Diversification drives flat sequential margins
and continued strong operating cash flow, despite 10% sequential
decline in rig count
HOUSTON, Nov. 6, 2023
/PRNewswire/ -- KLX Energy Services Holdings, Inc. (Nasdaq:
KLXE) ("KLX", the "Company", "we", "us" or "our") today
reported financial results for the third quarter ended
September 30, 2023.
Third Quarter 2023 Financial and Operational
Highlights
- Revenue of $221 million
- Net income of $8 million, net
income margin of 3%, diluted earnings per share of $0.47
- Adjusted net income of $8 million
and adjusted diluted earnings per share of $0.51
- Adjusted EBITDA of $37
million
- Adjusted EBITDA margin of 17%
- Cash balance of $90 million,
increased $8 million sequentially and
$49 million compared to Q3 2022
- Ended the quarter with $155
million of liquidity, consisting of $90 million of cash and $65 million of available borrowing capacity under
the September 2023 asset-based
revolving credit facility (the "ABL Facility") borrowing base
certificate
- Ended the quarter with a total debt balance of $284 million and reduced net debt 4%
sequentially, ending the quarter with a net debt balance of
$194 million and a Last Twelve Months
Net Leverage Ratio of 1.3x
- Successfully integrated Greene's and fully implemented
$3 million in annual cost
synergies
- Executed 12-month frac contract with leading operator base
loading 2024 activity
- Launched and commercialized latest generation downhole tools
and products
See "Non-GAAP Financial Measures" at the end of this release
for a discussion of adjusted EBITDA, adjusted EBITDA margin,
adjusted net income (loss), adjusted net income (loss) margin,
adjusted diluted earnings per share, levered and unlevered free
cash flow, net working capital, net debt, net leverage ratio and
their reconciliation to the most directly comparable financial
measure calculated and presented in accordance with U.S. generally
accepted accounting principles ("GAAP"). We have not provided
reconciliations of our future expectations as to adjusted EBITDA or
adjusted EBITDA margin as such reconciliation is not available
without unreasonable efforts.
Chris Baker, KLX President and
Chief Executive Officer, stated, "We are very pleased with our
third quarter results. Our teams did an exceptional job of managing
costs, maintaining price and maximizing utilization as we managed
forces outside of our control, specifically a volatile macro
environment driven by continued commodity price volatility and rig
count declines.
"KLX operates in every major basin in the U.S., and we touch
every part of the well cycle: drilling, completion and production
services," added Baker. "Regionally, we delivered our strongest
results in the Rockies during the third quarter, as we have a
market-leading franchise in that basin. Additionally, our
consolidated third quarter revenue outperformed the underlying 10%
decline in rig count and our adjusted EBITDA margin exceeded our
prior guidance range. We achieved these strong results by focusing
on pricing discipline and cost controls to maximize margins, which
ultimately translated into strong free cash flow generation."
Baker continued, "Commodity prices remain highly supportive of
underlying activity and are at levels which should drive
incremental year-over-year activity as operators begin finalizing
their drilling and completion programs for 2024. Moreover, we
launched and commercialized numerous new proprietary products
during the third quarter, including the PhantM Dissolvable Frac
Plug and our patent-pending extended reach tool, Oracle SRT (Smart
Reach Technology), which are rapidly gaining market acceptance. We
believe these new products and our continued dedication to
developing leading edge technology will be material differentiators
for KLX in 2024 and beyond.
"Looking ahead, we anticipate fourth quarter margins will hold
up well despite weaker seasonal activity and operator budget
exhaustion typical of the fourth quarter. As a result, we expect
strong full year 2023 adjusted EBITDA between $140 million to $150
million. In summary, we are encouraged by our growth
prospects and the market fundamentals for the U.S. onshore
drilling, completion and production markets expected in 2024 and
beyond," concluded Baker.
Third Quarter 2023 Financial Results
Revenue for the third quarter of 2023 totaled $220.6 million, which was consistent with third
quarter 2022 revenue of $221.6
million. The flat revenue reflects a strong quarter in the
Rocky Mountains business segment and an increase in Southwest due
to the addition of the Greene's business, offsetting the slowdown
in activity in Northeast/Mid-Con. On a product line basis,
drilling, completion, production and intervention services
contributed approximately 24%, 51%, 15% and 10%, respectively, to
revenues for the third quarter of 2023. We experienced a shift in
revenue mix with a greater contribution from our rentals and frac
rentals product service lines. Utilization was down almost across
the board driven by a 15% lower rig count and 10% lower frac spread
count relative to third quarter 2022 but was offset by
predominantly increased pricing.
