Good day, and welcome to the Core Laboratories Fourth Quarter and Fiscal Year 2025 Earnings Webcast and Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star and then 2. Please note this event is being recorded. I would now like to turn the conference over to Lawrence V. Bruno, Chairman and CEO. Please go ahead.

Good morning in The Americas. Good afternoon in Europe, Africa, and The Middle East. And good evening in Asia Pacific. We would like to welcome all of our shareholders, analysts, and most importantly, our employees to Core Laboratories Fourth Quarter 2025 earnings call. This morning, I am joined by Christopher Scott Hill, Core's Chief Financial Officer, and Gwendolyn Y. Gresham, Core's Senior Vice President and Head of Investor Relations. The call will be divided into six segments. Gwen will start by making remarks regarding forward-looking statements. We will then have some opening comments, including a high-level review of important factors in Core's Q4 performance. In addition, we will review Core's strategies and the three financial tenets that Core Lab employs to build long-term shareholder value. Chris will then give a detailed financial overview and have additional comments regarding shareholder value. Following Chris, Gwen will provide some comments on the company's outlook and guidance. I will then review Core's two operating segments, detailing our progress and discussing the continued successful introduction and deployment of Core Lab's technologies as well as highlighting some of Core's operations major projects worldwide. Then we will open the phones for a Q&A session. I will now turn the call over to Gwen for remarks on forward-looking statements. Thank you, Larry.

Before we start the conference this morning, I will mention that some of our statements that we make during the call may include projections, estimates, and other forward-looking information. This would include any discussion of the company's business outlook. These types of forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to materially differ from our forward-looking statements. These risks and uncertainties are discussed in our most recent annual report on Form 10-K as well as other reports and registration statements filed by us with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Our comments also include non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures is included in the press release announcing our fourth quarter results. Those non-GAAP measures can also be found on our website. With that, I will pass the discussion back to Larry.

Thanks, Gwen. Moving now to some high-level comments about our fourth quarter and full year 2025 results. Core continued to execute its strategic plan of technology investments, targeted to both solve client problems and capitalize on core technical and geographic opportunities. Fourth quarter 2025 revenue was up 3% compared to 2025. Full year revenue for the company increased slightly compared to 2024. Fourth quarter performance was driven by strong international demand for Core's proprietary technologies, which helped offset a seasonally soft US land market. Looking at reservoir description, fourth quarter revenue was up 5% compared to 2025, and up 6% from Q4 of last year, reflecting the continued demand for rock and fluid analysis across the company's global laboratory network. Demand for laboratory services tied to the assay of crude oil and derived products was negatively impacted by ongoing geopolitical conflicts and evolving sanctions, which were further expanded during Q4. These geopolitical tensions, along with supply-demand balance concerns, contributed to commodity price volatility during the quarter. Despite these headwinds, fourth quarter operating margins in Reservoir Description, ex items, remained strong at 14%, expanding sequentially by 60 basis points. The company's 2025 performance reflects Core's continued focus on operational efficiency and strong utilization across Core Lab's international laboratory network. In production enhancement, fourth quarter revenue was relatively flat compared to Q3, but meaningfully higher year over year, up over 8%. Ex items, fourth quarter 2025 operating margins in Production Enhancement were 7%, down from 11% in Q3 but up from 4% in 2024. Sequential results were negatively impacted by a provision for a potentially uncollectible receivable in Asia Pacific. This was partially offset by continued strong demand for Core Laboratories' proprietary completion diagnostic services across both onshore and offshore markets. Turning now to some fourth quarter highlights regarding capital allocation. The…

