CORE LABORATORIES INC. The following discussion highlights the current operating environment and summarizes the financial position ofCore Laboratories N.V. and its subsidiaries as ofSeptember 30, 2022 , and should be read in conjunction with (i) the unaudited interim consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report") and (ii) the audited consolidated financial statements and accompanying notes to our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 (the "2021 Annual Report").
General
Core Laboratories N.V. is aNetherlands limited liability company. It was established in 1936 and is one of the world's leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry. These services and products can enable our clients to evaluate and improve reservoir performance and increase oil and gas recovery from new and existing fields.Core Laboratories N.V. has over 70 offices in more than 50 countries and employs approximately 3,600 people worldwide.
References to "
We operate our business in two reportable segments: Reservoir Description and Production Enhancement. These complementary segments provide different services and products and utilize different technologies for evaluating and improving reservoir performance and increasing oil and gas recovery from new and existing fields.
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Reservoir Description: Encompasses the characterization of petroleum reservoir rock and reservoir fluids samples to increase production and improve recovery of crude oil and natural gas from our clients' reservoirs. We provide laboratory-based analytical and field services to characterize properties of crude oil and crude oil-derived products to the oil and gas industry. We also provide proprietary and joint industry studies based on these types of analyses and manufacture associated laboratory equipment. In addition, we provide reservoir description capabilities that advance the energy transition, including services that support carbon capture, utilization and storage, hydrogen storage, geothermal projects, and the evaluation and appraisal of mining activities around lithium and other elements necessary for energy storage.
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Production Enhancement: Includes services and manufactured products relating to reservoir well completions, perforations, stimulation, and production. We provide integrated diagnostic services to evaluate and monitor the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects.
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Certain statements contained in this Management's
Discussion and Analysis of Financial Condition and Results of Operations
section, including those under the headings "Outlook" and "Liquidity and Capital
Resources", and in other parts of this Quarterly Report, are forward-looking. In
addition, from time to time, we may publish forward-looking statements relating
to such matters as anticipated financial performance, business prospects,
technological developments, new products, research and development activities
and similar matters. Forward-looking statements can be identified by the use of
forward-looking terminology such as "may", "will", "believe", "expect",
"anticipate", "estimate", "continue", or other similar words, including
statements as to the intent, belief, or current expectations of our directors,
officers, and management with respect to our future operations, performance, or
positions or which contain other forward-looking information. These
forward-looking statements are based on our current expectations and beliefs
concerning future developments and their potential effect on us. While
management believes that these forward-looking statements are reasonable as and
when made, no assurances can be given that the future results indicated, whether
expressed or
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implied, will be achieved. While we believe that these statements are and will be accurate, our actual results and experience may differ materially from the anticipated results or other expectations expressed in our statements due to a variety of risks and uncertainties. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the foregoing risks and uncertainties, see Part II, "Item 1A - Risk Factors" of this Quarterly Report and "Item 1A - Risk Factors" in our 2021 Annual Report and other reports filed by us with theSecurities and Exchange Commission ("SEC").
