars, trade shows and print advertising. Direct sales and marketing are carried out by our sales force, technical experts and operating managers, as well as by sales representatives and distributors in various markets where we do not have offices. Our Business Development group manages a Large Account Management Program to better serve our largest and most active clients by meeting with key personnel within their organizations to ensure the quality of our services and products are meeting their expectations and address any issues or needs in a timely manner.
Research and Development
The market for our services and products is characterized by changing technology and frequent product introduction. As a result, our success is dependent upon our ability to develop or acquire new services and products on a cost-effective basis and to introduce them into the marketplace in a timely manner. Many of our acquisitions have allowed us to obtain the benefits of the acquired company’s research and development projects without incurring significant costs if we had attempted to develop the services and products ourselves. We incur costs as part of internal research and development, and these costs are charged to expense as incurred and reflected in the operational results of the associated operating segment. We intend to continue committing financial resources and effort to the development and acquisition of new services and products. Over the years, we have made a number of technological advances, including the development of key technologies utilized in our operations.
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Substantially all of our new technologies are the result of requests and guidance from our clients, particularly major oil companies.
Patents and Trademarks
We believe our trade secrets, patents, technology, trademarks and other intellectual property rights are an important factor in maintaining our technological advantage, although no single one of these is considered essential to our success. Typically, we will seek to protect our intellectual property in all jurisdictions where we believe the cost of such protection is warranted. While we have patented some of our key technologies, we do not patent all of our proprietary technology even where regarded as patentable. We protect our intellectual property, including through the use of appropriate confidentiality agreements, legal enforcement proceedings and by other means.
International Operations
We operate facilities in more than 50 countries. Our non-U.S. operations accounted for 66%, 66% and 65% of our revenue during the years ended December 31, 2025, 2024 and 2023, respectively. We attribute service revenue to the country in which the service was performed rather than where the reservoir or project is located, while we attribute product sales revenue to the country where the product was shipped as we feel this gives a clearer view of our operations. We do, however, have significant levels of service revenue performed and recorded in the U.S. that are sourced from projects on non-U.S. oilfields.
The following graphs and table summarize our reported revenue by geographic region for the years ended December 31, 2025, 2024 and 2023 (in thousands):
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United States |
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Europe/Africa/ |
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Asia Pacific |
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Canada |
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Former Soviet |
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Latin/ South America |
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Consolidated |
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2025 |
$ |
175,327 |
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$ |
227,279 |
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$ |
37,310 |
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$ |
27,464 |
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$ |
32,095 |
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$ |
27,045 |
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$ |
526,520 |
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2024 |
$ |
178,895 |
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$ |
220,360 |
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$ |
37,796 |
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$ |
28,637 |
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$ |
26,723 |
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$ |
31,437 |
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$ |
523,848 |
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2023 |
$ |
178,549 |
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$ |
213,339 |
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$ |
32,770 |
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$ |
26,898 |
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$ |
26,118 |
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$ |
32,116 |
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$ |
509,790 |
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While we are subject to fluctuations and changes in currency exchange rates relating to our international operations, we attempt to limit our exposure to foreign currency fluctuations by limiting the amount in which our foreign contracts are denominated in a currency other than the U.S. dollar. However, the ultimate decision as to the proportion of the foreign currency component within a contract usually resides with our clients. Consequently, we are not always able to eliminate our foreign currency exposure. We have not historically engaged in and are not currently engaged in any significant currency hedging or trading transactions designed to compensate for adverse currency fluctuations.
Environment and Climate
Governmental Laws and Regulations
We are subject to stringent governmental laws and regulations, both in the United States and other countries, pertaining to protection of the environment.
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We have developed policies and procedures associated with the management, handling, recycling or disposal of chemicals and gases and other materials and wastes resulting from our operations. In areas where environmental regulations do not exist, we have established other policies and procedures in efforts to preserve the environment.
Additionally, our analytical and manufacturing processes involve the handling and use of numerous chemicals and gases as well as the generation of wastes. Spills or other unauthorized releases of these chemicals, gases, and wastes at our facilities, whether by us or prior owners or operators, or at offsite locations where we transport them for recycling or disposal, could subject us to environmental liability, either from the applicable government agency or private landowners or other third parties. This could also include costs of cleaning up chemicals and wastes released into the environment and for damages to persons, properties or natural resources. As a result of such actions, we could be required to remove previously disposed wastes (including wastes disposed of or released by prior owners or operators), remediate environmental contamination (including contaminated groundwater), and undertake measures to prevent future contamination. Other countries where we operate have similar legal regimes. We may also be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances as well as damage to natural resources. We may not be able to recover some or any of these remedial or corrective costs from insurance.
Environmental laws and regulations, and their interpretation, frequently change, and have tended to become more stringent over time. Our costs for compliance may not be fully recoverable from our clients and, thus, could reduce net income. New, modified or stricter enforcement of environmental laws and regulations could be adopted or implemented that significantly increase our compliance costs, pollution mitigation costs, or the cost of any remediation of environmental contamination that may become necessary, and these costs could have a material adverse effect on our business, financial condition, results of operation, or cash flows.
Historically, our environmental compliance costs have not had a material adverse effect on our results of operations; however, there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material adverse effect on our business or results of operations.
In addition, we depend on the demand for our products and services from the oil and gas industry and, therefore, are affected by changing taxes (including subsidies), price controls, tariffs, and trade restrictions, and other laws and regulations relating to the oil and gas industry in general, including those specifically directed to hydraulic fracturing, onshore production, air pollution, and climate change.
Likewise, governmental, scientific, and public concern over the threat of climate change arising from greenhouse gas (“GHG”) emissions, including public and private incentive programs for alternative and renewable energy sources, may result in a change in consumer preferences for energy sources and therefore a decreased demand for our customers’ products. Sustained deviations from normal weather patterns, such as cooler or warmer summers and winters, can have a significant impact on demand as consumption of energy, particularly natural gas, is seasonal.
See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters.
Climate Related Initiatives
Core Lab’s ninety-plus years of expertise evaluating both subsurface geology and fluid flow through natural, porous media and our reputation for reliable and efficient reservoir optimization services provides us with opportunities to play a positive role in supporting emerging energy transition initiatives.
Core Lab offers technologically advanced services that provide scientific data important to the design of client projects that involve injecting carbon dioxide (“CO2”) into geologic formations for permanent storage or to improve recovery of hydrocarbons. Within Core Lab’s CCS Consortium and through our laboratories, we study how CO2 interacts with fluids in the reservoir as well as how CO2 mobilizes residual oil in collaboration with the reservoir.
We are committed to reducing our physical risks and environmental footprint associated with climate change while improving our performance and sustainability in line with the global transition toward lower carbon sources of energy. Core Lab has disclosed its environmental impact through the Carbon Disclosure Project (a non-profit that runs the world’s leading environmental disclosure platform, “CDP”) annual survey since 2014.
Physical Risk Analysis
In 2020, Core Lab conducted a physical risk assessment with the aid of a third-party sustainability data company for 100 of our locations to understand the exposure of our facilities and capital assets to climate change physical impacts under future
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climate change scenarios. Physical risks evaluated were water stress, flooding, heatwave, cold wave, hurricane, wildfire, and sea level rise using three climate scenarios over time periods of 2020 (baseline), 2030 and 2050. Overall, the assessment indicated that we face moderate physical risk with our greatest exposure to water stress and cold wave. Our overall exposure has remained consistent throughout the scenarios, although exposure to a cold wave shows a decline through the scenarios. These physical risks could result in loss of revenue, increase in our costs, including insurance premiums, or affect the availability of insurance against such risks.
We do not have locations in a natural, rural environment. Before opening a new location, potential impacts to the environment and community are considered by executive management. In the event we close a particular location, we try to ensure that the land and building are properly returned to a suitable condition. We also take steps designed to ensure that any potential environmental conditions have been remediated as required by local regulation and standards.
GHG Emissions
Core Laboratories maintains a sustainability management system that tracks our consumption of non-renewable resources. We have also engaged a third-party sustainability data company to quantify the impact of emissions categorized as:
This system assists us in setting science-based targets for our Scope 1 and Scope 2 emissions. Science-based targets aim to help companies work towards limiting the increase in global average temperatures to below 2°C, a limit agreed upon by leading climate scientists and governments to ensure long-term sustainability and profitability. These tools focus our efforts on reducing our environmental footprint and provide the data needed to create other climate targets and goals.
Our operational footprint is primarily from our office buildings and laboratories and their related electricity consumption (Scope 2 emission) and use of natural gas and diesel for heating, backup generation and refrigeration processes (Scope 1 emission). In our efforts to reduce GHG emissions, we choose alternative sources of electricity, such as renewable sources or low-carbon emission natural gas when there are options available and feasible. We also consume fuel to operate field vehicles (Scope 1 emission); however, this is primarily limited to our staff working in the field and is not a significant emission component of our total operations. Most of the value chain emissions (Scope 3 emissions) occurring upstream from our operations including those associated with employee commuting, purchased goods, services and downstream emissions include transportation and distribution of our services and products.
See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters.
Occupational Safety and Health Regulations
Our operations in the United States and foreign countries are subject to stringent occupational safety and health laws and regulations, which are intended to protect worker health and safety, including the federal Occupational Safety and Health Act, which establishes requirements to protect the health and safety of workers. The U.S. Occupational Safety and Health Administration hazard communication standard, the Environmental Protection Agency community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require maintenance of information about hazardous materials used or produced in operations and provision of this information to employees, state and local government authorities and citizens. The federal Bureau of Alcohol, Tobacco, Firearms and Explosives establishes requirements for the safe use and storage of explosives. Substantial fines and penalties can be imposed and orders or injunctions limiting or prohibiting certain operations may be issued in connection with any failure to comply with these laws and regulations. Foreign countries in which we conduct operations may also have analogous controls that regulate our worker safety-related activities, which controls may impose additional, or more stringent requirements.
As discussed above, our processes involve the handling and use of numerous chemicals and gases as well as the generation of waste which could cause harm to our employees. Such work is performed in an industrial or laboratory setting, or at our clients’ worksite, which would also require travel. These types of conditions are susceptible to workplace accidents.
See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters.
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Competition
The business in which we engage is competitive. Some of our competitors are divisions or subsidiaries of companies that are larger and have greater financial and other resources than we have. While no one company competes with us in all of our service and product lines, we face competition in these lines, primarily from independent regional companies and internal divisions of major integrated oil and gas companies. We compete in different service and product lines to various degrees on the basis of price, technical performance, availability, quality and technical support. Our ability to compete successfully depends on elements both within and outside of our control, including successful and timely development of new services and products, performance and quality, client service, pricing, industry trends and general economic trends.
Reliance on the Oil and Gas Industry
Our business and operations are substantially dependent upon the condition of the global oil and gas industry. Future downturns in the oil and gas industry, or in the oilfield services business as well as the adoption and implementation of legislation, executive orders, and other regulatory initiatives that seek to combat climate change by restricting fossil fuel activities, limiting GHG emissions, certain methods of extraction of oil and gas, or the locations in which such activities may be conducted, may have a material adverse effect on our financial position, results of operations or cash flows. This risk factor is perhaps amplified in an uncertain and shifting political environment.
The oil and gas industry is highly cyclical and has been subject to significant economic downturns at various times as a result of numerous factors affecting the supply of and demand for oil and natural gas, including the level of capital expenditures of the oil and gas industry, the level of drilling activity, the level of production activity, market prices of oil and gas, economic conditions existing in the world, interest rates and the cost of capital, environmental regulations, tax policies, the impact of certain geopolitical conflicts, political requirements of national governments, coordination by the Organization of Petroleum Exporting Countries and other oil producing nations (“OPEC+”), cost of producing oil and natural gas, and technological advances.
The success of our business has been underpinned by developing industry leading technologies used in evaluating and improving reservoir performance, increasing oil and gas recovery from new and existing fields, as well as evaluating potential CCS sites in the subsurface both onshore and offshore. Many of these technologies have been developed to meet the needs of our clients, which continue to evolve with demands in both traditional energy sources and with energy transition. As energy transition continues to evolve, our business may become more dependent on the continued innovation and adoption of our industry leading technologies.
Human Capital
Core Lab is primarily a service provider in the oilfield services industry. The Company’s workforce includes employees who are highly skilled professionals, including engineers and geologists, and other technical personnel, in addition to administrative employees. As of December 31, 2025, the Company had approximately 3,300 employees, approximately 10% of which was represented under collective bargaining agreements.
Core Lab’s Core Values: (1) Safety Awareness, (2) Honesty & Integrity, (3) Customer Focus, (4) Building Trust and (5) Employee Development, define the Company and are the framework that unite employees on the path toward achieving the Company’s goals and propelling Core Lab forward. These values represent and establish the foundation by which employees treat each other and conduct business. By embedding the Core Values into the Company’s operating strategies, Core Lab ensures its culture and mission also drive its sustainability efforts. Core Lab keeps employees informed of major business developments through CoreConnect, a communication initiative to drive connection and engagement between employees and executive leadership, and through contact by extended leadership teams, periodic emails, quarterly newsletters, quarterly reports, and annual events.
The actions Core Lab takes surrounding employees are geared toward building a strong, sustainable workforce that drives the Company toward long-lasting success. Core Lab achieves this through Building Our Bench, its employee-focused framework that outlines the Company’s approach to workforce management and employee engagement. Core Lab’s total rewards approach is aligned to its business strategy and country-specific market influences. The Company offers competitive compensation and benefit programs in each country where it operates. Core Lab’s approach not only encompasses competitive compensation and benefits, but also personal and professional growth opportunities within a global performance culture.
Core Lab develops its employees through performance management and talent assessment processes, competency-based development plans and training both in leadership and functional areas. Core Lab’s annual performance management cycle is an ongoing process that enables managers and employees to collaborate throughout the year to set performance goals and
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development objectives that align to business objectives. These processes are designed to help employees understand where they add value to the organization, provide focus on and discussion around career aspirations, and reward employees for high performance.
Core Lab aspires to create an inclusive work culture where differences are valued and recognizes the unique perspectives and thoughts employees bring to the work environment which stimulates innovation and generates out-of-the-box solutions that benefit our Company, clients and industry. Core Lab promotes a culture-centric focus on the health and safety of its employees and the environment with a proactive approach towards identifying and managing risks through recognition, evaluation, and education. Employees are empowered by a sense of responsibility for managing their own work environment through open communication, and a management-supported “zero accident” culture.
Web Site Access to Our Periodic SEC Reports
Our primary internet address is https://www.corelab.com. We file or furnish Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, Current Reports on Form 8-K, and any amendments to those reports with the U.S. Securities and Exchange Commission (“SEC”). These reports are available free of charge through our web site as soon as reasonably practicable after they are filed or furnished electronically with the SEC. We may from time to time provide important disclosures to investors by posting them in the investor relations section of our web site, as allowed by SEC rules.
The SEC maintains an internet website at https://www.sec.gov that contains reports, proxy and information statements, and other information regarding our company that we file electronically with the SEC. References to the Company’s website in this Form 10-K are provided as a convenience and do not constitute, and should not be deemed, an incorporation by reference of the information contained on, or available through, the website, and such information should not be considered part of this Form 10-K.
ITEM 1A. RISK FACTORS
Our forward-looking statements are based on assumptions that we believe to be reasonable but that may not prove to be accurate. All of our forward-looking information is, therefore, subject to risks and uncertainties that could cause actual results to differ materially from the results expected. All known material risks and uncertainties are discussed below.
Risk factors associated with the industry in which we operate
Any cost reduction initiatives that Core Lab undertakes may not deliver the results it expects, and these actions may adversely affect its business.
As business conditions change, the Company may need to implement cost-cutting measures that may adversely affect its business. These cost-cutting measures may include reductions in various expenses, including the quarterly dividend, base salaries of senior executives and employees, and annual capital expenditures, as well as implementation of temporary employee furloughs, workforce reductions, and other measures to reduce corporate and operating costs.
These cost-cutting initiatives could result in disruptions to Core Lab’s operations. Any such measures could also negatively impact Core Lab’s business by delaying the introduction of new products or technologies, interrupting the effective deployment of existing products and services, or impacting employee retention. In addition, there can be no assurance that these cost controls will closely correlate with reduced operating activity. If Core Lab’s operating costs are higher than expected, or if it does not maintain adequate control of its costs, Core Lab’s results of operations will suffer. If Core Lab is unable to mitigate these or other potential risks related to its initiatives, it may disrupt Core Lab’s business or could have a material adverse effect on its financial condition and results of operations.
Downturns in the oil and gas industry, or in the oilfield services business, or lower success rates of our clients’ exploration and drilling efforts, may have a material adverse effect on our financial condition or results of operations.
The oil and gas industry is highly cyclical and demand for the majority of our oilfield services and products is substantially dependent on the level of expenditures by the oil and gas industry for the exploration, development and production of crude oil and natural gas reserves, which are sensitive to oil and natural gas prices and generally dependent on the industry's view of future oil and gas prices. There are numerous factors affecting the supply of and demand for our services and products, which are summarized as:
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The oil and gas industry historically has experienced periodic downturns, which have been characterized by diminished demand for our oilfield services and products and downward pressure on the prices we charge. A significant downturn in the oil and gas industry could result in a reduction in demand for oilfield services and could adversely affect our operating results.
Drilling for oil and gas is subject to geologic risk, and exploration and appraisal wells are particularly exposed. In some instances, an operator’s drilling efforts may yield no recoverable hydrocarbons, known as a “dry hole”. Even when oil and gas is recoverable within a reservoir, the size of a discovery may make further drilling uneconomic. A higher incidence of dry holes or uneconomic wells could result in reduced demand for our products and services as operators abandon or substantially scale back their drilling and development programs.
Conditions in the Middle East, including current uncertainty and instability resulting from the conflict between the United States, Israel and Iran, as well as other regional hostilities could adversely affect our business.
The Company owns and operates laboratories throughout the Middle East, including an Advanced Technology Center in Abu Dhabi, reservoir rocks and fluids laboratories in Doha, Dammam and Kuwait City, and crude oil and derived products testing laboratories in Kuwait, Saudi Arabia, Bahrain, the United Arab Emirates and elsewhere in the region. Accordingly, political, economic and military conditions in the Middle East and the surrounding region directly affect our business and could materially and adversely affect our business, operations, or personnel.
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 Annual 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. The situation has led to the closure of regional airspace and retaliatory strikes impacting multiple nations in the Middle East where Core Lab operates, including Saudi Arabia, Kuwait, the United Arab Emirates and Qatar.
The conflict has resulted in, and could continue to result in, supply disruptions, damage to energy infrastructure, increased shipping and insurance costs, delays or rerouting of crude oil and refined products cargos, heightened security risks, and increased volatility in commodity prices, all of which could affect our customers and our ability to do business with them. For example, since the conflict began, Iran has targeted and launched numerous attacks on critical infrastructure in the region, including refining facilities, maritime ports and international commercial marine vessels, resulting in many vessel operators and charterers re-routing to avoid the Persian Gulf, the Strait of Hormuz and adjacent regional waters, worsening existing supply chain issues, including delays in supplier deliveries, extended lead times and increased cost of freight, and impacts to the shipment of crude oil and refined products.
The intensity and duration of this conflict are difficult to predict. The conflict is rapidly evolving and it is not possible to predict its long-term consequences on the Company or its clients. Any escalation and expansion of this conflict could have a negative impact on both global and regional conditions and may adversely affect our business, financial condition and results of operations.
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Changes in macro-economic factors impacting the oil and gas industry may negatively affect our ability to accurately predict client demand, which could cause us to hold excess or obsolete inventory and experience a reduction in gross margins and financial results.
We cannot accurately predict which or what level of our services and products our clients will need in the future. Orders are placed with our suppliers based on forecasts of client demand and, in some instances, we may establish buffer inventories to accommodate anticipated demand. Our forecasts for client demand are based on multiple assumptions, each of which may introduce errors into the estimates. In addition, many of our suppliers require a longer lead time to provide products than our clients’ demand for delivery of our finished products. If we overestimate client demand, we may allocate resources to the purchase of materials or manufactured products that we may not be able to sell when we expect to, if at all. As a result, we could hold excess or obsolete inventory, which would reduce gross margin and adversely affect financial results. Conversely, if we underestimate client demand or if insufficient manufacturing capacity is available, we could miss revenue opportunities and potentially lose market share and damage our client relationships. In addition, any future significant cancellations or deferrals of service contracts or product orders could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations.
Risk factors associated with our international presence
We depend on the results of our international operations, which expose us to risks inherent in doing business abroad.
We conduct our business in over 50 countries. Our operations, and those of our clients, are subject to the various laws, regulations and other legal requirements of those respective countries as well as various risks peculiar to each country, which may include, but are not limited to:
Historically, economic downturns and political events have resulted in lower demand for our services and products in certain markets. The continuing instability in North Africa, South America and Ukraine, escalation of military conflict in the Middle East, and the potential for activity from terrorist groups that the U.S. government has cautioned against have further heightened our exposure to international risks. The global economy is highly influenced by public confidence in the geopolitical environment, and the situations in the affected countries and regions, as mentioned above, continue to be highly fluid; therefore, we expect to experience heightened international risks.
From time to time, certain geopolitical conflicts may lead to imposition of economic sanctions and associated export controls applicable to our operations. These sanctions and/or export controls may be imposed against certain countries, companies and individuals and they may restrict or prohibit transactions involving the countries, companies and individuals identified, which may further restrict or prohibit us from providing good or services and/or maintaining operations in the affected jurisdictions.
Our operations may be adversely affected by sanctions, export controls, and similar measures targeting Russia and other countries and territories as well as other responses to Russia’s military conflict in Ukraine.
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The ongoing geopolitical conflict between Russia and Ukraine has resulted in the U.S. government, European Union, the United Kingdom and other countries imposing broad-ranging economic sanctions and export control measures against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic, including, among others:
Due to the international scope of our operations, the Company is subject to various laws and regulations including regulations issued by the U.S. Department of Treasury, the U.S. Department of State, the Bureau of Industry and Security and Office of Foreign Asset Control, as well as equivalent economic sanctions and trade embargo laws of other relevant jurisdictions in which we operate, including the United Kingdom and the European Union. The laws and regulations of these different jurisdictions vary in their application and do not in all instances apply to the same covered persons or prohibit the same activities in every jurisdiction. In addition, the sanctions and embargo laws and regulations for each jurisdiction may be amended to increase or reduce the restrictions they impose and may modify restricted parties lists to add or remove designated individuals or entities. Moreover, the sanctions laws may impose a full blocking or country-wide prohibition or may consist of a more targeted and specific transaction ban or sectoral sanction. Most sanctions regimes also provide that entities majority-owned or controlled by the persons or entities designated on such lists are subject to the same sanctions.
Since the Russia-Ukraine conflict began in February 2022, there have been several sanctions packages imposed by the U.S., the U.K., and the E.U. that impact the Company. The sanctions are complex, numerous and nuanced, requiring close review and assessment as they pertain to our business. Sanctions programs are subject to rapid change, sometimes with immediate effect, and it is possible that new sanctions programs could be established by these and other jurisdictions without warning. The extent of current sanctions measures, not all of which are fully aligned across jurisdictions, further increases operational complexity for our business and increases the risk of making errors in managing day-to-day business activities within the rapidly evolving sanctions environment.