Thanks, Larry. Before we review the financial performance for the quarter, guidance we gave on our last call and past calls, specifically excluded the impact of any FX gains or losses and assumed an effective tax rate of 25%. So accordingly, our discussion today excludes any foreign exchange gain or loss for current and prior periods. The comparison periods for the 2025 and 2024 also include items that were discussed in those calls and highlighted in our earnings release for those periods. These items have also been excluded from our discussion of the financial results today. You can find a summary of those items in the tables attached to our press release for the fourth quarter and full year of 2025. So now looking at the income statement, revenue was $138,300,000 in the fourth quarter, up 3% compared to the prior quarter. Year over year revenue also increased 7%. The sequential improvement was primarily associated with increased demand for our reservoir rock and fluid analysis as well as completion diagnostic services in The US and several international regions. For the full year 2025, revenue was $526,500,000, up slightly year over year again driven by growth in our service revenue, however, substantially offset by a decline in U.S. Onshore completion activity and associated product sales. Of this revenue, service revenue, which is more international, was $107,000,000 for the quarter, up 6% sequentially and 11% year over year. Sequentially, we continue to see growth for our reservoir rock and fluid analysis service in The U.S. and several international regions, as well as demand for our completion diagnostic services in The US. Year over year, the increase was driven by growth in our reservoir rock and fluid analysis as well as our completion diagnostic services. For the full year of 2025, service revenue…

Looking at cash flow,

for 2025, cash flow from operating activities was approximately $8,100,000 and after paying $2,900,000 of CapEx for operations, our free cash flow for the quarter was $5,100,000. As discussed in prior quarters, the capital expenditures associated with rebuilding our UK facility which was damaged by fire in February 2024, are covered by the company's property and casualty insurance and have been excluded from the calculation of free cash flow. For the full year, capital expenditures for operations, excluding the CapEx associated with rebuilding the UK facility was $11,200,000. Looking ahead to 2026, we will continue to manage investment and working capital and continue our strict capital discipline and asset-light business model with capital expenditures primarily targeted at growth opportunities. Excluding the CapEx associated with rebuilding the UK facility, we expect capital expenditures in 2026 to be in the range of $15,000,000 to $18,000,000. Core Lab's operational leverage continues to provide the ability to grow revenue and profitability with minimal capital requirements. Capital expenditures for operations have historically ranged from 2% to 4% of revenue even during periods of significant growth. That same level of laboratory infrastructure, intellectual property, and leverage exists in the business today. We believe evaluating a company's ability to generate free cash flow and free cash flow yield is an important metric for shareholders when comparing and projecting a company's financial results, particularly for those shareholders who utilize discount cash flow models to assess valuations. We will now turn it over to Gwen for an update on our guidance and outlook.

Thank you, Chris. Turning to Core Lab's outlook for the first quarter of 2026. The IEA, the EIA, and OPEC plus forecast global crude oil demand growth of approximately 900,000 to 1,400,000 barrels per day in 2026. A slight increase from their previous forecast. As discussed in our third quarter 2025 release, the IEA published a report in September 2025 which noted accelerating natural decline rates in existing producing fields which pose a significant risk to long-term supply. This analysis underpins the need for sustained investment in oil and gas development to maintain energy security and market stability. In The US, oil production growth is moderating as capital discipline, maturing shale plays, and natural decline rates increasingly offset efficiency gains. As efficiency gains become less impactful, activity levels must increase to maintain or expand US land production. These factors support the ongoing demand for oilfield services and Core Lab is seeing operators prioritize production sustainment, well optimization, and recovery enhancement. International markets continue to exhibit resilient activity levels of a multiyear offshore development and long-cycle investments across key global basins. The company's reservoir description and production enhancement technologies are well positioned to support these ongoing investments. In the near term, tariff pressures and OPEC plus production policy decisions continue to contribute to market volatility and softer commodity prices. Despite these headwinds, longer-term crude oil demand fundamentals remain strong. Core Lab maintains a constructive multiyear outlook and continues to see steady activity across committed long-cycle projects, including deepwater development in the South Atlantic margin, North and West Africa, Norway, The Middle East, and select Asia Pacific markets. Revenue realization from these projects remains partially dependent on the geologic success rates achieved by Core's clients. Short-cycle activities, particularly in The US onshore environment, will remain sensitive to changes in commodity prices. Geopolitical…