Outlook
The events associated with the COVID-19 pandemic that began in 2020 continued in 2021 and 2022. Certain international countries continued mandated shut-downs, home sheltering and social distancing policies that initially caused uncertainty in the demand for crude oil and associated products; however demand for these products has recovered more quickly than global production causing crude-oil commodity prices to increase significantly. AlthoughU.S. land drilling and completion activities continued to show improvement during 2021 and strengthened during the nine months endedSeptember 30, 2022 , activity still remains well below pre-pandemic levels. Additionally, international activity continued to be adversely impacted by increasing infection rates associated with new variant strains of the COVID-19 virus during 2021 and 2022, which has continued to cause business disruptions associated with government mandated shut-downs, travel restrictions, quarantine protocols and worksite closures in various international regions. These disruptions started to ease during the third quarter of 2022. The geopolitical conflict betweenRussia andUkraine that erupted inFebruary 2022 , has also resulted in disruptions to traditional supply chains associated with the movement of crude oil, primarily reducing the level of crude oil sourced fromRussia and being imported into various European ports. However, the supply chains associated with the movement of crude oil continue realigning to new logistical patterns, as we expectEurope will find new suppliers of crude oil to import into the region. These events have caused very elevated energy prices throughoutEurope , and the current global demand for crude oil and natural gas has remained at a high level; thus,Core Lab expects supply lines to realign, and the Company's volume of associated laboratory services to increase commensurate with the trading and movement of crude-oil intoEurope and across the globe. Additionally, European countries have begun elevating the level of LNG imports to offset the loss of natural gas sourced fromRussia . The Company provides some laboratory analytical services associated with the movement of LNG products, which may offer some additional opportunities for the Company in this region. InMarch 2022 , completion product sales delivered through our Production Enhancement segment intoUkraine were suspended and continue to be limited due to disruptions in freight transport services. We are actively monitoring the situation inUkraine and assessing its impact on our operations in the region, including our business partners and customers. We have not experienced any material interruptions in our infrastructure, supplies or networks needed to support our operations. However, the situation continues to evolve andthe United States , theEuropean Union , theUnited Kingdom and other countries may implement additional sanctions, export controls or other measures againstRussia ,Belarus and other countries, regions, officials, individuals or industries in the respective territories. We have no way to predict the progress or outcome of the conflict inUkraine or its impacts inUkraine ,Russia orBelarus as the conflict, and any resulting government responses, are fluid and beyond our control. Crude-oil commodity prices remain volatile and continued to increase significantly during the nine months endedSeptember 30, 2022 , as a result of theRussia -Ukraine geopolitical conflict and the additional uncertainty in supply of crude oil and natural gas. The activities associated with the production of oil and gas are expected to increase for the remainder of 2022; however growth may be moderated by limitations in personnel, equipment, supply chain disruptions, as well as the allocation of capital resources by oil and gas producing companies during the fourth quarter. As a result, it is anticipated that crude-oil commodity prices for the near-term will remain elevated and supported by increasing demand with only moderate growth in production levels. If crude-oil commodity prices remain at current levels or increase, our clients' activities associated with the energy markets are also expected to increase for the remainder of 2022 depending on the outlook for the global economy, decisions by 22 Return to Index
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OPEC nations andRussia associated with the crude oil supply and productions, the pace of recovery from the COVID-19 pandemic and considerations associated with theRussia -Ukraine geopolitical conflict.Core Laboratories has continued to operate as an essential business with timely delivery of products and services to our clients during the COVID-19 pandemic. The disruptions described above have primarily been associated with operational workflows stemming from travel and product delivery, as well as suspensions and delays in client projects. The global supply chain challenges have resulted in certain disruptions to our workflow; however, the impact to our operations has been minimized by carrying higher levels of inventory, and currently, we do not anticipate significant disruption in our key supply chains for the remainder of 2022. We also continue to follow an established continuity plan across our global organization to protect the health of employees while servicing our clients. In addition, the continuing inflationary impact that began in 2021 and worsened during the nine months endedSeptember 30, 2022 , has resulted in increased costs for raw materials, transportation and shipping, and personnel, which has negatively impacted profit margins on both product sales and service revenue. Our major clients continue to focus on capital management, return on invested capital, free cash flow, and returning capital to their shareholders, as opposed to a focus on production growth. The companies adopting value versus volume metrics tend to be the more technologically sophisticated operators and form the foundation ofCore Lab's worldwide client base. As oil and gas commodity prices are expected to remain elevated in the near to mid-term, the Company expects our clients' activities associated with increasing oil and gas reserves and production levels will continue to increase in the coming years. Additionally, some of our major clients have begun investing and developing other sources of energy, including renewables, and focusing on emission reduction initiatives. Some of these initiatives include deployment of technologies associated with hydrogen or lithium-based batteries, and carbon capturing and sequestration. Considering a longer-term strategy, we expect to be well positioned as our clients continue their focus on employing higher technological solutions in their efforts to optimize production and estimated ultimate recovery in the most cost efficient and environmentally responsible manner.
We believe some oil and gas operators will continue to manage their capital spending within free cash flow and maintain their focus on improving and maintaining a stronger balance sheet, which could constrain future growth in activities associated with the production of oil and gas.