The U.S., U.K., and E.U. continue to adopt new sanctions and enhance existing sanctions programs associated with the Russia-Ukraine conflict. Additional countries or territories, as well as additional persons or entities within or affiliated with those countries or territories, have, and in the future could, become the target of sanctions. Frequent changes in these programs require us to be diligent in ensuring our compliance with sanctions laws. We actively monitor regulatory changes as they pertain to the goods and services we provide and their impact on our business, including our business partners and customers, including through dynamic screening of our business partners globally against restricted parties lists.
Further, the U.S., U.K. and E.U. have increased their focus on sanctions enforcement with respect to the energy sector. Our current or future business partners may be affiliated with persons or entities that are or may in the future become the subject of sanctions or trade embargoes imposed by the U.S., U.K., E.U., and/or other international bodies. If we determine that certain sanctions require us to terminate existing or future contracts to which we, or our subsidiaries, are party, or if we are found to be in violation of applicable sanctions, our results of operations may be adversely affected and/or we may suffer reputational harm.
Although we have policies, procedures and internal controls in place designed to ensure compliance with sanctions laws and regulations, it is possible that an employee, contractor, agent or other intermediary could fail to comply with such policies,
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applicable laws and regulations, and we could be held responsible. In addition, regulators have discretion to interpret complex sanctions and may interpret certain sanctions programs and their application to our business differently than we do. Notwithstanding our compliance safeguards, there can be no assurance that we will not be found to have been in violation, particularly as the sanctions and embargo laws and regulations are amended, the lack of clarity or guidance as to the scope of certain laws and regulations, and the possibility of discretionary legal interpretations by regulators that may change over time.
Sanctions and trade embargo laws and regulations are generally subject to a strict liability standard. A party need not know it is violating sanctions and need not intend to violate sanctions to be held liable. We could be subject to significant monetary fines and other civil and/or criminal penalties for violating applicable sanctions or embargo laws even in circumstances where our conduct is consistent with our sanctions-related policies or where our conduct is inadvertent. Such violations could also limit our ability to conduct business, damage our reputation and/or subject us to increased regulatory scrutiny, any of which could result in a material adverse effect on our financial condition and results of operations.
As the conflict in Ukraine continues and these sanctions may change and be expanded, it could further hinder the Company’s ability to do business in Russia or with certain Russian entities and/or our ability to repatriate cash, which could have an adverse impact on the Company’s financial condition and results of operations. Furthermore, in retaliation against new international sanctions and as part of measures to stabilize and support the volatile Russian financial and currency markets, Russian authorities imposed significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of various products and imposed other economic and financial restrictions.
We have not experienced any material interruptions in our infrastructure, supplies or networks needed to support our operations in Russia or Ukraine. Should future sanctions require us to cease or wind down our Russian operations, our assets located there may be impacted and could become subject to impairment. As of December 31, 2025, the Company’s fixed assets and total assets in Russia were $4.6 million and $16.8 million, respectively. Total assets located in Russia represent approximately 2.8% of the Company’s total assets. Additionally, the Company leases its operating facilities in Russia, and as of December 31, 2025, the contractual obligation to exit these leased facilities is approximately $0.8 million. For the year ended December 31, 2025, revenue attributable to our operations in Russia was $26.2 million, representing approximately 5.0% of the Company’s total revenue. If we discontinue our operations in Russia as a result of expanded sanctions, we could incur employee severance and other associated exit costs of approximately $2.5 million, as required under local laws.
During the year ended December 31, 2025, revenue attributable to the Company’s Ukraine operations and assets located in Ukraine, were immaterial to the Company’s total revenue and total assets.
We have no way to predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the conflict and any resulting government responses, are fluid and beyond our control. The effect on our operations, financial results and cash flows will depend on various factors, including the extent and duration of the conflict, its effects on regional and global economic and geopolitical conditions, and the effect of more expansive or stringent laws, sanctions or trade controls, whether adopted by Western nations or the Russian Federation, on our business, the global economy and global supply chains.
The Russia-Ukraine conflict may also heighten many other risks, any of which could materially and adversely affect our business and results of operations. Such risks include, but are not limited to, adverse effects on global macroeconomic conditions, including increased inflation; increased volatility in the price and demand of oil and natural gas; increased exposure to cyber-attacks; limitations in our ability to implement and execute our business strategy; risks to employees and contractors that we have in the region; disruptions in global supply chains; exposure to foreign currency fluctuations; potential nationalizations and assets seizures in Russia; constraints or disruption in the capital markets and our sources of liquidity; our potential inability to service our remaining performance obligations; and potential contractual breaches and litigation.
Tariffs and other trade measures could adversely affect our business, results of operations, financial position and cash flows.
Our business and results of operations may be adversely affected by uncertainty and changes in U.S. trade policies, including tariffs, trade agreements or other trade restrictions imposed by the U.S. or other governments. Our input costs for raw materials and other goods, such as steel, electronic components, chemical reagents and laboratory equipment, may be adversely affected by tariffs imposed by the U.S. government on products imported into the United States. Additionally, we sell our products internationally and our product sales may be subject to any retaliatory measures by other countries. Any imposition of or increase in tariffs on the goods we purchase or the products we sell could increase our costs and the price of our products and services. To the extent we are unable to pass all or a portion of these cost increases on to our customers, such cost increases could adversely affect our results of operations.
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Additional tariffs, further trade restrictions and retaliatory trade measures could disrupt our supply chain and logistics, restrict or limit the availability of goods or supplies, may cause adverse financial impacts due to volatility in foreign exchange rates and interest rates, and inflationary pressures on raw materials. Any potential impact will depend on future developments with respect to trade policy and the results of trade negotiations, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our business, results of operations and financial condition.
Our results of operations may be significantly affected by foreign currency exchange rate risk.
We are exposed to risks due to fluctuations in currency exchange rates. By the nature of our business, we derive a substantial amount of our revenue from our international operations, where certain of our customer contracts are in foreign currencies that subject us to risks relating to fluctuations in currency exchange rates.
Our results of operations may be adversely affected because our efforts to comply with applicable anti-corruption laws such as the United States’ Foreign Corrupt Practices Act (the “FCPA”) and the United Kingdom’s Anti-Bribery Act (the “ABA”) could restrict our ability to do business in foreign markets relative to our competitors who are not subject to these laws.
We operate in many parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. We may be subject to competitive disadvantages to the extent that our competitors are able to secure business, licenses or other preferential treatment by making payments to government officials and others in positions of influence or through other methods that we are prohibited from using.
We are subject to the regulations imposed by the FCPA and the ABA, which generally prohibits us and our intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business. In particular, we may be held liable for actions taken by our strategic or local partners even though our partners are not subject to these laws. Any such violations could result in substantial civil and/or criminal penalties and might adversely affect our business, results of operations or financial condition. In addition, our ability to continue to work in these parts of the world discussed above could be adversely affected if we were found to have violated certain laws, including the FCPA and the ABA.
Risk factors associated with technology advancement
If we are not able to develop or acquire new services or products or our services and products become technologically obsolete, our results of operations may be adversely affected.
The market for our services and products is characterized by changing technology and product introduction. As a result, our success is dependent upon our ability to develop or acquire new services and products on a cost-effective basis and to introduce them into the marketplace in a timely manner. Our future growth and financial performance will depend in part upon our ability to develop, market and integrate new products and services and to accommodate our customer’s preferences along with the rapid pace of technological advancement, including artificial intelligence and machine learning.
Generative artificial intelligence (“genAI”) technologies are becoming increasingly available. As genAI technologies continue to improve, we may not be able to replicate or compete with potential applications relevant to our business, including, for example, enhanced computer modeling of reservoir rock and fluid properties, which could displace some of our current products or services. While we intend to continue committing substantial financial resources and effort to the development or acquisition of new services and products, including those embodying genAI technologies, we may not be able to successfully differentiate our services and products from those of our competitors. Our clients may not consider our proposed services and products to be of value to them; or if the proposed services and products are of a competitive nature, our clients may not view them as superior to our competitors’ services and products. In addition, we may not be able to adapt to evolving markets and technologies, develop or acquire new services or products, or achieve and maintain a competitive market advantage.
If we are unable to continue developing or acquiring competitive services and products in a timely manner in response to changes in technology, our business and operating results may be materially and adversely affected. In addition, continuing development or acquisition of new products inherently carries the risk of inventory obsolescence with respect to our older products.
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If we are unable to obtain patents, licenses and other intellectual property rights covering our services and products, our operating results may be adversely affected.
Our success depends, in part, on our ability to obtain patents, licenses and other intellectual property rights covering our services and products. To that end, we have obtained certain patents and intend to continue to seek patents on some of our inventions, services and products. While we have patented some of our key technologies, we do not patent all of our proprietary technology, even when regarded as patentable. The process of seeking patent protection can be long and expensive. There can be no assurance that patents will be issued from currently pending or future applications or that, if patents are issued, they will be of sufficient scope or strength to provide meaningful protection or any commercial advantage to us. In addition, effective copyright and trade secret protection may be unavailable or limited in certain countries. Litigation, which could demand significant financial and management resources, may be necessary to enforce our patents or other intellectual property rights. Also, there can be no assurance that we can obtain licenses or other rights to necessary intellectual property on acceptable terms.
We are subject to cyber security risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.
The frequency and magnitude of cybersecurity attacks is increasing, and threat actors have become more sophisticated. Cybersecurity attacks are similarly evolving and include without limitation use of malicious software, surveillance, credential stuffing, spear phishing, social engineering, use of deepfakes (i.e., highly realistic synthetic media generated by artificial intelligence), attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. We may be unable to anticipate, detect or prevent future attacks, particularly as the vectors used by threat actors change frequently or are not readily identifiable until deployed. We may also be unable to investigate or remediate cybersecurity incidents as threat actors are increasingly using techniques designed to circumvent controls, avoid detection, and delete or obfuscate forensic evidence.
Our technologies, systems and networks, and those of our vendors, suppliers and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary information, personal information and other data, or other disruption of our business operations. In addition, certain cyber incidents, such as unauthorized surveillance, may remain undetected for an extended period. Our systems and insurance coverage (if any) for protecting against cyber security risks, including cyberattacks, may not be sufficient and may not protect against or cover all of the losses (including potential reputational loss) we may experience. As cyber incidents continue to evolve, particularly with the advent of artificial intelligence, we may be required to expend additional resources to modify or enhance our cybersecurity measures or to investigate and remediate the effects of cyber incidents.
We utilize technologies, controls and procedures, as well as internal staff and external service providers to protect our systems and data, to identify and remediate vulnerabilities and to monitor and respond to threats. However, there can be no assurance that such measures will be sufficient to prevent security breaches from occurring. No security measure is infallible. If we or the third parties with whom we interact were to experience a successful attack, the potential consequences to our business, workforce and the communities in which we operate could be significant, including financial losses, regulatory fines, loss of business, an inability to settle transactions or maintain operations, litigation costs, remediation costs, disruptions related to investigation, and significant damage to our reputation. If our systems for protecting against cyber-attacks prove not to be sufficient, we could be adversely affected by loss or damage of intellectual property, proprietary information, client data, employee data, financial data, our reputation, interruption of business operations, or additional costs to prevent, respond to, or mitigate cyber-attacks. These risks could have a material adverse effect on our business, reputation, results of operations, and financial condition.
Risk factors associated with our supply chain, resources, liquidity and capital management
We are subject to the risk of supplier concentration.
Certain of our product lines depend on a limited number of third party suppliers and vendors available in the marketplace. As a result of this concentration in some of our supply chains, our business and operations could be negatively affected if our key suppliers were to experience significant disruptions affecting the price, quality, availability or timely delivery of their products. For example, we have a limited number of vendors for our manufactured product lines. The partial or complete loss of any one of our key suppliers, or a significant adverse change in the relationship with any of these suppliers, through consolidation or otherwise, would limit our ability to manufacture and sell certain of our products.
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There are risks relating to our acquisition strategy. If we are unable to successfully integrate and manage businesses that we have acquired and any businesses acquired in the future, our results of operations and financial condition could be adversely affected.
One of our key business strategies is to acquire technologies, operations and assets that are complementary to our existing business. There are financial, operational and legal risks inherent in any acquisition strategy, including:
The success of any completed acquisition will depend on our ability to effectively integrate the acquired business into our existing operations. The process of integrating acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources. In addition, possible future acquisitions may be larger and for purchase prices significantly higher than those paid for earlier acquisitions. No assurance can be given that we will be able to continue to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets. Our failure to achieve consolidation savings, to incorporate the acquired businesses and assets into our existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on our financial condition and results of operation.
We may be unable to attract and retain skilled and technically knowledgeable employees, which could adversely affect our business.
Our success depends upon attracting and retaining highly skilled professionals and other technical personnel. A number of our employees are highly skilled engineers, geologists and highly trained technicians, and our failure to continue to attract and retain such individuals could adversely affect our ability to compete in the oilfield services industry. In periods of high utilization, there may be a shortage of skilled and technical personnel available in the market, potentially compounding the difficulty of attracting and retaining these employees. As a result, our business, results of operations and financial condition may be materially adversely affected.
We require a significant amount of cash to service our indebtedness, make capital expenditures, fund our working capital requirements and pay our dividend, and our ability to generate cash may depend on factors beyond our control.
Our ability to make payments on and to refinance our indebtedness, to fund planned capital expenditures, and pay our dividend depends, in part, on our ability to generate cash in the future. This ability is, to a certain extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
No assurance can be given that we will generate sufficient cash flows from operations or that future borrowings will be available to us in an amount sufficient to enable us to service and repay our indebtedness or to fund our other liquidity needs. If we are unable to satisfy our debt obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our indebtedness, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure that any refinancing or debt restructuring would be possible or, if possible, would be completed on favorable or acceptable terms, that any assets could be sold or that, if sold, the timing of the sales and the amount of proceeds realized from those sales would be favorable to us or that additional financing could be obtained on acceptable terms.
Disruptions in the capital and credit markets could adversely affect our ability to refinance our indebtedness, including our ability to borrow under our existing revolving credit facility. Banks that are party to our existing revolving credit facility may not be able to meet their funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from us and other borrowers within a short period of time.
We may have greater difficulty accessing capital in the future due to the adoption of more stringent climate change policies as shareholders, bondholders and institutional lenders who currently invest in fossil-fuel energy companies or service companies such as ours express increased concern about the potential adverse effects of climate change and therefore elect to shift some or all of their investable or loanable funds into alternative energy investments.
Risk factors associated with health, safety and the environment
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We are subject to a variety of environmental and occupational safety and health laws and regulations, which may result in increased costs and significant liability to our business.
We are subject to a variety of stringent governmental laws and regulations, both in the United States and foreign countries, pertaining to protection of the environment, and occupational health and safety.
Compliance with environmental legal requirements in the United States at the federal, state or local levels may require acquiring permits to conduct regulated activities, incurring capital expenditures to limit or prevent emissions, discharges and any unauthorized releases, and complying with stringent practices to handle, recycle and dispose of certain wastes. These laws and regulations could require us to acquire permits or other authorizations to conduct regulated activities, install and maintain costly equipment and pollution control technologies, impose specific safety and health standards addressing work protection, or to incur costs or liabilities to mitigate or remediate pollution conditions caused by our operations or attributable to former owners or operators. Certain of these laws and regulations may impose liability on a joint and several and strict liability basis requiring the remediation of historical contamination not directly associated with our operations as well as more recent releases. Failure to comply with applicable laws and regulations could result in the assessment of monetary fines and other civil and/or criminal penalties, the imposition of remedial or corrective action obligations, the occurrence of delays or cancellations in permitting or development of projects, or the suspension or cessation of some or all of our operations.
Environmental laws and regulations, and their interpretation, frequently change, and have tended to become more stringent over time. Our costs for compliance may not be fully recoverable from our clients and, thus, could reduce net income. New, modified or stricter enforcement of environmental laws and regulations could be adopted or implemented that significantly increase our compliance costs, pollution mitigation costs, or the cost of any remediation of environmental contamination that may become necessary, and these costs could have a material adverse effect on our business, financial condition, results of operation, or cash flows. Additionally, our clients are also subject to many of the same laws and regulations relating to environmental protection and occupational safety and health in the United States and in foreign countries where we operate. To the extent existing environmental laws and regulations or any new or more stringently enforced environmental legal requirements significantly increase our clients’ compliance costs, pollution mitigation costs or remedial costs, our clients could elect to delay, restrict or cancel drilling, exploration or production programs, which could reduce demand for our products and services and have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Historically, our worker safety compliance costs have not had a material adverse effect on our results of operations; however, there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material adverse effect on our business or results of operations.
Legislative and regulatory initiatives relating to oil and gas development and the potential for related litigation could result in increased costs and additional operating restrictions or delays for our clients, which could reduce demand for our products or services.
Environmental laws and regulations could limit our clients’ exploration and production activities. For example, hydraulic fracturing continues to attract considerable public and governmental attention, both in the United States and in foreign countries, resulting in various controls applied to fracturing activities or locations where such activities may be performed. Although we do not directly engage in drilling or hydraulic fracturing activities, we provide products and services to operators in the oil and gas industry. For example, certain states have adopted, or are considering adopting, legal requirements that could impose more stringent disclosure, permitting and/or well construction requirements on hydraulic fracturing operations, and local governments may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of hydraulic fracturing activities.
U.S., foreign federal, regional, state or local governmental actions aimed at species conservation, preventing hydraulic fracturing activities, or otherwise limiting oil and gas operations or production in certain locations, could indirectly cause us to incur additional costs, cause our or our oil and natural gas exploration and production customers’ operations to become subject to operating restrictions or bans, result in new difficulties obtaining permits or other authorizations, and limit future development activity in affected areas. To the extent any such existing or future legal requirements result in increased costs or restrictions or cancellation in the operation of our clients, such developments could reduce demand for our products and services and have an indirect material adverse effect on our business.
See Part I, Item 1. Business, “Environment and Climate” and “Occupational Safety and Health Regulations” for further discussion on environmental and worker safety and health matters.
We are subject to compliance with governmental regulations associated with climate change, energy conservation measures, or initiatives that stimulate demand for alternative forms of energy that could result in increased costs, limit the
18
areas in which our clients’ oil and natural gas production may occur and reduce demand for our services, which may adversely affect our business and results of operations.
Our clients in the oil and gas industry are also subject to many laws and regulations relating to environmental and natural resource protection in the United States and in foreign countries where we operate, and many are required to obtain permits and other authorizations for their operations. In particular, we, our third-party vendors that supply us with goods and services in support of our business, and our clients are subject to governmental, and public, political and scientific attention focus on risks associated with the threat of climate change arising from the emission of GHG. Various governments have adopted or are considering adopting legislation, regulations or other regulatory initiatives, including the Paris Agreement, the Europe Climate Law, that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions at national or local levels in jurisdictions where our clients operate. Compliance with existing, or any new or amended legal requirements that are placed into effect and applicable in areas where we or our clients conduct operations, could result in our or our clients’ incurring significant additional expense and operating restrictions which could result in reduced demand for our products and services.
New or amended legislation, executive actions, regulations or other regulatory initiatives that impose more stringent oil and gas sector requirements or fees on GHG emissions or restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased compliance costs or costs of producing fossil fuels.
To the extent that climate change alters weather patterns, it can impact the demand for our customers’ products. Our operations and the operations of our customers are also susceptible to the physical effects of climate change, such as increased frequency or severity of storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions. Such events may impact our operations directly and indirectly, and could also result in increased insurance costs.
Additionally, political, financial and litigation risks, as well as stakeholder pressures may result in our clients restricting, delaying or canceling operational or production activities, incurring liability for infrastructure damages as a result of climatic changes, restricting access to capital, or impairing the ability to continue to operate in an economic manner, which could reduce demand for our products and services. Fuel conservation measures, alternative fuel requirements and increasing consumer demand for, or legislative incentives supporting, alternative energy sources (such as wind, solar, geothermal and tidal) could also reduce demand for oil and natural gas. The occurrence of one or more of these developments could have a material adverse effect on our business, financial condition and results of operation.
Our customers may also face litigation risks based on allocations of their contribution to climate change. Consequently, to the extent one or more of these climate-related events are incurred by us, our third party vendors, or our clients, any of us could incur increased costs, we could incur disruptions to our operations as a result of our vendor’s inability to supply us with goods and services, and our clients in particular could elect to delay, restrict or cancel drilling, exploration or production programs, which could reduce demand for our products and services, any of which developments could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Increasing attention to sustainability and corporate responsibility matters may impact our business.
Regulations associated with sustainability and corporate responsibility have been, and are, being implemented and we anticipate that these regulatory requirements will continue to expand in markets where we operate. As a result, numerous regulations have been made, and are likely to continue to be made, to monitor and limit emissions of GHGs or implement laws, policies or regulatory initiatives that may contribute to energy conservation measures, stimulate demand for alternative forms of energy or limit areas where fossil fuel production may occur, which may translate into reduced demand for our services.
Business operations may also subject us or our customers to state-mandated climate disclosures. For instance, the Climate-Related Financial Risk Act (“CRFRA”) in California requires the disclosure of a climate-related financial risk report (in line with the Task Force on the Climate-related Financial Disclosures recommendations or equivalent disclosure requirements under the International Sustainability Standards Board’s climate-relate disclosure standards) every other year for public and private companies that are “doing business in California” and have total annual revenue of at least $500 million. Reporting under this law was set to begin in 2026 and the ultimate impact of the law on our business is uncertain. In November 2025, the Ninth Circuit Court of Appeals granted an injunction pending appeal that stays enforcement of the CRFRA. A separate law, SB 253 directed the California Air Resources Board (“CARB”) to create rules relating to GHG reporting. CARB’s regulations require the reporting of Scope 1 and Scope 2 GHG emissions starting August 10, 2026, for companies that are “doing business in California” and have total annual revenue of at least $1 billion. Absent clarification or revisions to these laws, alongside the compliance, may result in increased costs and restrictions on access to capital.
19
Investor and societal expectations regarding voluntary corporate responsibility disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our services, reduced profits, increased risks of governmental investigations and private party litigation, and negative impacts on our stock price and access to capital markets. These pressures could have similar impacts on our customers, and therefore, indirectly impact our operations by decreasing demand for our services. Our managerial ESG Steering Team is the primary group for overseeing and managing our sustainability initiatives. Team members review the implementation and effectiveness of our sustainability programs and policies and report on these matters to the Board of Directors. While we have sought voluntary aspirational goals for GHG emission reductions from base year 2018, we note that even with our governance oversight in place, we may not be able to adequately identify or manage sustainability-related risks and opportunities, which may include failing to achieve sustainability-related aspirational goals. We have published voluntary disclosures regarding sustainability matters under an annual Sustainability Report and the Global Reporting Initiative, an international independent standards organization. From time to time, statements in those voluntary disclosures may be based on aspirational expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions may be prone to error or subject to misinterpretation given the lack of an established single approach to identifying, measuring and reporting on many sustainability matters.
We are subject to the physical effects of climate change, which may adversely affect our business and results of operations.
We operate from locations around the globe and provide services in coastal regions and coastal cities and services related to marine shipping activities of our clients. These locations and activities are susceptible to the physical effects of climate change, such as increased frequency or severity of tropical storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions that may result in:
See Item 1A. Risk Factors, “Risk factors associated with health, safety and the environment” for further discussion on environmental matters.
Risk factors associated with our common stock
Provisions in our certificate of incorporation, bylaws and Delaware law may discourage a takeover attempt even if a takeover might be beneficial to our stockholders.
