Core Laboratories N.V. (CLB) reported its second-quarter results after the market closed on Wednesday. The oilfield-service company beat its own guidance on both the top and bottom lines, while raising its earnings guidance above Wall Street estimates for both the third and fourth quarters. Results were minimally affected by the downturn in the oil market, which it sees improving in the quarters ahead.

A look at the numbers
Core Labs reported revenue of $204 million, which was only down 4.6% from last quarter. Further, it was above the high end of the company's own guidance range that estimated that revenue would be in the range of $192 million to $202 million. Revenue would have been even stronger if not for the negative impact of foreign currencies, which resulted in a $8 million, or 4%, drag on reported revenue.

Driving the solid top-line number was the company's Reservoir Description business, which delivered second-quarter revenue of $119 million, down only 2% sequentially. Core Labs' other two segments, Production Enhancement and Reservoir Management, turned in decent quarters as well. Production Enhancement revenue was $70.6 million, down slightly from last quarter's $75.1 million, while the Reservoir Management segment's revenue slipped from $16.76 million last quarter to $14.4 million this quarter.

That better-than-expected revenue also fueled stronger earnings, as the company reported net income of $35 million, or $0.82 per share. That was also ahead of the company's guidance range of $0.76-$0.81 per share. Another important driver of earnings was the company's operating margins, which improved during the quarter by 30 basis points to 24%.

A look at the outlook
Core Labs expects its solid results to continue, as it sees the crude-oil market beginning to balance. The company noted that production declines from key U.S. shale plays are already beginning to emerge, leading to the belief that global oil production should at least stagnate at current levels, if not decline. This could lead to a "sharp recovery in crude oil prices and industry activity levels," according to the company.

That said, the company sees at least a flattening of activity levels in the second half of this year. As a result, Core Labs is raising its guidance for the rest of the year, with revenue expected to range between $203 million and $205 million next quarter and $205 million to $210 million in the fourth quarter. Meanwhile, earnings per share are expected to be in the range of $0.82 to $0.84 next quarter and $0.84 to $0.86 in the fourth quarter, both of which are ahead of the consensus analyst estimate.

Investor takeaway
Core Labs reported a really solid quarter, given that the oil market is in the midst of one of its worst downturns in years. Its results were minimally affected this quarter, which is a real coup as big oilfield service giants, for example, saw their revenue fall by double digits as a result of the 40% quarter-over-quarter plunge in the North American rig count. It is now Core Labs' belief that the rig count has finished its decline and that oil and gas activity levels are starting to flatten out, with the potential for an acceleration in activity as early as next year.