Core Laboratories (CLB) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue was $124.6 million, up 2% sequentially but down 4% year-over-year, with continued execution of a technology-focused strategy despite significant geopolitical disruptions in the Middle East and Russia/Ukraine, leading to project delays and logistical challenges, especially in Reservoir Description.

• Production Enhancement segment showed resilience with improved energetic product sales and increased operator adoption of proprietary technologies in both U.S. and international markets.

• Maintained commitment to shareholder returns through dividends and share repurchases, marking the seventh consecutive quarter of buybacks, with 214,712 shares repurchased for $2.7 million and a quarterly dividend of $0.01 per share.

• Focused on maximizing free cash flow, return on invested capital, and returning excess cash to shareholders.

• Free cash flow for the quarter was $3.1 million.

Financial highlights

• Q2 2026 revenue was $124.6 million, up 2% sequentially but down 4% year-over-year.

• Service revenue was $94.3 million, flat sequentially and down 2% year-over-year; product sales were $30.3 million, up 10% sequentially but down 11% year-over-year.

• EBIT ex items was $9.4 million (8% margin), up from $6.6 million last quarter; net income ex items was $5.1 million, up from $2.7 million last quarter but down from $8.8 million a year ago; net income GAAP was $5.8 million; diluted EPS was $0.13; adjusted EPS was $0.11, up from $0.06 last quarter but down from $0.19 last year.

• Free cash flow for the quarter was $3.1 million; cash from operations was $7.8 million.

• Net debt at $93.6 million as of June 30, 2026; leverage ratio at 1.3.

Outlook and guidance

• Q3 2026 revenue projected at $128.5–$135.5 million, with operating income of $10.5–$15 million and operating margins around 10%; EPS for Q3 expected to range from $0.12–$0.20.

• Reservoir Description Q3 revenue expected at $81–$84 million; Production Enhancement at $47.5–$51.5 million.

• Sequential revenue growth expected, driven by improvements in Africa, Brazil, Asia-Pacific, and parts of Europe, with only marginal improvement anticipated in the Middle East and modest improvement in U.S. land completion activity.

• Guidance excludes FX gains/losses and assumes a 25% tax rate.

• Long-term fundamentals remain strong, with global demand growth projected to rebound in 2027.