Provisions contained in our Certificate of Incorporation and our Bylaws, which we refer to herein as our “certificate of incorporation” and “bylaws,” respectively, could make it more difficult for a third party to acquire us. Provisions of our certificate of incorporation and bylaws impose various procedural and other requirements, which could make it more difficult for stockholders to effect certain corporate actions. For example, our certificate of incorporation authorizes our board of directors to determine the rights, preferences, privileges and restrictions of unissued series of preferred stock without any vote or action by our stockholders. Thus, our board of directors can authorize and issue shares of preferred stock with voting or conversion rights that could adversely affect the voting or other rights of holders of our capital stock. These rights may have the effect of delaying or deterring a change of control of our company. Additionally, our bylaws establish limitations on the removal of directors and on the ability of our stockholders to call special meetings and include advance notice requirements for nominations for election to our board of directors and for proposing matters that can be acted upon at stockholder meetings. These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock.
Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for
20
(i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim against us or any director or officer or other employee or agent of ours arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or (iv) any action asserting a claim against us or any director or officer or other employee or agent of ours that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.
The exclusive forum provision would not apply to suits brought to enforce any liability or duty created by the Securities Act of 1933 (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation or similar governing documents has been challenged in legal proceedings, and it is possible that a court could find the choice of forum provisions contained in our certificate of incorporation to be inapplicable or unenforceable, including with respect to claims arising under the U.S. federal securities laws.
Our ability to maintain effective internal controls over financial reporting may be insufficient to allow us to accurately report our financial results or prevent fraud, and this could cause our financial statements to become materially misleading and adversely affect the trading price of our common stock.
The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that accurately and fairly reflect the transactions and dispositions of assets of the Company; (ii) provide reasonable assurance that transactions are recorded to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are made only in accordance with authorization of management; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements, including the possibility of human error, the circumvention or overriding of controls, or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with internal policies or procedures may deteriorate. Disclosure controls and procedures and internal control over financial reporting will not prevent every accounting error or every instance of fraud. Further, the design of disclosure controls and internal control over financial reporting are governed by resource constraints, and the benefits of such controls must be considered relative to their costs. Because of the inherent limitations in every control system, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a Company have been detected. For example, if two individuals were able to circumvent our internal controls through collusion and commit fraud, the Company’s internal controls may not detect the fraud, which could potentially reach a material level if undetected.
Our ability to maintain effective internal controls over financial reporting also depends on the efforts, skills, and performance of our accounting and finance staff. The loss of key personnel or our inability to attract and retain qualified accounting personnel could adversely affect our ability to maintain effective internal controls and to prepare accurate financial statements in a timely manner.
The inability of the Company to maintain the effectiveness of our internal controls over financial reporting, including any failure to implement required new or improved controls, or any difficulty we encounter in their implementation, could result in a material weakness in the control environment. Any material weakness could affect investor confidence in the accuracy and completeness of our financial statements. As a result, our ability to raise capital through the issuance of debt or equity, or our ability to obtain financing on favorable terms, could be materially and adversely affected. This, in turn, could materially and adversely affect our business, financial condition, and the market value of our stock and require us to incur additional costs to improve our internal control systems and procedures. In addition, perceptions of the Company among customers, suppliers, lenders, investors, securities analysts, and others could be adversely affected.
Risk factors associated with the Redomestication Transaction
21
The expected benefits of the Redomestication Transaction may not be realized.
There can be no assurance that all of the anticipated benefits of the Redomestication Transaction will be achieved. Achieving the anticipated benefits of the Redomestication Transaction is subject to a number of risks and uncertainties, including factors that we do not and cannot control. In addition, if the expected benefits of the Redomestication Transaction do not meet expectations of investors or securities analysts, the price of our common stock may decline.
If the Redomestication Transaction does not qualify as a “reorganization” under Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended, Core Lab Shareholders may be required to pay U.S. federal income taxes.
It is intended that the steps in the Redomestication Transaction qualify as a form of “reorganization” within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Although Vinson & Elkins L.L.P., Core Lab’s U.S. tax counsel, provided an opinion that the Redomestication Transaction should qualify as a form of reorganization within the meaning of Section 368(a) of the Code, and Core Laboratories N.V., Core Laboratories Luxembourg S.A. and Core Laboratories Inc. may have or intend to file tax returns consistent with this intended tax treatment, this tax treatment is not free from doubt. Your tax advisor may not agree with our intended tax treatment and the IRS may assert, or a court may sustain, a contrary position.
If the Redomestication Transaction did not qualify as a form of reorganization within the meaning of Section 368(a) of the Code, Core Lab Shareholders would generally recognize taxable gain or loss upon their exchange of stock pursuant to the Redomestication Transaction, as applicable.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
The Company maintains information systems which contain personal data, financial reports and proprietary data. As a result, we are exposed to cybersecurity threats which could result in loss of or damage to our intellectual property, proprietary information, client data and reputation, or interruption of our business operations, or additional costs to prevent, respond to, or mitigate cyber-attacks.
Our Board of Directors is responsible for oversight of the risks that the Company faces, including cybersecurity threats. Our operating divisions and management teams help identify risks that are relevant to the Company during our periodic business planning and review cycle and rank these risks in relation to the achievement of business objectives. We understand cybersecurity threats to be dynamic and to intersect with various other enterprise risks within the organization.
As a result, in addition to our information technology policies and procedures, we have implemented cybersecurity processes that aim to address, among other things, information security, password security, third party vetting, security incident response and vulnerability management.
We have established a permanent management position of Director of Cybersecurity and IT Governance that reports directly to the Chief Financial Officer.
22
Director of Cybersecurity and IT Governance and various members of senior management, including our Chief Financial Officer and General Counsel.
In addition, we have established a Data Privacy Committee coordinated by our Data Privacy Officer and represented by seven other committee members from various corporate functional departments. The objective of the Committee is to ensure that personal data is protected and handled in accordance with applicable law and Core Lab policies.
ITEM 2. PROPERTIES
Currently, we have over 70 offices (totaling approximately 2.9 million square feet of space) in more than 50 countries. In these locations, we lease approximately 1.4 million square feet and own approximately 1.5 million square feet. We serve our worldwide clients through five Advanced Technology Centers (“ATCs”) that are located in Aberdeen, Scotland; Abu Dhabi, United Arab Emirates; Houston, Texas; Kuala Lumpur, Malaysia; and Rotterdam, The Netherlands. The ATCs provide support for our more than 50 regional specialty centers located throughout the global energy producing provinces. In addition, our more significant manufacturing facilities are located in Frépillon, France, which is included in our Reservoir Description operating segment, Godley, Texas, Red Deer, Alberta, Canada, and Pyle, Wales, which are included in our Production Enhancement operating segment. Our facilities are adequate for our current operations; however, expansion into new facilities or the replacement or modification of existing facilities may be required to accommodate future growth.
ITEM 3. LEGAL PROCEEDINGS
See Note 12 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
23
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Price Range of Common Stock
Our common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “CLB”.
On February 27, 2026, the closing price, as quoted by the NYSE, was $17.59 per share and there were 46,050,433 shares of common stock issued and outstanding held by approximately 160 record holders. These amounts exclude shares held by us as treasury stock.
See Part III, “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for discussion of equity compensation plans.
Performance Graph
The following performance graph compares the performance of our common stock to the Standard & Poor’s (“S&P”) 500 Index, the S&P 500 Oil & Gas Equipment & Service Index and the Philadelphia Oil Service Index (“OSX”) for the period beginning December 31, 2020 and ending December 31, 2025. Core Lab is now an established member of the OSX which includes a greater concentration of our most direct peers.
The graph assumes that the value of the investment in our common shares and each index was $100 at December 31, 2020 and that all dividends were reinvested. The stockholder return set forth below is not necessarily indicative of future performance. The following graph and related information is “furnished” and shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended except to the extent that Core Laboratories specifically incorporates it by reference into such filing.
24
Share Repurchases in the Fourth Quarter of 2025
The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the three months ended December 31, 2025:
Period |
|
Total Number |
|
|
Average Price |
|
|
Total Number of Shares |
|
|
Maximum Number of |
|
||||
October 1-31, 2025 |
|
|
25,281 |
|
|
$ |
14.70 |
|
|
|
— |
|
|
|
— |
|
November 1-30, 2025 |
|
|
73,380 |
|
|
$ |
14.97 |
|
|
|
— |
|
|
|
— |
|
December 1-31, 2025 |
|
|
264,546 |
|
|
$ |
16.06 |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
363,207 |
|
|
$ |
15.74 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1) During the three months ended December 31, 2025, we repurchased 154,040 shares in the open market. Additionally, 209,167 shares were surrendered to us by participants in a stock-based compensation plan to settle any personal tax liabilities which may result from the award. |
|
|||||||||||||||
(2) The Company does not have a publicly announced share repurchase program. |
|
|||||||||||||||
The repurchase of shares in the open market is at the discretion of our Board of Directors and management.
The Company does not have a publicly announced share repurchase program; however, it does from time to time undertake share repurchases in the open market at the discretion of Company management and with prior authorization from the Board of Directors. Through December 31, 2025, we have made discretionary purchases of 41,860,760 shares for an aggregate purchase price of approximately $1.7 billion, or an average price of $40.30 per share. At December 31, 2025, we held 871,489 shares in treasury.
ITEM 6. [RESERVED]
25
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Core Laboratories Inc. is a Delaware corporation. We were established in 1936 and are one of the world’s leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry, primarily through client relationships with many of the world’s major, national and independent oil companies.
On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation. See Note 1 - Description of Business of the Notes to the Consolidated Financial Statements.
We operate our business in two segments. These complementary operating segments provide different services and products and utilize different technologies for evaluating and improving reservoir performance and increasing oil and gas recovery from new and existing fields:
General Overview
We provide services as well as design and produce products which enable our clients to evaluate and improve reservoir performance and increase oil and gas recovery from new and existing fields. These services and products are generally in higher demand when our clients are investing capital in their field development programs that are designed to increase productivity from existing fields or when exploring for, appraising and developing new fields. Our clients’ investment in capital expenditure programs tends to correlate over the longer term to oil and natural gas commodity prices. During periods of higher, stable prices, our clients generally invest more in capital expenditures and, during periods of lower or volatile commodity prices, they tend to invest less. Consequently, the level of capital expenditures by our clients impacts the demand for our services and products.
The following table summarizes the annual average and year-end worldwide and U.S. rig counts for the years ended December 31, 2025, 2024 and 2023, as well as the annual average and year-end spot price of a barrel of West Texas Intermediate (“WTI”) crude, Europe Brent crude and a MMBtu of natural gas:
26
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Average Baker Hughes Worldwide Rig Count (1) |
|
|
1,819 |
|
|
|
1,948 |
|
|
|
1,814 |
|
Average Baker Hughes U.S. Rig Count (1) |
|
|
562 |
|
|
|
599 |
|
|
|
689 |
|
Average Baker Hughes U.S. Land-based Rig Count (1) |
|
|
547 |
|
|
|
580 |
|
|
|
670 |
|
Year-end Baker Hughes Worldwide Rig Count (2) |
|
|
1,783 |
|
|
|
1,865 |
|
|
|
1,739 |
|
Year-end Baker Hughes U.S. Rig Count (2) |
|
|
546 |
|
|
|
589 |
|
|
|
623 |
|
Year-end Baker Hughes U.S. Land-based Rig Count (2) |
|
|
529 |
|
|
|
575 |
|
|
|
603 |
|
Average Crude Oil Price per Barrel WTI (3) |
|
$ |
65.39 |
|
|
$ |
76.63 |
|
|
$ |
77.58 |
|
Average Crude Oil Price per Barrel Brent (4) |
|
$ |
69.14 |
|
|
$ |
80.52 |
|
|
$ |
82.49 |
|
Average Natural Gas Price per MMBtu (5) |
|
$ |
3.52 |
|
|
$ |
2.19 |
|
|
$ |
2.52 |
|
Year-end Crude Oil Price per Barrel WTI (3) |
|
$ |
57.26 |
|
|
$ |
72.44 |
|
|
$ |
71.89 |
|
Year-end Crude Oil Price per Barrel Brent (4) |
|
$ |
61.35 |
|
|
$ |
74.58 |
|
|
$ |
77.69 |
|
Year-end Natural Gas Price per MMBtu (5) |
|
$ |
4.00 |
|
|
$ |
3.40 |
|
|
$ |
2.58 |
|
(1) Twelve-month average rig count as reported by Baker Hughes - Worldwide Rig Count. |
|
|||||||||||
(2) Year-end rig count as reported by Baker Hughes - Worldwide Rig Count. |
|
|||||||||||
(3) Average daily and year-end WTI crude spot price as reported by the U.S. Energy Information Administration ("EIA"). |
|
|||||||||||
(4) Average daily and year-end Europe Brent crude spot price as reported by the EIA. |
|
|||||||||||
(5) Average daily and year-end Henry Hub natural gas spot price as reported by the EIA. |
|
|||||||||||
In general, activities associated with the exploration of oil and gas in the U.S. onshore market are more sensitive to changes in the crude-oil commodity prices, as opposed to larger international and offshore projects which take multiple years to plan and develop. These international and offshore projects, once announced and started, will continue through completion, despite changes in the current price of crude oil.
According to the latest reports from the EIA, the International Energy Agency (“IEA”) and the Organization of the Petroleum Exporting Countries and other oil producing nations (“OPEC+”), global demand for crude oil and natural gas is expected to continue increasing beyond 2025. New tariffs announced by the U.S. during the year have triggered global trade negotiations and have raised the level of uncertainty for global economies. Additionally, OPEC+ affirmed their decision to proceed with a gradual return of 2.2 million barrels of daily production by removing the voluntary production restrictions established in 2023. OPEC+ also published an updated “compensation plan” which shows committed reductions in production for countries that produced volumes over their committed quotas since January 2024, which if complied with, should partially offset the scheduled increases to production quotas. In each announcement from OPEC+ regarding the production increases, they have also stated they will continue to hold monthly meetings to review market conditions, conformity, and compensation. The gradual increase in production from OPEC+ began in May 2025 with incremental increases in production expected through September 2026, which could create a surplus in supply and lead to lower commodity prices. 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 Annual 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. The conflict has resulted in, and could continue to result in, supply disruptions, damage to energy infrastructure, increased shipping and insurance costs, delays or rerouting of crude oil and refined products cargos, heightened security risks, and increased volatility in commodity prices, all of which could affect our customers and our ability to do business with them.
The geopolitical conflict between Russia and Ukraine that began in February 2022, caused disruptions to traditional maritime supply chains associated with the movement of crude oil, initially reducing the level of crude oil sourced from Russia and being imported into various European ports. The disruptions to traditional maritime supply chains of crude oil and derived products, such as diesel fuel, and associated sanctions imposed on maritime exports of these products out of Russia caused significant volatility in both the prices and trading patterns of these products from the inception of the conflict through 2023 before stabilizing in 2024 and throughout 2025. Average crude-oil prices which were elevated at the inception of the conflict, have since moderated in 2023 and continued to stabilize in 2024. However, expanded sanctions were issued in January 2025, which caused temporary disruptions in supply, but did not have any meaningful or extended impact to commodity prices.
The Company's volume of associated laboratory services is commensurate with the trading and movement of crude-oil into Europe, the Middle East, Asia and across the globe. However, the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories. We have no way to predict the progress or outcome of these events, and any resulting government responses are fluid and beyond our control.
Information published recently by the EIA, shows that the inventory of wells drilled but uncompleted (a “DUC” well) in the U.S., was 5,798 as of December 31, 2024, and declined to 5,020, or a 13% reduction, at end of 2025. This data indicates that
27
during the period of higher activity, operators were drilling wells but not completing them as the DUC inventory grew. As activity levels began to decline, operators began to drill fewer new wells and were completing some of the wells that had been previously drilled but not completed. As drilling and completion activity levels continued to decline from 2024 to 2025, the number of wells completed continued to outpace the number of new wells drilled during these periods.
In the U.S., the land-based average rig count decreased approximately 13% in 2024 from 2023 primarily due to a significant decline in natural gas prices. Additionally, efficiencies gained in drilling and completing wells allowed operators to complete their drilling programs ahead of their original schedule. In 2025, despite the overall U.S. land-based average rig count decrease of 6% from 2024 levels, activity in certain natural gas basins improved as the average natural gas prices increased by 61% in 2025 compared to average prices in 2024. Demand for product sales and associated services will typically change in tandem with the changes in the rig count and associated drilling and completion activity.
Outside of the U.S., international average rig count showed an increase of approximately 20% in 2024 from 2023, however, subsequently decreased by 7% in 2025, which was primarily in the Middle East, Latin America and Asia Pacific regions. Long-term international and offshore projects which are commonly announced through Final Investment Decisions and subsequently initiated are not as susceptible or at-risk to delay or suspension due to short-term volatility in crude-oil commodity prices.
Results of Operations
Operating Results for the Year Ended December 31, 2025 Compared to the Years Ended December 31, 2024 and 2023
We evaluate our operating results by analyzing revenue, operating income and operating income margin (defined as operating income divided by total revenue). Since we have a relatively fixed cost structure, decreases in revenue generally translate into lower operating income results. Results for the years ended December 31, 2025, 2024 and 2023 are summarized in the following chart.
28
Results of operations as a percentage of applicable revenue for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands, except for per share information):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 / 2024 |
|
|
2024 / 2023 |
|
||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
|||||||||||||||||
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Services |
|
$ |
399,422 |
|
|
75.9 |
% |
|
$ |
388,205 |
|
|
74.1 |
% |
|
$ |
371,914 |
|
|
73.0 |
% |
|
|
2.9 |
% |
|
|
4.4 |
% |
Product sales |
|
|
127,098 |
|
|
24.1 |
% |
|
|
135,643 |
|
|
25.9 |
% |
|
|
137,876 |
|
|
27.0 |
% |
|
|
(6.3 |
)% |
|
|
(1.6 |
)% |
Total revenue |
|
|
526,520 |
|
|
100.0 |
% |
|
|
523,848 |
|
|
100.0 |
% |
|
|
509,790 |
|
|
100.0 |
% |
|
|
0.5 |
% |
|
|
2.8 |
% |
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services* (1) |
|
|
302,206 |
|
|
75.7 |
% |
|
|
297,324 |
|
|
76.6 |
% |
|
|
282,135 |
|
|
75.9 |
% |
|
|
1.6 |
% |
|
|
5.4 |
% |
Cost of product sales* (1) |
|
|
115,381 |
|
|
90.8 |
% |
|
|
123,198 |
|
|
90.8 |
% |
|
|
117,822 |
|
|
85.5 |
% |
|
|
(6.3 |
)% |
|
|
4.6 |
% |
Total cost of services and product |
|
|
417,587 |
|
|
79.3 |
% |
|
|
420,522 |
|
|
80.3 |
% |
|
|
399,957 |
|
|
78.5 |
% |
|
|
(0.7 |
)% |
|
|
5.1 |
% |
General and administrative expense (1) |
|
|
45,430 |
|
|
8.6 |
% |
|
|
39,770 |
|
|
7.6 |
% |
|
|
40,259 |
|
|
7.9 |
% |
|
|
14.2 |
% |
|
|
(1.2 |
)% |
Depreciation and amortization |
|
|
14,649 |
|
|
2.8 |
% |
|
|
14,953 |
|
|
2.9 |
% |
|
|
15,784 |
|
|
3.1 |
% |
|
|
(2.0 |
)% |
|
|
(5.3 |
)% |
Other (income) expense, net |
|
|
(7,614 |
) |
|
(1.4 |
)% |
|
|
(9,953 |
) |
|
(1.9 |
)% |
|
|
(850 |
) |
|
(0.2 |
)% |
|
NM |
|
|
NM |
|
||
OPERATING INCOME |
|
|
56,468 |
|
|
10.7 |
% |
|
|
58,556 |
|
|
11.2 |
% |
|
|
54,640 |
|
|
10.7 |
% |
|
|
(3.6 |
)% |
|
|
7.2 |
% |
Interest expense |
|
|
10,572 |
|
|
2.0 |
% |
|
|
12,369 |
|
|
2.4 |
% |
|
|
13,430 |
|
|
2.6 |
% |
|
|
(14.5 |
)% |
|
|
(7.9 |
)% |
Income before income taxes |
|
|
45,896 |
|
|
8.7 |
% |
|
|
46,187 |
|
|
8.8 |
% |
|
|
41,210 |
|
|
8.1 |
% |
|
|
(0.6 |
)% |
|
|
12.1 |
% |
Income tax expense |
|
|
15,505 |
|
|
2.9 |
% |
|
|
14,034 |
|
|
2.7 |
% |
|
|
4,185 |
|
|
0.8 |
% |
|
|
10.5 |
% |
|
|
235.3 |
% |
Net income |
|
|
30,391 |
|
|
5.8 |
% |
|
|
32,153 |
|
|
6.1 |
% |
|
|
37,025 |
|
|
7.3 |
% |
|
|
(5.5 |
)% |
|
|
(13.2 |
)% |
Net income attributable to non-controlling interest |
|
|
722 |
|
|
0.1 |
% |
|
|
753 |
|
|
0.1 |
% |
|
|
350 |
|
|
0.1 |
% |
|
NM |
|
|
NM |
|
||
Net income attributable to Core Laboratories Inc. |
|
$ |
29,669 |
|
|
5.6 |
% |
|
$ |
31,400 |
|
|
6.0 |
% |
|
$ |
36,675 |
|
|
7.2 |
% |
|
|
(5.5 |
)% |
|
|
(14.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share |
|
$ |
0.65 |
|
|
|
|
$ |
0.67 |
|
|
|
|
$ |
0.78 |
|
|
|
|
|
(3.0 |
)% |
|
|
(14.1 |
)% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share attributable to Core Laboratories Inc. |
|
$ |
0.63 |
|
|
|
|
$ |
0.66 |
|
|
|
|
$ |
0.77 |
|
|
|
|
|
(4.5 |
)% |
|
|
(14.3 |
)% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average common shares outstanding |
|
|
47,028 |
|
|
|
|
|
47,685 |
|
|
|
|
|
47,523 |
|
|
|
|
|
|
|
|
|
|||||
Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current ratio (2) |
|
2.02:1 |
|
|
|
|
2.16:1 |
|
|
|
|
2.53:1 |
|
|
|
|
|
|
|
|
|
||||||||
Debt to EBITDA ratio (3) |
|
1.20:1 |
|
|
|
|
1.37:1 |
|
|
|
|
2.11:1 |
|
|
|
|
|
|
|
|
|
||||||||
Debt to Adjusted EBITDA ratio (4) |
|
1.10:1 |
|
|
|
|
1.31:1 |
|
|
|
|
1.76:1 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
* Percentage based on applicable revenue rather than total revenue. |
|
||||||||||||||||||||||||||||
"NM" means not meaningful. |
|
||||||||||||||||||||||||||||
(1) Excludes depreciation. |
|
||||||||||||||||||||||||||||
(2) Current ratio is calculated as follows: current assets divided by current liabilities. The current ratio at December 31, 2024 has been revised from 2.32:1 to 2.16:1 as a result of certain prior period immaterial corrections. See Note 2 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements. |
|
||||||||||||||||||||||||||||
(3) 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. |
|
||||||||||||||||||||||||||||
(4) 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. |
|
||||||||||||||||||||||||||||
Service Revenue
Service revenue is primarily tied to activities associated with the exploration, production, movement and refinement of oil, gas and derived products outside the U.S. Service revenue for the year ended December 31, 2025, was $399.4 million, an increase of 3% compared to 2024. Approximately 70% of service revenue is generated from international markets. The increase in service revenue was due to growth in both U.S. and international markets. In 2025, growth occurred in several international markets, primarily in Europe and Africa, despite the headwinds from the on-going geopolitical conflicts and expanded sanctions previously discussed. The increase in U.S. service revenue in 2025 compared to 2024, was attributable to increased demand for well completion diagnostic services and growing client activity for our laboratory crude assay services in 2025. Growth in service revenue in 2025 has been negatively impacted by certain projects that were planned and scheduled but were canceled, as the well drilled by our clients were determined to be uneconomical or unsuccessful. Service revenue for the year ended December 31, 2024, was $388.2 million, an increase of 4% compared to 2023. The increase was due to growth in activity levels in both U.S. and international markets. In 2024, growth occurred in several international markets, primarily in
29
Europe, Africa and Asia Pacific, despite the headwinds from the on-going geopolitical conflicts. The increase in U.S. service revenue in 2024 compared to 2023, benefited from increased demand for reservoir core and reservoir fluids analysis services on international projects that are often conducted in our advanced technology center located in Houston, Texas, as well as a growing demand for CCS projects. Well completion diagnostic services in the U.S. market also showed strong growth in 2024 compared to 2023.