As part of our long-term growth strategy, we continue to expand our market presence by opening or expanding facilities in strategic areas and realizing synergies within our business lines consistent with client demand and market conditions. More recently, we have expanded our laboratory capabilities inQatar ,Saudi Arabia andBrazil . We believe our market presence in strategic areas provides us a unique opportunity to serve our clients who have global operations, whether they are international oil companies, national oil companies, or independent oil companies. 23 Return to
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Results of Operations
Our results of operations as a percentage of applicable revenue are as follows
(in thousands):
Three Months Ended September 30, Change
2022 2021 $ %
REVENUE:
Services $ 87,891 70% $ 84,820 72% $ 3,071 4%
Product sales 38,075 30% 33,165 28% 4,910 15%
Total revenue 125,966 100% 117,985 100% 7,981 7%
OPERATING EXPENSES:
Cost of services, exclusive
of depreciation expense
shown below* 67,618 77% 67,086 79% 532 1%
Cost of product sales,
exclusive of depreciation
expense shown below* 31,312 82% 25,832 78% 5,480 21%
Total cost of services and
product sales 98,930 79% 92,918 79% 6,012 6%
General and administrative
expense, exclusive of
depreciation expense shown
below 10,001 8% 15,115 13% (5,114 ) (34)%
Depreciation and
amortization 4,171 3% 4,496 4% (325 ) (7)%
Other (income) expense, net (1,781 ) (1)% (1,184 ) (1)% (597 ) 50%
OPERATING INCOME (LOSS) 14,645 12% 6,640 6% 8,005 121%
Interest expense 3,138 2% 2,669 2% 469 18%
Income (loss) from
continuing operations before
income taxes 11,507 9% 3,971 3% 7,536 190%
Income tax expense (benefit) 3,856 3% 2,962 3% 894 30%
Income (loss) from
continuing operations 7,651 6% 1,009 1% 6,642 658%
Net income (loss) 7,651 6% 1,009 1% 6,642 658%
Net income (loss)
attributable to
non-controlling interest 127 -% 135 -% (8 ) NM
Net income (loss)
attributable to Core
Laboratories N.V. $ 7,524 6% $ 874 1% $ 6,650 761%
Other Data:
Current ratio (1) 2.23:1 2.21:1
Debt to EBITDA ratio (2) 2.81:1 2.33:1
Debt to Adjusted EBITDA 2.42:1 2.10:1
ratio (3)
"NM" means not meaningful
*Percentage based on applicable revenue rather than total revenue
(1)
Current ratio is calculated as follows: current assets divided by current
liabilities.
(2)
Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum
of consolidated net income plus interest, taxes, depreciation, amortization and
certain non-cash adjustments.
(3)
Debt to Adjusted EBITDA ratio (as defined in our Credit Facility) is calculated
as follows: debt less cash divided by the sum of consolidated net income plus
interest, taxes, depreciation, amortization, impairments, severance and certain
non-cash adjustments.
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Three Months Ended Change
September 30, 2022 June 30, 2022 $ %
REVENUE:
Services $ 87,891 70% $ 85,422 71% $ 2,469 3%
Product sales 38,075 30% 35,476 29% 2,599 7%
Total revenue 125,966 100% 120,898 100% 5,068 4%
OPERATING EXPENSES:
Cost of services, exclusive
of depreciation expense
shown below* 67,618 77% 68,166 80% (548 ) (1)%
Cost of product sales,
exclusive of depreciation
expense shown below* 31,312 82% 29,791 84% 1,521 5%
Total cost of services and
product sales 98,930 79% 97,957 81% 973 1%
General and administrative
expense, exclusive of
depreciation expense shown
below 10,001 8% 6,847 6% 3,154 46%
Depreciation and
amortization 4,171 3% 4,360 4% (189 ) (4)%
Other (income) expense, net (1,781 ) (1)% 82 -% (1,863 ) NM
OPERATING INCOME (LOSS) 14,645 12% 11,652 10% 2,993 26%
Interest expense 3,138 2% 2,707 2% 431 16%
Income (loss) from
continuing operations before
income taxes 11,507 9% 8,945 7% 2,562 29%
Income tax expense (benefit) 3,856 3% 1,789 1% 2,067 116%
Income (loss) from
continuing operations 7,651 6% 7,156 6% 495 7%
Net income (loss) 7,651 6% 7,156 6% 495 7%
Net income (loss)
attributable to
non-controlling interest 127 -% 90 -% 37 NM
Net income (loss)
attributable to Core
Laboratories N.V. $ 7,524 6% $ 7,066 6% $ 458 6%
Other Data:
Current ratio (1) 2.23:1 2.08:1
Debt to EBITDA ratio (2) 2.81:1 3.23:1
Debt to Adjusted EBITDA 2.42:1 2.47:1
ratio (3)
"NM" means not meaningful
*Percentage based on applicable revenue rather than total revenue
(1)
Current ratio is calculated as follows: current assets divided by current
liabilities.
