# Core Laboratories Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Core Laboratories Inc.](/companies/clb.md) (CIK 1958086)
- Form: 10-Q
- Filed: 2023-11-02
- Accepted by EDGAR: Nov 2, 2023, 20:11 ET
- Period: 2023-09-30
- Accession: 0000950170-23-058206
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1958086/000095017023058206/clb-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1958086/000095017023058206/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $125.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $381.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $14.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $40.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $3.1m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $9.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $2.3m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | −$4.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $9.3m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $34.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.19 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.73 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.20 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.74 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 47,604,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 47,536,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $5.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-07-01 to 2023-09-30 | $3.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $7.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $1.4m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $418.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $16.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $228.5m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $592.4m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $84.3m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-09-30 | $177.9m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2023-09-30 | $224.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 53,334 characters.

On May 1, 2023, Core Laboratories N.V. completed its previously announced redomestication transaction (the “Redomestication Transaction”), which included (i) the merger (the “Merger”) of Core Laboratories N.V. 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 (ii) following the completion of the Merger, 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. are now the same as the business, assets, liabilities, directors and officers of Core Laboratories N.V. immediately prior to the Redomestication Transaction. See Note 2 - *Significant Accounting Policies Update – Basis of Presentation and Principles of Consolidation*, Note 7 - *Long-Term Debt, net*, Note 8 - *Pension And Other Postretirement Benefit Plans*, Note 10 - *Equity* and Note 14 - *Income Tax Expense (Benefit)* of the Notes to the Interim Consolidated Financial Statements for additional information regarding the Redomestication Transaction. The following discussion should be read in conjunction with Core Laboratories N.V.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023, and Core Laboratories N.V.’s Annual Report on Form 10-K for the year ended December 31, 2022.

The following discussion highlights the current operating environment and summarizes the financial position of Core Laboratories Inc. and its subsidiaries as of September 30, 2023, and should be read in conjunction with the unaudited interim consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”).

### General

Core Laboratories Inc. is a Delaware corporation and successor to Core Laboratories N.V. subsequent to the Redomestication Transaction. It was established in 1936 and is 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. These services and products can enable our clients to evaluate and improve reservoir performance and increase oil and gas recovery from new and existing fields. Core Laboratories Inc. has over 70 offices in more than 50 countries and employs approximately 3,600 people worldwide.

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

We operate our business in two segments: Reservoir Description and Production Enhancement. 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.

- *Reservoir Description:* Encompasses the characterization of petroleum reservoir rock and reservoir fluids samples to increase production and improve recovery of crude oil and natural gas from our clients' reservoirs. We provide laboratory-based analytical and field services to characterize properties of crude oil and crude oil-derived products to the oil and gas industry. Services relating to these fluids include determining the quality and measuring the quantity of the reservoir fluids and their derived products, such as gasoline, diesel and biofuels. We also provide proprietary and joint industry studies based on these types of analyses and manufacture associated laboratory equipment. In addition, we provide reservoir description capabilities that support various activities associated with energy transition projects, including services that support carbon capture, utilization and storage, hydrogen storage, geothermal projects, and the evaluation and appraisal of mining activities around lithium and other elements necessary for energy storage.
- *Production Enhancement:* Includes services and manufactured products associated with reservoir well completions, perforations, stimulation, production and well abandonment. We provide integrated diagnostic services to evaluate and monitor the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects.

### Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations section, including those under the headings “Outlook” and “Liquidity and Capital Resources”, and in other parts of this Quarterly Report, are forward-looking. In addition, from time to time, we may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. Forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “believe”, “expect”, “anticipate”, “estimate”, “continue”, or other similar words, including statements as to the intent, belief, or current expectations of our directors, officers, and management with respect to our future operations, performance, or positions or which contain other forward-looking information. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, no assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While we believe that these statements are and will be accurate, our actual results and experience may differ materially from the anticipated results or other expectations expressed in our statements due to a variety of risks and uncertainties.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the foregoing risks and uncertainties, see Part II, “Item 1A - Risk Factors” of this Quarterly Report and “Item 1A - Risk Factors” of Core Laboratories N.V.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023, and Core Laboratories N.V.’s Annual Report on Form 10-K for the year ended December 31, 2022, filed by us with the SEC.

### Outlook

Currently, global oil inventories are low relative to historical levels, and supply from the Organization of the Petroleum Exporting Countries and other oil producing nations (“OPEC+”) is not expected to be sufficient to meet forecasted oil demand growth for the next few years. On April 2, 2023, OPEC+ announced further reductions in production of around 1.66 million barrels (“bbls”) per day. In addition to the two earlier reductions, Saudi Arabia, a key member of OPEC+, initiated a third voluntary reduction of 1.0 million bbls in July that is expected to continue through the end of 2023, as a precautionary measure aimed at supporting the stability of the oil market.

The current global demand for crude oil and natural gas remains at a high level and according to the latest International Energy Agency’s report, global demand is expected to increase for the remainder of 2023. As a result, it is anticipated that crude-oil commodity prices for the near-term will remain at current levels or increase if projections for demand remain accurate. In 2022, capital spending towards the exploration of crude oil and natural gas reached their highest level in over a decade. However, drilling and completion activities onshore in the U.S. slowed in recent months as a result of several large consolidation transactions and as operating companies continue to maintain their focus on improving efficiencies and return on investment versus growing production. U.S. onshore drilling and completion activities are expected to maintain at current levels with some typical seasonal decrease towards the end of 2023. Outside the U.S., international oil and gas projects continue to build and are expected to grow and accelerate into the next several years. Therefore, our clients' activities associated with the appraisal, development and production of crude oil and natural gas are also expected to remain at current levels or increase for the remainder of 2023.