Product Sales Revenue
Product sales revenue is equally tied to the completion of onshore wells in North America and international activities. Product sales to the U.S. onshore markets are generally delivered more frequently and in smaller quantities, versus product sales to international markets which are typically shipped and delivered in bulk and the timing of delivery can vary from one period to another. Product sales revenue for the year ended December 31, 2025, was $127.1 million, a decrease of 6% compared to 2024. The decline in our product sales revenue was in line with the 6% decline in U.S. land-based average rig count in 2025 compared to 2024. Product sales revenue for the year ended December 31, 2024, was $135.6 million, a decrease of 2% compared to 2023. The decline in our product sales revenue was primarily associated with the activity decline in the U.S. onshore market, where the U.S. land-based average rig count decreased 13% in 2024 compared to 2023. The decrease in product sales to the U.S. market was partially offset by a higher level of product sales to international markets in 2024.
Cost of Services, excluding depreciation
Cost of services for the year ended December 31, 2025 was $302.2 million, an increase of 2% compared to 2024, which is lower than the change in service revenue. Cost of services expressed as a percentage of service revenue decreased to 76% in 2025 compared to 77% in 2024. The improvement in cost of services as a percentage of service revenue in 2025 compared to 2024, was primarily due to increased efficiencies and the benefits of lower compensation costs as a result of cost reduction initiatives implemented during 2025. Cost of services for the year ended December 31, 2024 was $297.3 million, an increase of 5% compared to 2023, which is slightly higher than the change in service revenue. Cost of services expressed as a percentage of service revenue increased to 77% in 2024 compared to 76% in 2023. The slight increase in cost of services as a percentage of service revenue in 2024, was primarily associated with higher employee compensation and higher operating costs incurred due to the fire incident at our Aberdeen, U.K. facility. The fire related costs and loss of income from business interruption were substantially covered by insurance proceeds recorded in Other (income) expense, net.
Cost of Product Sales, excluding depreciation
Cost of product sales for the year ended December 31, 2025 was $115.4 million, a decrease of 6% compared to 2024, which was in line with the changes in product sales revenue. Cost of product sales as a percentage of sales revenue remained flat between 2025 and 2024. In 2025, cost of product sales as a percentage of product sales was affected by higher absorption of fixed costs on a lower revenue base; but was offset by improved manufacturing efficiency and cost reduction initiatives implemented and lower inventory and asset write-downs of $1.8 million in 2025 compared to $3.3 million in 2024. Cost of product sales for the year ended December 31, 2024 was $123.2 million, an increase of 5% compared to 2023. Cost of product sales expressed as a percentage of product sales revenue increased to 91% in 2024 from 86% in 2023 primarily due to certain inventory and asset write-downs in 2024 as discussed above, with no such write-downs in 2023.
General and Administrative Expense, excluding depreciation
General and administrative (“G&A”) expense includes corporate management and centralized administrative services that benefit our operations. G&A expense was $45.4 million in 2025, an increase of 14% or $5.7 million. The increase was primarily associated with: 1) a higher stock compensation cost of $3.4 million that aligned with achievement of certain performance conditions; 2) unfavorable changes in mark-to-market value of company-owned life insurance of $1.9 million; and 3) increased license fees and implementation costs of $0.7 million associated with a new global human capital management system. G&A expense was $39.8 million in 2024, a decrease of 1% or $0.5 million compared to 2023. The decrease is associated with lower employee compensation costs, which were substantially offset by increases in costs associated with the implementation of a global human capital management system and a third-party assessment of the Company’s IT cybersecurity environment. See Note 16 - Stock-Based Compensation of the Notes to the Consolidated Financial Statements for further details.
Depreciation and Amortization
Depreciation and amortization expense for the year ended December 31, 2025 was $14.6 million, a decrease from $15.0 million and $15.8 million in 2024 and 2023, respectively. The decrease in 2025 and 2024 is primarily associated with assets which became fully depreciated.
30
Other (Income) Expense, net
The components of other (income) expense, net are as follows (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Gain on sale of assets |
|
$ |
(813 |
) |
|
$ |
(1,779 |
) |
|
$ |
(200 |
) |
Results of non-consolidated subsidiaries |
|
|
654 |
|
|
|
(236 |
) |
|
|
(394 |
) |
Foreign exchange (gain) loss, net |
|
|
745 |
|
|
|
1,197 |
|
|
|
176 |
|
Rents and royalties |
|
|
(24 |
) |
|
|
(1,922 |
) |
|
|
(698 |
) |
Return on pension assets and other pension costs |
|
|
(1,205 |
) |
|
|
(1,178 |
) |
|
|
(1,365 |
) |
Credits and other settlements |
|
|
(429 |
) |
|
|
— |
|
|
|
(1,046 |
) |
Assets write-down, loss on lease abandonment and other exit costs |
|
|
707 |
|
|
|
1,809 |
|
|
|
2,289 |
|
Insurance recovery - business interruption and costs |
|
|
(1,466 |
) |
|
|
(4,034 |
) |
|
|
— |
|
Insurance recovery - property, plant and equipment |
|
|
(6,830 |
) |
|
|
(4,398 |
) |
|
|
— |
|
ATM termination costs |
|
|
— |
|
|
|
— |
|
|
|
455 |
|
Severance and other charges |
|
|
2,256 |
|
|
|
985 |
|
|
|
— |
|
Other, net |
|
|
(1,209 |
) |
|
|
(397 |
) |
|
|
(67 |
) |
Total other (income) expense, net |
|
$ |
(7,614 |
) |
|
$ |
(9,953 |
) |
|
$ |
(850 |
) |
In 2024, we sold certain ownership interest in mineral rights of certain properties for a net gain of $1.4 million, which is included in gain on sale of assets.
During the year ended December 31, 2023, the State of Louisiana expropriated the access road to one of our facilities and paid us a settlement of $0.6 million.
During the years ended December 31, 2025, 2024 and 2023, as a result of our continuous efforts in consolidating and exiting certain facilities in the U.S and other international locations for operational efficiency, we recognized a write-down of the associated leasehold improvements, right of use assets and other assets and incurred lease abandonment and other exit costs of $0.7 million, $1.8 million and $2.3 million, respectively.
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 $1.1 million and $4.0 million during the years ended December 31, 2025 and 2024, respectively. Additionally, we recorded insurance recovery associated with loss on property and assets of $6.8 million and $4.4 million, respectively, during the years ended December 31, 2025 and 2024. In September 2025, Core Lab reached final settlement with the insurance company.
During the year ended December 31, 2023, we wrote off previously deferred costs of $0.5 million upon termination of our 2022 at-the-market Offering (“ATM Program”).
Foreign exchange (gain) loss, net for the primary currencies in which we operate and those with a material effect for the period presented is summarized in the following table (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Australian Dollar |
|
$ |
(7 |
) |
|
$ |
(2 |
) |
|
$ |
81 |
|
British Pound |
|
|
(52 |
) |
|
|
117 |
|
|
|
(408 |
) |
Canadian Dollar |
|
|
(44 |
) |
|
|
293 |
|
|
|
156 |
|
Euro |
|
|
824 |
|
|
|
41 |
|
|
|
438 |
|
Indonesian Rupiah |
|
|
163 |
|
|
|
315 |
|
|
|
82 |
|
Russian Ruble |
|
|
(336 |
) |
|
|
36 |
|
|
|
(375 |
) |
Other currencies, net |
|
|
197 |
|
|
|
397 |
|
|
|
202 |
|
Foreign exchange (gain) loss, net |
|
$ |
745 |
|
|
$ |
1,197 |
|
|
$ |
176 |
|
Interest Expense
Interest expense for the year ended December 31, 2025 was $10.6 million compared to $12.4 million and $13.4 million in 2024 and 2023, respectively. In 2025, the Company reduced its total outstanding debt by $15.0 million or 12% from end of
31
2024. The decrease in interest expense is associated with lower outstanding debt and lower average blended interest rates in 2025 compared to 2024. In 2024, the Company reduced its total outstanding debt by $38.0 million or 23% from end of 2023. The decrease in interest expense associated with lower outstanding debt was partially offset by a higher average blended interest rate in 2024 compared to 2023. In September 2023, the 2011 Senior Notes of $75 million with a fixed rate of 4.11% matured and were partially refinanced with the 2023 Senior Notes of $50 million with higher fixed rates of 7.25% and 7.50%. See Note 10 - Long-term Debt, net of the Notes to the Consolidated Financial Statements for further detail. Interest expense was also affected by changes associated with our interest rate swap agreements, as described in Note 14 - Derivative Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements.
Income Tax Expense
Income tax expense was $15.5 million in 2025 and resulted in an effective tax rate of 33.8%. The 2025 tax expense was primarily impacted by our geographic mix of earnings, non-deductible expenses, unrecoverable tax receivable, and valuation allowance on deferred tax assets. Income tax expense was $14.0 million in 2024 and resulted in an effective tax rate of 30.4%. The 2024 tax expense was primarily impacted by the geographic mix of earnings. Income tax expense was $4.2 million in 2023 and resulted in an effective tax rate of 10.2%. The 2023 tax expense was primarily impacted by the reversal of deferred tax liabilities of $11.6 million associated with the Redomestication Transaction, partially offset by the geographic mix of earnings.
See Note 8 - Income Taxes of the Notes to the Consolidated Financial Statements for further detail of income tax expense.
Segment Analysis
The following charts and tables summarize the annual revenue and operating results as a percentage of applicable revenue for our two complementary operating segments.
Segment Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 / 2024 |
|
|
2024 / 2023 |
|
||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
|||||||||||||||||
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reservoir Description |
|
$ |
347,683 |
|
|
66.0 |
% |
|
$ |
346,146 |
|
|
66.1 |
% |
|
$ |
333,345 |
|
|
65.4 |
% |
|
|
0.4 |
% |
|
|
3.8 |
% |
Production Enhancement |
|
|
178,837 |
|
|
34.0 |
% |
|
|
177,702 |
|
|
33.9 |
% |
|
|
176,445 |
|
|
34.6 |
% |
|
|
0.6 |
% |
|
|
0.7 |
% |
Consolidated revenue |
|
$ |
526,520 |
|
|
100.0 |
% |
|
$ |
523,848 |
|
|
100.0 |
% |
|
$ |
509,790 |
|
|
100.0 |
% |
|
|
0.5 |
% |
|
|
2.8 |
% |
OPERATING INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reservoir Description* |
|
$ |
43,939 |
|
|
12.6 |
% |
|
$ |
51,466 |
|
|
14.9 |
% |
|
$ |
41,039 |
|
|
12.3 |
% |
|
|
(14.6 |
)% |
|
|
25.4 |
% |
Production Enhancement* |
|
|
12,055 |
|
|
6.7 |
% |
|
|
6,612 |
|
|
3.7 |
% |
|
|
12,519 |
|
|
7.1 |
% |
|
|
82.3 |
% |
|
|
(47.2 |
)% |
Corporate and other (1) |
|
|
474 |
|
|
0.1 |
% |
|
|
478 |
|
|
0.1 |
% |
|
|
1,082 |
|
|
0.2 |
% |
|
NM |
|
|
NM |
|
||
Consolidated operating income |
|
$ |
56,468 |
|
|
10.7 |
% |
|
$ |
58,556 |
|
|
11.2 |
% |
|
$ |
54,640 |
|
|
10.7 |
% |
|
|
(3.6 |
)% |
|
|
7.2 |
% |
* Percentage, which represents operating margin, is based on operating income divided by applicable revenue rather than total revenue.
“NM” means not meaningful.
(1) “Corporate and other” represents those items that are not directly relating to a particular operating segment.
32
Reservoir Description
Reservoir Description operations are closely correlated with trends in international and offshore activity levels, with approximately 80% of its revenue sourced from producing fields, development projects and movement of crude oil and derived products outside the U.S. The Company continues to see growth in international projects across several international regions. Additionally, despite expanded sanctions imposed in early 2025, the temporary disruptions in the maritime movement and logistical trading patterns for crude oil and derived products, caused by the Russia-Ukraine and Middle East geopolitical conflicts stabilized somewhat the remainder of 2025.
Revenue from the Reservoir Description operating segment for the year ended December 31, 2025 was $347.7 million, relatively flat compared to 2024. During 2025, revenue growth in certain regions has been negatively impacted from cancelled projects due to the decrease in the success rate for international offshore exploration and appraisal wells. The success rate for international offshore exploration and appraisal wells reached a 20-year low as we exited 2024 and entered 2025. The decrease in international offshore commercial success rates has resulted in the cancellation of several reservoir rock and fluid analysis projects that were originally planned for late 2024 and 2025. In 2025, higher revenue from international projects and crude-assay services was substantially offset by a lower revenue in reservoir rock and fluid analysis projects in the U.S. due to cancellation of uneconomical or unsuccessful well drilling projects.
Revenue from the Reservoir Description operating segment for the year ended December 31, 2024 was $346.1 million, an increase of 4% compared to 2023. The increased revenue in 2024 was primarily due to growing client activity for our reservoir core and reservoir fluids analysis services on projects in several regions across the globe, as well as continued momentum of growing demand for CCS projects in the last couple of years. Additionally, crude assay services associated with the maritime movement of crude oil and derived products which were impacted by the Russia-Ukraine conflict continued to improve in 2024. The growth in revenue was partially offset by delayed project revenue caused by the fire incident at one of our U.K. facilities. The Company holds insurance policies for both property damage and business interruption, which has minimized the loss to the Company associated with the fire.
Operating income was $43.9 million for the year ended December 31, 2025, a decrease of 15% compared to 2024. Operating margins were 13% for the year ended December 31, 2025, compared to 15% in 2024. The changes in operating income and operating margins were primarily attributable to a different mix of revenue with a lower level of revenue from reservoir rock and reservoir fluid analysis in 2025, which yields a higher margin, and higher level of laboratory assay services and laboratory instrument sales, which yield lower margins. Additionally, a total of $2.3 million of severance and facility consolidation cost was recorded in 2025 compared to $1.1 million recorded in 2024.
Operating income for the year ended December 31, 2024 was $51.5 million, an increase of 25% compared to 2023. Operating margins increased to 15% in 2024 from 12% in 2023. The increase in operating income and operating margins in 2024 was primarily due to high operating margins associated with the incremental revenue of $12.8 million in 2024 and continued improvement in utilization of our global laboratory network.
Production Enhancement
Production Enhancement’s operations are largely focused on complex completions in unconventional, tight-oil reservoirs in the U.S. as well as conventional projects across the globe. U.S. onshore drilling and completion activities peaked in 2022, after the COVID-19 pandemic, but declined in 2023 through 2025. The decline in drilling and completion activity was primarily due to the weakening of both crude oil and natural gas commodity prices in 2023. Oil and gas operators continue to remain focused on return of investment versus growing production, and as a result have continued to remain more disciplined with their annual production growth plans. In 2025, the U.S. land based average rig count decreased by 6% from 2024’s level, as a result of lower crude oil prices in 2025. However, the average natural gas prices rebounded in 2025 by approximately 61% from 2024, which resulted in some growth in rig count working in natural gas basins and helped offset some of the overall decline in total land-based rig count. The average rig count in the U.S. onshore market declined by 13% in 2024 compared to 2023.
Revenue from the Production Enhancement operating segment of $178.8 million for the year ended December 31, 2025, increased 1% compared to 2024. The increase in revenue is primarily due to a higher level of service revenue associated with strong growth in well completion diagnostic services in 2025 as natural gas prices rebounded, substantially offset by lower product sales in the U.S. land market and certain international markets in 2025.
Revenue from the Production Enhancement operating segment for the year ended December 31, 2024 was $177.7 million, a slight increase of 1% compared to 2023, primarily due to a strong growth in well completion diagnostic services and international product sales in 2024. This increase was substantially offset by lower activity and product sales into the U.S. onshore market.
33
Operating income was $12.1 million for the year ended December 31, 2025, an increase of $5.4 million or 82% compared to 2024. Operating margins for the year ended December 31, 2025 improved to 7% compared to 4% in 2024. The significant increase in operating income and improvement in operating margins was primarily attributed to increased revenue from well completion diagnostic services which yield a higher operating margin. Additionally, the year ended December 31, 2024 includes: 1) a charge of $3.3 million associated with inventory and other related asset write-downs, 2) a $0.6 million loss on the sale of a building, and 3) severance and other charges of $0.5 million.
Operating income for the year ended December 31, 2024 was $6.6 million, a decrease of 47% when compared to 2023. Operating margins decreased to 4% in 2024 from 7% in 2023. The decrease in operating income and operating margin in 2024, was primarily due to inventory and other related asset write-downs, loss on the sale of a building, and severance and other charges as discussed above incurred in 2024, and no similar transactions in 2023.
Liquidity and Capital Resources
General
We have historically financed our activities through cash on hand, cash flows from operations, bank credit facilities, equity financing and the issuance of debt. Cash flows from operating activities provide the primary source of funds to finance our operating needs, capital expenditures, dividends and discretionary share repurchases. Our ability to maintain and grow our operating income and cash flow depends, to a large extent, on continued investing activities. We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity and debt, should be sufficient to fund our debt requirements, working capital, capital expenditures, dividends, discretionary share repurchases and future acquisitions. The Company will continue to monitor and evaluate the availability of debt and equity markets.
We are a holding company incorporated in Delaware and conduct substantially all of our operations through our subsidiaries. Our cash availability is largely dependent upon the ability of our subsidiaries to pay cash dividends or otherwise distribute or advance funds to us and on the terms and conditions of our existing and future credit arrangements. There are no restrictions preventing any of our subsidiaries from repatriating earnings, except for the unrepatriated earnings of our Russian subsidiary which are not expected to be distributed in the foreseeable future, and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances. As of December 31, 2025, $22.2 million of our $22.7 million of cash balances was held by our foreign subsidiaries.
The Company maintains a quarterly dividend program of $0.01 per share.
Cash Flows
The following table summarizes cash flows (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|||
Operating activities |
|
$ |
37,031 |
|
|
$ |
56,388 |
|
|
$ |
24,789 |
|
Investing activities |
|
|
(2,231 |
) |
|
|
(6,394 |
) |
|
|
(6,652 |
) |
Financing activities |
|
|
(31,255 |
) |
|
|
(45,957 |
) |
|
|
(18,445 |
) |
Net change in cash and cash equivalents |
|
$ |
3,545 |
|
|
$ |
4,037 |
|
|
$ |
(308 |
) |
Comparing the year ended December 31, 2025, to the year ended December 31, 2024, net income decreased $1.8 million while cash provided by operating activities decreased $19.4 million. The decrease in cash provided by operating activities was primarily due to: 1) higher levels of operational working capital utilization as accounts receivable increased $5.0 million in 2025 compared to an increase of $3.6 million in 2024; 2) the Company’s efforts in inventory management continued in 2025, as a result inventory was further reduced by $2.6 million in 2025 after a larger reduction of $9.4 million in 2024; and 3) higher net cash used in unearned revenues of $3.8 million in 2025 compared to net cash provided of $4.6 million in 2024. Comparing the year ended December 31, 2024, to the year ended December 31, 2023, net income decreased $4.9 million, however, cash provided by operating activities increased $31.6 million. In 2024, improvement in cash provided by operating activities was primarily driven by a decrease in operational working capital which increased cash flow by $34.7 million compared to 2023. The improvements in working capital and associated cash flow in 2024 was partially offset by higher cash used in prepaid expenses and other assets in 2024 versus 2023.
Cash used in investing activities for the year ended December 31, 2025 of $2.2 million was driven by $14.6 million of capital expenditures for normal operations and rebuilding of the Aberdeen, U.K. facility, and $1.2 million of net cash used for business
34
acquisitions in 2025. The cash used in investing activities was substantially offset by: 1) $3.0 million of proceeds from sale of assets; and 2) $10.0 million of proceeds recovered through insurance associated with the fire incident at the Aberdeen, U.K. facility. Cash used in investing activities for the year ended December 31, 2024 of $6.4 million was driven primarily by funding capital expenditures of $13.0 million offset by: 1) $1.7 million of proceeds from sale of assets; 2) $2.1 million of proceeds recovered through insurance associated with the fire incident as previously discussed.; and 3) $2.8 million received on company owned life insurance policies. Cash used in investing activities for the year ended December 31, 2023 of $6.7 million was driven primarily by funding capital expenditures of $10.6 million offset by $3.4 million of net proceeds received on company owned life insurance policies and $0.5 million of proceeds from sales of assets.
Cash used in financing activities for the year ended December 31, 2025 of $31.3 million was driven primarily by: 1) net reduction in debt of $15.0 million; 2) debt issuance cost of $1.7 million in renewing the Company’s credit facility; 3) dividends paid of $1.9 million; and 4) repurchase of common stock of $12.4 million. Cash used in financing activities in 2024 of $46.0 million was primarily due to: 1) a net reduction in debt of $38.0 million, 2) dividends paid of $1.9 million, and 3) repurchase of common stock of $5.3 million. Cash used in financing activities in 2023 of $18.4 million was primarily due to: 1) a net reduction in debt of $9.0 million, 2) debt issuance costs of $1.3 million primarily associated with the issuance of the 2023 Senior Notes, 3) $4.1 million for costs incurred in the Redomestication Transaction, 4) dividends paid of $1.9 million, and 5) repurchase of common stock of $2.2 million.
During 2025, we made discretionary repurchases of 1,194,685 shares of our common stock for an aggregate amount of $15.5 million, or an average price of $12.96 per share. See Note 13 - Equity of the Notes to the Consolidated Financial Statements for additional information. We believe our discretionary share repurchases have been beneficial to our shareholders over the longer term. Our share price has increased from $4.03 per share in 2002, when we began to repurchase shares, to $16.03 per share on December 31, 2025, an increase of approximately 300%. The 1% stock buyback excise tax may apply to our discretionary shares repurchases. The amount subject to the excise tax generally is the fair market value of stock repurchased by us net of the fair market value of any stock issued by us during such taxable year.
