KLX Energy Services Holdings, Inc. (Nasdaq: KLXE) ("KLX", the "Company", "we", "us" or "our") announced preliminary financial results for the three months ended June 30, 2024.
Preliminary Second Quarter 2024 Financial and Operational Highlights
- Estimated Revenue range of $178 million to $182 million, increased sequentially approximately 3% despite a 7% decline in rig count over the same period
- Enacted approximately $16 million of annualized cost reductions in the second quarter of 2024 primarily related to operational streamlining initiatives, insurance and professional fees
- Estimated Net Loss range of $(7) million to $(11) million
- Estimated Adjusted EBITDA and Adjusted EBITDA Margin ranges of $24 million to $27 million and 14% to 15%, respectively
- Estimated Adjusted EBITDA and Adjusted EBITDA Margin improved sequentially by 100% to 125% and by 104% to 118%, respectively
- Estimated Net Cash Flow Provided by Operating Activities range of $18 million to $22 million
- Estimated Levered Free Cash Flow range of $5 million to $11 million
- Estimated Cash balance of approximately $87 million, increased $2 million sequentially
- Estimated Total Debt and Net Debt of approximately $285 million and $198 million, respectively
- Estimated Liquidity of approximately $126 million, including approximately $87 million of cash and $39 million of borrowing availability as of the May 2024 Borrowing Base Certificate
Chris Baker, KLX President and Chief Executive Officer, stated, "We are extremely proud of our second quarter performance. Despite a 7% rig count decline this quarter, and continued drilling and completions activity volatility, KLX revenue results are expected to increase approximately 3% sequentially and Adjusted EBITDA Margin results are materially above our previously provided guidance. We expect to generate second quarter Adjusted EBITDA and Adjusted EBITDA Margin of $24 million to $27 million and 14% and 15% respectively.
"Similar to the third quarter of 2023, where KLX's geographic and product service line diversification drove margin sustainability in the face of market weakness, we once again saw a similar rotation this quarter, highlighting the strengths of the KLX platform as seasonal impacts waned and production and intervention activity returned to a normalized level. KLX's leading presence in extended reach laterals, completion technologies, and production and intervention services should continue to yield sustainable results even in a flat market.
"The sequential improvement in Adjusted EBITDA and Adjusted EBITDA Margin 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 (Rockies) and product service lines (Rentals and Tech Services (including Fishing)), particularly within the Rockies and Southwest segments.
"Based on current calendars and latest customer conversations, we expect third quarter 2024 revenue to be flat to slightly up relative to the second quarter, with similar margins to the prior quarter," concluded Baker.