The geopolitical conflict between Russia and Ukraine that erupted in February 2022, caused disruptions to traditional maritime supply chains associated with the movement of crude oil, primarily 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 during 2022 and into 2023. As a result, average crude-oil prices were elevated during 2022, but have since decreased and moderated for the nine months ended September 30, 2023. The maritime supply chains associated with the movement of crude oil have continued to realign and stabilize throughout 2023, which has reduced some of the volatility in crude-oil prices. Core Lab expects crude-oil supply lines to remain more stable, although the recent conflict that erupted in the Middle East resulted in some disruption in the movement and trading of crude oil in October of 2023. The Company's volume of associated laboratory services is expected to be 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.

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, Southern Namibia and the Middle East, including Qatar, Saudi Arabia, Kuwait and the United Arab Emirates. Analysis and measurement of crude oil derived products also occurs in every major producing region of the world. Additionally, some of our major clients have begun investing in projects to reduce the levels of CO2 in the atmosphere, including carbon capture and sequestration projects. The Company’s activities on these projects have expanded and are expected to continue expanding in 2024 and beyond.

Our major clients continue to focus on capital management, return on invested capital, free cash flow, and returning capital to their shareholders, as opposed to a focus on production growth. The companies adopting value versus volume metrics tend to be the more technologically sophisticated operators and form the foundation of Core Lab’s worldwide client base. As oil and gas commodity prices have stabilized or are expected to increase in the near to mid-term, the Company expects our clients’ activities associated with increasing oil and gas reserves and production levels will continue to increase in the coming years.

### Results of Operations

Our results of operations as a percentage of applicable revenue are as follows (in thousands):

| REVENUE: | Three Months Ended September 30, 2023 |  | 2022 |  | 2023/2022 $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Services | $92,883 | 74% | $87,891 | 70% | $4,992 | 6% |
| Product sales | 32,460 | 26% | 38,075 | 30% | (5,615) | (15)% |
| Total revenue | 125,343 | 100% | 125,966 | 100% | (623) | (0)% |
| OPERATING EXPENSES: |  |  |  |  |  |  |
| Cost of services, exclusive of depreciation expense shown below\* | 68,976 | 74% | 67,618 | 77% | 1,358 | 2% |
| Cost of product sales, exclusive of depreciation expense shown below\* | 27,641 | 85% | 31,312 | 82% | (3,671) | (12)% |
| Total cost of services and product sales | 96,617 | 77% | 98,930 | 79% | (2,313) | (2)% |
| General and administrative expense, exclusive of depreciation expense shown below | 9,452 | 8% | 10,001 | 8% | (549) | (5)% |
| Depreciation and amortization | 3,929 | 3% | 4,171 | 3% | (242) | (6)% |
| Other (income) expense, net | 673 | 1% | (1,781) | (1)% | 2,454 | NM |
| OPERATING INCOME | 14,672 | 12% | 14,645 | 12% | 27 | 0% |
| Interest expense | 3,147 | 3% | 3,138 | 2% | 9 | 0% |
| Income before income taxes | 11,525 | 9% | 11,507 | 9% | 18 | 0% |
| Income tax expense (benefit) | 2,305 | 2% | 3,856 | 3% | (1,551) | (40)% |
| Net income | 9,220 | 7% | 7,651 | 6% | 1,569 | 21% |
| Net income (loss) attributable to non-controlling interest | (37) | —% | 127 | —% | (164) | NM |
| Net income attributable to Core Laboratories Inc. | $9,257 | 7% | $7,524 | 6% | $1,733 | 23% |
| **Other Data:** |  |  |  |  |  |  |
| Current ratio (1) | 2.71:1 |  | 2.23:1 |  |  |  |
| Debt to EBITDA ratio (2) | 2.26:1 |  | 2.81:1 |  |  |  |
| Debt to Adjusted EBITDA ratio (3) | 1.92:1 |  | 2.42:1 |  |  |  |

“NM” means not meaningful

\*Percentage based on applicable revenue rather than total revenue

*(1) Current ratio is calculated as follows: current assets divided by current liabilities.*

*(2) Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, amortization and certain non-cash adjustments.*

