• COMPANY FOURTH QUARTER REVENUE OF $114 MILLION; UP 8% SEQUENTIALLY
• FOURTH QUARTER GAAP EPS OF $0.31; $0.18, EX-ITEMS; UP OVER 10% SEQUENTIALLY
• CORE GENERATES FCF FOR 19TH CONSECUTIVE YEAR; $46 MILLION FOR 2020
• CORE REDUCES NET DEBT BY $49 MILLION OR 16.5% FOR 2020
• RESERVOIR DESCRIPTION’S REVENUE UP 5% SEQUENTIALLY
• PRODUCTION ENHANCEMENT’S REVENUE UP 18% SEQUENTIALLY, LED BY U.S. ENERGETICS SALES, UP OVER 65% SEQUENTIALLY
AMSTERDAM (27 January 2021) - Core Laboratories N.V. (NYSE: "CLB US" and Euronext Amsterdam: "CLB NA") ("Core", "Core Lab", or the "Company") reported that continuing operations resulted in fourth quarter 2020 revenue of $113,700,000. Core’s operating income was $23,400,000, with earnings per diluted share (“EPS”) of $0.31, all in accordance with U.S. generally accepted accounting principles ("GAAP"). The financial results for the fourth quarter of 2020 include a non-cash adjustment of $11.9 million to reverse previously recognized stock compensation expense associated with performance share awards that did not fully vest and were revalued. Operating income, ex-items, a non-GAAP financial measure, was $13,000,000, yielding operating margins of 11% and EPS, ex-items, of $0.18. A full reconciliation of non-GAAP financial measures and year-over-year comparisons are included in the attached financial tables.
Core’s CEO, Larry Bruno stated, “Core’s fourth quarter results demonstrate the dedicated efforts of our innovative staff, the durability and adaptability of the business model, as well as the benefits of the cost reduction plans that were quickly enacted earlier this year. Despite the challenges encountered in 2020, after adjusting for non-cash impairments, Core generated sector-leading operating margins, four consecutive quarters of positive earnings, and positive free cash flow for 2020. This performance enabled the Company to reduce net debt by $48,700,000 throughout the year, while continuing to fund capital investments for growth initiatives. As we embark on 2021, Core remains well-positioned to navigate today’s challenging market and capitalize on future growth opportunities, while providing innovative solutions that drive efficiency and reservoir optimization for our clients.”
Liquidity, Free Cash Flow, Private Placement Notes and Dividend
Core continues to focus and generate free cash flow (“FCF”), a non-GAAP financial measure defined as cash from operations less capital expenditures. For the full year of 2020 cash from operations was $57,900,000 and capital expenditures were $11,900,000, yielding FCF of $ 46,000,000, marking the 19th consecutive year in which the Company has generated positive free cash flow. Cash flow from operations, for the fourth quarter
of 2020, included cash payments unique to the quarter, and had a negative impact on operational cash flow. These cash payments included (i) $16 million for employee post-retirement deferred compensation distributions and employment separation payments and (ii) approximately $5 million for prepaid 2021 corporate insurance programs, which resulted in lower annual premium costs. Accounting for the $21 million in cash payments ($16 million + $5 million), cash from operations was ($2,900,000) for the fourth quarter of 2020, and together with $3,300,000 in capital expenditures, FCF was ($6,200,000). Although these cash payments for employee post-retirement benefits in the fourth quarter are required to be deducted from operational cash flow and FCF, the Company had partially funded the employee post-retirement payments with $11,500,000 of cash received through previously purchased company owned life insurance (“COLI”) policies. The cash received from COLI is considered investing activities, and thus, is not included in cash generated from operations or FCF. The following table summarizes the impact of these cash payments on operational cash flow.

Quarter ended
December 31, 2020
(in $ millions)
Net cash provided by operations, before employee post-retirement and prepaid insurance payments $ 18.1
Cash payments for employee post-retirement and prepaid Insurance $ (21.0)
U.S. GAAP – net cash used by operations $ (2.9)
Capital Expenditures $ (3.3) FCF $ (6.2)

For the full year, free cash was used to reduce the Company’s outstanding debt, and net debt was decreased by $48,700,000 or 16.5%. Core will continue applying its excess free cash flow towards debt reduction for the foreseeable future.
The following graph summarizes the maximum leverage ratio permitted over the relevant period:
Quarter Ending 2020 2021 Jun. 30 Sept. 30 Dec. 31 Mar. 31 Jun. 30 Sept. 30 Dec. 31 Maximum Leverage Ratio 3.00 2.75 2.50 2.00 1.50 1.00 Core Lab’s leverage ratio of 2.21 at 30 June 2020
As of 31 December 2020, Core Lab’s leverage ratio was 2.82, with $101,000,000 of excess capacity under the Company’s revolving credit facility. As previously disclosed, subsequent to year-end, on 12 January 2021, the Company issued $60 million of senior unsecured notes in a private placement transaction. Proceeds from the sale were exclusively used to reduce outstanding borrowings under the credit facility. The Company anticipates it will continue to generate positive cash flow and reduce net debt, while
Leverage Ratio3.002.752.502.25Quarter Ending20202021Dec. 31Mar. 31 Jun. 30Sept. 30Dec.

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The Company has scheduled a conference call to discuss Core's fourth quarter 2020 earnings announcement. The call will begin at 7:30 a.m. CST / 2:30 p.m. CET on Thursday, 28 January 2021. To listen to the call, please go to Core's website at www.corelab.com