Net income for the third quarter of 2023 was $7.6 million, compared to third quarter 2022 net
income of $11.1 million. Adjusted net
income for the third quarter of 2023 was $8.2 million, compared to third quarter 2022
adjusted net income of $12.8 million.
Adjusted EBITDA for the third quarter of 2023 decreased 1% to
$36.7 million, compared to third
quarter 2022 adjusted EBITDA of $37.1
million. Adjusted EBITDA margin for the third quarter of
2023 was 16.6%, compared to third quarter 2022 adjusted EBITDA
margin of 16.7%. Our adjusted EBITDA and adjusted EBITDA margin
were flat compared to third quarter 2022, but we saw a shift in
geographic mix with a more material contribution from the Rocky
Mountains and Southwest as well as a 18% reduction in Corporate and
other costs.
Third Quarter 2023 Segment Results
The Company reports revenue, operating income and adjusted
EBITDA through three geographic business segments: Rocky Mountains,
Southwest and Northeast/Mid-Con.
- Rocky Mountains: Revenue, operating income and adjusted EBITDA
for the Rocky Mountains segment was $77.0
million, $17.7 million and
$23.3 million, respectively, for the
third quarter of 2023. Third quarter revenue represents a 16%
increase over the third quarter of 2022 largely driven by an
increase in activity in the Bakken offset by a decrease in activity
in the DJ Basin and Wyoming.
Segment operating income and adjusted EBITDA increased 51% and 35%
over the third quarter of 2022, driven by reduced white space and a
positive shift in product service mix, with a greater contribution
from higher margin services, including frac rentals, coiled tubing
and rentals.
- Southwest: Revenue, operating income and adjusted EBITDA for
the Southwest segment, which includes the Permian and South Texas, was $77.8
million, $4.8 million and
$11.8 million, respectively, for the
third quarter of 2023. Third quarter revenue represents a 14%
increase over the third quarter of 2022, operating income decreased
by 8% and adjusted EBITDA increased by 16%, largely driven by
strength in rentals, frac rentals and downhole production services,
driven by our latest generation PhantM Dissolvable Frac Plug,
partially offset by relative softness in coiled tubing and
directional drilling.
- Northeast/Mid-Con: Revenue, operating income and adjusted
EBITDA for the Northeast/Mid-Con segment was $65.8 million, $5.2
million and $11.4 million,
respectively, for the third quarter of 2023. Third quarter revenue
represents a 24% decrease over the third quarter of 2022 and
operating income and adjusted EBITDA declined 70% and 46%
respectively, largely due to increased white space for our
completions and intervention businesses, including coiled tubing,
pressure pumping and tech services.
The following is a tabular summary of revenue, operating income
(loss) and adjusted EBITDA (loss) for the third quarter ended
September 30, 2023, the second
quarter ended June 30, 2023 and the
third quarter ended September 30,
2022 ($ in millions).
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Revenue:
|
|
|
|
|
|
|
Rocky Mountains
|
|
$
77.0
|
|
$
66.4
|
|
$
66.5
|
Southwest
|
|
77.8
|
|
86.3
|
|
68.5
|
Northeast/Mid-Con
|
|
65.8
|
|
81.3
|
|
86.6
|
Total
Revenue
|
|
$
220.6
|
|
$
234.0
|
|
$
221.6
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Operating income
(loss):
|
|
|
|
|
|
|
Rocky Mountains
|
|
$
17.7
|
|
$
11.9
|
|
$
11.7
|
Southwest
|
|
4.8
|
|
8.1
|
|
5.2
|
Northeast/Mid-Con
|
|
5.2
|
|
12.6
|
|
17.2
|
Corporate and
other
|
|
(11.3)
|
|
(13.0)
|
|
(13.7)
|
Total operating
income
|
|
$
16.4
|
|
$
19.6
|
|
$
20.4
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Adjusted EBITDA
(loss)
|
|
|
|
|
|
|
Rocky Mountains
|
|
$
23.3
|
|
$
17.0
|
|
$
17.3
|
Southwest
|
|
11.8
|
|
14.8
|
|
10.2
|
Northeast/Mid-Con
|
|
11.4
|
|
18.0
|
|
21.3
|
Segment
Total
|
|
46.5
|
|
49.8
|
|
48.8
|
Corporate and
other
|
|
(9.8)
|
|
(10.1)
|
|
(11.7)
|
Total adjusted
EBITDA(1)
|
|
$
36.7
|
|
$
39.7
|
|
$
37.1
|
|
(1) Excludes one-time costs, as
defined in the Reconciliation of Consolidated Net Income to
adjusted EBITDA table below, non-cash compensation expense and
non-cash asset impairment expense.