We utilize the non-generally accepted accounting principles (“GAAP”) financial measure of free cash flow to evaluate our cash flows and results of operations. Free cash flow is defined as net cash provided by operating activities (which is the most directly comparable U.S. GAAP measure) less cash paid for capital expenditures. Management believes that free cash flow provides useful information to investors regarding the cash available in the period that was in excess of our needs to fund our capital expenditures and operating activities. Free cash flow is not a measure of operating performance under U.S. GAAP and should not be considered in isolation nor construed as an alternative to operating income, net income or cash flows from operating, investing or financing activities, each as determined in accordance with U.S. GAAP. Free cash flow does not represent residual cash available for distribution because we may have other non-discretionary expenditures that are not deducted from the measure. Moreover, since free cash flow is not a measure determined in accordance with U.S. GAAP and thus is susceptible to varying interpretations and calculations, free cash flow, as presented, may not be comparable to similarly titled measures presented by other companies. The following table reconciles this non-GAAP financial measure to the most directly comparable measure calculated and presented in accordance with U.S. GAAP (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
Free Cash Flow Calculation |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Net cash provided by operating activities |
|
$ |
37,031 |
|
|
$ |
56,388 |
|
|
$ |
24,789 |
|
Less: Cash paid for capital expenditures - operations |
|
|
(11,209 |
) |
|
|
(11,888 |
) |
|
|
(10,579 |
) |
Free cash flow |
|
$ |
25,822 |
|
|
$ |
44,500 |
|
|
$ |
14,210 |
|
Free cash flow decreased by $18.7 million for the year ended December 31, 2025 compared to 2024, primarily due to higher cash used in our working capital as discussed above, offset by slightly lower capital expenditures for operations in 2025. Free cash flow increased significantly by $30.3 million for the year ended December 31, 2024 compared to 2023, primarily due to improvement in our operational working capital as discussed above. Capital expenditures for operations excludes capital expenditures of $3.4 million and $1.1 million for the years ended December 31, 2025 and 2024, respectively, associated with the rebuilding of the Aberdeen, U.K. facility that was impacted by a fire incident and is covered by insurance.
Credit Facility, Senior Notes and Available Future Liquidity
We, along with our wholly owned subsidiary Core Laboratories (U.S.) Interests Holdings, Inc. (“CLIH”), have a secured credit facility, which we renewed on July 22, 2025 as the Ninth Amended and Restated Credit Agreement (as amended, the “Credit Facility”) for an aggregate borrowing commitment of $150.0 million with a $50.0 million “accordion” feature. Draws up to $100.0 million are available in the form of a revolving credit facility, and a single draw of $50.0 million is available in the form of a delayed draw term loan (“DDTL”) through January 12, 2026. As of December 31, 2025, the Credit Facility has an
35
available borrowing capacity of approximately $136.0 million. Additionally, we, along with CLIH as issuer, have senior notes that were issued through private placement transactions (“Senior Notes”). On January 12, 2026, we made a draw of $50.0 million on the DDTL to repay the 2021 Senior Notes Series A in the amount of $45.0 million, which matured on that date.
These debt instruments are summarized in the following table (in thousands):
|
|
|
|
|
December 31, |
|
|||||
|
Interest Rate |
|
Maturity Date |
|
2025 |
|
|
2024 |
|
||
Credit Facility |
|
|
|
|
$ |
3,000 |
|
|
$ |
18,000 |
|
2021 Senior Notes Series A(1) |
4.09% |
|
January 12, 2026 |
|
|
45,000 |
|
|
|
45,000 |
|
2021 Senior Notes Series B(1) |
4.38% |
|
January 12, 2028 |
|
|
15,000 |
|
|
|
15,000 |
|
2023 Senior Notes Series A(2) |
7.25% |
|
June 28, 2028 |
|
|
25,000 |
|
|
|
25,000 |
|
2023 Senior Notes Series B(2) |
7.50% |
|
June 28, 2030 |
|
|
25,000 |
|
|
|
25,000 |
|
Total long-term debt |
|
|
|
|
|
113,000 |
|
|
|
128,000 |
|
Less: Debt issuance costs |
|
|
|
|
|
(2,745 |
) |
|
|
(1,889 |
) |
Long-term debt, net |
|
|
|
|
$ |
110,255 |
|
|
$ |
126,111 |
|
See Note 10 - Long-term Debt, net of the Notes to the Consolidated Financial Statements for additional information regarding the terms and financial covenants of the Credit Facility and the Senior Notes.
In accordance with the terms of the Credit Facility, our leverage ratio is 1.10, and our interest coverage ratio is 7.79, each for the period ended December 31, 2025. We are in compliance with all covenants contained in our Credit Facility and Senior Notes as of December 31, 2025. Certain of our material, wholly owned subsidiaries, are guarantors or co-borrowers under the Credit Facility and Senior Notes. The Company determined certain prior period corrections, as disclosed in Note 2 - Summary of Significant Accounting Policies-Prior Period Immaterial Corrections of the Notes to the Consolidated Financial Statements, did not impact any financial covenants under the terms of the Company’s Credit Facility or Senior Notes.
See Note 14 - Derivative Instruments and Hedging Activities of the Notes to the Consolidated Financial Statements for additional information regarding interest rate swap agreements we have entered to fix the underlying risk-free rate on the 2023 Senior Notes.
In addition to our repayment commitments under our Credit Facility and our Senior Notes, we have non-cancellable operating lease arrangements under which we lease office and lab space, machinery, equipment and vehicles. We also have employer contribution commitments related to our Dutch pension plan with amounts payable in the future based upon workforce factors that cannot be estimated beyond one year. These material future contractual obligations are discussed in Note 6 - Leases, Note 10 - Long-term Debt, net and Note 11 - Pension and Other Postretirement Benefit Plans of the Notes to the Consolidated Financial Statements. We have no significant purchase commitments or similar obligations outstanding at December 31, 2025.
We have uncertain tax positions of $4.2 million that we have accrued for at December 31, 2025; the amounts and timing of payment, if any, are uncertain. See Note 8 - Income Taxes of the Notes to the Consolidated Financial Statements for further detail of this amount.
At December 31, 2025, we had tax net operating loss carry-forwards in various jurisdictions of $38.3 million. Although we cannot be certain that these net operating loss carry-forwards will be utilized, we anticipate that we will have sufficient taxable income in future years to allow us to fully utilize the carry-forwards that are not subject to a valuation allowance as of December 31, 2025. If unused, those carry-forwards which are subject to expiration may expire during the years 2026 through 2037. During 2025, no material net operating loss carry-forwards, which carried a full valuation allowance, expired unused.
The Company has maintained its annual capital expenditures for operations between $10.0 million and $13.0 million during the years 2025, 2024 and 2023 which is significantly reduced from average annual capital expenditures in years prior to the pandemic. We expect our investment in capital expenditures to track with client demand for our services and products. Given the uncertain trend in industry activity levels, we have not determined, at this time, the level of investment that will be made in 2026. We will, however, continue to invest in the purchase or replacement of obsolete or worn-out instrumentation, tools and equipment, to consolidate certain facilities to gain operational efficiencies, and to increase our presence where requested by our clients.
36
Outlook
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. This concern has also resulted in lower crude oil prices. 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.
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 Annual 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.
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.
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.
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.
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.
37
Critical Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis and utilize our historical experience, as well as various other assumptions that we believe are reasonable in a given circumstance, in order to make these estimates. By nature, these judgments are subject to an inherent degree of uncertainty. We consider an accounting estimate to be critical if it is highly subjective and if changes in the estimate under different assumptions would result in a material impact on our financial condition and results of operations. The following transaction types require significant judgment and, therefore, are considered critical accounting policies as of December 31, 2025.
Income Taxes
Our income tax expense includes income taxes of the U.S. and other countries as well as local, state and provincial income taxes. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying value and the tax basis of assets and liabilities using enacted tax rates in effect for the years in which the asset is expected to be recovered or the liability is expected to be settled. We estimate the likelihood of the recoverability of our deferred tax assets (particularly, net operating loss carry-forwards). Any valuation allowance recorded is based on estimates and assumptions of taxable income into the future and a determination is made of the magnitude of deferred tax assets which are more likely than not to be realized. Valuation allowances of our net deferred tax assets aggregated to $15.8 million and $8.8 million at December 31, 2025 and 2024, respectively. If these estimates and related assumptions change in the future, we may be required to record additional valuation allowance against our deferred tax assets and our effective tax rate may increase which could result in a material adverse impact on our financial position, results of operations and cash flows. We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in our tax return. We also recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet financing arrangements such as securitization agreements, liquidity trust vehicles or special purpose entities. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such financing arrangements.
Forward-Looking Statements
This Form 10-K and the documents incorporated in this Form 10-K by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These “forward-looking statements” are based on an analysis of currently available competitive, financial and economic data and our operating plans. They are inherently uncertain and investors should recognize that events and actual results could turn out to be significantly different from our expectations. By way of illustration, when used in this document, words such as “anticipate”, “believe”, “expect”, “intend”, “estimate”, “project”, “will”, “should”, “could”, “may”, “predict”, “continue” and similar expressions are intended to identify forward-looking statements. You are cautioned that actual results could differ materially from those anticipated in forward-looking statements. Any forward-looking statements, including statements regarding the intent, belief or current expectations of our directors, officers, and management, are not guarantees of future performance and involve risks, uncertainties and assumptions about us and the industry in which we operate, including, among other things:
38
Our business depends, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Therefore, a sustained increase or decrease in the oil and natural gas commodity prices, which could have a material impact on exploration, development and production activities, could also materially affect our financial position, results of operations and cash flows.
The above description of risks and uncertainties is by no means all-inclusive, but is designed to highlight what we believe are important factors to consider. For a more detailed description of risk factors, please see “Item 1A. Risk Factors” in this Form 10-K and our reports and registration statements filed from time to time with the SEC.
All forward-looking statements in this Form 10-K are based on information available to us on the date of this Form 10-K. We do not intend to update or revise any forward-looking statements that we may make in this Form 10-K or other documents, reports, filings or press releases, whether as a result of new information, future events or otherwise, unless required by law.
Recent Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for further discussion of accounting standards adopted during the year and to be adopted in future periods.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
We are exposed to market risk, which is the potential loss arising from adverse changes in market prices and rates. We do not believe that our exposure to market risks, which is primarily related to interest rate changes, is material.
Interest Rate Risk
We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in interest rates and market perception of our credit risk. The fair value of our debt at December 31, 2025 and 2024 approximated the book value.
Under the Credit Facility, the Secured Overnight Financing Rate (“SOFR”) plus 2.00% to SOFR plus 3.00% will be applied to outstanding borrowings. At December 31, 2025, we had outstanding borrowings of $3.0 million. A 10% change in interest rates would not have a material impact on our results of operations or cash flows.
Foreign Currency Risk
We operate in a number of international areas which exposes us to foreign currency exchange rate risk. We do not currently hold or issue forward exchange contracts or other derivative instruments for hedging or speculative purposes. Foreign exchange gains and losses are the result of fluctuations in the U.S. dollar (“USD”) against foreign currencies and are included in other (income) expense, net in the consolidated statements of operations. We recognize foreign exchange losses in countries where the USD weakens against the local currency and we have net monetary liabilities denominated in the local currency, as well as in countries where the USD strengthens against the local currency and we have net monetary assets denominated in the local currency. We recognize foreign exchange gains in countries where the USD strengthens against the local currency and we have net monetary liabilities denominated in the local currency and in countries where the USD weakens against the local currency and we have net monetary assets denominated in the local currency.
Credit Risk
Our financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Substantially all cash and cash equivalents are on deposit at commercial banks or investment firms. Our trade receivables are with a variety of domestic, international and national oil and gas companies.
39
Management considers the Company’s credit risk to be limited due to the creditworthiness and financial resources of these financial institutions and companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For the financial statements and supplementary data required by this Item 8, see Part IV “Item 15. Exhibits and Financial Statement Schedules.”
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2025 at the reasonable assurance level.
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. Further, the design of disclosure controls and internal control over financial reporting must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth in Internal Control − Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment using these criteria, our management determined that our internal control over financial reporting was effective as of December 31, 2025.
The effectiveness of our internal control over financial reporting as of December 31, 2025, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which appears herein.
Changes in Internal Control over Financial Reporting
There was no change in our system of internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our fiscal quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
40
ITEM 9B. OTHER INFORMATION
During our fiscal quarter ended December 31, 2025, no director or officer of the Company
NYSE Notification
On March 18, 2026, the Company received a notice of noncompliance (the “NYSE Notice”) from the New York Stock Exchange (“NYSE”) noting that the Company is not in compliance with Section 802.01E of the NYSE Listed Company Manual due to the delayed filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Form 10-K”).
As previously reported in the Company’s Notification of Late Filing on Form 12b-25 filed with the SEC on March 3, 2026 (the “Form 12b-25”), the Company was unable to file the Form 10-K within the prescribed period because additional time, resources and effort were required to complete work related to its financial reporting and closing procedures, specifically in connection with income tax accounting matters across various international jurisdictions. Subsequent to filing the Form 12b-25, the Company continued to dedicate significant resources to the accounting analysis and completion of those procedures but was unable to file the Form 10-K by March 17, 2026, the end of the 15-day extension period provided by the Form 12b-25.
The NYSE Notice has no immediate effect on the listing of the Company’s common stock on the NYSE. The NYSE Notice informed the Company that, under NYSE rules, the Company has six months from March 18, 2026 to regain compliance with the NYSE listing standards by filing the Form 10-K with the SEC. If the Company fails to file the Form 10-K within the six-month period, the NYSE may grant, in its sole discretion, an extension of up to six additional months for the Company to regain compliance, depending on the specific circumstances. The NYSE Notice also notes that the NYSE may nevertheless commence delisting proceedings at any time if it deems that the circumstances warrant.
As a result of filing this Form 10-K on March 20, 2026, the Company believes it has fully regained compliance with NYSE listing standards.
Correction of Information in Current Report on Form 8-K/A filed on March 17, 2026
On March 17, 2026, the Company filed a Form 8-K/A (the “Amended Report”) with the Securities and Exchange Commission, which amended and supplemented the Company’s Current Report on Form 8-K filed on February 4, 2026 (the “Original Form 8-K”). The Amended Report was filed to correct certain financial information contained in Exhibit 99.1 to the Original Form 8-K. The sole purpose of this disclosure is to correct certain financial information contained in the Amended Report.
In completing the reconciliation and corresponding controls for preparation of the financial statements to be included in the Annual Report on Form 10-K for the year ended December 31, 2025, the Company determined that the adjustment to estimated income tax expense for the quarter and year ended December 31, 2025 as reported in the Amended Report was overstated by $2.0 million. The final income tax expense adjustments have been recorded by the Company, which resulted in decreasing deferred income tax expense by $2.0 million, decreasing deferred tax liabilities by $2.0 million, and increasing net income by $2.0 million for the year-ended December 31, 2025.
The adjustment to income tax expense did not have any impact on, or result in any change to, consolidated revenue, operating income, income before tax, or cash from operations as presented in the Original Form 8-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
41
PART III
The information required by Part III (Items 10 through 14) is incorporated by reference from our definitive proxy statement (the “2026 Proxy Statement”) to be filed in connection with our 2026 annual meeting of shareholders pursuant to Regulation 14A under the Exchange Act. We expect to file our definitive proxy statement with the SEC within 120 days after the close of the year ended December 31, 2025.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated by reference to the definitive Proxy Statement for the 2026 Annual Meeting of Shareholders.
Core Lab has a Code of Ethics and Corporate Responsibility that applies to all of its directors, officers and employees, including its principal executive, financial and accounting officers, or persons performing similar functions. Core Lab’s Code of Ethics and Corporate Responsibility is posted on its website at www.corelab.com/sustainability/governance/our-ethics-program.pdf.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the captions “Compensation Discussion and Analysis” in Core Lab’s 2026 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information under the captions “Ownership of Securities—Security Ownership by Certain Beneficial Owners and Management” and “Compensation Discussion and Analysis—2025 Compensation Program Details” in Core Lab’s 2026 Proxy Statement is incorporated herein by reference.
The information under the captions “Information About our Directors and Director Compensation—Director Independence” and “Information About our Directors and Director Compensation—Related Person Transactions” in Core Lab’s 2026 Proxy Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is
The information under the caption “Information About our Independent Registered Public Accounting Firm” in Core Lab’s 2026 Proxy Statement is incorporated herein by reference.
42
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. The following reports, financial statements and schedules are filed herewith on the pages indicated:
|
Page |
Reports of Independent Registered Public Accounting Firm-KPMG LLP |
F-1 |
Consolidated Balance Sheets as of December 31, 2025 and 2024 |
F-4 |
Consolidated Statements of Operations for the Years Ended December 31, 2025, 2024 and 2023 |
F-5 |
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2025, 2024 and 2023 |
F-6 |
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2025, 2024 and 2023 |
F-7 |
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023 |
F-9 |
Notes to the Consolidated Financial Statements |
F-11 |
2. Financial Statement Schedule
Schedule II - Valuation and Qualifying Account
The exhibits listed in the accompanying “Index to Exhibits” are incorporated by reference to the filing indicated or are filed herewith.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
43
INDEX TO EXHIBITS
Exhibit No. |
|
Exhibit Title |
|
Incorporated by Reference from the Following Documents |
3.1 |
|
Core Laboratories Inc. Certificate of Incorporation |
|
Form 8-K, May 1, 2023 (File No. 001-41695) |
|
|
|
|
|
3.2 |
|
First Amended and Restated Bylaws of Core Laboratories Inc. |
|
Form 8-K, March 5, 2026 (File No. 001-41695) |
|
|
|
|
|
4.1 |
|
Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 |
|
Form 10-K, February 13, 2025 (File No. 001-4195) |
|
|
|
|
|
10.1 |
|
Core Laboratories Inc. 2024 Long-Term Incentive Plan (1) |
|
Appendix A to Definitive Proxy Statement dated March 18, 2024 for Annual Meeting of Shareholders (File No. 001-41695) |
|
|
|
|
|
10.2 |
|
Core Laboratories Inc. 2023 Non-Employee Director Stock Incentive Plan (as amended and restated effective as of June 28, 2023) (1) |
|
Appendix A to Definitive Proxy Statement dated April 28, 2023 for Annual Meeting of Shareholders (File No. 001-14273) |
|
|
|
|
|
10.3 |
|
Core Laboratories Supplemental Executive Retirement Plan effective as of January 1, 1998 (1) |
|
Form 10-K, March 31, 1998 (File No. 000-26710) |
|
|
|
|
|
10.4 |
|
Amendment to Core Laboratories Supplemental Executive Retirement Plan, effective July 29, 1999 (1) |
|
Form 10-Q, August 16, 1999 (File No. 001-14273) |
|
|
|
|
|
10.5 |
|
Amendment to Core Laboratories Supplemental Executive Retirement Plan, effective February 28, 2003 (1) |
|
Form 10-Q, May 15, 2003 (File No. 001-14273) |
|
|
|
|
|
10.6 |
|
Amendment to Core Laboratories Supplemental Executive Retirement Plan dated as of March 5, 2008 (1) |
|
Form 10-Q, May 12, 2008 (File No. 001-14273) |
|
|
|
|
|
10.7 |
|
Form of Restricted Share Award Program Agreement (1) |
|
Form 10-K, February 20, 2007 (File No. 001-14273) |
|
|
|
|
|
10.8 |
|
Form of Core Laboratories 2023 Non-Employee Director Restricted Share Award Program Agreement (1) |
|
Form 10-K, February 15, 2024 (File No. 001-41695) |
|
|
|
|
|
10.9 |
|
Form of Core Laboratories 2020 Performance Share Award Program Agreement (ROIC Based) (1) |
|
Form 10-K, February 15, 2024 (File No. 001-41695) |
|
|
|
|
|
10.10 |
|
Ninth Amended and Restated Credit Agreement, dated as of July 22, 2025, among Core Laboratories Inc., and Core Laboratories (U.S.) Interests Holdings, Inc., and the lenders party thereto and Bank of America, N.A., as administrative agent and Wells Fargo Bank, N.A., as syndication agent and Comerica Bank, as documentation agent. |
|
Form 8-K, July 22, 2025 (File No. 001-41695) |
|
|
|
|
|
10.12 |
|
Assumption and Reaffirmation Agreement, dated May 1, 2023, by and between Core Laboratories Inc. and Bank of America, N.A. |
|
Form 8-K, May 1, 2023 (File No. 001-41695) |
|
|
|
|
|
10.13 |
|
Master Note Purchase Agreement, dated as of September 30, 2011 |
|
Form 8-K, September 30, 2011 (File No. 001-14273) |
|
|
|
|
|
10.14 |
|
Amendment No. 2 to Master Note Purchase Agreement and Assumption Agreement, dated as of May 1, 2023 |
|
Form 8-K, May 1, 2023 (File No. 001-41695) |
|
|
|
|
|
10.15 |
|
Amendment No. 2 to Note Purchase Agreement and Assumption Agreement, dated as of May 1, 2023 |
|
Form 8-K, May 1, 2023 (File No. 001-41695) |
|
|
|
|
|
10.16 |
|
Note Purchase Agreement, dated as of May 4, 2023 |
|
Form 8-K, May 4, 2023 (File No. 001-41695) |
|
|
|
|
|
10.17 |
|
Employment Agreement between Core Laboratories N.V. and Lawrence V. Bruno, dated March 1, 2019 (1) |
|
Form 8-K, March 6, 2019 (File No. 001-14273) |
44
|
|
|
|
|
10.18 |
|
Employment Agreement between Core Laboratories N.V. and Christopher S. Hill, dated March 1, 2019 (1) |
|
Form 8-K, March 6, 2019 (File No. 001-14273) |
|
|
|
|
|
10.19 |
|
Employment Agreement between Core Laboratories N.V. and Gwendolyn Y. Schreffler, dated March 1, 2019 (1) |
|
Form 10-K, February 8, 2021 (File No. 001-14273) |
|
|
|
|
|
10.20 |
|
Note Purchase Agreement, dated as of October 16, 2020. |
|
Form 8-K, October 16, 2020 (File No. 001-14273) |
|
|
|
|
|
10.21 |
|
Amendment to Employment Agreement, by and between Core Laboratories N.V. and Lawrence V. Bruno, dated March 1, 2020 (1). |
|
Form 8-K, March 5, 2020 (File No. 001-14273) |
|
|
|
|
|
10.22 |
|
Employment Agreement, by and between Core Laboratories N.V. and Mark D. Tattoli, dated October 18, 2021 (1) |
|
Form 8-K, October 19, 2021 (File No. 001-14273) |
|
|
|
|
|
10.23 |
|
Amended and Restated Employment Agreement, by and between Core Laboratories Inc. and Lawrence V. Bruno, dated February 1, 2024 (1) |
|
Form 10-K, February 15, 2024 (File No. 001-41695) |
|
|
|
|
|
10.24 |
|
Amended and Restated Employment Agreement, by and between Core Laboratories Inc. and Christopher S. Hill, dated February 1, 2024 (1) |
|
Form 10-K, February 15, 2024 (File No. 001-41695) |
|
|
|
|
|
10.25 |
|
Amended and Restated Employment Agreement, by and between Core Laboratories Inc. and Gwendolyn Y. Gresham, dated February 1, 2024 (1) |
|
Form 10-K, February 15, 2024 (File No. 001-41695) |
|
|
|
|
|
10.26 |
|
Amended and Restated Employment Agreement, by and between Core Laboratories Inc. and Mark D. Tattoli, dated February 1, 2024 (1) |
|
Form 10-K, February 15, 2024 (File No. 001-41695) |
|
|
|
|
|
10.27 |
|
Core Laboratories Inc. Nonqualified Deferred Compensation Plan for Board of Directors |
|
Form 10-Q, October 23, 2025 (File No. 001-41695) |
|
|
|
|
|
19.1 |
|
Insider Trading Policy |
|
Form 10-K, February 13, 2025 (File No. 001-4195) |
|
|
|
|
|
21.1 |
|
Significant Subsidiaries of the Registrant |
|
Filed Herewith |
|
|
|
|
|
23.1 |
|
Consent of KPMG LLP |
|
Filed Herewith |
|
|
|
|
|
31.1 |
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
Filed Herewith |
|
|
|
|
|
31.2 |
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
Filed Herewith |
|
|
|
|
|
32.1 |
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
Filed Herewith |
|
|
|
|
|
32.2 |
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
Filed Herewith |
|
|
|
|
|
97.1 |
|
Core Laboratories Inc. Incentive Compensation Recoupment Policy |
|
Form 10-K, February 15, 2024 (File No. 001-41695) |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
Filed Herewith |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document |
|
Filed Herewith |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
|
Filed Herewith |
|
|
|
|
|
(1) Management contracts or compensatory plans or arrangements.