*(3) 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.*

| REVENUE: | Three Months Ended September 30, 2023 |  | June 30, 2023 |  | Q3/Q2 $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Services | $92,883 | 74% | $93,265 | 73% | $(382) | (0)% |
| Product sales | 32,460 | 26% | 34,616 | 27% | (2,156) | (6)% |
| Total revenue | 125,343 | 100% | 127,881 | 100% | (2,538) | (2)% |
| OPERATING EXPENSES: |  |  |  |  |  |  |
| Cost of services, exclusive of depreciation expense shown below\* | 68,976 | 74% | 71,121 | 76% | (2,145) | (3)% |
| Cost of product sales, exclusive of depreciation expense shown below\* | 27,641 | 85% | 29,174 | 84% | (1,533) | (5)% |
| Total cost of services and product sales | 96,617 | 77% | 100,295 | 78% | (3,678) | (4)% |
| General and administrative expense, exclusive of depreciation expense shown below | 9,452 | 8% | 5,811 | 5% | 3,641 | 63% |
| Depreciation and amortization | 3,929 | 3% | 3,937 | 3% | (8) | (0)% |
| Other (income) expense, net | 673 | 1% | (1,068) | (1)% | 1,741 | NM |
| OPERATING INCOME | 14,672 | 12% | 18,906 | 15% | (4,234) | (22)% |
| Interest expense | 3,147 | 3% | 3,236 | 3% | (89) | (3)% |
| Income before income taxes | 11,525 | 9% | 15,670 | 12% | (4,145) | (26)% |
| Income tax expense (benefit) | 2,305 | 2% | (7,259) | (6)% | 9,564 | NM |
| Net income | 9,220 | 7% | 22,929 | 18% | (13,709) | (60)% |
| Net income (loss) attributable to non-controlling interest | (37) | —% | 83 | —% | (120) | NM |
| Net income attributable to Core Laboratories Inc. | $9,257 | 7% | $22,846 | 18% | $(13,589) | (59)% |
| **Other Data:** |  |  |  |  |  |  |
| Current ratio (1) | 2.71:1 |  | 2.45:1 |  |  |  |
| Debt to EBITDA ratio (2) | 2.26:1 |  | 2.18:1 |  |  |  |
| Debt to Adjusted EBITDA ratio (3) | 1.92:1 |  | 1.85:1 |  |  |  |

“NM” means not meaningful

\*Percentage based on applicable revenue rather than total revenue

*(1) Current ratio is calculated as follows: current assets divided by current liabilities.*

*(2) 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.*

*(3) 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.*

| REVENUE: | Nine Months Ended September 30, 2023 |  | 2022 |  | 2023/2022 $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Services | $277,224 | 73% | $258,036 | 71% | $19,188 | 7% |
| Product sales | 104,356 | 27% | 104,128 | 29% | 228 | 0% |
| Total revenue | 381,580 | 100% | 362,164 | 100% | 19,416 | 5% |
| OPERATING EXPENSES: |  |  |  |  |  |  |
| Cost of services, exclusive of depreciation expense shown below\* | 211,031 | 76% | 204,641 | 79% | 6,390 | 3% |
| Cost of product sales, exclusive of depreciation expense shown below\* | 87,409 | 84% | 89,198 | 86% | (1,789) | (2)% |
| Total cost of services and product sales | 298,440 | 78% | 293,839 | 81% | 4,601 | 2% |
| General and administrative expense, exclusive of depreciation expense shown below | 31,594 | 8% | 29,393 | 8% | 2,201 | 7% |
| Depreciation and amortization | 11,910 | 3% | 13,088 | 4% | (1,178) | (9)% |
| Other (income) expense, net | (423) | —% | (62) | —% | (361) | 582% |
| OPERATING INCOME (LOSS) | 40,059 | 10% | 25,906 | 7% | 14,153 | 55% |
| Interest expense | 9,812 | 3% | 8,489 | 2% | 1,323 | 16% |
| Income before income taxes | 30,247 | 8% | 17,417 | 5% | 12,830 | 74% |
| Income tax expense (benefit) | (4,344) | (1)% | 4,449 | 1% | (8,793) | NM |
| Net income | 34,591 | 9% | 12,968 | 4% | 21,623 | 167% |
| Net income attributable to non-controlling interest | 115 | —% | 266 | —% | (151) | NM |
| Net income attributable to Core Laboratories Inc. | $34,476 | 9% | $12,702 | 4% | $21,774 | 171% |
| **Other Data:** |  |  |  |  |  |  |
| Current ratio (1) | 2.71:1 |  | 2.23:1 |  |  |  |
| Debt to EBITDA ratio (2) | 2.26:1 |  | 2.81:1 |  |  |  |
| Debt to Adjusted EBITDA ratio (3) | 1.92:1 |  | 2.42:1 |  |  |  |

“NM” means not meaningful

\*Percentage based on applicable revenue rather than total revenue

*(1) Current ratio is calculated as follows: current assets divided by current liabilities.*

*(2) 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.*

*(3) 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.*

***Operating Results for the Three Months Ended September 30, 2023 compared to the Three Months Ended September 30, 2022 and June 30, 2023 and for the Nine Months Ended September 30, 2023 compared to the Nine Months Ended September 30, 2022***

### Service Revenue

Service revenue is primarily tied to activities associated with the exploration, appraisal, development, and production of oil, gas and derived products outside the U.S. For the three months ended September 30, 2023, service revenue was $92.9 million, an increase of 6% year-over-year and relatively flat sequentially. Year-over-year, the increase was due to growth in activity levels in both U.S. and international markets. Growth occurred in several international markets including the recovery of services in the European region as supply chains and logistic patterns of maritime transportation of crude oil and derived products realign. The increase in U.S. operations benefited from growing client activity for our reservoir core and reservoir fluids analysis services in the U.S. market. Sequentially, international projects improved marginally as activity on projects outside the U.S. continues to build, however, these increases were offset by decreased use of our diagnostic services on the U.S.

onshore completions. For the nine months ended September 30, 2023, service revenue was $277.2 million, an increase of 7% compared to the same period in the prior year, driven by increases in both international and U.S. activity, as discussed above.