|
Balance Sheet and Liquidity
Total debt outstanding as of September 30, 2023 was
$284.1 million. As of
September 30, 2023, cash and cash equivalents totaled
$90.4 million. Liquidity as of
September 30, 2023 was $154.8
million, including availability of $64.4 million on the September 2023 ABL Facility borrowing base
certificate. The senior secured notes bear interest at an annual
rate of 11.5%, payable semi-annually in arrears on May 1st and November 1st. Accrued interest as of
September 30, 2023 was $11.4
million for the senior secured notes and $0.1 million related to the ABL
Facility.
Net working capital as of September 30, 2023 was
$85.4 million.
KLX sold no shares under our at-the-market offering
program in both the third quarter and the nine months ended
September 2023.
Other Financial Information
Capital expenditures were $17.8
million during the third quarter of 2023. Capital spending
during the third quarter was driven primarily by maintenance
capital expenditures across our segments. As of September 30,
2023, we had $2.3 million of assets
held for sale related to real property and equipment in the Rocky
Mountains and Southwest segments. Full year capital expenditures
guidance remains unchanged at $45
million to $55
million.
Greene's Integration
KLX's integration of Greene's has been completed as of the
date of this release. We have fully implemented approximately
$3.0 million in annual cost
synergies.
Conference Call Information
KLX has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Tuesday,
November 7, 2023, to review reported results. You may access
the call by telephone at 1-201-389-0867 and ask for the KLX 2023
Third Quarter Conference Call at least 10 minutes prior to the
start time. The webcast of the call may also be accessed through
the Investor Relations section of the Company's website at
https://investor.klxenergy.com/events-and-presentations/events.
For those who cannot listen to the live call, a replay of the call
can be accessed on the Company's website for 90 days and will be
available by telephone through November 21,
2023, at 1-201-612-7415, access code 13740666#. Please
submit any questions for management prior to the call via email
to KLXE@dennardlascar.com.
About KLX Energy Services Holdings, Inc.
KLX is a growth-oriented provider of diversified oilfield
services to leading onshore oil and natural gas exploration and
production companies operating in both conventional and
unconventional plays in all of the active major basins throughout
the United States. The Company
delivers mission critical oilfield services focused on drilling,
completion, production, and intervention activities for technically
demanding wells from over 50 service and support facilities located
throughout the United States.
KLX's complementary suite of proprietary products and specialized
services is supported by technically skilled personnel and a broad
portfolio of innovative in-house manufacturing, repair and
maintenance capabilities. More information is available at
www.klxenergy.com.
Forward-Looking Statements and Cautionary
Statements
The Private Securities Litigation Reform Act of 1995
provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information to
investors. This news release (and any oral statements made
regarding the subjects of this release, including on the conference
call announced herein) includes forward-looking statements that
reflect our current expectations and projections about our future
results, performance and prospects. Forward-looking statements
include all statements that are not historical in nature and are
not current facts. When used in this news release (and any oral
statements made regarding the subjects of this release, including
on the conference call announced herein), the words "believe,"
"expect," "plan," "intend," "anticipate," "estimate," "predict,"
"potential," "continue," "may," "might," "should," "could," "will"
or the negative of these terms or similar expressions are intended
to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. These
forward-looking statements are based on our current expectations
and assumptions about future events and are based on currently
available information as to the outcome and timing of future events
with respect to, among other things: our operating cash flows; the
availability of capital and our liquidity; our ability to renew and
refinance our debt; our future revenue, income and operating
performance; our ability to sustain and improve our utilization,
revenue and margins; our ability to maintain acceptable pricing for
our services; future capital expenditures; our ability to finance
equipment, working capital and capital expenditures; our ability to
execute our long-term growth strategy and to integrate our
acquisitions; our ability to successfully develop our research and
technology capabilities and implement technological developments
and enhancements; and the timing and success of strategic
initiatives and special projects.