45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
CORE LABORATORIES INC. |
|
|
|
|
Date: |
March 20, 2026 |
By: |
/s/ LAWRENCE BRUNO |
|
|
|
Lawrence Bruno |
|
|
|
Chief Executive Officer, Chairman, President and Director |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, on the 20th day of March 2026.
|
Signature |
|
|
|
|
|
|
|
/s/ LAWRENCE BRUNO |
|
/s/ CHRISTOPHER S. HILL |
Lawrence Bruno |
|
Christopher S. Hill |
Chief Executive Officer, Chairman, |
|
Senior Vice President and |
President and Director |
|
Chief Financial Officer |
|
|
|
|
|
|
/s/ SOW HANG TEO |
|
/s/ CURTIS ANASTASIO |
Sow Hang Teo |
|
Curtis Anastasio |
Vice President, Treasurer and |
|
Director |
Chief Accounting Officer |
|
|
|
|
|
|
|
|
/s/ MARTHA Z. CARNES |
|
/s/ HARVEY KLINGENSMITH |
Martha Z. Carnes |
|
Harvey Klingensmith |
Director |
|
Director |
|
|
|
|
|
|
/s/ ROBERT F. MARTINOVICH |
|
/s/ KATHERINE A. MURRAY |
Robert F. Martinovich |
|
Katherine A. Murray |
Director |
|
Director |
|
|
|
|
|
|
/s/ KWAKU TEMENG |
|
|
Kwaku Temeng |
|
|
Director |
|
|
46
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Core Laboratories Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Core Laboratories Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 20, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of income tax expense
As discussed in Note 8 to the consolidated financial statements, the Company recorded deferred tax assets, net of $67.4 million and deferred tax liabilities, net of $8.0 million as of December 31, 2025, and income tax expense of $15.5 million for the year then ended. The Company serves international markets and is subject to income taxes in the U.S. and foreign jurisdictions, which affect the Company’s income tax expense.
We identified the evaluation of income tax expense as a critical audit matter. Complex auditor judgment was required in evaluating the Company’s interpretation and application of U.S. tax laws and the related impacts to income tax expense. There was complexity in the evaluation of the U.S. tax on Subpart F income and global intangible low-taxed income (GILTI), and the Company’s calculations were based on interpretations of complex income tax regulations.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s income tax expense process, including controls over
F-1
the Company’s determination of Subpart F income and GILTI. We involved tax professionals with specialized skills and knowledge who assisted in:
• evaluating the Company’s application of U.S. tax laws to its legal entity structure and the effect on the Company’s income tax provision
• assessing the accuracy of the Company’s calculations of current period income tax expense and deductions associated with Subpart F income and GILTI.
/s/ KPMG LLP
We have served as the Company’s auditor since 2015.
Houston, Texas
March 20, 2026
F-2
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Core Laboratories Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Core Laboratories Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated March 20, 2026 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Houston, Texas
March 20, 2026
F-3
CORE LABORATORIES INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2025 and 2024
(In thousands, except share and per share data)
|
|
2025 |
|
|
2024 |
|
||
ASSETS |
|
|
|
|
|
|
||
CURRENT ASSETS: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable, net of allowance for credit losses |
|
|
|
|
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|
||
Inventories |
|
|
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|
||
Prepaid expenses |
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|
||
Income taxes receivable |
|
|
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|
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|
||
Other current assets |
|
|
|
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|
||
TOTAL CURRENT ASSETS |
|
|
|
|
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|
||
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation |
|
|
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|
||
RIGHT OF USE ASSETS |
|
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|
||
INTANGIBLES, net of accumulated amortization and impairment |
|
|
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|
||
GOODWILL |
|
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|
|
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|
||
DEFERRED TAX ASSETS, net |
|
|
|
|
|
|
||
OTHER ASSETS |
|
|
|
|
|
|
||
TOTAL ASSETS |
|
$ |
|
|
$ |
|
||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
||
CURRENT LIABILITIES: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued payroll and related costs |
|
|
|
|
|
|
||
Taxes other than payroll and income |
|
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|
||
Unearned revenues |
|
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|
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|
||
Operating lease liabilities |
|
|
|
|
|
|
||
Income taxes payable |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
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|
||
TOTAL CURRENT LIABILITIES |
|
|
|
|
|
|
||
LONG-TERM DEBT, net |
|
|
|
|
|
|
||
LONG-TERM OPERATING LEASE LIABILITIES |
|
|
|
|
|
|
||
DEFERRED COMPENSATION |
|
|
|
|
|
|
||
DEFERRED TAX LIABILITIES, net |
|
|
|
|
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|
||
OTHER LONG-TERM LIABILITIES |
|
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|
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|
||
|
|
|
|
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|
|||
EQUITY: |
|
|
|
|
|
|
||
Preference stock, |
|
|
|
|
|
|
||
Common stock, |
|
|
|
|
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|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
Treasury stock (at cost), |
|
|
( |
) |
|
|
( |
) |
Total Core Laboratories Inc. shareholders' equity |
|
|
|
|
|
|
||
Non-controlling interest |
|
|
|
|
|
|
||
TOTAL EQUITY |
|
|
|
|
|
|
||
TOTAL LIABILITIES AND EQUITY |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-4
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2025, 2024 and 2023
(In thousands, except per share data)
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
REVENUE: |
|
|
|
|
|
|
|
|
|
|||
Services |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Product sales |
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|||
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|||
Cost of services, exclusive of depreciation expense shown below |
|
|
|
|
|
|
|
|
|
|||
Cost of product sales, exclusive of depreciation expense shown below |
|
|
|
|
|
|
|
|
|
|||
General and administrative expense, exclusive of depreciation |
|
|
|
|
|
|
|
|
|
|||
Depreciation |
|
|
|
|
|
|
|
|
|
|||
Amortization |
|
|
|
|
|
|
|
|
|
|||
Other (income) expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
OPERATING INCOME |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Income tax expense |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
|
|
|
|
|
|
|
|
|||
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|||
Net income attributable to Core Laboratories Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
EARNINGS PER SHARE INFORMATION: |
|
|
|
|
|
|
|
|
|
|||
Basic earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Basic earnings per share attributable to Core Laboratories Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Diluted earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Diluted earnings per share attributable to Core Laboratories Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
|
|||
Diluted |
|
|
|
|
|
|
|
|
|
|||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-5
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2025, 2024 and 2023
(In thousands)
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|||
Interest rate swaps: |
|
|
|
|
|
|
|
|
|
|||
Interest rate swap amount reclassified to net income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax (expense) benefit on interest rate swaps reclassified to net income |
|
|
|
|
|
|
|
|
|
|||
Total interest rate swaps |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Pension and other postretirement benefit plans: |
|
|
|
|
|
|
|
|
|
|||
Amortization of actuarial gain (loss) reclassified to net income |
|
|
|
|
|
|
|
|
( |
) |
||
Income tax (expense) benefit on pension and other postretirement benefit plans reclassified to net income |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Total pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
( |
) |
||
Total other comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Comprehensive income |
|
|
|
|
|
|
|
|
|
|||
Comprehensive income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|||
Comprehensive income attributable to Core Laboratories Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-6
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Years Ended December 31, 2025, 2024 and 2023
(In thousands, except share and per share data)
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Common Stock |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
New share issuance |
|
|
|
|
|
|
|
|
|
|||
Change in par value |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additional Paid-In Capital |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
New share issuance |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Change in par value and equity related transactions |
|
|
|
|
|
|
|
|
( |
) |
||
Stock-based compensation |
|
|
|
|
|
( |
) |
|
|
|
||
Balance at End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Retained Earnings |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Dividends paid |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income attributable to Core Laboratories Inc. |
|
|
|
|
|
|
|
|
|
|||
Balance at End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Accumulated Other Comprehensive Income (Loss) |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Interest rate swaps, net of income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Pension and other postretirement benefit plans, net of income taxes |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at End of Period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Treasury Stock |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|||
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at End of Period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Non-Controlling Interest |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Non-controlling interest dividends |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
|
|
|||
Balance at End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Total Equity |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
New share issuance |
|
|
|
|
|
|
|
|
|
|||
Change in par value and equity related transactions |
|
|
|
|
|
|
|
|
( |
) |
||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|||
Dividends paid |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-controlling interest dividends |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net income |
|
|
|
|
|
|
|
|
|
|||
Interest rate swaps, net of income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Pension and other postretirement benefit plans, net of income taxes |
|
|
|
|
|
|
|
|
( |
) |
||
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Cash Dividends per Share |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-7
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)
For the Years Ended December 31, 2025, 2024 and 2023
(In thousands, except share and per share data)
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Common Stock - Number of shares issued |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
|
|
|
|
|
|
|
|
|||
New share issuance |
|
|
|
|
|
|
|
|
|
|||
Balance at End of Period |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Treasury Stock - Number of shares |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|||
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at End of Period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|||
Common Stock - Number of shares outstanding |
|
|
|
|
|
|
|
|
|
|||
Balance at Beginning of Period |
|
|
|
|
|
|
|
|
|
|||
New share issuance |
|
|
|
|
|
|
|
|
|
|||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|||
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at End of Period |
|
|
|
|
|
|
|
|
|
|||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-8
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2025, 2024 and 2023
(In thousands)
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Assets write-down |
|
|
|
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Inventory write-off and obsolescence |
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|
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Net provision for credit losses |
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Changes in value of life insurance policies |
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( |
) |
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( |
) |
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( |
) |
Deferred income taxes |
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( |
) |
||
Insurance recovery on property, plant and equipment |
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|
( |
) |
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( |
) |
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|
Realization of pension obligation |
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( |
) |
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( |
) |
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Other non-cash items |
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( |
) |
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||
Changes in assets and liabilities: |
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Accounts receivable |
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( |
) |
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( |
) |
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( |
) |
Inventories |
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( |
) |
||
Prepaid expenses and other current assets |
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|
( |
) |
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( |
) |
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Other assets |
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|
( |
) |
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||
Accounts payable |
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( |
) |
||
Accrued expenses |
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( |
) |
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( |
) |
|
Unearned revenues |
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( |
) |
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( |
) |
|
Other liabilities |
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|
( |
) |
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|
|
( |
) |
|
Net cash provided by operating activities |
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|
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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|
|
|
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|
|
|||
Capital expenditures - operations |
|
|
( |
) |
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|
( |
) |
|
|
( |
) |
Capital expenditures - rebuilding of Aberdeen facility |
|
|
( |
) |
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|
( |
) |
|
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|
Proceeds from insurance recovery - Aberdeen facility |
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|
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Proceeds from sale of assets |
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Patents and other intangibles |
|
|
( |
) |
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|
||
Acquisitions, net of cash acquired |
|
|
( |
) |
|
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|
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||
Net proceeds on life insurance policies |
|
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|
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|
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Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
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|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
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|
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|
|||
Repayment of long-term debt |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds from long-term debt |
|
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|
|
|
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|
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|
|||
Debt issuance costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Equity related transaction costs |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Dividends paid |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other financing activities |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
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|
( |
) |
||
CASH AND CASH EQUIVALENTS, beginning of year |
|
|
|
|
|
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|
|||
CASH AND CASH EQUIVALENTS, end of year |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-9
CORE LABORATORIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For the Years Ended December 31, 2025, 2024 and 2023
(In thousands)
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Supplemental disclosures of cash flow information: |
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|
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|
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|
|||
Cash payments for interest |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cash payments for income taxes |
|
|
|
|
|
|
|
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|
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Non-cash investing and financing activities: |
|
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|
|
|
|
|
|
|
|||
Restricted shares withheld from employees for settlement of tax liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Business acquisition contingent cash consideration |
|
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|
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|
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Capital expenditures incurred but not paid for as of the end of the year |
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|
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|
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|
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Equity related transaction costs incurred but not paid for as of the end of the year |
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|
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The accompanying notes are an integral part of these Consolidated Financial Statements.
F-10
CORE LABORATORIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025
1. DESCRIPTION OF BUSINESS
Core Laboratories Inc. (“Core Laboratories”, “Core Lab”, “the Company”, “we”, “our” or “us”) is a Delaware corporation. We were established in 1936 and are one of the world’s leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry primarily through client relationships with many of the world’s major, national and independent oil companies. These services and products can enable our clients to evaluate and improve reservoir performance and increase oil and gas recovery from their new and existing fields. We make measurements on reservoir rocks, reservoir fluids (crude oil, natural gas and water) and their derived products. In addition, we assist clients in evaluating subsurface targets associated with carbon capture and sequestration projects or initiatives. We have over
On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which through a series of steps, resulted in the merger of Core Laboratories N.V., a holding company in the Netherlands, with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg, with Core Laboratories Luxembourg S.A. surviving, and subsequently the migration of Core Laboratories Luxembourg S.A. out of Luxembourg and its domestication as Core Laboratories Inc., a Delaware corporation. As a result of the Redomestication Transaction, all common shares in Core Laboratories N.V. were canceled and exchanged for common stock in Core Laboratories Luxembourg S.A. on a one-for-one basis. Former holders of Core Laboratories N.V. common shares now hold one share of common stock of Core Laboratories Inc. (formerly Core Laboratories Luxembourg S.A.) for each Core Laboratories N.V. common share owned immediately prior to the consummation of the Redomestication Transaction, and the business, assets, liabilities, directors and officers of Core Laboratories Inc. became the same as the business, assets, liabilities, directors and officers of Core Laboratories N.V. immediately prior to the Redomestication Transaction.
We operate our business in
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Core Laboratories Inc. and its subsidiaries for which we have a controlling voting interest and/or a controlling financial interest. These financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). We use the equity method of accounting for investments in which we have less than a majority interest and do not exercise control but do exert significant influence. Non-controlling interest has been recorded to reflect outside ownership attributable to consolidated subsidiaries that are less than 100% owned. All inter-company transactions and balances have been eliminated in consolidation.
Certain reclassifications were made to prior period amounts in order to conform to the current period presentation. These reclassifications had no impact on the reported net income or cash flows for the years ended December 31, 2024 and 2023.
Prior Period Immaterial Corrections
The Company has made certain adjustments to previously reported amounts to correct immaterial errors in our consolidated balance sheet as of December 31, 2024. These adjustments included 1) a misclassification of $
We evaluated these matters in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,
F-11
and determined that their related impact was not material to the financial statements for any prior annual or interim periods. The Company will correct comparative previously reported financial information for these immaterial matters in our future filings, as applicable.
Recent Accounting Pronouncements
Pronouncements Adopted in 2025
In December 2023, FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures to improve transparency of income tax disclosures, primarily by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendment is effective for annual periods beginning after December 15, 2024. We adopted the guidance for the year ended December 31, 2025, and our disclosures regarding income taxes were expanded. See Note 8 - Income Taxes. The guidance has been applied prospectively, therefore, certain comparative information for the years ended December 31, 2024 and 2023 has not been reported where new disclosures not previously required are presented.
Pronouncements Not Yet Effective
In November 2024, FASB issued ASU 2024-03 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) to improve disclosures about a public business entity’s expenses, by providing more detailed information about the types of expenses in commonly presented expense captions. As amended by ASU 2025-01 issued in January 2025, the amendment is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendment may be applied prospectively or retrospectively. Upon adoption, our disclosures regarding expenses will be expanded.
In July 2025, FASB issued ASU 2025-05 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows public business entities to apply a practical expedient when estimating expected credit losses that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendment is effective for annual and interim periods beginning after December 15, 2025. Early adoption is permitted. The amendment will be applied prospectively. Upon adoption, our disclosures regarding estimating expected credit losses will be expanded.
In December 2025, FASB issued ASU 2025-11—Interim Reporting (Topic 270): Narrow-Scope Improvements to clarify the applicability of Topic 270, including types of interim reporting and the form and content of interim financial statements. It also provides a comprehensive list of required interim disclosures and requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendment is effective for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. We do not expect the update to have an effect on our interim reporting.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis and utilize our historical experience, as well as various other assumptions that we believe are reasonable in a given circumstance, in order to make these estimates. Actual results could differ from our estimates, as assumptions and conditions change.
The following accounts, among others, require us to use estimates and assumptions:
F-12
Accounting policies relating to these accounts and the nature of these estimates are further discussed under the applicable caption. For each of these critical estimates it is at least reasonably possible that changes in these estimates will occur in the short term which may impact our financial position or results of operations.
Foreign Currencies
Our functional currency is the U.S. Dollar (“USD”). All inter-company financing, transactions and cash flows with our subsidiaries are transacted in USD. Revenue and expenses denominated in other currencies are measured at the applicable month-end exchange rate which approximates the average exchange rate. We remeasure monetary assets and liabilities denominated in other currencies to USD at year-end exchange rates. Non-monetary items, depreciation, amortization and certain components of cost of sales are measured at historical rates. Remeasurement and settlement difference are included in other (income) expense, net in the accompanying consolidated statements of operations. See Note 18 - Other (Income) Expense, net.
Concentration of Credit Risk
Our financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. All cash and cash equivalents are on deposit at commercial banks or investment firms with significant financial resources. Our trade receivables are with a variety of domestic, international and national oil and gas companies. We had no clients who provided more than 10% of our revenue for the years ended December 31, 2025, 2024 and 2023. We consider our credit risk related to trade accounts receivable to be limited due to the creditworthiness and financial resources of our clients. We apply the expected credit losses methodology for measurement of credit losses on financial assets measured at amortized cost basis. We evaluate our estimate for credit losses on an on-going basis throughout the year.
Concentration of Interest Rate Risk
We are exposed to interest rate risk on our revolving credit facility debt, which carries a variable interest rate. We are exposed to interest rate risk on our Senior Notes which carry a fixed interest rate, but whose fair value will fluctuate based on changes in interest rates and market perception of our credit risk. See Note 10 - Long-term Debt, net.
Cash and Cash Equivalents
Cash and cash equivalents include all short-term, highly liquid instruments purchased with an original maturity of three months or less. These items are carried at cost, which approximates fair value.
Accounts Receivable
Trade accounts receivable are recorded at their invoiced amounts and do not bear interest. We perform ongoing credit evaluations of our clients, monitor collections and payments, consider our historical collection experience and our current aging of client receivables outstanding, in addition to client’s representations and our understanding of the economic environment in which our clients operate. Based on our review we establish or adjust allowances for credit losses for specific clients and recognize expense. When an account is determined to be uncollectible, we charge the receivable to our allowance for credit losses. The net carrying value of accounts receivable approximates fair value.
Contract Assets and Liabilities
Contract assets and liabilities arise from differences in timing of revenue recognition, billings and cash collections.
Contract assets include our right to payment for goods and services already transferred to a customer when the right to payment is conditional on something other than the passage of time. For example, we have contracts where we recognize revenue over time but do not have a contractual right to payment until we complete the performance obligations. We include the current portion of contract assets in accounts receivable. Contract assets were not material at December 31, 2025 and 2024.
Contract liabilities consist of advance payments received and billings in excess of revenue recognized. We generally receive up-front payments relating to our consortia studies. We recognize revenue over the life of the study as the testing and analysis results are made available to our consortia members. We classify contract liabilities for contracts with a duration greater than twelve months as current or non-current based on the timing of revenue recognition. The current portion of contract liabilities is
F-13
included in unearned revenues, and the non-current portion of contract liabilities is included in other long-term liabilities. Contract liabilities were not material at December 31, 2025 and 2024.
Inventories
Inventories consist of manufactured goods, materials and supplies used for sales or services to clients. Inventories are stated at the lower of cost or estimated net realizable value. Inventory costs are recorded at standard cost which approximates the first-in, first-out method.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets are comprised primarily of prepaid insurance, value added taxes and prepaid software licenses.
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation. Major renewals and improvements are capitalized while maintenance and repair costs are charged to expense as incurred. They are depreciated using the straight-line method based on their individual estimated useful lives, except for leasehold improvements, which are depreciated over the remaining lease term, if shorter.
Buildings and leasehold improvements |
|
|
Machinery and equipment |
|
When long-lived assets are sold or retired, the remaining costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income.
We review our long-lived assets for impairment when events or changes in circumstances indicate that their net book value may not be recovered over their remaining service lives. Indicators of possible impairment may include significant declines in activity levels in regions where specific assets or groups of assets are located, extended periods of idle use, declining revenue or cash flow or overall changes in general market conditions.
Whenever possible impairment is indicated, we compare the carrying value of the assets or asset groups to the sum of the estimated undiscounted future cash flows expected from use, plus salvage value, less the costs of the subsequent disposition of the assets. If impairment is still indicated, we compare the fair value of the assets to the carrying value and recognize an impairment loss for the amount by which the carrying value exceeds the fair value. We did
Leases
We have operating leases primarily consisting of offices and lab space, machinery, equipment and vehicles. We determine if an arrangement is an operating or finance lease at inception. Lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Where our lease does not provide an implicit rate, we estimate the discount rate used to discount the future minimum lease payments using our incremental borrowing rate and other information available at the commencement date. Operating leased assets also include all initial direct costs incurred. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
Operating leased assets are included in right of use (“ROU”) assets and, along with current and long-term operating lease liabilities, are separately presented in our consolidated balance sheet. Financing leased assets are included in property, plant and equipment, net and the related liabilities are included in other current and other long-term liabilities in our consolidated balance sheet.
F-14
ROU assets are subsequently depreciated over the estimated useful life of the asset and lease liabilities are carried at amortized cost using the effective interest rate method.
The Company has elected to apply the short-term lease exemption to all classes of underlying ROU assets. Accordingly, no ROU asset or lease liability is recognized for leases with a term of twelve months or less.
The Company has elected to apply the practical expedient for combining lease and non-lease components for vehicle leases and elected not to apply the practical expedient for combining lease and non-lease components to all other classes of underlying ROU assets.
Intangibles and Goodwill
Intangible assets, which include trade secrets, patents, technology, agreements not to compete, trade names, and trademarks, are carried at cost less accumulated amortization and any impairment, for intangibles with a definite life. Intangibles with definite lives are amortized using the straight-line method based on the estimated useful life of the intangible. We review our intangible assets with definite lives for impairment when events or changes in circumstances indicate that carrying value may not be recovered over their remaining service lives.
We record goodwill as the excess of the purchase price over the fair value of the net assets acquired in acquisitions accounted for under the purchase method of accounting. Intangibles with indefinite lives and goodwill are not subject to amortization and are tested for impairment annually or more frequently if events or changes in circumstances indicate intangibles with indefinite lives and goodwill are more likely than not impaired.
