On July 24, 2024, ChampionX Corp (CHX, Financial) released its 8-K filing for the second quarter of 2024. ChampionX, a provider of chemical solutions and equipment for onshore and offshore oil and gas production, reported revenue of $893.3 million and net income attributable to ChampionX of $52.6 million. Adjusted net income stood at $71.2 million, with an adjusted EBITDA of $183.2 million. The company also reported an income before income taxes margin of 9.3% and an adjusted EBITDA margin of 20.5%. Cash from operating activities was $67.6 million, and free cash flow was $38.3 million.
Company Overview
ChampionX provides chemical solutions and equipment for onshore and offshore oil and gas production. Its engineering expertise spans the well lifecycle, with a particular focus on the production phase. Key offerings include artificial lift services and drilling technologies, specializing in polycrystalline diamond cutter inserts. ChampionX was formed after Apergy acquired its chemical technologies business from Ecolab in 2020.
Performance and Challenges
ChampionX's revenue for Q2 2024 was $893.3 million, a 4% decrease year-over-year and a 3% sequential decline. The revenue drop was primarily due to lower sales in Mexico, which decreased by approximately $54 million sequentially and $61 million compared to Q2 2023. Despite these challenges, the company saw revenue growth in North America, the Middle East & Africa, and Asia Pacific, offset by declines in Latin America.
Financial Achievements
ChampionX reported a net income attributable to the company of $52.6 million and an adjusted EBITDA of $183.2 million, representing a 20.5% adjusted EBITDA margin. The company generated positive free cash flow for the ninth consecutive quarter, highlighting the resilience of its high-margin operating model and capital-light portfolio.
Income Statement Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Revenue | $893.3 million | $922.1 million | $926.6 million |
| Net Income Attributable to ChampionX | $52.6 million | $112.9 million | $95.8 million |
| Adjusted EBITDA | $183.2 million | $191.7 million | $190.7 million |
Balance Sheet and Cash Flow
ChampionX ended the second quarter with approximately $1.1 billion of liquidity, including $393 million in cash and $672 million of available capacity on its revolving credit facility. Cash from operating activities was $67.6 million, and free cash flow was $38.3 million. The company returned 27% of cash from operating activities and 47% of free cash flow to shareholders through dividends.
CEO Commentary
“We continued to demonstrate the unique nature of ChampionX’s cash flow resiliency driven by the strength of our high-margin operating model and capital-light portfolio of businesses as we generated positive free cash flow for the ninth consecutive quarter. Our strong results in what is a variable environment reflects the ethos of our 7,100 ChampionX employees around the world who have an unwavering focus on delivering value-added solutions for our customers’ most important challenges. I am thankful and humbled to lead such a talented and dedicated team,” said ChampionX’s President and Chief Executive Officer Sivasankaran “Soma” Somasundaram.
Segment Performance
Production Chemical Technologies revenue was $569.6 million, a 3% sequential decrease due to lower sales in Mexico. Production & Automation Technologies revenue was $244.5 million, a 3% sequential decrease driven by lower customer demand in North America. Drilling Technologies revenue was $52.9 million, a 4% sequential decrease due to lower worldwide rig count. Reservoir Chemical Technologies revenue was $27.1 million, a 10% sequential increase driven by higher sales volumes.
Acquisition and Future Outlook
ChampionX completed the acquisition of RMSpumptools Limited, enhancing its Production and Automation Technologies portfolio. The company expects order activity in Mexico to resume towards the end of the year. Given the pending acquisition of ChampionX by SLB, the company has discontinued providing quarterly guidance and will not host a conference call to discuss its Q2 2024 results.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from ChampionX Corp for further details.