Forward-looking statements are not assurances of future
performance and actual results could differ materially from our
historical experience and our present expectations or projections.
These forward-looking statements are based on management's current
expectations and beliefs, forecasts for our existing operations,
experience, expectations and perception of historical trends,
current conditions, anticipated future developments and their
effect on us and other factors believed to be appropriate. Although
management believes the expectations and assumptions reflected in
these forward-looking statements are reasonable as and when made,
no assurance can be given that these assumptions are accurate or
that any of these expectations will be achieved (in full or at
all). Our forward-looking statements involve significant risks,
contingencies and uncertainties, most of which are difficult to
predict and many of which are beyond our control. Known material
factors that could cause actual results to differ materially from
those in the forward-looking statements include, but are not
limited to, risks associated with the following: a decline in
demand for our services, including due to the COVID-19 pandemic,
declining commodity prices, overcapacity and other competitive
factors affecting our industry; the cyclical nature and volatility
of the oil and gas industry, which impacts the level of
exploration, production and development activity and spending
patterns by oil and natural gas exploration and production
companies; a decline in, or substantial volatility of, crude oil
and gas commodity prices, which generally leads to decreased
spending by our customers and negatively impacts drilling,
completion and production activity; inflation; increases in
interest rates; the ongoing war in Ukraine and its continuing effects on global
trade; the ongoing conflict in Israel; supply chain issues; and other risks
and uncertainties listed in our filings with the U.S. Securities
and Exchange Commission, including our Current Reports on Form 8-K
that we file from time to time, Quarterly Reports on Form 10-Q and
Annual Report on Form 10-K. Readers are cautioned not to place
undue reliance on forward-looking statements, which speak only as
of the date hereof. We undertake no obligation to publicly update
or revise any forward-looking statements after the date they are
made, whether as a result of new information, future events or
otherwise, except as required by law.
KLX Energy Services
Holdings, Inc.
|
Condensed
Consolidated Statements of Operations
|
(In millions of
U.S. dollars and shares, except per share
amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Revenues
|
$
220.6
|
|
$
234.0
|
|
$
221.6
|
Costs and
expenses:
|
|
|
|
|
|
Cost of
sales
|
166.2
|
|
173.3
|
|
168.8
|
Depreciation and amortization
|
18.9
|
|
17.6
|
|
14.2
|
Selling,
general and administrative
|
18.6
|
|
22.0
|
|
18.0
|
Research
and development costs
|
0.4
|
|
0.3
|
|
0.2
|
Bargain
purchase gain
|
0.1
|
|
1.2
|
|
—
|
Operating
income
|
16.4
|
|
19.6
|
|
20.4
|
Non-operating
expense:
|
|
|
|
|
|
Interest
income
|
(0.7)
|
|
(0.2)
|
|
—
|
Interest
expense
|
9.2
|
|
8.7
|
|
9.0
|
Net income before
income tax
|
7.9
|
|
11.1
|
|
11.4
|
Income tax
expense
|
0.3
|
|
(0.3)
|
|
0.3
|
Net income
|
$
7.6
|
|
$
11.4
|
|
$
11.1
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
Basic
|
$
0.47
|
|
$
0.71
|
|
$
0.96
|
Diluted
|
$
0.47
|
|
$
0.71
|
|
$
0.96
|
|
|
|
|
|
|
Weighted average common
shares:
|
|
|
|
|
|
Basic
|
16.0
|
|
16.0
|
|
11.5
|
Diluted
|
16.1
|
|
16.1
|
|
11.5
|
KLX Energy Services
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(In millions of
U.S. dollars and shares, except per share data)
|
|
|
September 30,
2023
|
|
December 31,
2022
|
|
(Unaudited)
|
|
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
90.4
|
|
$
57.4
|
Accounts
receivable–trade, net of allowance of $6.1 and $5.7
|
155.7
|
|
154.3
|
Inventories,
net
|
33.4
|
|
25.7
|
Prepaid expenses and
other current assets
|
7.9
|
|
17.3
|
Total current
assets
|
287.4
|
|
254.7
|
Property and equipment,
net
|
201.7
|
|
168.1
|
Operating lease
assets
|
28.6
|
|
37.4
|
Intangible assets,
net
|
1.9
|
|
2.1
|
Other assets
|
4.7
|
|
3.6
|