### Product Sales Revenue

For the three months ended September 30, 2023, product sales revenue of $32.5 million decreased 15% year-over-year and 6% sequentially. Year-over-year the decline in our product sales revenue is primarily associated with the activity decline in the U.S. onshore market, where the average U.S. land rig count decreased 15% over the same period. Additionally, during the three months ended September 30, 2023, our product sales were impacted by a slight delay in some larger international bulk sales. Product sales to international markets are typically shipped and delivered in bulk and the timing of delivery can vary from one quarter to another. Sequentially, the average rig count for U.S. land decreased 10% and associated well completions also decreased, however, product sales in the U.S. remained flat. The 6% decrease in product sales revenue was caused by some delays in larger bulk sales to international markets. For the nine months ended September 30, 2023, product sales revenue was $104.4 million, relatively flat in both the U.S. land and international markets, compared to the same period in the prior year.

### Cost of Services, excluding depreciation

Cost of services was $69.0 million for the three months ended September 30, 2023, an increase of 2% year-over-year and a decrease of 3% sequentially. Cost of services expressed as a percentage of service revenue improved to 74% for the three months ended September 30, 2023, compared to 77% for the same period in the prior year, and 76% compared to the prior quarter. The year-over-year and sequential improvement in cost of services as a percentage of service revenue for the three months ended September 30, 2023, was primarily associated with improved utilization of our global laboratory network on higher revenue. For the nine months ended September 30, 2023, cost of services was $211.0 million, an increase of 3% compared to the same period in the prior year. Cost of services expressed as a percentage of service revenue improved to 76% compared to 79% in the same period in the prior year. The improvement was also primarily associated with improved utilization of our global laboratory network on higher revenue.

### Cost of Product Sales, excluding depreciation

Cost of product sales was $27.6 million for the three months ended September 30, 2023, a decrease of 12% year-over-year and 5% sequentially. Cost of product sales expressed as a percentage of product sales revenue was 85% for the three months ended September 30, 2023, compared to 82% year-over-year and 84% for the prior quarter. The year-over-year and sequential changes in cost of product sales as a percentage of product sales for the three months ended September 30, 2023, were primarily due to inflation in material costs throughout 2023 and higher absorption of fixed costs on a lower revenue base. For the nine months ended September 30, 2023, cost of product sales was $87.4 million, a decrease of 2% compared to the same period in the prior year. Cost of product sales expressed as a percentage of product sales revenue was 84% for the nine months ended September 30, 2023, and improved from 86% compared to the same period in the prior year. The improvement in cost of product sales as a percentage of product sales revenue was primarily due to improved manufacturing productivity while the revenue base remained relatively flat in these periods, though this improvement was partially offset by inflation, as discussed above.

### 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 for the three months ended September 30, 2023, was $9.5 million, a decrease of $0.5 million year-over-year and an increase of $3.6 million sequentially. Year-over-year, the decrease was primarily due to changes in compensation expenses. Sequentially, the increase was primarily due to two items that reduced G&A expense in the three months ended June 30, 2023: 1) a reversal of $0.9 million in stock compensation expense previously recognized as the performance conditions associated with the performance share awards were determined to be unachievable and 2) a net gain of $2.0 million from the company owned life insurance policies associated with death benefit proceeds; no such transactions occurred in the three months ended September 30, 2023.

G&A expense for the nine months ended September 30, 2023, was $31.6 million compared to $29.4 million for the nine months ended September 30, 2022. The increase of $2.2 million was primarily due to 1) the recognition of additional stock compensation expense of $6.5 million in 2023, compared to $3.9 million in 2022, which was associated with the accelerated stock compensation expense for retirement eligible employees; and 2) the reversal of stock compensation expense previously recognized as the performance conditions associated with the performance share awards were determined to be unachievable in the amount of $0.9 million in 2023 compared to a reversal of $3.3 million in 2022. Additionally, the nine months ended September 30, 2023 includes: 1) a net gain of $2.0 million from the company owned life insurance policies associated with death benefit proceeds; and 2) investment gains on company owned life insurance policies in 2023 compared to losses in 2022.

### Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended September 30, 2023, was $3.9 million, a decrease of 6% year-over-year and relatively flat sequentially. Depreciation and amortization expense for the nine months ended September 30, 2023, was $11.9 million, a decrease of 9% year-over-year. Decreasing depreciation and amortization expense is primarily due to lower levels of capital expenditures for the last several years.

### Other (Income) Expense, Net

The components of other (income) expense, net, are as follows (in thousands):

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| (Gain) loss on sale of assets | $(76) | $(96) | $(109) | $(363) |
| Results of non-consolidated subsidiaries | (135) | (59) | (334) | (173) |
| Foreign exchange (gain) loss, net | 238 | (1,303) | (292) | (462) |
| Rents and royalties | (205) | (222) | (460) | (533) |
| Return on pension assets and other pension costs | (336) | (132) | (992) | (416) |
| Loss on lease abandonment and other exit costs | 505 | — | 1,146 | — |
| Assets write-down | 128 | — | 1,143 | — |
| Severance and other charges | — | — | — | 3,332 |
| Insurance and other settlements | — | — | (604) | (669) |
| ATM termination costs | 455 | — | 455 | — |
| Other, net | 99 | 31 | (376) | (778) |
| Total other (income) expense, net | $673 | $(1,781) | $(423) | $(62) |

During the three and nine months ended September 30, 2023, we abandoned certain leases in the U.S. and Canada and incurred costs of $0.5 million and $1.1 million, respectively. We integrated and relocated these facilities and wrote down related leasehold improvements and right of use assets of $0.1 million and $1.1 million, respectively.

