Core Laboratories (NYSE:CLB) reported fourth-quarter and full-year 2025 results that reflected modest top-line growth, continued shareholder returns, and a mix of strength in international demand alongside weakness in U.S. land activity. Management emphasized that demand for the company’s proprietary technologies helped offset a seasonally soft U.S. land market, while geopolitical tensions, evolving sanctions, and commodity price volatility created headwinds in certain laboratory services tied to crude oil trade and transportation.
Fourth-quarter performance and segment results
Company-wide revenue in the fourth quarter was $138.3 million, up 3% sequentially and up 7% year-over-year. CFO Chris Hill said the sequential improvement was driven primarily by increased demand for reservoir rock and fluid analysis as well as completion diagnostic services in the U.S. and several international regions. Full-year 2025 revenue was $526.5 million, up slightly from 2024, with growth in service revenue substantially offset by lower U.S. onshore completion activity and associated product sales.
In Production Enhancement, revenue was $46.0 million, relatively flat sequentially but up more than 8% year-over-year. Segment operating income (excluding items) was $3.0 million, for a 7% operating margin. Management said sequential margins fell from 11% in the third quarter primarily due to a provision for a potentially uncollectible receivable in Asia Pacific; Bruno added there are no further receivables at risk with that contract. The segment also faced higher raw material costs tied to tariffs, partially offset by strong demand for completion diagnostic services in both onshore and offshore markets.
Revenue mix: services up, product sales down
Hill said fourth-quarter service revenue was $107.0 million, up 6% sequentially and 11% year-over-year, reflecting growth in reservoir rock and fluid analysis and completion diagnostics. Full-year service revenue rose to $399.4 million, up 3% from $388.2 million in 2024.
Product sales were $31.3 million in the fourth quarter, down 6% sequentially and down 4% year-over-year. Hill attributed the quarterly decline to variability in international bulk orders and continued sequential declines in U.S. onshore completion activity. For the full year, product sales were $127.1 million, down 6% from $135.6 million in 2024, again tied primarily to lower U.S. completion activity.
Profitability, cash flow, and balance sheet
On the income statement, EBIT excluding items was $15.7 million in the fourth quarter (an EBIT margin of over 11%), down from $16.6 million in the third quarter and flat versus the prior-year quarter. Full-year 2025 EBIT excluding items was $58.7 million, down 10% from $65.3 million in 2024.
Net income excluding items was $9.7 million in the fourth quarter, with earnings per diluted share excluding items of $0.21 (versus $0.22 in the prior quarter and prior-year quarter). For full-year 2025, net income excluding items was $35.4 million and EPS excluding items was $0.75, down from 2024.
Core generated $8.1 million of cash flow from operating activities in the fourth quarter. After $2.9 million of operating capital expenditures, free cash flow was $5.1 million. Hill noted capital expenditures related to rebuilding the company’s U.K. facility damaged by a February 2024 fire are covered by property and casualty insurance and excluded from free cash flow calculations. For 2026, Core expects operating CapEx (excluding the U.K. rebuild) of $15 million to $18 million.
At year-end 2025, long-term debt was $113.0 million and cash was $22.8 million, resulting in net debt of $90.2 million. Hill said net debt declined by $18.7 million during 2025 and the leverage ratio improved to 1.09. Since the company’s renewed focus on reducing debt in the fourth quarter of 2019, Hill said Core has reduced net debt by $205.8 million, or 70%.
Hill also disclosed that in January 2026 Core funded the retirement of its 2021 $45 million senior notes by drawing $50 million against a term loan under its credit facility. The variable-rate term loan is tied to SOFR and is expected to be about 200 basis points higher than the retired notes’ fixed rate (a little over 4%), implying slightly higher interest expense beginning in the first quarter of 2026.
Shareholder returns and capital allocation priorities
Bruno said the company continued returning cash to shareholders through its quarterly dividend and share repurchases. During the fourth quarter, Core repurchased more than 363,000 shares for $5.7 million. For the full year, the company repurchased 1.2 million shares for $15.5 million, marking the fifth consecutive quarter of share buybacks.
In the Q&A, Hill said moving debt to the term loan provides more flexibility, including the ability to pay it down early without penalty, while required annual paydowns are about $2.5 million. He said management still views the stock as undervalued and expects the company to remain opportunistic with buybacks, balancing repurchases with maintaining a leverage ratio “where we’re comfortable.” Bruno added there is a pricing benefit if leverage falls below 1, which management indicated is within reach.
Outlook: seasonal softness, weather disruptions, and Q1 guidance
For the first quarter of 2026, Core expects the typical seasonal sequential decline in activity, compounded by weather-related disruptions. Gwen Gresham, senior vice president and head of investor relations, said severe freezing conditions in North America in early January disrupted both client activity and Core’s operations, and adverse weather in Europe and the Mediterranean suspended crude assay work and damaged one Core facility, creating additional revenue and margin headwinds.
Management also discussed broader market factors, including tariff pressures, OPEC+ policy decisions, sanctions, and commodity price volatility. While Core said tariffs have not had a significant impact on Reservoir Description to date, Production Enhancement faces tariff-related cost pressure on certain imported raw materials, and the company is taking steps to mitigate the impact.
Core provided first-quarter 2026 guidance (excluding FX gains/losses and assuming a 25% tax rate):
- Reservoir Description: revenue of $82 million to $86 million; operating income of $6.8 million to $8.2 million
- Production Enhancement: revenue of $42 million to $44 million; operating income of $2.8 million to $3.8 million
- Total company: revenue of $124 million to $130 million; operating income of $9.7 million to $12.2 million (operating margin approximately 9%)
- EPS: $0.11 to $0.15
Operationally, Bruno highlighted activity tied to international and long-cycle projects, including deepwater developments across regions such as the South Atlantic margin, North and West Africa, Norway, the Middle East, and parts of Asia-Pacific, while noting that revenue realization depends in part on clients’ geologic success rates. He also described regional work in South America, including a geomechanics and reservoir characterization study in Colombia’s Palagua Field and laboratory support for a carbon capture and storage initiative in Brazil using the company’s Nitro Digital Rock Tomography technology.
In Production Enhancement, Bruno pointed to deployments of Core’s Pulverizer system in a Middle East plug-and-abandonment program and said the technology received the 2025 Offshore Well Intervention Global Award for Plug and Abandonment Innovation. He also discussed U.S. diagnostic work evaluating plugless completion designs using the company’s SpectraStim proppant tracer diagnostics.
During Q&A, Bruno addressed questions about Venezuela, saying Core has legacy data from decades of history in the country and could deploy mobile lab capabilities if operators return, but characterized it as a story “several quarters” away and suggested it may be “more of a 2027 story than a 2026 story.”
About Core Laboratories (NYSE:CLB)
Core Laboratories N.V. is a global provider of proprietary and patented reservoir description and production enhancement services to the oil and gas industry. The company applies specialized expertise in core and fluid analysis, advanced petrophysical interpretation, and reservoir engineering to optimize hydrocarbon recovery. By integrating laboratory testing with field services and digital analytics, Core Laboratories delivers insights that help operators maximize production and extend the life of their assets.
The company’s portfolio spans two primary service lines: reservoir description and production enhancement.