Total
assets
|
$
524.3
|
|
$
465.9
|
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
78.5
|
|
$
84.2
|
Accrued
interest
|
11.5
|
|
4.8
|
Accrued
liabilities
|
33.1
|
|
41.0
|
Current portion of
operating lease obligations
|
14.1
|
|
14.2
|
Current portion of
finance lease obligations
|
15.7
|
|
10.2
|
Total current
liabilities
|
152.9
|
|
154.4
|
Long-term
debt
|
284.1
|
|
283.4
|
Long-term operating
lease obligations
|
13.9
|
|
22.8
|
Long-term finance lease
obligations
|
25.2
|
|
20.3
|
Other non-current
liabilities
|
0.4
|
|
0.8
|
Commitments,
contingencies and off-balance sheet arrangements
|
|
|
|
Stockholders' equity
(deficit):
|
|
|
|
Common stock, $0.01 par
value; 110.0 authorized; 16.8 and 14.3 issued
|
0.1
|
|
0.1
|
Additional paid-in
capital
|
553.2
|
|
517.3
|
Treasury stock, at
cost, 0.4 shares and 0.4 shares
|
(5.3)
|
|
(4.6)
|
Accumulated
deficit
|
(500.2)
|
|
(528.6)
|
Total stockholders'
equity (deficit)
|
47.8
|
|
(15.8)
|
Total liabilities and
stockholders' equity
|
$
524.3
|
|
$
465.9
|
|
KLX Energy Services Holdings,
Inc.
Additional Selected Operating
Data
(Unaudited)
Non-GAAP Financial Measures
This release includes adjusted EBITDA, adjusted EBITDA margin,
adjusted net income (loss), adjusted net income (loss) margin,
adjusted diluted earnings per share, unlevered and levered free
cash flow, net working capital, net debt and net leverage ratio
measures. Each of the metrics are "non-GAAP financial measures" as
defined in Regulation G of the Securities Exchange Act of 1934.
Adjusted EBITDA is a supplemental non-GAAP financial measure
that is used by management and external users of our financial
statements, such as industry analysts, investors, lenders and
rating agencies. Adjusted EBITDA is not a measure of net earnings
or cash flows as determined by GAAP. We define adjusted EBITDA as
net earnings (loss) before interest, taxes, depreciation and
amortization, further adjusted for (i) goodwill and/or long-lived
asset impairment charges, (ii) stock-based compensation expense,
(iii) restructuring charges, (iv) transaction and integration costs
related to acquisitions, (v) costs incurred related to the COVID-19
pandemic and (vi) other expenses or charges to exclude certain
items that we believe are not reflective of the ongoing performance
of our business. Adjusted EBITDA is used to calculate the Company's
leverage ratio, consistent with the terms of the Company's ABL
Facility.
We believe adjusted EBITDA is useful because it allows us to
more effectively evaluate our operating performance and compare the
results of our operations from period to period without regard to
our financing methods or capital structure. We exclude the items
listed above in arriving at adjusted EBITDA because these amounts
can vary substantially from company to company within our industry
depending upon accounting methods and book values of assets,
capital structures and the method by which the assets were
acquired. Adjusted EBITDA should not be considered as an
alternative to, or more meaningful than, net income as determined
in accordance with GAAP, or as an indicator of our operating
performance or liquidity. Certain items excluded from adjusted
EBITDA are significant components in understanding and assessing a
company's financial performance, such as a company's cost of
capital and tax structure, as well as the historic costs of
depreciable assets, none of which are components of adjusted
EBITDA. Our computations of adjusted EBITDA may not be comparable
to other similarly titled measures of other companies.
Adjusted EBITDA margin is a supplemental non-GAAP financial
measure that is used by management and external users of our
financial statements, such as industry analysts, investors, lenders
and rating agencies. Adjusted EBITDA margin is not a measure of net
earnings or cash flows as determined by GAAP. Adjusted EBITDA
margin is defined as the quotient of adjusted EBITDA and total
revenue. We believe adjusted EBITDA margin is useful because it
allows us to more effectively evaluate our operating performance
and compare the results of our operations from period to period
without regard to our financing methods or capital structure, as a
percentage of revenues.