Thanks, Gwen. First, I would like to thank our global team of employees for providing innovative solutions, integrity, and exceptional service to our clients. As we celebrate our ninetieth year, the company's granite anniversary, our staff's collective expertise and their dedication to servicing our clients continues to be the foundation of the company's success. Looking at the macro, even as global energy markets work through near-term economic headwinds, and volatile commodity prices, the IEA, EIA, and OPEC all continue to forecast growth in global crude oil demand. These agencies are now projecting demand growth to range between 0.9 and 1.4 million barrels per day for 2026 compared to 2025. A slight increase from their prior guidance. In addition to the forecasted growth in demand, new production will need to be brought online to offset the natural decline from existing producing fields. Combined, these trends will require continued investment in the long-term development of new onshore and offshore crude oil fields. US tight oil production has been by far the largest component of non-OPEC oil production growth since 2010. However, the most recent EIA short-term energy outlook for US oil production projects approximately 13,600,000 barrels of crude oil production per day in 2026, essentially flat to 2025. With little or no year-over-year growth. This forecast reinforces the view that incremental US production growth is flattening. Continued growth in global oil demand combined with the constrained incremental US oil production growth supports the thesis that the balance of future supply growth must increasingly rely on discoveries and field developments outside the Continental US. Of particular note, during the fourth quarter, the IEA continued to pivot from earlier projections on the need for investment in new oil and gas production. The most recent IEA forecast shows oil demand rising to 113,000,000 barrels per…

Moreover, these results demonstrate that Core's SpectraStim technology provides operators with a reliable, cost-efficient method to evaluate new completion designs. Additional diagnostically evaluated wells will be needed to determine the range of applications that are suitable for plugless completions. We appreciate your participation. That concludes our operational review. Dave will now open the phone for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. Our first question comes from Don Crist with Johnson Rice. Please go ahead.

Morning, Dawn. Morning, guys.

Good morning. Hopefully, you all are doing well this morning. Yeah. Fine, Don.

Larry, the first question for me and I know it has gotten a lot of headlines recently, but maybe it has calmed down in the last week or two, is on Venezuela. I know it is going to take a lot to go back in there for these operators, but from Core's perspective, I would assume that you all have a long history there and could benefit if operators are looking to expand presence there. Any comments around Venezuela?

Yeah, Don. Good question. And it is a common question that is coming up in meetings. So yeah. So it turns out Venezuela was the first international company that Core Lab ventured into some, and we were there for nearly sixty years. And so a lot of experience dealing with very challenging reservoirs in the Orinoco Belt, the heavy oil belt. And also our headquarters at the time were in Maracaibo. Our predecessors, I think, made a good call a number of years back when the red shirt showed up and looked like a challenging environment, and we left Venezuela and moved into Colombia. So what we do have is a fair amount of legacy data that we could monetize if there was interest in it. From people wanting to get back in and get up to speed on rock and fluid properties. I think for the near term, the bigger advantage is going to be for metal-heavy companies, not Core Lab. And so if you are a wellhead company, if you are into patching pipe, if you are into fixing leaks and environmental remediation, probably going to be where the first dollars are made down there. We would probably follow operators into the country. And we have mobile lab capabilities that we can deploy. And we can be present, in a yard with some power. That we can set up to do rock and fluid analysis or the basics at least in-country, and we can do that quickly. When the need arises. And then over time, we will look at the landscape and see if it makes sense to have a presence back in Venezuela. But I think that is a question that is several quarters at least away from having to be addressed.

Yeah. I would agree with that comment. It is probably more of a 27 story than a 26 story, but just wanted to get, you know, your kind of expectation on it. So you know, we are hearing a lot of moving over to The Middle East, of commentary about rigs going back to work in Saudi and then good conversations in you know, Algeria and Turkey and other places on the unconventional side. I know it has been a couple of quarters since you put out a broader update on your Middle East facility that was built during COVID and kind of had a slow start. But do you have capabilities there to expand rapidly, or would you have to put more CapEx into that facility if you know, Algeria kicked off in a big way in, you know, later 2627, or Turkey or any of these other kind of areas picked up.

Yeah. So let us bifurcate a little bit the Middle East and North Africa. So in 2025, we announced that we expanded our lab capabilities in Saudi Arabia to bring the full suite of analytical technologies that had been developed in our US operation for unconventionals, and we put that into the Middle East. And if you read our earnings release there, we were quickly rewarded for that investment. Large expedited project with some very nice returns on that. I think the what I how I would describe and I only have we only have one really great client, Saudi Arabia, We did not see the pullback in activity that some of the more drilling-focused companies did. We have ongoing great engagement with Aramco. They are a great client for us and have been for decades. And so throughout The Middle East, we have got opportunities, lab in Qatar, a nice flow of work from there. Oman, Abu Dhabi, and Kuwait. And we are in position with permanent facilities in all those locations. In North Africa, we recently held a technology conference to address opportunities across North Africa, from Algeria, Libya, Tunisia, and into Egypt, And we see opportunities developing there. There is a great need for people to assess damaged and underdeveloped fields that have been, I will call it, wilting under years of neglect. And so there are opportunities for us there. There are unconventional opportunities emerging. In that region that we have we will have a lot to say about. We currently operate or would service that out of our facility for rock and fluid analysis. On reservoir evaluation. And, again, if we have to put in some mobile lab operations to facilitate that, we are ready to roll.