(2)
Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum
of consolidated net income plus interest, taxes, depreciation and amortization
and certain non-cash adjustments.
(3)
Debt to Adjusted EBITDA ratio (as defined in our Credit Facility) is calculated
as follows: debt less cash divided by the sum of consolidated net income plus
interest, taxes, depreciation, amortization, impairments, severance and certain
non-cash adjustments.
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Nine Months Ended September 30, Change
2022 2021 $ %
REVENUE:
Services $ 258,036 71% $ 255,065 74% $ 2,971 1%
Product sales 104,128 29% 90,048 26% 14,080 16%
Total revenue 362,164 100% 345,113 100% 17,051 5%
OPERATING EXPENSES:
Cost of services, exclusive of
depreciation expense shown
below* 204,641 79% 197,717 78% 6,924 4%
Cost of product sales, exclusive
of depreciation expense shown
below* 89,198 86% 73,192 81% 16,006 22%
Total cost of services and
product sales 293,839 81% 270,909 78% 22,930 8%
General and administrative
expense, exclusive of
depreciation expense shown below 29,393 8% 33,246 10% (3,853 ) (12)%
Depreciation and amortization 13,088 4% 14,118 4% (1,030 ) (7)%
Other (income) expense, net (62 ) -% (4,222 ) (1)% 4,160 (99)%
OPERATING INCOME (LOSS) 25,906 7% 31,062 9% (5,156 ) (17)%
Interest expense 8,489 2% 6,562 2% 1,927 29%
Income (loss) from continuing
operations before income taxes 17,417 5% 24,500 7% (7,083 ) (29)%
Income tax expense (benefit) 4,449 1% 7,068 2% (2,619 ) (37)%
Income (loss) from continuing
operations 12,968 4% 17,432 5% (4,464 ) (26)%
Net income (loss) 12,968 4% 17,432 5% (4,464 ) (26)%
Net income (loss) attributable
to non-controlling interest 266 -% 393 -% (127 ) NM
Net income (loss) attributable
to Core Laboratories N.V. $ 12,702 4% $ 17,039 5%
Other Data: Current ratio (1) 2.23:1 2.21:1 Debt to EBITDA ratio (2) 2.81:1 2.33:1 Debt to Adjusted EBITDA ratio 2.42:1 2.10:1 (3) "NM" means not meaningful *Percentage based on applicable revenue rather than total revenue (1) Current ratio is calculated as follows: current assets divided by current liabilities. (2) Debt to EBITDA ratio is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation and amortization and certain non-cash adjustments. (3) Debt to Adjusted EBITDA ratio (as defined in our Credit Facility) is calculated as follows: debt less cash divided by the sum of consolidated net income plus interest, taxes, depreciation, amortization, impairments, severance and certain non-cash adjustments. Operating Results for the Three Months EndedSeptember 30, 2022 compared to the Three Months EndedSeptember 30, 2021 andJune 30, 2022 and for the Nine Months EndedSeptember 30, 2022 compared to the Nine Months EndedSeptember 30, 2021
Service Revenue
Service revenue is primarily tied to activities associated with the exploration and production of oil, gas and derived products outside theU.S. For the three months endedSeptember 30, 2022 , service revenue was$87.9 million , an increase of 4% year-over-year and 3% sequentially. Year-over-year, the increase was due to the moderate increase in activity levels in the U.S. market coupled with slight growth in activity levels in international markets, which continued to be impacted by theRussia -Ukraine geopolitical conflict. Sequentially, activity levels in the international markets increased moderately as disruptions caused by theRussia -Ukraine geopolitical conflict have decreased and new logistical patterns of the supply lines of crude oil and derived products continue to realign. However, the increase was partially offset by a decrease in the U.S market. For the nine months endedSeptember 30, 2022 , service revenue of$258.0 million slightly increased 1% compared to$255.1 million 26 Return to
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for the nine months endedSeptember 30, 2021 . As over 70% of service revenue is generated from international markets and some of our customer contracts are denominated in foreign currencies, the devaluation of most major currencies against theU.S. Dollar adversely impacted the growth of service revenue during the nine months endedSeptember 30, 2022 . We continue to focus on large-scale core analyses and reservoir fluids characterization studies in the Eagle Ford, thePermian Basin and theGulf of Mexico , along withGuyana , Suriname,Malaysia and other international locations such as offshoreSouth America ,Australia ,Southern Namibia and theMiddle East , includingKuwait and theUnited Arab Emirates . Analysis of crude oil derived products also occurs in every major producing region of the world.