We define adjusted net income (loss) as consolidated net income
(loss) adjusted for (i) goodwill and/or long-lived asset impairment
charges, (ii) restructuring charges, (iii) transaction and
integration costs related to acquisitions, (iv) costs incurred
related to the COVID-19 pandemic and (v) other expenses or charges
to exclude certain items that we believe are not reflective of the
ongoing performance of our business. We believe adjusted net income
(loss) is useful because it allows us to exclude non-recurring
items in evaluating our operating performance.
We define adjusted net income (loss) margin as the quotient of
adjusted net income (loss) and total revenue. We believe adjusted
net income (loss) margin is useful because it allows us to exclude
non-recurring items in evaluating our operating performance.
We define adjusted diluted earnings per share as the quotient of
adjusted net income (loss) and diluted weighted average common
shares. We believe that adjusted diluted earnings per share
provides useful information to investors because it allows us to
exclude non-recurring items in evaluating our operating performance
on a diluted per share basis.
We define unlevered free cash flow as net cash provided by
operating activities less capital expenditures and proceeds from
sale of property and equipment plus interest expense. Our
management uses unlevered free cash flow to assess the Company's
liquidity and ability to repay maturing debt, fund operations and
make additional investments. We believe that unlevered free cash
flow provides useful information to investors because it is an
important indicator of the Company's liquidity, including its
ability to reduce net debt, make strategic investments and
repurchase stock.
We define levered free cash flow as net cash provided by
operating activities less capital expenditures and proceeds from
sale of property and equipment. Our management uses levered free
cash flow to assess the Company's liquidity and ability to repay
maturing debt, fund operations and make additional investments. We
believe that levered free cash flow provides useful information to
investors because it is an important indicator of the Company's
liquidity, including its ability to reduce net debt, make strategic
investments and repurchase stock.
Net working capital is calculated as current assets, excluding
cash, less current liabilities, excluding accrued interest and
finance lease obligations. We believe that net working capital
provides useful information to investors because it is an important
indicator of the Company's liquidity.
We define net debt as total debt less cash and cash equivalents.
We believe that net debt provides useful information to investors
because it is an important indicator of the Company's
indebtedness.
We define net leverage ratio as net debt divided by quarterly
annualized adjusted EBITDA or adjusted EBITDA over the last twelve
months. We believe that net leverage ratio provides useful
information to investors because it is an important indicator of
the Company's indebtedness in relation to its operating
performance.
The following tables present a reconciliation of the non-GAAP
financial measures of adjusted EBITDA and adjusted EBITDA margin to
the most directly comparable GAAP financial measure for the periods
indicated:
KLX Energy Services
Holdings, Inc.
|
Reconciliation of
Consolidated Net Income to Adjusted EBITDA
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September
30,
2023
|
|
June 30,
2023
|
|
September
30,
2022
|
Consolidated net
income(2)
|
$
7.6
|
|
$
11.4
|
|
$
11.1
|
Income tax
expense
|
0.3
|
|
(0.3)
|
|
0.3
|
Interest
expense, net
|
8.5
|
|
8.5
|
|
9.0
|
Operating
income
|
16.4
|
|
19.6
|
|
20.4
|
Bargain
purchase gain
|
0.1
|
|
1.2
|
|
—
|
One-time
costs(1)
|
0.5
|
|
0.5
|
|
1.7
|
Adjusted operating
income
|
17.0
|
|
21.3
|
|
22.1
|
Depreciation and amortization
|
18.9
|
|
17.6
|
|
14.2
|
Non-cash
compensation
|
0.8
|
|
0.8
|
|
0.8
|
Adjusted
EBITDA
|
$
36.7
|
|
$
39.7
|
|
$
37.1
|
|
*Previously announced
quarterly numbers may not sum to the year-end total due to
rounding.
|
(1) The
one-time costs during the third quarter of 2023 relate to $0.3 in
costs related to the Greene's acquisition and $0.2 in
severance.
|
(2) Quarterly cost of sales includes
$2.1 of lease expense associated with five coiled tubing unit
leases.
|
KLX Energy Services
Holdings, Inc.
|
Consolidated Net
Income Margin(1)
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Consolidated net
income
|
$
7.6
|
|
$
11.4
|
|
$
11.1
|
Revenue
|
220.6
|
|
234.0
|
|
221.6
|
Consolidated net income
margin percentage
|
3.4 %
|
|
4.9 %
|
|
5.0 %
|
|
(1) Consolidated net income margin is
defined as the quotient of consolidated net income and total
revenue.