During the nine months ended September 30, 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 nine months ended September 30, 2022, we received insurance settlements of $0.7 million associated with business interruptions and property losses to certain facilities caused by the North America mid-continent winter storm in February 2021.

During the three and nine months ended September 30, 2023, we wrote off previously deferred costs of $0.5 million upon termination of our ATM Program. See Note 10 - *Equity* of the Notes to the Interim Consolidated Financial Statements, for additional information.

Foreign exchange (gain) loss, net by currency is summarized in the following table (in thousands):

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| British Pound | $(30) | $(187) | $(211) | $(195) |
| Canadian Dollar | 98 | 130 | 92 | 159 |
| Colombian Peso | (12) | (309) | 120 | (398) |
| Euro | 13 | (501) | (4) | (956) |
| Russian Ruble | 15 | (533) | (326) | 572 |
| Turkish Lira | (24) | (7) | (472) | 117 |
| Other currencies, net | 178 | 104 | 509 | 239 |
| Foreign exchange (gain) loss, net | $238 | $(1,303) | $(292) | $(462) |

### Interest Expense

Interest expense for the three months ended September 30, 2023 was $3.1 million, relatively flat year-over-year and compared to $3.2 million in the prior quarter. Sequentially, the decrease was primarily due to lower average borrowings during the three months ended September 30, 2023, and the net effect of our interest rate swap hedging transactions during these periods. Interest expense for the nine months ended September 30, 2023 was $9.8 million compared to $8.5 million for the nine months ended September 30, 2022. Year-over-year, for the nine months ended September 30, 2023, interest expense was higher primarily due to rising interest rates on our aggregated variable rate debt during these periods. See Note 11 - *Derivative Instruments and Hedging Activities* of the Notes to the Interim Consolidated Financial Statements, for additional information.

### Income Tax Expense (Benefit)

The Company recorded income tax expense of $2.3 million and an income tax benefit of $4.3 million for the three and nine months ended September 30, 2023, respectively, compared to an income tax expense of $3.9 million and $4.4 million for the three and nine months ended September 30, 2022, respectively. The effective tax rate for the three and nine months ended September 30, 2023, was 20% and (14.4%), respectively. The effective tax rate for the three and nine months ended September 30, 2022, was 33.5% and 25.5%, respectively. The tax rate for the three months ended September 30, 2023, was largely impacted by the earnings mix of jurisdictions subject to tax for that period and items discrete to that period. The tax rate for the nine months ended September 30, 2023 was largely impacted by the reversal of net deferred tax liabilities attributable to Core Laboratories N.V. which will not be realized subsequent to the Redomestication Transaction on May 1, 2023. The tax rate for the three months ended September 30, 2022, in contrast, was largely impacted by nondeductible items and the earnings mix of jurisdictions subject to tax for that period. The tax rate for the nine months ended September 30, 2022, was largely impacted by taxable gains in local jurisdictions associated with foreign currency translation of U.S. dollar denominated receivables, primarily in the United Kingdom and Turkey. The increased tax was partially offset by the release of withholding tax of $0.6 million related to unrepatriated earnings of our Russian subsidiary amounting to $12.0 million, which are not expected to be distributed in the foreseeable future.

### Segment Analysis

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. The following tables summarize our results by operating segment (in thousands):

| Revenue: | Three Months Ended September 30, 2023 | 2022 | 2023/2022 $ Change | % Change | Three Months Ended June 30, 2023 | Q3/Q2 $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Reservoir Description | $85,145 | $78,996 | $6,149 | 8% | $83,384 | $1,761 | 2% |
| Production Enhancement | 40,198 | 46,970 | (6,772) | (14)% | 44,497 | (4,299) | (10)% |
| Consolidated | $125,343 | $125,966 | $(623) | (0)% | $127,881 | $(2,538) | (2)% |
| **Operating income (loss):** |  |  |  |  |  |  |  |
| Reservoir Description | $12,992 | $9,798 | $3,194 | 33% | $13,316 | $(324) | (2)% |
| Production Enhancement | 1,544 | 4,417 | (2,873) | (65)% | 5,498 | (3,954) | (72)% |
| Corporate and Other (1) | 136 | 430 | (294) | NM | 92 | 44 | NM |
| Consolidated | $14,672 | $14,645 | $27 | 0% | $18,906 | $(4,234) | (22)% |
| "NM" means not meaningful (1) "Corporate and Other" represents those items that are not directly related to a particular operating segment. |  |  |  |  |  |  |  |

| Revenue: | Nine Months Ended September 30, 2023 | 2022 | 2023/2022 $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Reservoir Description | $248,717 | $229,567 | $19,150 | 8% |
| Production Enhancement | 132,863 | 132,597 | 266 | 0% |
| Consolidated | $381,580 | $362,164 | $19,416 | 5% |
| **Operating income (loss):** |  |  |  |  |
| Reservoir Description | $28,780 | $16,085 | $12,695 | 79% |
| Production Enhancement | 10,324 | 8,447 | 1,877 | 22% |
| Corporate and Other (1) | 955 | 1,374 | (419) | NM |
| Consolidated | $40,059 | $25,906 | $14,153 | 55% |
| "NM" means not meaningful (1) "Corporate and Other" represents those items that are not directly related to a particular operating segment. |  |  |  |  |

