CLB 2018 Annual Report

20 Results of operations as a percentage of applicable revenue for the years ended December 31, 2018, 2017 and 2016 are as follows (in thousands, except for per share information): 2018 2017 2016 2018 / 2017 2017 / 2016 Revenue: % Change Services $ 486,820 69.5 % $ 480,264 74.1 % $ 468,388 79.4 % 1.4 % 2.5 % Product Sales 214,026 30.5 % 167,555 25.9 % 121,844 20.6 % 27.7 % 37.5 % TOTAL REVENUE 700,846 100.0 % 647,819 100.0 % 590,232 100.0 % 8.2 % 9.8 % OPERATING EXPENSES: Cost of services* (1) 343,833 70.6 % 333,365 69.4 % 329,520 70.4 % 3.1 % 1.2 % Cost of product sales* (1) 153,131 71.5 % 131,593 78.5 % 107,983 88.6 % 16.4 % 21.9 % Total cost of services and product sales 496,964 70.9 % 464,958 71.8 % 437,503 74.1 % 6.9 % 6.3 % General and administrative expenses (1) 62,910 9.0 % 47,737 7.4 % 39,390 6.7 % 31.8 % 21.2 % Depreciation and amortization 23,087 3.3 % 24,524 3.8 % 26,288 4.5 % (5.9)% (6.7)% Other (income) expense, net (737) (0.1)% 632 0.1 % (400) (0.1)% NM NM OPERATING INCOME 118,622 16.9 % 109,968 17.0 % 87,451 14.8 % 7.9 % 25.7 % Interest expense 13,328 1.9 % 10,734 1.7 % 11,572 2.0 % 24.2 % (7.2)% Income before income tax expense 105,294 15.0 % 99,234 15.3 % 75,879 12.9 % 6.1 % 30.8 % Income tax expense 25,447 3.6 % 18,249 2.8 % 10,855 1.8 % 39.4 % 68.1 % Income from continuing operations 79,847 11.4 % 80,985 12.5 % 65,024 11.0 % (1.4)% 24.5 % Income (loss) from discontinued operations (58) — % 2,111 0.3 % (1,165) (0.2)% NM NM Net income 79,789 11.4 % 83,096 12.8 % 63,859 10.8 % (4.0)% 30.1 % Net income (loss) attributable to non- controlling interest 263 — % (29) —% (36) — % NM NM Net income attributable to Core Laboratories N.V. $ 79,526 11.3 % $ 83,125 12.8 % $ 63,895 10.8 % (4.3)% 30.1 % Diluted earnings per share from continuing operations $ 1.80 $ 1.83 $ 1.49 (1.6)% 22.8 % Diluted earnings per share attributable to Core Laboratories N.V. $ 1.79 $ 1.88 $ 1.46 (4.8)% 28.8 % Diluted weighted average common shares outstanding 44,474 44,264 43,670 *Percentage based on applicable revenue rather than total revenue. "NM" means not meaningful. (1) Excludes depreciation. Services Revenue Services revenue, which is tied more to activities associated with the exploration and production of oil and gas outside the U.S., increased 1.4% to $486.8 million in 2018 from $480.3 million in 2017 which increased 2.5% from $468.4 million in 2016. The increase in revenue was driven by a stronger U.S. market for most of 2018, which was partially offset by a weaker market outside the U.S. Crude oil prices continued to strengthen throughout 2018 until early October when crude oil prices peaked and decreased over 40% by December 2018. The improvement in crude oil prices continued to support elevated activity levels in the U.S. onshore market for most of 2018, however activities outside the U.S. have remained flat. Although our clients have announced Final Investment Decisions ("FIDs") for several projects outside the U.S. and in offshore environments, significant activity on these projects did not start in 2018 and wells must be drilled and/or completed, stimulated, cored and have reservoir fluid samples collected, before we see a revenue opportunity. We continue our focus on worldwide crude oil related projects, including those related to the development of fields in onshore and offshore North America, offshore South America, offshore Europe and Africa, the Middle East, and Asia Pacific regions. Product Sales Revenue Product sales revenue, which is tied more to the completion of wells in North America, increased 28% to $214.0 million in 2018 from $167.6 million in 2017 and increased 38% from $121.8 million in 2016. The 28% increase in product sales revenue