Product Sales Revenue
For the three months endedSeptember 30, 2022 , product sales revenue of$38.1 million increased 15% year-over-year and 7% sequentially. Rig count is one indicator of activity levels associated with the exploration and production of oil and gas. The average rig count forU.S. land increased 53% year-over-year and 6% sequentially. The average rig count for international markets increased 11% year-over-year and 5% sequentially. Year-over-year our product sales revenue increased by 13% in the U.S. market and 16% in the international markets, as a result of the elevated rig counts and activity. Sequentially, our product sales revenue in the U.S. market increased approximately 22%, outperforming the average rig count and estimated well completion activity; however, product sales revenue in the international markets decreased by approximately 4% due to a lower level of large bulk orders completed in the three months endedSeptember 30, 2022 . For the nine months endedSeptember 30, 2022 , product sales revenue of$104.1 million increased compared to$90.0 million for the nine months endedSeptember 30, 2021 . The increase was due primarily to higher activity levels in bothU.S. land and international markets, as discussed above.
Cost of Services, excluding depreciation
Cost of services was$67.6 million for the three months endedSeptember 30, 2022 , and remained flat year-over-year and sequentially. Cost of services expressed as a percentage of service revenue decreased to 77% for the three months endedSeptember 30, 2022 , compared to 79% for the same period in the prior year, and 80% for the prior quarter. The year-over-year and sequential improvement in cost of services as a percentage of service revenue for the three months endedSeptember 30, 2022 , was primarily associated with improved utilization of our laboratory network on higher revenue. Cost of services increased to$204.6 million for the nine months endedSeptember 30, 2022 , compared to$197.7 million for the nine months endedSeptember 30, 2021 . Cost of services expressed as a percentage of service revenue increased slightly primarily due to the restoration of employees' compensation and benefit plans in 2022 from temporary cost saving measures that were implemented in response to COVID-19.
Cost of Product Sales, excluding depreciation
Cost of product sales was$31.3 million for the three months endedSeptember 30, 2022 , an increase of 21% year-over-year and 5% sequentially. Cost of product sales expressed as a percentage of product sales revenue was 82% for the three months endedSeptember 30, 2022 , compared to 78% for the same period in the prior year, and 84% for the prior quarter. Year-over-year, higher cost of product sales as a percentage of product sales revenue was primarily due to continued supply chain challenges and elevated inflation which has increased our shipping and raw materials costs. Sequentially, lower cost of product sales as a percentage of products sales revenue was primarily due to improved manufacturing productivity and absorption of fixed costs on a higher revenue base. Cost of product sales of$89.2 million for the nine months endedSeptember 30, 2022 , increased compared to$73.2 million for the nine months endedSeptember 30, 2021 . Cost of product sales expressed as a percentage of product sales revenue was 86% for the nine months endedSeptember 30, 2022 , compared to 81% for the nine months endedSeptember 30, 2021 . Higher cost of product sales as a percentage of products sales revenue in the nine months endedSeptember 30, 2022 , was due to a combination of increased employees' compensation, shipping and raw materials costs, as discussed above. 27 Return to
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General and Administrative Expense, excluding depreciation
General and administrative ("G&A") expense includes corporate management and
centralized administrative services that benefit our operations. G&A expense for
the three months ended September 30, 2022 , was $10.0 million , a decrease of $5.1
million year-over-year and an increase of $3.2 million sequentially. The
variances across these three quarters are primarily due to adjustments in the
recognition of stock-based compensation expense during those periods. The three
months ended September 30, 2021 , includes a charge of $6.5 million to recognize
the full award for performance shares granted to employees eligible for
retirement. The three months ended June 30, 2022 , includes the reversal of $3.3
million in stock compensation expense previously recognized, as performance
conditions associated with performance share awards scheduled to vest on
December 31, 2022 , were determined to be unachievable. G&A expense of $29.4
million for the nine months ended September 30, 2022 , compared to $33.2 million
for the nine months ended September 30, 2021 . The decrease was primarily due to
changes in compensation expense during those periods, as discussed above,
partially offset as employees' compensation was fully restored in 2022 from
temporary cost saving measures that were implemented in response to COVID-19.