### Reservoir Description

Reservoir Description operations are closely correlated with trends in international and offshore activity levels, with approximately 80% of its revenue sourced from existing producing fields, development projects and movement of crude oil products outside the U.S. The Company continues to see improvement in international projects across several international regions; however, increases in project activity have been offset by disruptions caused by the Russia-Ukraine geopolitical conflict. The Russia-Ukraine geopolitical conflict that erupted in February 2022 caused disruptions and changes in the maritime movement and logistical trading patterns for crude oil and derived products, primarily exports from Russia being transported into Europe. As the supply chains and logistic patterns of maritime transportation of crude oil and derived products continue to stabilize, activity in the European region has improved and become more stable during 2023.

Revenue from the Reservoir Description operating segment of $85.1 million for the three months ended September 30, 2023 increased 8% year-over-year and 2% sequentially. During the three months ended September 30, 2023, the year-over-year increase was primarily due to increased demand for reservoir core and reservoir fluids analysis services on international projects along with relatively strong growth associated with both oil and gas and carbon capture and storage projects in the U.S., compared to the same period in 2022. Additionally, growth occurred in several international markets including the recovery of services in the European region as supply chains and logistic patterns of maritime transportation of crude oil and derived products realign. The sequential increase in revenue is primarily due to growing client activity for our reservoir core and reservoir fluids analysis services in the U.S. and South America, as well as continued recovery and stabilization of crude-oil importation and blending activity levels in the European region. Revenue from the Reservoir Description segment of $248.7 million for the nine months ended September 30, 2023 increased 8% from the same period in 2022. The increased revenue in 2023 is primarily due to growing client activity in the U.S., and multiple international regions, and continued recovery of some services associated with the maritime movement of crude oil and derived products which was impacted by the Russia-Ukraine conflict, as discussed above.

Operating income of $13.0 million for the three months ended September 30, 2023, increased $3.2 million, year-over-year and was relatively flat sequentially. Year-over-year, the operating income increased primarily due to operating income from incremental revenue of $6.1 million and improved utilization of our global laboratory network on higher activity levels. Sequentially, the increase in operating income generated from the incremental revenue was offset by a charge of $0.6 million associated with the exit and consolidation of certain facilities in the three months ended September 30, 2023. In the three months ended June 30, 2023, a gain associated with the reversal of previously recognized stock compensation expense of $0.6 million was recorded, as the performance conditions associated with the performance share awards were determined to be unachievable, and a net gain of $1.3 million from company owned life insurance policies associated with death benefit proceeds. No similar transactions were recorded in the three months ended September 30, 2023. Operating income of $28.8 million for the nine months ended September 30, 2023, increased $12.7 million or 79% year-over-year compared to the same period in 2022. The increase in operating income is primarily due to the incremental revenue of $19.2 million in 2023 and the improved utilization of our global laboratory network and the other transactions, as discussed above.

Operating margins were 15% for the three months ended September 30, 2023, compared to 12% for the three months ended September 30, 2022, and 16% for the three months ended June 30, 2023. Operating margins were 12% for the nine months ended September 30, 2023, which increased from 7% for the nine months ended September 30, 2022. The increases in operating margin were primarily driven by higher revenue, improved utilization and additionally a net gain from company owned life insurance policies in 2023, as discussed above.

### Production Enhancement

Production Enhancement operations are largely focused on complex completions in unconventional oil and gas reservoirs in the U.S. as well as conventional projects across the globe. During the year 2022, U.S. onshore drilling and completion activities continued to increase during the year through mid-November, and then had a typical seasonal decline at the end of the year. As 2023 began, U.S. onshore drilling and completion activities began to increase but peaked in April of 2023, and have since declined through the end of September. The decline in drilling and completion activity is due to the weakening of natural gas commodity prices in 2023, some consolidation transactions of oil and gas operating companies, and operating companies being ahead of schedule in their annual drilling programs due to efficiencies gained in drilling and completing wells. Operators have remained disciplined with their annual plans and remain focused on return of investment versus growing production. As a result, the average rig count in the U.S. land market for the three months ended September 30, 2023, was down by 15% year-over-year and 10% sequentially. International drilling and completion activities continued to improve during the three months ended September 30, 2023.

Revenue from the Production Enhancement operating segment of $40.2 million for the three months ended September 30, 2023, decreased 14% year-over-year and 10% sequentially. Although international markets continue to strengthen year-over-year, this has been offset by a weaker U.S. onshore market. Decreases year-over-year and sequentially were primarily due to decreased activity in the U.S. market, as discussed above. Additionally, some product sales were delayed into Asia Pacific and in South America due to instability caused by political unrest. Revenue from the Production Enhancement segment of $132.9 million for the nine months ended September 30, 2023, remained flat compared to the same period in 2022. The increased drilling and completion activity in international markets was substantially offset by the decrease in drilling and completion activities in the U.S. land market due to the factors discussed above.