|
KLX Energy Services
Holdings, Inc.
|
Consolidated
Adjusted EBITDA Margin(1)
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Adjusted
EBITDA
|
$
36.7
|
|
$
39.7
|
|
$
37.1
|
Revenue
|
220.6
|
|
234.0
|
|
221.6
|
Adjusted EBITDA Margin
Percentage
|
16.6 %
|
|
17.0 %
|
|
16.7 %
|
|
(1) Adjusted EBITDA margin is defined
as the quotient of adjusted EBITDA and total revenue. Adjusted
EBITDA is operating income excluding one-time costs (as defined in
the Reconciliation of Consolidated Net Income to adjusted EBITDA
table above), depreciation and amortization expense, non-cash
compensation expense and non-cash asset impairment
expense.
|
Reconciliation of
Rocky Mountains Operating Income to Adjusted EBITDA
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Rocky Mountains
operating income
|
$
17.7
|
|
$
11.9
|
|
$
11.7
|
One-time
costs(1)
|
—
|
|
—
|
|
0.3
|
Adjusted
operating income
|
17.7
|
|
11.9
|
|
12.0
|
Depreciation and amortization expense
|
5.6
|
|
5.1
|
|
5.3
|
Rocky Mountains
adjusted EBITDA
|
$
23.3
|
|
$
17.0
|
|
$
17.3
|
|
(1) One-time costs are defined in the
Reconciliation of Consolidated Net Income to adjusted EBITDA table
above. For purposes of segment reconciliation, one-time costs also
includes impairment and other charges.
|
Reconciliation of
Southwest Operating Income to Adjusted EBITDA
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Southwest operating
income
|
$
4.8
|
|
$
8.1
|
|
$
5.2
|
One-time
costs(1)
|
0.2
|
|
—
|
|
0.4
|
Adjusted
operating income
|
5.0
|
|
8.1
|
|
5.6
|
Depreciation and amortization expense
|
6.8
|
|
6.7
|
|
4.6
|
Southwest adjusted
EBITDA
|
$
11.8
|
|
$
14.8
|
|
$
10.2
|
|
(1) One-time costs are defined in the
Reconciliation of Consolidated Net Income to adjusted EBITDA table
above. For purposes of segment reconciliation, one-time costs also
includes impairment and other charges.
|
Reconciliation of
Northeast/Mid-Con Operating Income to Adjusted
EBITDA
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Northeast/Mid-Con
operating income
|
$
5.2
|
|
$
12.6
|
|
$
17.2
|
One-time
costs(1)
|
—
|
|
—
|
|
—
|
Adjusted
operating income
|
5.2
|
|
12.6
|
|
17.2
|
Depreciation and amortization expense
|
6.1
|
|
5.4
|
|
4.0
|
Non-cash
compensation
|
0.1
|
|
—
|
|
0.1
|
Northeast/Mid-Con
adjusted EBITDA
|
$
11.4
|
|
$
18.0
|
|
$
21.3
|
|
(1) One-time costs are defined in the
Reconciliation of Consolidated Net Income to adjusted EBITDA table
above. For purposes of segment reconciliation, one-time costs also
includes impairment and other charges.
|
KLX Energy Services
Holdings, Inc.
|
Segment Operating
Income Margin(1)
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Rocky
Mountains
|
|
|
|
|
|
Operating
income
|
$
17.7
|
|
$
11.9
|
|
$
11.7
|
Revenue
|
77.0
|
|
66.4
|
|
66.5
|
Segment operating
income margin percentage
|
23.0 %
|
|
17.9 %
|
|
17.6 %
|
Southwest
|
|
|
|
|
|
Operating
income
|
4.8
|
|
8.1
|
|
5.2
|
Revenue
|
77.8
|
|
86.3
|
|
68.5
|
Segment operating
income margin percentage
|
6.2 %
|
|
9.4 %
|
|
7.6 %
|
Northeast/Mid-Con
|
|
|
|
|
|
Operating
income
|
5.2
|
|
12.6
|
|
17.2
|
Revenue
|
65.8
|
|
81.3
|
|
86.6
|
Segment operating
income margin percentage
|
7.9 %
|
|
15.5 %
|
|
19.9 %
|
|
(1) Segment
operating income margin is defined as the quotient of segment
operating income and segment revenue.