I appreciate all that color. And I guess one for Chris. You know, obviously, you shifted around some of the debt as you paid off the notes and put it on the revolver. Can you just kind of frame how you are thinking about future cash flows, free cash flow, and you know, paying off that revolver debt that has a higher interest rate versus share buybacks and just kind of your thoughts around that.

Sure. It did. Moving it into this term loan under the credit facility out of the private placement notes does give us more flexibility with that. There is no, you know, penalty to pay down that early. There are some required pay downs. I think it is $2,500,000 a year if my memory serves me right. So we will be paying it down as far as our use of free cash flow, we still think the stock is undervalued. You have seen us shift over the last five quarters. On using some of that towards share repurchases versus paying down the debt. And so I do not see that changing. You know, we are going to be opportunistic with the share buyback. So we see a dip in the market. We might get more aggressive. But I see it as a mix between continuing to make sure the leverage ratio kind of stays where we are comfortable but also using it to buy back shares.

And, Don, I might add to that. Appreciate all the Donna, there is a quarter of a point click in our favor. We get the leverage ratio proximity to where we are. below one and we are you would see we are it is within it is within close That looks like a smart place to try to get to. As we can. But in the meantime, I think if you look at how we have been allocating capital between debt reduction and share buybacks, that is probably a good optics on where we are going. For the near term.

All about those basis points. I get I appreciate all the color, guys. I will turn it back. Thanks. You, Don. Appreciate it.

And the next question comes from Josh Jain with Daniel Energy Partners. Please go ahead.

Hey, Josh.

Hello, Jarry. Good morning. Wanted to start with something you mentioned in the release and then also on the call, you talked about an increase in regional study sales on Africa and Brazil. Highlighting the renewed industry interest in exploration activity. And I feel like there were numerous large operators over the last couple of quarters who have highlighted the need for exploration activity international and offshore moving forward. So do you see this sort of as the beginning of demand accelerating as we move through this year? And into next year? Or, or do you think it was just you know, a little a small uptick in Q4? Just how do you see this all playing out?

No. Josh, it is clearly a trend. And I have talked about this a little bit We think the trend has already started. And last year, we would have seen, I would say, markedly better performance in reservoir description. If we had not had so many operators come up with dry holes. So in other words, committed work to Core Lab, nice stack of work coming up for us, and a series of geologic failures, if you will, by the operators that resulted in no cores, no fluids. And so, we see that trend continuing. We have got a nice portfolio of project commitments in front of us. And I think, people are getting further along in their commitment to these larger projects and at larger evaluations. We do have core coming in. We have folks on location, in a number of places over the last, quarter. Or two and today. We do see an increase in FIDs around the world. That are all I would say, they are not indications. They are facts. That are showing that an international wave is coming. People recognize that the growth in US production is flattening. And look, there are opportunities in that. We are engaged with I will call it, mechanical improvements in a production enhancement that might help improve US production. And also, thermodynamic lab testing for ways to get those extra molecules out of the ground. We have got experiments going on in the lab for clients. So we are going to work on trying to improve recovery in The US. But for the longer term, the trend is clearly in the direction of more international exploration, and the bigger structures that can move the needle in terms of reserve replacement, which is a term we have been waiting to come back into the vernacular in the industry. Is going to be offshore opportunities. And so the sale of off the shelf and ongoing studies that we are able to provide allow people to quickly get up to speed on the geologic variables they are going to encounter as they drill in these, offshore environments, whether it is the South Atlantic margin or, offshore Africa. Or Asia Pacific.

Thanks for all that. And maybe we could just move to the oh, go ahead.