Operating income of $1.5 million for the three months ended September 30, 2023, decreased $2.9 million year-over-year, and $4.0 million sequentially. The year-over-year and sequential decreases in operating income were primarily due to decremental revenue during the respective periods and continued increase in cost of materials and shipping as a result of inflation, partially offset by improved manufacturing efficiencies. Operating income of $10.3 million for the nine months ended September 30, 2023, increased $1.9 million compared to the same period in the prior year. The increase in operating income was primarily driven by improved manufacturing efficiencies and a net gain of $0.7 million from company owned life insurance policies associated with death benefit proceeds, partially offset by increased cost of materials and shipping due to inflation in 2023.

Operating margins for the three months ended September 30, 2023, were 4%, compared to operating margins of 9% for the same period in the prior year and 12% in the three months ended June 30, 2023. The decreases in year-over-year and sequential operating margins were primarily due to the higher absorption of fixed costs on a lower revenue base and continued inflationary impact on material and other costs, as discussed above. Operating margins were 8% for the nine months ended September 30, 2023, which increased from 6% for the nine months ended September 30, 2022. The increases in operating margin were primarily driven by improved manufacturing efficiencies and a net gain of $0.7 million from company owned life insurance policies, partially offset by increased cost of materials and shipping caused by inflation, as discussed above.

### 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 operating needs, capital expenditures, dividends and our share repurchase program. Our ability to maintain and grow our operating income and cash flow depends, to a large extent, on continued investing activities. We believe our future cash flows from operations, supplemented by our borrowing capacity and the ability to issue additional equity and debt, should be sufficient to fund our debt requirements, capital expenditures, working capital, dividends, share repurchase program and future acquisitions. The Company will continue to monitor and evaluate the availability of debt and equity markets.

We were a holding company incorporated in the Netherlands, and after the Redomestication Transaction completed in May 2023, we are a holding company incorporated in Delaware. Therefore, we conduct substantially all of our operations through our subsidiaries. Our cash availability is largely dependent upon the ability of our subsidiaries to pay cash dividends or otherwise distribute or advance funds to us and on the terms and conditions of our existing and future credit arrangements. There are no restrictions preventing any of our subsidiaries from repatriating earnings, except for the unrepatriated earnings of our Russian subsidiary which are not expected to be distributed in the foreseeable future, and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances. As of September 30, 2023, $15.9 million of our $16.6 million of cash was held by our foreign subsidiaries.

The Company continues to maintain the quarterly dividend of $0.01 per share.

### Cash Flows

The following table summarizes cash flows (in thousands):

| Cash flows provided by (used in): | Nine Months Ended September 30, 2023 | 2022 | 2023/2022 % Change |
| --- | ---: | ---: | ---: |
| Operating activities | $5,360 | $11,745 | (54)% |
| Investing activities | (4,206) | (4,914) | (14)% |
| Financing activities | 34 | (10,802) | NM |
| Net change in cash and cash equivalents | $1,188 | $(3,971) | NM |

Comparing the nine months ended September 30, 2023 to the same period in the prior year, net income increased $21.6 million, however, cash flows provided by operating activities decreased by $6.4 million. Net income for the nine months ended September 30, 2023 includes a non-cash tax benefit of approximately $11.6 million associated with the Company’s Redomestication Transaction, and non-cash investment gains of $3.2 million in 2023 compared to non-cash losses of $6.4 million in 2022.

In the nine months ended September 30, 2023, there was an increase of approximately $22.0 million of cash used in working capital, which includes a higher cash tax paid of $5.6 million, when compared to the same period in the prior year. The Company continues to carry higher levels of inventory in anticipation of higher demand and to mitigate longer lead times required to source raw materials used in the manufacturing of the products we sell as supply chains continue to be disrupted.

Cash flows used in investing activities for the nine months ended September 30, 2023 of $4.2 million were driven primarily by funding capital expenditures of $7.8 million offset by net proceeds received on company owned life insurance policies of $3.4 million. Cash flows used in investing activities for the nine months ended September 30, 2022 of $4.9 million were driven primarily by funding capital expenditures of $8.2 million offset by net proceeds received on company owned life insurance policies and proceeds from insurance settlements of $2.1 million and $0.6 million, respectively.

Cash flows provided by financing activities for the nine months ended September 30, 2023 were nominal and driven by a $6.0 million net increase in long-term debt related to the issuance of $50.0 million of new senior notes and increases in the Credit Facility primarily to repay the 2011 Senior Notes that matured September 30, 2023. Cash used for debt issuance costs related to the new senior notes was $1.3 million. We also paid quarterly dividends of $1.4 million and Redomestication Transaction costs of $2.8 million. Cash flows used in financing activities for the nine months ended September 30, 2022 of $10.8 million were driven primarily by net repayment on our Credit Facility of $5.0 million, debt issuance costs related to the renewal of the Credit Facility of $1.7 million, quarterly dividend payments of $1.4 million and repurchase of common stock of $2.3 million.