We assess intangibles with indefinite lives and goodwill for impairment by performing a qualitative assessment or a quantitative test. The qualitative assessment is to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value is less than carrying value. If it is concluded that it is more-likely-than not that an impairment exists, a quantitative test is required which compares the estimated fair value to the carrying value. If the estimated fair value is less than the carrying value, then there is an impairment loss limited to the carrying value.
Significant judgments and assumptions are inherent in our estimate of future cash flows used to determine the estimate of the reporting unit’s fair value which include assumptions regarding future revenue growth rates, discount rates and expected margins. See Note 17 - Impairments.
Accounts Payable
Trade accounts payable are recorded at their invoiced amounts and do not bear interest. The carrying value of accounts payable approximates fair value.
Income Taxes
We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the asset is expected to be recovered or the liability is expected to be settled. We include interest and penalties from tax judgments in income tax expense.
We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken, in our tax return. We also recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. See Note 8 - Income Taxes.
With the Redomestication, the Company became subject to U.S. Subpart F (“Subpart F”) income tax on controlled foreign corporations, which primarily applies to passive income. In addition, global intangible low-taxed income (“GILTI”) tax must also be recognized. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in the future years or provide for tax expense related to GILTI in the year the tax is incurred. The Company recognizes tax expense related to GILTI in the year the tax is incurred.
F-15
Pension and Other Postretirement Benefit Plans
We provide a non-contributory defined benefit pension plan covering substantially all of our Dutch employees (“Dutch Plan”) who were hired prior to 2000. We recognize net periodic pension costs associated with the Dutch Plan in income and recognize the unfunded status of the plan, if any, in other long-term liabilities in the consolidated balance sheet. We recognize the actuarial gains or losses that arise during the period as a component of other comprehensive income. The projection of benefit obligation and fair value of plan assets requires the use of assumptions and estimates. Actual results could differ from those estimates. See Note 11 - Pension and Other Postretirement Benefit Plans.
We maintain defined contribution plans for the benefit of eligible employees primarily in Canada, the Netherlands, the United Kingdom and the United States. We expense contributions in the period the contribution is made.
Derivative Instruments
We may enter into a variety of derivative instruments in connection with the management of our exposure to fluctuations in interest rates or currency exchange rates. See Note 14 - Derivative Instruments and Hedging Activities.
We do not enter into derivatives for speculative purposes.
Comprehensive Income
Comprehensive income is comprised of net income and other charges or credits to equity that are not the result of transactions with owners. Accumulated other comprehensive income (loss) consists of unrecognized net actuarial gain or loss from the Dutch Plan and changes in the fair value of our interest rate swaps. See Note 11 - Pension and Other Postretirement Benefit Plans and Note 14 - Derivative Instruments and Hedging Activities.
Revenue Recognition
All of our revenue is derived from contracts with clients. Our contracts include standard commercial payment terms generally acceptable in each region, and do not include financing with extended payment terms. We have no significant obligations for refunds, warranties, or similar obligations. Our revenue does not include taxes collected from our clients. In certain circumstances we apply the guidance in Accounting Standards Codification Topic 606 - Revenue from Contracts with Customers (“Topic 606”) to a portfolio of contracts with similar characteristics. We use estimates and assumptions when accounting for a portfolio that reflect the size and composition of the portfolio of contracts.
We recognize revenue at an amount that reflects the consideration expected to be received in exchange for such services or goods as described below by applying the five-step method to: (1) identify the contract(s) with clients; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligation(s) in the contract; and (5) recognize revenue when (or as) we satisfy the performance obligation(s). A performance obligation is a promise in a contract to transfer a distinct service or good to a client and is the unit of account under Topic 606. We have contracts with two general groups of performance obligations: those that require us to perform analysis and/or diagnostic tests in our laboratory or at the client’s wellsite and those from the sale of tools, diagnostic and equipment products and related services.
Service Revenue: We provide a variety of services to clients in the oil and gas industry. Where services are provided related to the testing and analysis of rock and fluids, we recognize revenue upon the provision of the test results or analysis to the client. For our design, field engineering and completion diagnostic services, we recognize revenue upon the delivery of those services at the well site or delivery of diagnostic data. In the case of our consortia studies, we have multiple performance obligations and revenue is recognized at the point in time when the testing and analysis results on each contributed core are made available to our consortia members. For arrangements that include multiple performance obligations, we allocate revenue to each performance obligation based on estimates of the price that we would charge the client for each promised service or product if it were sold on a standalone basis.
To a lesser extent, we enter into other types of contracts including service arrangements and non-subscription software and licensing agreements. We recognize revenue for these arrangements over time or at a point in time, depending on our evaluation of when the client obtains control of the promised services or products.
Product Sales Revenue: We manufacture equipment that we sell to our clients in the oil and gas industry, and we recognize revenue when control of the promised product is transferred to the client. Control of the product usually passes to the client at the time shipment is made or picked up by the client at our facilities, as defined within the contract.
F-16
Disaggregation of Revenue
We contract with clients for service revenue and/or product sales revenue. We present revenue disaggregated by services and product sales in our consolidated statements of operations. For revenue disaggregated by operating segment, see Note 20 - Segment Reporting and Other Disaggregated Information.
Stock-Based Compensation
For new awards issued and awards modified, repurchased or canceled, we record compensation expense in the consolidated statements of operations equal to the fair value of the award at the date of the grant, modification, repurchase or cancellation over the requisite service period of the award. The fair value is generally determined by the quoted market price of the Company’s common stock on the date of grant less the discounted value of the expected dividends to be paid over the vesting period. Market vesting conditions, as applicable, are included in the estimation of the fair value of the award. Forfeitures are recognized as they occur.
Non-controlling Interests
We maintain non-controlling interests in several investment ventures. Non-controlling interest have been recorded to reflect outside ownership attributable to consolidated subsidiaries that are less than 100% owned and presented as a separate component of equity in the consolidated balance sheets and income in the consolidated statements of operations and other comprehensive income, respectively. In addition, when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary will be initially measured at fair value and recorded as a gain or loss.
3. ACQUISITIONS AND DIVESTURES
We had
On October 1, 2025, we acquired
Purchase price payments in the amount of $
4. INVENTORIES
Inventories consist of the following (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Finished goods |
|
$ |
|
|
$ |
|
||
Parts and materials |
|
|
|
|
|
|
||
Work in progress |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
||
We include freight costs incurred for shipping inventory to our clients in the cost of product sales caption in the accompanying consolidated statements of operations.
F-17
5. PROPERTY, PLANT AND EQUIPMENT, NET
The components of property, plant and equipment, net are as follows (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Land |
|
$ |
|
|
$ |
|
||
Building and leasehold improvements |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Total property, plant and equipment |
|
|
|
|
|
|
||
Less: Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
See Note 18 - Other (Income) Expense, net for additional information regarding the write-down of leasehold improvements.
6. LEASES
Our operating leases primarily consist of offices and lab space, machinery, equipment, and vehicles.
We abandoned certain leases in the U.S. and Canada during the years ended December 31, 2024 and 2023. We entered into a sublease agreement that commenced on July 1, 2023 and was terminated at the beginning of 2025, for a portion of the existing office and lab space in Calgary, Alberta, Canada. See Note 18 - Other (Income) Expense, net for additional information regarding the write-down of right of use assets.
The components of lease expense and other information are as follows (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Consolidated Statements of Operations: |
|
|
|
|
|
|
|
|
|
|||
Operating lease expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Short-term lease expense |
|
|
|
|
|
|
|
|
|
|||
Variable lease expense |
|
|
|
|
|
|
|
|
|
|||
Sublease income |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total lease expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Consolidated Statements of Cash Flows: |
|
|
|
|
|
|
|
|
|
|||
Operating cash flows - operating leases payments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Right of use assets obtained in exchange for operating lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other information: |
|
|
|
|
|
|
|
|
|
|||
Weighted-average remaining lease term - operating leases |
|
|
|
|
|
|
||||||
Weighted-average discount rate - operating leases |
|
|
% |
|
|
% |
|
|
% |
|||
Scheduled undiscounted lease payments for non-cancellable operating leases consist of the following (in thousands):
|
|
December 31, 2025 |
|
|
|
|
Operating Leases |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total undiscounted lease payments |
|
|
|
|
Less: Imputed interest |
|
|
( |
) |
Total operating lease liabilities |
|
$ |
|
|
F-18
7. INTANGIBLES AND GOODWILL
The components of intangibles, net are as follows (in thousands):
|
|
|
|
December 31, |
|
|||||||||||||
|
|
|
|
2025 |
|
|
2024 |
|
||||||||||
|
|
|
|
Gross |
|
|
Accumulated Amortization |
|
|
Gross |
|
|
Accumulated Amortization |
|
||||
|
|
Useful life in years |
|
Carrying Value |
|
|
and Impairment |
|
|
Carrying Value |
|
|
and Impairment |
|
||||
Acquired trade secrets |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
Acquired patents and technology |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Agreements not to compete and other |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Acquired trade names and trademarks |
|
Indefinite |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total intangibles, net |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Our estimated amortization expense relating to these intangibles for the next five years is summarized in the following table (in thousands):
|
|
December 31, 2025 |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
The following table summarizes the change in goodwill for each reportable segment (in thousands):
|
|
Reservoir |
|
|
Production |
|
|
|
|
|||
|
|
Description |
|
|
Enhancement |
|
|
Total |
|
|||
Balance at December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Balance at December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Business acquisitions |
|
|
|
|
|
|
|
|
|
|||
Balance at December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
8. INCOME TAXES
See Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements - Pronouncements Adopted in 2025. We elected to apply ASU 2023-09 prospectively, therefore, certain comparative information for the years ended December 31, 2024 and 2023 has not been reported where new disclosures not previously required are presented.
The components of income before income taxes are as follows (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
United States |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Other countries |
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
F-19
The components of income tax expense are as follows (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other countries |
|
|
|
|
|
|
|
|
|
|||
State and provincial |
|
|
|
|
|
( |
) |
|
|
|
||
Total current |
|
|
|
|
|
|
|
|
|
|||
Deferred: |
|
|
|
|
|
|
|
|
|
|||
United States |
|
|
|
|
|
( |
) |
|
|
|
||
Other countries |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
State and provincial |
|
|
|
|
|
|
|
|
( |
) |
||
Total deferred |
|
|
|
|
|
|
|
|
( |
) |
||
Income tax expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The table below summarizes cash payments, net of refunds, for income taxes by legal jurisdiction (in thousands):
|
|
For the Year Ended |
|
|
|
|
2025 |
|
|
United States |
|
$ |
|
|
Other countries: |
|
|
|
|
Canada |
|
|
|
|
Colombia |
|
|
( |
) |
Curacao |
|
|
( |
) |
France |
|
|
|
|
Malta |
|
|
|
|
Netherlands |
|
|
|
|
Russia |
|
|
|
|
Other countries |
|
|
|
|
State and provincial |
|
|
|
|
Total |
|
$ |
|
|
The differences in income tax expense computed using the U.S. statutory income tax rate of
F-20
|
|
For the Year Ended December 31, |
|
|||||
|
|
2025 |
|
|||||
Tax at the statutory income tax rate |
|
$ |
|
|
|
% |
||
State and provincial taxes (1) |
|
|
|
|
|
% |
||
Foreign taxes: |
|
|
|
|
|
|
||
Canada |
|
|
|
|
|
|
||
Change in valuation allowance |
|
|
|
|
|
% |
||
Withholding taxes |
|
|
|
|
|
% |
||
Other |
|
|
|
|
|
% |
||
Colombia |
|
|
|
|
|
|
||
Foreign exchange |
|
|
( |
) |
|
|
( |
%) |
Other |
|
|
( |
) |
|
|
( |
%) |
Indonesia |
|
|
|
|
|
|
||
Change in valuation allowance |
|
|
( |
) |
|
|
( |
%) |
Other |
|
|
( |
) |
|
|
( |
%) |
Malaysia |
|
|
|
|
|
|
||
Change in valuation allowance |
|
|
|
|
|
% |
||
Other |
|
|
( |
) |
|
|
( |
%) |
Mexico |
|
|
|
|
|
|
||
Unrecoverable receivable |
|
|
|
|
|
% |
||
Other |
|
|
|
|
|
% |
||
Netherlands |
|
|
|
|
|
|
||
Withholding taxes |
|
|
|
|
|
% |
||
International earnings taxed at rates other than the statutory income tax rate |
|
|
|
|
|
% |
||
Other |
|
|
|
|
|
% |
||
Curacao |
|
|
|
|
|
|
||
Withholding taxes |
|
|
( |
) |
|
|
( |
%) |
International earnings taxed at rates other than the statutory income tax rate |
|
|
|
|
|
% |
||
Foreign exchange |
|
|
( |
) |
|
|
( |
%) |
Other |
|
|
|
|
|
% |
||
Russian Federation |
|
|
|
|
|
|
||
Foreign exchange |
|
|
( |
) |
|
|
( |
%) |
Other |
|
|
( |
) |
|
|
( |
%) |
United Kingdom |
|
|
|
|
|
|
||
Research and development credit |
|
|
( |
) |
|
|
( |
%) |
Adjustments of prior year taxes - interest income |
|
|
|
|
|
% |
||
Unremitted earnings of subsidiaries |
|
|
( |
) |
|
|
( |
%) |
Foreign exchange |
|
|
( |
) |
|
|
( |
%) |
Other |
|
|
|
|
|
% |
||
Other countries |
|
|
|
|
|
% |
||
Withholding taxes - other countries |
|
|
|
|
|
% |
||
Changes in unrecognized tax benefits |
|
|
( |
) |
|
|
( |
%) |
United States taxes: |
|
|
|
|
|
|
||
Non-deductible expenses |
|
|
|
|
|
% |
||
Foreign earnings currently taxed in the U.S. : |
|
|
|
|
|
|
||
GILTI tax |
|
|
|
|
|
% |
||
Subpart F income inclusion |
|
|
( |
) |
|
|
( |
%) |
Change in valuation allowance |
|
|
|
|
|
% |
||
Tax credits: |
|
|
|
|
|
|
||
Foreign tax credit |
|
|
( |
) |
|
|
( |
%) |
Research and development credit |
|
|
( |
) |
|
|
( |
%) |
Other |
|
|
( |
) |
|
|
( |
%) |
Income tax expense |
|
$ |
|
|
|
% |
||
F-21
(1) State taxes in Texas made up the majority (greater than 50%) of the tax effect in this category. |
|
The 2025 tax expense was primarily impacted by our geographic mix of earnings, non-deductible expenses, unrecoverable tax receivables and valuation allowance on deferred tax assets. The Company is subject to Subpart F income tax, which is a tax primarily on passive income from controlled foreign corporations. In addition, the Company recognizes global intangible low-taxed income (“GILTI”). For the year ended December 31, 2025, the Company estimates approximately $
|
|
For the Years Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Tax at the statutory income tax rate |
|
$ |
|
|
$ |
|
||
State and provincial taxes |
|
|
|
|
|
|
||
International earnings taxed at rates other than the statutory income tax rate |
|
|
|
|
|
|
||
Non-deductible expenses |
|
|
|
|
|
|
||
Net operating loss |
|
|
( |
) |
|
|
|
|
Foreign earnings currently taxed in the U.S. |
|
|
|
|
|
|
||
Change in valuation allowance |
|
|
|
|
|
( |
) |
|
Tax credits |
|
|
( |
) |
|
|
( |
) |
Unremitted earnings of subsidiaries |
|
|
|
|
|
( |
) |
|
Adjustments of prior year taxes |
|
|
( |
) |
|
|
|
|
Changes in unrecognized tax benefits |
|
|
|
|
|
|
||
Foreign exchange |
|
|
( |
) |
|
|
( |
) |
Accrued withholding taxes |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Income tax expense |
|
$ |
|
|
$ |
|
||
For the year ended December 31, 2024, the Company estimated approximately $
On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes significant provisions, including tax cut extensions and modifications to the U.S. and international tax frameworks. We are evaluating the impact of these legislative changes as additional guidance becomes available. Currently, we do not believe legislation will have a material impact on our tax expense.
F-22
Deferred tax assets and liabilities result from various temporary differences between the financial statement carrying value and their tax basis. Deferred tax assets and liabilities are summarized as follows (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Net operating loss carry-forwards |
|
$ |
|
|
$ |
|
||
Tax credit carry-forwards |
|
|
|
|
|
|
||
Accruals for compensation |
|
|
|
|
|
|
||
Accruals for inventory capitalization |
|
|
|
|
|
|
||
Unrealized benefit from corporate restructuring |
|
|
|
|
|
|
||
Intangibles |
|
|
|
|
|
|
||
Unrealized benefit plan loss |
|
|
|
|
|
|
||
Unrealized foreign exchange and capital loss carry-forwards |
|
|
|
|
|
|
||
Unearned revenue |
|
|
|
|
|
|
||
Interest carry-forward |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total deferred tax assets |
|
|
|
|
|
|
||
Valuation allowance |
|
|
( |
) |
|
|
( |
) |
Net deferred tax assets |
|
|
|
|
|
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
( |
) |
|
|
( |
) |
Accrued withholding taxes |
|
|
( |
) |
|
|
( |
) |
Unrealized foreign exchange |
|
|
|
|
|
( |
) |
|
Other |
|
|
( |
) |
|
|
( |
) |
Total deferred tax liabilities |
|
|
( |
) |
|
|
( |
) |
Net deferred income taxes |
|
$ |
|
|
$ |
|
||
The table below summarizes the net deferred tax assets and net deferred tax liabilities by legal jurisdiction (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Long-term deferred tax assets, net |
|
$ |
|
|
$ |
|
||
Long-term deferred tax liabilities, net |
|
|
( |
) |
|
|
( |
) |
Net deferred income taxes |
|
$ |
|
|
$ |
|
||
Deferred tax assets associated with tax credit carryforwards are in the U.S. and interest carry-forwards are in both the U.S. and U.K. The tax credits and interest carry-forwards may only be utilized against certain U.S. and U.K. related income in their respective jurisdictions. The U.S. tax credit carryforwards have a
At December 31, 2025, we had tax net operating loss carry-forwards in various tax jurisdictions of $
Although we cannot be certain that our deferred tax assets will be realized, we anticipate that we will have sufficient taxable income in future years to allow us to fully utilize those that are not subject to a valuation allowance.
We file income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. We are currently undergoing multiple examinations in various jurisdictions, primarily in Canada, Indonesia, Kuwait and Nigeria, and the years 2011 through 2024 remain open for examination in various tax jurisdictions in which we operate. The ultimate settlement and timing of these additional tax assessments is uncertain, but the Company will continue to vigorously defend its return filing position and does not view the assessments as probable at this time.
F-23
During 2025, adjustments were made to estimates for uncertain tax positions in certain tax jurisdictions based upon changes in facts and circumstances, resulting in a reduction to the unrecognized tax benefits.
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Unrecognized tax benefits at January 1, |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Tax positions, current period |
|
|
|
|
|
|
|
|
|
|||
Tax positions, prior period |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Lapse of applicable statute of limitations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrecognized tax benefits at December 31, |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Our policy is to record accrued interest and penalties on uncertain tax positions, net of any tax effect, as part of total tax expense for the period. The corresponding liability is carried along with the tax exposure as a non-current payable in other long-term liabilities. For the years ended December 31, 2025, 2024 and 2023, we recognized $(
9. OTHER ASSETS
Other assets consist of the following (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash surrender value of life insurance policies |
|
$ |
|
|
$ |
|
||
Investments in unconsolidated affiliates |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other assets |
|
$ |
|
|
$ |
|
||
Cash surrender value of life insurance policies is associated with postretirement benefit plans. See Note 11 - Pension and Other Postretirement Benefit Plans. Investments include unconsolidated affiliates accounted for under the equity method where the operations of these entities are in line with those of our core business. These entities are not considered special purpose entities, nor do we have special off-balance sheet arrangements through these entities.
10. LONG-TERM DEBT, NET
have
|
|
|
|
|
December 31, |
|
|||||
|
Interest Rate |
|
Maturity Date |
|
2025 |
|
|
2024 |
|
||
Credit Facility |
|
|
|
|
$ |
|
|
$ |
|
||
2021 Senior Notes Series A(1) |
|
|
|
|
|
|
|
||||
2021 Senior Notes Series B(1) |
|
|
|
|
|
|
|
||||
2023 Senior Notes Series A(2) |
|
|
|
|
|
|
|
||||
2023 Senior Notes Series B(2) |
|
|
|
|
|
|
|
||||
Total long-term debt |
|
|
|
|
|
|
|
|
|
||
Less: Debt issuance costs |
|
|
|
|
|
( |
) |
|
|
( |
) |
Long-term debt, net |
|
|
|
|
$ |
|
|
$ |
|
||
On July 22, 2025, we, along with our wholly owned subsidiary Core Laboratories (U.S.) Interests Holdings, Inc. (“CLIH”) entered into the Ninth Amended and Restated Credit Agreement (as amended, the “Credit Facility”) for an aggregate borrowing commitment of $
F-24
of a revolving credit facility, and a single draw of $
(1) October 14, 2027, if any portion of the Company’s 2021 Senior Notes Series B due
(2) March 30, 2028, if any portion of the Company’s 2023 Senior Notes Series A due
There are no significant changes to other terms from the Eighth Amended and Restated Credit Agreement, including assets securing the debt, interest rates, and cross default provisions associated with the Senior Notes (as defined below), financial covenants or the interest coverage and leverage ratios as described below.
The Credit Facility is secured by first priority interests in (1) substantially all of the tangible and intangible personal property, and equity interest of CLIH and certain of the Company’s U.S. and foreign subsidiary companies; and (2) instruments evidencing intercompany indebtedness owing to the Company, CLIH and certain of the Company’s U.S. and foreign subsidiary companies. Certain of our material, wholly owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes.
Under the Credit Facility, the Secured Overnight Financing Rate (“SOFR”) plus
The Credit Facility and Senior Notes include a cross-default provision, whereby a default under one agreement may trigger a default in the other agreements.
The terms of the Credit Facility and Senior Notes require us to meet certain covenants, including, but not limited to, an interest coverage ratio (calculated as consolidated EBITDA divided by interest expense) and a leverage ratio (calculated as consolidated net indebtedness divided by consolidated EBITDA), where consolidated EBITDA (as defined in each agreement) and interest expense are calculated using the most recent four fiscal quarters. The Credit Facility has more restrictive covenants with a minimum interest coverage ratio of
We, along with CLIH as issuer, have senior notes outstanding that were issued through private placement transactions. Series A and Series B of the 2021 Senior Notes were issued in 2021 (the “2021 Senior Notes”). Series A and Series B of the 2023 Senior Notes were issued in 2023 (the “2023 Senior Notes”). The 2021 Senior Notes and the 2023 Senior Notes are collectively the “Senior Notes”. On January 12, 2026, we made a single draw of $
See Note 14 - Derivative Instruments and Hedging Activities for additional information regarding interest rate swap agreements we have entered to fix the underlying risk-free rate on our 2023 Senior Notes.
The estimated fair value of total debt at December 31, 2025 and 2024 approximated the book value of total debt. The fair value was estimated using Level 2 inputs by calculating the sum of the discounted future interest and principal payments through the maturity date.
F-25
11. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
Defined Benefit Plan
Prior to January 2020, one of our subsidiaries provided a noncontributory defined benefit pension plan covering substantially all of our Dutch employees who were hired prior to 2000 (“Dutch Plan”). This pension benefit was based on years of service and final pay or career average pay depending on when the employee began participating. The Dutch Plan was curtailed prior to January 2020, and these employees have been moved into the Dutch defined contribution plan. However, the unconditional indexation for this group of participants continues for so long as they remain in active service with the Company.
