KLX Energy Services Holdings Inc is a provider of completion, intervention, and production services and products to the onshore oil and gas producing regions of the United States. It serves companies engaged in the exploration and development of onshore conventional and unconventional oil and natural gas reserves. Its products and services offerings include surface facilities and equipment, pressure control services, wireline services, fishing services, and engineered products. The company's segments include Southwest, Rocky Mountains, and Northeast/Mid-Con region. It derives maximum revenue from the Northeast/Mid-Con region.
Second Quarter 2024 Financial Highlights
KLX Energy Services Holdings Inc (KLXE, Financial) reported revenue of $180 million for the second quarter of 2024, slightly below the analyst estimate of $183.10 million. The company enacted approximately $16 million of annualized cost reductions primarily related to operational streamlining initiatives, insurance, and professional fees.
The net loss for the quarter was $(8) million, translating to a diluted loss per share of $(0.49), which is better than the analyst estimate of $(0.76). Adjusted EBITDA stood at $27 million, reflecting a significant improvement from the previous quarter's $12 million. The net loss margin was (4)%, while the adjusted EBITDA margin was 15%.
Performance and Challenges
Despite a 7% decline in the total rig count during the quarter and continued market volatility, KLX Energy Services Holdings Inc (KLXE, Financial) managed to increase its revenue by 3.1% sequentially. This performance underscores the company's resilience and ability to navigate challenging market conditions.
Chris Baker, KLX President and Chief Executive Officer, stated, "Our dramatic growth in sequential Adjusted EBITDA and Adjusted EBITDA margin saw results return to more normalized levels and was driven by a non-recurrence of first quarter 2024 transitory issues, cost structure optimization initiatives, improved crew utilization, seasonally-reduced payroll tax exposure, and incremental activity and a shift in revenue mix towards higher margin segments."
Financial Achievements
KLX Energy Services Holdings Inc (KLXE, Financial) achieved a net cash flow provided by operating activities of $22 million and a levered free cash flow of $10 million. The company's cash balance increased by $2 million sequentially to $87 million, while total debt and net debt stood at $285 million and $198 million, respectively. The liquidity position was strong at $121 million, consisting of approximately $87 million of cash and approximately $34 million of available borrowing capacity under the June 2024 asset-based revolving credit facility (ABL Facility).
Income Statement Highlights
| Three Months Ended | June 30, 2024 | March 31, 2024 | June 30, 2023 |
|---|---|---|---|
| Revenue | $180.2 million | $174.7 million | $234.0 million |
| Net (Loss) Income | $(8.0) million | $(22.2) million | $11.4 million |
| Adjusted EBITDA | $27.0 million | $12.0 million | $39.7 million |
Balance Sheet and Liquidity
As of June 30, 2024, KLX Energy Services Holdings Inc (KLXE, Financial) had total assets of $491.2 million, down from $539.8 million at the end of 2023. The company's total debt was $284.9 million, and it had a cash balance of $86.9 million. The available liquidity was $121.0 million, including $34.1 million of availability on the ABL Facility borrowing base certificate.
Segment Performance
| Three Months Ended | June 30, 2024 | March 31, 2024 | June 30, 2023 |
|---|---|---|---|
| Rocky Mountains Revenue | $61.4 million | $45.6 million | $66.4 million |
| Southwest Revenue | $69.9 million | $69.4 million | $86.3 million |
| Northeast/Mid-Con Revenue | $48.9 million | $59.7 million | $81.3 million |
Analysis
KLX Energy Services Holdings Inc (KLXE, Financial) demonstrated resilience in the face of market challenges, achieving sequential revenue growth and significantly improving its adjusted EBITDA. The company's cost reduction initiatives and strategic focus on higher-margin segments contributed to this performance. However, the decline in the total rig count and market volatility remain challenges that could impact future performance.
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Explore the complete 8-K earnings release (here) from KLX Energy Services Holdings Inc for further details.