Nope. We did not have anything. Oh,

oh, sorry about that. Maybe just to move to The US you highlighted the onshore environment and how it is obviously a little bit more sensitive to change in commodity prices. Could you talk to what those are? So if we sort of break out of this you know, flat to flat to down commodity price range that we have seen over the last couple of months, what it ultimately would take from a commodity price standpoint to sort of materially change the activity outlook in, in The US.

Yeah. I think, Josh, that is probably a better question for some of our operators.

I think if I was if I was in their shoes, I would be looking for some stability in the commodity price. And, you know, you see eight, 10% swings, you know, $56 bouncing around here. And, look, a lot of the companies have different hedging strategies. And all that that impact their plans. I think it is best to defer to them on that But if you look at actions as an indication of their thinking, rig counts down, frac spreads down, And so would say it is still an environment that they are and, also, there has been consolidation in the industry. That is also impacting activity. Levels as those kind of sort themselves through. I would hate to put a price on it because I think it varies by company. Our objective is to use our product to help them get more oil and gas out of the ground. As cheaply as possible. And then where there are opportunities like enhanced oil recovery and unconventionals to do the lab testing that give them techniques that they can try to increase the recoverable on these unconventional wells from high single digits eight, nine, 10%. If we can help them get that to 12, 13%, by some laboratory proven techniques then that will be good for us and good for our clients.

Thanks for that. And then if I could just squeeze one more. I am not sure if you explicitly called out the tariff impact in 2025. Know you highlighted it in Q4 as sort of a headwind. But so if you did call it out, I apologize for missing it, but maybe you could talk about the impact in 2025 so that we could think about what the potential tailwind is, you know, moving forward in the event that things settled out a bit. Thanks.

Sure. Josh, this is Chris. So I think, you know, in 2025, it started to become more impactful. As we got into, I would say, the latter part of the third quarter and then the fourth quarter because we had previously purchased supplies. You know, think of raw materials for the products, but then also the chemical tracers for the service side. We had supplies that kind of lasted through partway through the third quarter. So those are all imported products. They all attract tariffs. Some are higher than others. So I think the impact in Q4 is you are going to see that repeat going forward unless there is a change in know, the tariffs that are being applied right now. So it is probably somewhere in the range of, you know, two to 3¢ each quarter. And it is primarily the production enhancement group but also some things in reservoir description, but not as impactful for that group.

And, Josh, I would add to that. Thank you. I will turn it back. Yeah. I would add to that that we are always trying to mitigate this. And so, for example, on the chemicals used for diagnostics, we traditionally had brought those into The US, mixed up cocktails, of our proprietary blends of these chemicals to be used as tracers and then ship them out as we needed to various other regions on the world. Well, if we can ship those directly to the other regions and our expanding footprint like the lab we put into Abu Dhabi, for example, for tracer diagnostics. If we could ship those right to Abu Dhabi, going forward, we will bypass some of the tariff, call it complications that are presented to us in making up our proprietary tracer. So it is an impact for us. I would say it is hard part is planning. But steel costs have gone up. Energetic powders have gone up. Chemical tracers and lab supplies, have gone up. We are but we are working hard to mitigate that through our procurement process and how we let us call it, draw the arrows on where things come from and where they go.

Understood. Thank you for taking the questions.

Thanks, Josh.

This concludes our question and answer session. I would like to turn the conference back over to Lawrence V. Bruno for any closing remarks.

Okay. We will wrap up here. In summary, Core's operational leadership continues to position the company for improving client activity levels in the coming quarters and years. We have never been better operationally or technologically positioned to help our global client base optimize their reservoirs and to address their evolving needs. We remain uniquely focused and are the most technologically advanced, client-focused reservoir optimization company in the oilfield service sector. The company will remain focused on maximizing free cash, returns on invested capital. In addition to our quarterly dividend, we will bring value to our shareholders via growth opportunities driven by both the introduction of problem-solving technologies and new market penetration. In the near term, Core will continue to use free cash to repurchase shares, maintain a strong balance sheet while always investing in growth opportunities and evaluating various methods to increase shareholder value. So in closing, we thank and appreciate all of our shareholders and the analysts that cover Core Lab. Executive management team, the board of Core Laboratories give a special thanks to our worldwide employees that have made these results possible. We are proud to be associated with their continuing achievements. So thanks for spending time with us, and we look forward to our next update. Goodbye for now.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.