The following table summarizes the change in the projected benefit obligation and the fair value of plan assets for the Dutch Plan (in thousands):
|
|
For the Years Ended |
|
|||||
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Projected Benefit Obligation: |
|
|
|
|
|
|
||
Projected benefit obligation at beginning of year |
|
$ |
|
|
$ |
|
||
Interest cost |
|
|
|
|
|
|
||
Benefits paid and administrative expenses |
|
|
( |
) |
|
|
( |
) |
Actuarial (gain) loss, net |
|
|
( |
) |
|
|
( |
) |
Unrealized (gain) loss on foreign exchange |
|
|
|
|
|
( |
) |
|
Projected benefit obligation at end of year |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Fair Value of Plan Assets: |
|
|
|
|
|
|
||
Fair value of plan assets at beginning of year |
|
$ |
|
|
$ |
|
||
Increase (decrease) in plan asset value |
|
|
( |
) |
|
|
|
|
Employer contributions |
|
|
|
|
|
|
||
Benefits paid and administrative expenses |
|
|
( |
) |
|
|
( |
) |
Unrealized gain (loss) on foreign exchange |
|
|
|
|
|
( |
) |
|
Fair value of plan assets at end of year |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Under-funded status of the plan at end of the year |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Accumulated Benefit Obligation |
|
$ |
|
|
$ |
|
||
The following actuarial assumptions were used to determine the actuarial present value of our projected benefit obligation and the net periodic pension cost for the Dutch Plan:
|
|
For the Years Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Weighted average assumed discount rate |
|
|
% |
|
|
% |
||
Expected long-term rate of return on plan assets |
|
|
% |
|
|
% |
||
Weighted average rate of compensation increase |
|
|
% |
|
|
% |
||
The discount rate used to determine our projected benefit obligation at December 31, 2025 was increased from
Amounts recognized for the Dutch Plan in the consolidated balance sheets consist of (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax asset |
|
$ |
|
|
$ |
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
F-26
The components of net periodic pension cost for the Dutch Plan include (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net periodic pension cost |
|
$ |
|
|
$ |
|
|
$ |
|
|||
We funded the future obligations of the Dutch Plan by purchasing an insurance contract from a large multi-national insurance company with a five-year maturity. Each year we made annual premium payments to the insurance company (1) to provide for the benefit obligation of the current year of service based on each employee’s age, gender and current salary, and (2) for the changes in the benefit obligation for prior years of service due to changes in participants’ salary. Plan assets returns equal the contractual rates, which are comparable with governmental debt securities. We determine the fair value of these plan assets with the assistance of an actuary using observable inputs (Level 2), which approximates the contract value of the investments. Our expected long-term rate of return assumptions are based on the weighted-average contractual rates for each contract. Dutch law dictates the minimum requirements for pension funding. Our goal is to meet these minimum funding requirements, while our insurance carrier invests to minimize risks associated with future benefit payments.
In 2026, our minimum funding requirements are expected to be $
Expected benefit payments to eligible participants under this plan for the next five years are as follows (in thousands):
|
|
December 31, 2025 |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Succeeding five years |
|
|
|
|
Defined Contribution Plans
We maintain defined contribution plans for the benefit of eligible employees primarily in Canada, the Netherlands, the United Kingdom, and the United States. In accordance with the terms of each plan, we and our participating employees contribute up to specified limits and under certain plans, we may make discretionary contributions in accordance with the defined contribution plans. Our primary obligation under these defined contribution plans is limited to paying the annual contributions. For the years ended December 31, 2025, 2024 and 2023, we paid $
Vesting in all employer contributions is accelerated upon the death of the participant or a change in control. Employer contributions under the plans are forfeited upon a participant’s termination of employment to the extent they are not vested at that time.
Deferred Compensation Arrangements
We have entered into deferred compensation contracts for certain key employees to provide additional retirement income to the participants. The benefit is determined by the contract for either a fixed amount or by a calculation using years of service or age at retirement along with the average of their base salary for the
We provide severance compensation to certain key employees if employment is terminated under certain circumstances, such as following a change in control or for any reason other than upon their death or disability, for “cause” or upon a material breach of a material provision of their employment agreement, as defined in their employment agreements. In addition, there are certain countries where we are legally required to make severance payments to employees when they leave our service. We have accrued for all of these severance payments, but they are not funded.
F-27
We also have adopted a non-qualified deferred compensation plan (“Deferred Compensation Plan”) that allows certain highly compensated employees to defer a portion of their salary, commission and bonus, as well as the amount of any reductions in their deferrals under the Deferred Compensation Plan for employees in the United States, due to certain limitations imposed by the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Contributions to the plan are invested in equity and other investment fund assets and carried on the balance sheet at fair value. The benefits under these contracts are fully vested. Our primary obligation for the Deferred Compensation Plan is limited to our annual contributions. Employer contributions to the Deferred Compensation Plan for the years ended December 31, 2025, 2024 and 2023 were $
12. COMMITMENTS AND CONTINGENCIES
We have been and may from time to time be named as a defendant in legal actions that arise in the ordinary course of business. These include, but are not limited to, employment-related claims and contractual disputes or claims for personal injury or property damage which occur in connection with the provision of our services and products. A liability is accrued when a loss is both probable and can be reasonably estimated.
We do not maintain any off-balance sheet debt or other similar financing arrangements, nor have we formed any special purpose entities for the purpose of maintaining off-balance sheet debt.
See Note 10 - Long-term Debt, net for amounts committed under letters of credit and performance guarantees and bonds.
13. EQUITY
Common Stock
In 2024 and 2023, we issued
In connection with the Redomestication Transaction in May 2023, Core Laboratories Inc.’s common stock par value was decreased by $
Treasury Stock
The repurchase of shares in the open market is at the discretion of our Board of Directors and management. Such common stock, unless canceled, may be reissued for a variety of purposes such as future acquisitions, non-employee director stock awards or employee stock awards. From the activation of the discretionary share repurchases on October 29, 2002 through December 31, 2025, we have repurchased
Dividend Policy
Core Laboratories has maintained a cash dividend program since 2008. In 2025, 2024 and 2023, cash dividends of $
F-28
Accumulated Other Comprehensive Income (Loss)
Amounts recognized, net of income taxes, in accumulated other comprehensive income (loss) consist of the following (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Pension and other postretirement benefit plans - unrecognized prior service costs and net actuarial loss |
|
$ |
( |
) |
|
$ |
( |
) |
Interest rate swaps - net fair value gain (loss) |
|
|
( |
) |
|
|
|
|
Total accumulated other comprehensive income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
Retained Earnings
The beginning balances of retained earnings and total equity for the year ended December 31, 2023 have been adjusted for certain prior period immaterial corrections. See Note 2 - Summary of Significant Accounting Policies.
14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risks related to fluctuations in interest rates. To mitigate these risks, we may utilize derivative instruments in the form of interest rate swaps. We do not enter into derivative transactions for speculative purposes.
In March 2021, we entered into a forward interest rate swap agreement and carried the fair value of certain terminated variable-to-fixed swaps into the agreement in a “blend and extend” structured transaction. The purpose of this forward interest rate swap agreement was to fix the underlying risk-free rate, that would be associated with the anticipated issuance of new long-term debt by the Company in future periods. The forward interest rate swap would hedge the risk-free rate on forecasted long-term debt through March 2033. Risk associated with future changes in the
As of December 31, 2025, the aggregated loss on interest swaps included in accumulated other comprehensive income (loss) is a net loss of $
As of December 31, 2025, we had fixed rate long-term debt aggregating $
The effect of the interest rate swaps on the consolidated statements of operations was as follows (in thousands):
|
|
For the Years Ended December 31, |
|
|
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
Income Statement Classification |
|||
Derivatives designated as hedges: |
|
|
|
|
|
|
|
|
|
|
|
|||
5 year interest rate swap |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
Increase (decrease) to interest expense |
||
10 year interest rate swap |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Increase (decrease) to interest expense |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
F-29
15. FINANCIAL INSTRUMENTS
The Company’s only financial assets and liabilities which are measured at fair value on a recurring basis relate to certain aspects of the Company’s benefit plans. We use the market approach to determine the fair value of these assets and liabilities using significant other observable inputs (Level 2) with the assistance of a third-party specialist. We do not have any assets or liabilities measured at fair value on a recurring basis using quoted prices in an active market (Level 1) or significant unobservable inputs (Level 3). Gains and losses related to the fair value changes in the financial assets and liabilities are recorded in general and administrative expense in the consolidated statements of operations.
The following table summarizes the fair value balances (in thousands):
|
|
Fair Value Measurement at December 31, 2025 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Company owned life insurance policies (1) |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation liabilities |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
Fair Value Measurement at December 31, 2024 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Company owned life insurance policies (1) |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation liabilities |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
(1) Company owned life insurance policies have cash surrender value and are intended to assist in funding deferred compensation liabilities and other benefit plans.
16. STOCK-BASED COMPENSATION
We have two stock incentive plans: the 2024 Long-Term Incentive Plan (the “LTIP”) and the 2023 Non-Employee Director Stock Incentive Plan (the “Director Plan”). We issue shares from either treasury stock or authorized common stock for the following stock-based compensation plans. In 2025, we issued
2024 Long-Term Incentive Plan
Under the LTIP, awards may be granted to eligible employees until May 8, 2034, and the maximum number of shares available for award is
We have granted restricted stock awards under two programs: (1) the Performance Share Award Program (“PSAP”); and (2) the Restricted Share Award Program (“RSAP”). During the year ended December 31, 2025, participants surrendered
Performance Share Award Program
The PSAP allows us to compensate our executive and senior management teams as we meet or exceed our business objectives. The PSAP shares are unvested and may not be sold, assigned, pledged, hedged, margined or otherwise transferred by an award recipient until such time as, and then only to the extent that, the restricted performance shares have vested. In the event of a change in control (as defined in the LTIP) prior to the last day of the Performance Period, as defined, all of the award
F-30
recipient’s restricted performance shares will vest as of the effective date of such change in control. Subject to continued employment with us, or upon death or disability, PSAP shares vest if we meet or exceed our business objectives.
We award certain members of our executive and senior management teams rights to receive common stock if our calculated return on invested capital (“ROIC”), as defined in the PSAP Agreement, achieves certain performance criteria as compared to the Bloomberg Peer Group, as defined in the PSAP Agreement, on the
On January 14, 2026, the Compensation Committee of our Board of Directors approved the 2026 PSAP award for an aggregate total of
The following table summarizes information of shares awarded under the PSAP (in thousands except share data):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Grants awarded (share unit) |
|
|
|
|
|
|
|
|
|
|||
Grant date fair value of grants awarded |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Grant date fair value (intrinsic value) of shares vested |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Stock compensation expense recognized: |
|
|
|
|
|
|
|
|
|
|||
Acceleration due to retirement eligibility (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Adjustment due to expected performance level and forfeitures |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Stock compensation expense recognized |
|
|
|
|
|
|
|
|
|
|||
Total stock compensation expense recognized |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other information: |
|
|
|
|
|
|
|
|
|
|||
Remaining stock compensation expense to be recognized |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Remaining weighted average period over which stock compensation expense will be recognized |
|
|
|
|
|
|
||||||
(1) Additional stock compensation expense has been recorded in accordance with FASB ASC Topic 718, “Compensation - Stock Compensation”, which states that the period over which stock compensation expense is recognized should not extend beyond the eligible retirement age as defined in each executive’s PSAP award agreement. The PSAP awards remain unvested until the end of the performance period and until it can be determined whether the performance criteria have been achieved. The executive will not forfeit the right to vest in the awarded shares if they voluntarily retire from the Company after attaining the retirement age as defined in each agreement.
Restricted Share Award Program
In 2004, the Compensation Committee of our Board of Directors approved the RSAP to attract and retain key employees, and to better align employee interests with those of our shareholders. Each of these grants has a vesting period of principally either five or
The following table summarizes information of shares awarded under the RSAP (in thousands except share data):
F-31
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Grants awarded (share unit) |
|
|
|
|
|
|
|
|
|
|||
Grant date fair value of grants awarded |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Grant date fair value (intrinsic value) of shares vested |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Stock compensation expense recognized |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other information: |
|
|
|
|
|
|
|
|
|
|||
Remaining stock compensation expense to be recognized |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Remaining weighted average period over which stock compensation expense will be recognized |
|
|
|
|
|
|
||||||
2023 Non-Employee Director Stock Incentive Plan
Under the Director Plan, awards may be granted until June 28, 2033, and the maximum number of shares available for award under this plan is
We have granted restricted stock awards under the Restricted Share Award Program for Non-Employee Directors (the “Director Program”). The Compensation Committee of our Board of Directors approved the Director Program to compensate our non-employee Directors.
All shares awarded have a vesting period of
On January 14, 2026, the Compensation Committee of our Board of Directors approved the 2026 award for an aggregate total of
The following table summarizes information of shares awarded under the Restricted Share Award Program for Non-Employee Directors (in thousands, except share data):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Grants awarded (share unit) |
|
|
|
|
|
|
|
|
|
|||
Grant date fair value of grants awarded |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Stock compensation expense recognized |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other information: |
|
|
|
|
|
|
|
|
|
|||
Remaining stock compensation expense to be recognized |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Remaining weighted average period over which stock compensation expense will be recognized |
|
|
|
|
|
|
||||||
Equity Compensation Plans Information
Non-vested restricted share awards outstanding and changes during the year ended December 31, 2025 under both the LTIP and the Director Plan are as follows:
|
|
For the Year Ended December 31, 2025 |
|
|||||
|
|
Number of Shares |
|
|
Weighted Average Grant Date Fair Value per Share |
|
||
Non-vested at December 31, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Non-vested at December 31, 2025 |
|
|
|
|
$ |
|
||
F-32
Stock-based compensation expense under both the LTIP and the Director Plan recognized in the consolidated statement of operations is as follows (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Cost of services and product sales |
|
$ |
|
|
$ |
|
|
$ |
|
|||
General and administrative expense |
|
|
|
|
|
|
|
|
|
|||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|||
17. IMPAIRMENTS
The geopolitical conflict between Russia and Ukraine, which began in February 2022 and has continued through December 31, 2025, has resulted in some disruptions to our operations in Russia and Ukraine. As of December 31, 2025, all laboratory facilities, offices, and locations in Russia and Ukraine continued to operate with no significant impact to local business operations. Therefore, we determined there was no triggering event for long-lived assets in Russia and Ukraine, and no impairment assessments have been performed as of December 31, 2025.
For the years ended December 31, 2025, 2024 and 2023, there were no triggering events during the year, and we determined there was
We completed our annual impairment assessment of indefinite lived intangible assets and goodwill of our reporting units for the years ended December 31, 2025, 2024 and 2023, by performing qualitative assessments, which indicated we did not meet the threshold of more likely than not that there was impairment and therefore no quantitative tests were required.
18. OTHER (INCOME) EXPENSE, NET
The components of other (income) expense, net are as follows (in thousands):
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Gain on sale of assets |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Results of non-consolidated subsidiaries |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Foreign exchange (gain) loss, net |
|
|
|
|
|
|
|
|
|
|||
Rents and royalties |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Return on pension assets and other pension costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Credits and other settlements |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Assets write-down, loss on lease abandonment and other exit costs |
|
|
|
|
|
|
|
|
|
|||
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Insurance recovery - property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
ATM termination costs |
|
|
|
|
|
|
|
|
|
|||
Severance and other charges |
|
|
|
|
|
|
|
|
|
|||
Other, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other (income) expense, net |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
In 2024, we sold certain ownership interest in mineral rights of certain properties for a net gain of $
During the year ended December 31, 2023, the State of Louisiana expropriated the access road to one of our facilities and paid us a settlement of $
During the years ended December 31, 2025, 2024 and 2023, as a result of our continuous efforts in consolidating and exiting certain facilities in the U.S. and other international locations for operational efficiency, we recognized a write-down of the
F-33
associated leasehold improvements, right of use assets and other assets and incurred lease abandonment and other exit costs of $
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 $
During the year ended December 31, 2023, we wrote off previously deferred costs of $
Foreign Currency Risk
We operate in a number of international areas which exposes us to foreign currency exchange rate risk. We do not currently hold or issue forward exchange contracts or other derivative instruments for hedging or speculative purposes. Foreign exchange gains and losses result from fluctuations in the USD against foreign currencies and are included in other (income) expense, net in the consolidated statements of operations. We recognized foreign exchange losses in countries where the USD weakened against the local currency and we had net monetary liabilities denominated in the local currency; as well as countries where the USD strengthened against the local currency and we had net monetary assets denominated in the local currency. We recognized foreign exchange gains in countries where the USD strengthened against the local currency and we had net monetary liabilities denominated in the local currency and in countries where the USD weakened against the local currency and we had net monetary assets denominated in the local currency.
Foreign exchange (gain) loss, net for the primary currencies in which we operate and those with a material effect for the period presented is summarized in the following table (in thousands):
|
|
For the Years Ended December 31, |
|
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|
2025 |
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|
2024 |
|
|
2023 |
|
|||
Australian Dollar |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
British Pound |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Canadian Dollar |
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( |
) |
|
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||
Euro |
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|||
Indonesian Rupiah |
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|
|||
Russian Ruble |
|
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( |
) |
|
|
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( |
) |
|
Other currencies, net |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange (gain) loss, net |
|
$ |
|
|
$ |
|
|
$ |
|
|||
19. EARNINGS PER SHARE
We compute basic earnings per share by dividing net income attributable to Core Laboratories Inc. by the number of weighted average common shares outstanding during the period. Diluted earnings per share includes the incremental effect of contingently issuable shares from performance and restricted stock awards, as determined using the treasury stock method.
The following table summarizes the calculation of weighted average common shares outstanding used in the computation of basic and diluted earnings per share (in thousands):
|
|
For the Years Ended December 31, |
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2025 |
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2024 |
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2023 |
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|||
Weighted average common shares outstanding - basic |
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Effect of dilutive securities: |
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Restricted shares |
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Performance shares |
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Weighted average common shares outstanding - diluted |
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F-34
20. SEGMENT REPORTING AND OTHER DISAGGREGATED INFORMATION
Segment Reporting
We operate our business in
We use the same accounting policies to prepare our operating segment results as are used to prepare our consolidated financial statements. All interest and other non-operating income (expense) is attributable to Corporate & Other and is not allocated to specific operating segments.
Our chief operating decision maker (“CODM”) is our .
Summarized financial information of our operating segments is shown in the following table (in thousands):
F-35
As at and for the years ended: |
|
Reservoir Description |
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Production Enhancement |
|
|
Corporate & Other (1) |
|
|
Consolidated |
|
||||
December 31, 2025 |
|
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|
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|
|
|
|
|
|
|
||||
CODM Measure - Revenue from unaffiliated clients |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Reconciliation of CODM measure - revenue from unaffiliated clients to segment operating income: |
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Inter-segment revenue |
|
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|
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( |
) |
|
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|||
Cost of services and product sales |
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General and administrative expense (2) |
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||||
Depreciation and amortization |
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|
||||
Other operating (income) expense, net (3) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign exchange (gain) loss, net (3) |
|
|
|
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( |
) |
|
|
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|||
CODM Measure - Segment operating income |
|
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||||
Supplemental Disclosures: |
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Total assets |
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Capital expenditures |
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||||
December 31, 2024 |
|
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|
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|
|
|
|
|
||||
CODM Measure - Revenue from unaffiliated clients |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Reconciliation of CODM measure - revenue from unaffiliated clients to segment operating income: |
|
|||||||||||||||
Inter-segment revenue |
|
|
|
|
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( |
) |
|
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|
|||
Cost of services and product sales |
|
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( |
) |
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General and administrative expense (2) |
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||||
Depreciation and amortization |
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||||
Other operating (income) expense, net (3) |
|
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( |
) |
|
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( |
) |
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( |
) |
|
Foreign exchange (gain) loss, net (3) |
|
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( |
) |
|
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|||
CODM Measure - Segment operating income |
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Supplemental Disclosures: |
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||||
Total assets (4) |
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Capital expenditures |
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|
||||
December 31, 2023 |
|
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|
|
|
|
|
|
|
|
|
|
||||
CODM Measure - Revenue from unaffiliated clients |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Reconciliation of CODM measure - revenue from unaffiliated clients to segment operating income: |
|
|||||||||||||||
Inter-segment revenue |
|
|
|
|
|
|
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|
( |
) |
|
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|
|||
Cost of services and product sales |
|
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( |
) |
|
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|
|||
General and administrative expense (2) |
|
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||||
Depreciation and amortization |
|
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||||
Other operating (income) expense, net (3) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign exchange (gain) loss, net (3) |
|
|
( |
) |
|
|
|
|
|
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|
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|
|||
CODM Measure - Segment operating income |
|
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|
||||
Supplemental Disclosures: |
|
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|
||||
Total assets |
|
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|
||||
Capital expenditures |
|
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|
||||
(1) “Corporate and other” represents those items not directly related to a particular operating segment and eliminations.
(2) General and administrative expense is presented as a total amount to the CODM and consists primarily of employee benefits, professional fees and information technology costs.
(3) Other operating (income) expense, net and foreign currency exchange (loss), net are included in the consolidated statement of operations as other (income) expense, net. See Note 18 - Other (Income) Expense, net for further detail.
(4) Total assets for Reservoir Description have been adjusted for certain prior period immaterial corrections. See Note 2 - Summary of Significant Accounting Policies.
Disaggregated Revenue
We derive our revenue from services and product sales contracts with clients primarily in the oil and gas industry. No single client accounted for 10% or more of revenue in any of the periods presented.
F-36
|
|
For the Years Ended December 31, |
|
|||||||||
1 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Reservoir Description Services |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Production Enhancement Services |
|
|
|
|
|
|
|
|
|
|||
Total Revenue - Services |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reservoir Description Product sales |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Production Enhancement Product sales |
|
|
|
|
|
|
|
|
|
|||
Total Revenue - Product sales |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
We attribute service revenue to the country in which the service was performed rather than where the reservoir or project is located while we attribute product sales revenue to the country where the product was shipped as we feel this gives a clearer view of our operations. We do, however, have significant levels of service revenue performed and recorded in the U.S. that are sourced from projects on non-U.S. oilfields.
|
|
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|
|||
As at and for the years ended: |
|
United States |
|
|
Other |
|
|
Consolidated |
|
|||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
|
|||
(1)
(2)
F-37
CORE LABORATORIES INC.
Schedule II - Valuation and Qualifying Account
(In thousands)
|
|
Balance at Beginning of Period |
|
|
Additions Charged to/(Recovered from) Expense |
|
|
Write-offs |
|
|
Other (1) |
|
|
Balance at End of Period |
|
|||||
Year ended December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for credit losses |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Year ended December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for credit losses |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Year ended December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for credit losses |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
(1) Comprised primarily of differences due to changes in exchange rates.
F-38
FAQ
What does Core Laboratories (CLB) primarily do in the energy sector?
How much revenue did Core Laboratories (CLB) generate in 2025 and from where?
What are the main business segments of Core Laboratories (CLB)?
How is Core Laboratories (CLB) involved in the energy transition and CCS projects?
What key risks does Core Laboratories (CLB) identify related to geopolitics and sanctions?
How do environmental and climate regulations affect Core Laboratories (CLB) and its customers?
What human capital priorities does Core Laboratories (CLB) emphasize?
