Replies to post #13481 on The Rising Influence of Rising Affluence

[DewDiligence]

CLB—If the "V" shape recovery has arrived, why is their 4th qtr guidance showing that they are just rolling around in the bottom of the "V"?

There wasn’t a good answer for this on today’s CC, which is one reason the stock is down 9% as I’m typing.

[DewDiligence]

CLB reports 4Q16 results—sees 1H17 market bottom for deepwater and ex-US activity; (CLB says US land-based activity bottomed in 3Q16):

https://www.sec.gov/Archives/edgar/data/1000229/000100022917000018/exhibit99-1_pressreleaseq4.htm

[1Q17 outlook]: ...Core is clearly benefiting from increased U.S. onshore activity and expects revenue and operating income to increase further in 2017 as international and offshore markets improve with additional major capital project announcements. These activities should drive Core's revenue higher in consecutive quarters in 2017, expanding incremental and operating margins.

As Core projected earlier this year, the Company’s third quarter results established the bottom of the expected "V-shaped" recovery that will continue into 2017. Core believes that the global crude oil market is currently under-supplied. This is indicated by recent IEA worldwide crude-oil inventory data that has declined over the past four months and is projected to decline for the fifth straight month in December 2016. Projected OPEC production cuts in early 2017 of 1,344,000 barrels of oil per day (“bopd”), and other cooperating countries, including Russia, pledging to cut another 600,000 bopd should lead to extended worldwide inventory declines and a continuing rally in energy prices throughout 2017.

As customary, Core expects typical sequential seasonal industry activity patterns that will cause the first quarter of 2017 to be similar to the preceding quarter. Within that context, Core expects activity levels to further increase in NA but international and deepwater markets to be flat or slightly down placing Core's Company-wide revenue at approximately $150,000,000. Reservoir Description operating margins are expected to remain near 18% while operating margins for Production Enhancement are expected to expand to low double digits with Company-wide operating margins expanding slightly. Assuming those operating margins, Core projects first quarter 2017 operating profit to be approximately $22,500,000, a slight increase over the prior quarter.

…given that the effective tax rate can vary based on the jurisdictions where income is earned, Core believes an effective tax rate of 14% as stated during last quarter's call is more likely in the first quarter of 2017 as a result of the shift in activity to the U.S. On a GAAP basis, Core has projected EPS for the first quarter of 2017 to be $0.38 which compares favorably to the GAAP EPS of $0.35 earned in the fourth quarter of 2016. First quarter 2017 FCF is expected, once again, to exceed net income. Core expects to continue to make opportunistic repurchases of its shares using the FCF in excess of its dividend payments.

CC tomorrow at 8:30am ET.