Depreciation and Amortization Expense
Depreciation and amortization expense for the three months endedSeptember 30, 2022 , was$4.2 million a decrease of 7% year-over-year and 4% sequentially. Depreciation and amortization expense for the nine months endedSeptember 30, 2022 , was$13.1 million compared to$14.1 million for the nine months endedSeptember 30, 2021 . The decrease in depreciation and amortization expense was primarily due to a lower level of capital expenditures over the last two years.
Other (Income) Expense, Net
The components of other (income) expense, net, are as follows (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(Gain) loss on sale of assets $ (96 ) $ (231 ) $ (363 ) $ (350 )
Results of non-consolidated subsidiaries (59 ) (31 ) (173 ) (1 )
Foreign exchange (gain) loss, net (1,303 ) (140 ) (462 ) (196 )
Rents and royalties (222 ) (133 ) (533 ) (414 )
Return on pension assets and other pension costs (132 ) (77 ) (416 ) (232 )
Gain on sale of business - - - (1,012 )
Severance and other charges - - 3,332 -
Insurance and other settlements - (550 ) (669 ) (1,300 )
Other, net 31 (22 ) (778 ) (717 )
Total other (income) expense, net $ (1,781 ) $ (1,184
)
Foreign exchange (gain) loss, net by currency is summarized in the following
table (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
British Pound $ (187 ) $ (15 ) $ (195 ) $ (45 )
Canadian Dollar 130 48 159 13
Euro (501 ) (146 ) (956 ) (337 )
Russian Ruble (533 ) (10 ) 572 31
Colombian Peso (309 ) (50 ) (398 ) (233 )
Other currencies, net 97 33 356 375
Foreign exchange (gain) loss, net
$ (196 ) 28 Return to Index
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Interest Expense
Interest expense for the three months endedSeptember 30, 2022 , was$3.1 million compared to$2.7 million and$2.7 million for the three months endedSeptember 30, 2021 , andJune 30, 2022 , respectively. Interest expense for the nine months endedSeptember 30, 2022 , was$8.5 million compared to$6.6 million for the nine months endedSeptember 30, 2021 . The variances are primarily associated with higher interest rates on our aggregated variable rate debt, and changes in aggregated fixed rate debt in the respective quarters. Additionally, the effect of settlement and restructuring of our interest rate swap agreements during the first quarter of 2021 resulted in a lower interest expense in 2021.
Income Tax Expense (Benefit)
The Company recorded an income tax expense of$3.9 million and$4.4 million for the three and nine months endedSeptember 30, 2022 , respectively, compared to an income tax expense of$3.0 million and$7.1 million for the three and nine months endedSeptember 30, 2021 , respectively. The effective tax rate for the three and nine months endedSeptember 30, 2022 , was 33.5% and 25.5% respectively. The effective tax rate for the three and nine months endedSeptember 30, 2021 , was 74.6% and 28.8% respectively. The tax rate for the nine months endedSeptember 30, 2022 , was largely impacted by taxable gains in local jurisdictions associated with foreign currency translation ofU.S. dollar denominated receivables, primarily in theUnited Kingdom andTurkey . The increased tax was partially offset by the release of withholding tax of$0.6 million related to unrepatriated earnings of our Russian subsidiary amounting to$12 million , which are not expected to be distributed in the foreseeable future. The tax rate for the three months endedSeptember 30, 2021 , in contrast, was largely impacted by non-deductible items and the earnings mix of jurisdictions subject to tax for that period.
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