During the nine months ended September 30, 2023, we repurchased 17,041 shares of our common stock to satisfy personal tax liabilities of participants in our stock-based compensation plan for an aggregate purchase price of $0.4 million.

We utilize the non-GAAP financial measure of free cash flow to evaluate our cash flows and results of operations. Free cash flow is defined as net cash provided by operating activities (which is the most directly comparable GAAP measure) less cash paid for capital expenditures. Management believes that free cash flow provides useful information to investors regarding the cash available in the period that was in excess of our needs to fund our capital expenditures and operating activities. Free cash flow is not a measure of operating performance under GAAP and should not be considered in isolation nor construed as an alternative to operating profit, net income (loss) or cash flows from operating, investing or financing activities, each as determined in accordance with GAAP. Free cash flow does not represent residual cash available for distribution because we may have other non-discretionary expenditures that are not deducted from the measure. Moreover, since free cash flow is not a measure determined in accordance with GAAP and thus is susceptible to varying interpretations and calculations, free cash flow as presented, may not be comparable to similarly titled measures presented by other companies. The following table reconciles this non-GAAP financial measure to the most directly comparable measure calculated and presented in accordance with GAAP (in thousands):

| Free cash flow calculation: | Nine Months Ended September 30, 2023 | 2022 | 2023/2022 % Change |
| --- | ---: | ---: | ---: |
| Net cash provided by (used in) operating activities | $5,360 | $11,745 | (54)% |
| Less: Cash paid for capital expenditures | (7,843) | (8,195) | (4)% |
| Free cash flow | $(2,483) | $3,550 | NM |

Free cash flow decreased for the nine months ended September 30, 2023, compared to the same period in 2022 primarily as a result of higher levels of working capital which decreased cash provided by operating activities for the nine months ended September 30, 2023, compared to the same period in 2022, as discussed above.

### Senior Notes, Credit Facility and Available Future Liquidity

We, along with our wholly owned subsidiary Core Laboratories (U.S.) Interests Holdings, Inc. (“CLIH”) as issuer, have senior notes that were issued through private placement transactions. On September 30, 2023, we retired the 2011 Senior Notes with aggregate principal amount of $75 million upon the maturity date. Series A and Series B of the 2021 Senior Notes were issued and funded in 2021. Series A of the 2021 Senior Notes consists of $45 million in aggregate principal amount that bears interest at a fixed rate of 4.09% and is due in full on January 12, 2026. Series B of the 2021 Senior Notes consists of $15 million in aggregate principal amount that bears interest at a fixed rate of 4.38% and is due in full on January 12, 2028. Series A and Series B of the 2023 Senior Notes were issued and funded in June 2023. Series A of the 2023 Senior Notes consists of $25 million in aggregate principal amount that bears interest at a fixed rate of 7.25% and is due in full on June 28, 2028. Series B of the 2023 Senior Notes consists of $25 million in aggregate principal amount that bears interest at a fixed rate of 7.50% and is due in full on June 28, 2030. The 2021 Senior Notes and the 2023 Senior Notes are collectively the “Senior Notes”.

Additionally, we, along with our wholly owned subsidiary CLIH, have a secured credit facility, the Eighth Amended and Restated Credit Agreement (as amended, the “Credit Facility”) for an aggregate borrowing commitment of $135 million with a $50 million “accordion” feature. Proceeds from the 2023 Senior Notes were used to repay all amounts outstanding under the Credit Facility at June 30, 2023, and in September 2023, we used $71.0 million of the Credit Facility’s available capacity towards retiring the 2011 Senior Notes that matured September 30, 2023. As of September 30, 2023, the Credit Facility has an available borrowing capacity of approximately $56 million. In accordance with the terms of the Credit Facility, our leverage ratio is 1.92, and our interest coverage ratio is 6.63, each for the period ended September 30, 2023. We believe that we are in compliance with all covenants contained in our Credit Facility and Senior Notes. Certain of our material, wholly owned subsidiaries are guarantors or co-borrowers under the Credit Facility and Senior Notes. See Note 7 - *Long-Term Debt, net* of the Notes to the Interim Consolidated Financial Statements for additional information regarding the terms and financial covenants of the Senior Notes and the Credit Facility.

See Note 11 - *Derivative Instruments and Hedging Activities* of the Notes to the Interim Consolidated Financial Statements, for additional information regarding interest rate swap agreements we have entered to fix the underlying risk-free rate on our Credit Facility and the 2023 Senior Notes.

## Market risk

As filed, 246 characters.

There have been no material changes in market risk from the information provided in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” of Core Laboratories N.V.'s Annual Report on Form 10-K for the year ended December 31, 2022.

## Controls and procedures

As filed, 2,245 characters.

A complete discussion of our controls and procedures is included in Core Laboratories N.V.'s Annual Report on Form 10-K for the year ended December 31, 2022.

### 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 September 30, 2023, 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.

### Changes in Internal Control Over Financial Reporting

There have been no changes 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 the fiscal quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 613 characters.

Our business faces many risks. Any of the risks discussed in this Quarterly Report or our other SEC filings could have a material impact on our business, financial position or results of operations.

Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our securities, please refer to “Item 1A - Risk Factors” in Core Laboratories N.V.’s Annual Report on Form 10-K for the year ended December 31, 2022.

Filed Nov 2, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-058206. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.