|
KLX Energy Services
Holdings, Inc.
|
Segment Adjusted
EBITDA Margin(1)
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Rocky
Mountains
|
|
|
|
|
|
Adjusted
EBITDA
|
$
23.3
|
|
$
17.0
|
|
$
17.3
|
Revenue
|
77.0
|
|
66.4
|
|
66.5
|
Adjusted EBITDA Margin
Percentage
|
30.3 %
|
|
25.6 %
|
|
26.0 %
|
|
|
|
|
|
|
Southwest
|
|
|
|
|
|
Adjusted
EBITDA
|
11.8
|
|
14.8
|
|
10.2
|
Revenue
|
77.8
|
|
86.3
|
|
68.5
|
Adjusted EBITDA Margin
Percentage
|
15.2 %
|
|
17.1 %
|
|
14.9 %
|
|
|
|
|
|
|
Northeast/Mid-Con
|
|
|
|
|
|
Adjusted
EBITDA
|
11.4
|
|
18.0
|
|
21.3
|
Revenue
|
65.8
|
|
81.3
|
|
86.6
|
Adjusted EBITDA Margin
Percentage
|
17.3 %
|
|
22.1 %
|
|
24.6 %
|
|
(1) Segment
adjusted EBITDA margin is defined as the quotient of segment
adjusted EBITDA and total segment revenue. Segment adjusted EBITDA
is segment operating income excluding one-time costs (as defined
above), non-cash compensation expense and non-cash asset impairment
expense.
|
|
The following tables present a reconciliation of the non-GAAP
financial measure of adjusted net income, adjusted net income
margin and adjusted diluted earnings per share to the most directly
comparable GAAP financial measure for the periods indicated:
KLX Energy Services
Holdings, Inc.
|
Reconciliation of
Consolidated Net Income to Adjusted Net Income and Adjusted Diluted
Earnings per Share
|
(In millions of
U.S. dollars and shares, except per share
amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Consolidated net
income(2)
|
$
7.6
|
|
$
11.4
|
|
$
11.1
|
Bargain
purchase gain
|
0.1
|
|
1.2
|
|
—
|
One-time
costs(1)
|
0.5
|
|
0.5
|
|
1.7
|
Adjusted net
income
|
$
8.2
|
|
$
13.1
|
|
$
12.8
|
Diluted
weighted average common shares
|
16.1
|
|
16.1
|
|
11.5
|
Adjusted diluted
earnings per share(3)
|
$
0.51
|
|
$
0.81
|
|
$
1.11
|
|
*Previously announced
quarterly numbers may not sum to the year-end total due to
rounding.
|
(1) The
one-time costs during the third quarter of 2023 relate to $0.3 in
costs related to the Greene's acquisition and $0.2 in
severance.
|
(2) Quarterly cost of sales includes
$2.1 of lease expense associated with five coiled tubing unit
leases.
|
(3) Adjusted diluted earnings per
share is defined as the quotient of adjusted net income (loss) and
diluted weighted average common shares.
|
KLX Energy Services
Holdings, Inc.
|
Adjusted Net Income
Margin(1)
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Adjusted net
income
|
$
8.2
|
|
$
13.1
|
|
$
12.8
|
Revenue
|
220.6
|
|
234.0
|
|
221.6
|
Adjusted net income
margin percentage
|
3.7 %
|
|
5.6 %
|
|
5.8 %
|
|
(1) Adjusted net income margin is
defined as the quotient of adjusted net income and total
revenue.
|
|
The following table presents a reconciliation of the non-GAAP
financial measure of free cash flow to the most directly comparable
GAAP financial measure for the periods indicated:
KLX Energy Services
Holdings, Inc.
|
Reconciliation of
Net Cash Flow Provided by (Used in) Operating Activities to Free
Cash Flow
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Net cash flow provided
by operating activities
|
$
25.6
|
|
$
60.0
|
|
$
18.5
|
Capital
expenditures
|
(17.8)
|
|
(16.2)
|
|
(12.5)
|
Proceeds from sale of
property and equipment
|
4.8
|
|
3.5
|
|
5.3
|
Levered free cash
flow
|
$
12.6
|
|
$
47.3
|
|
$
11.3
|
Add: Interest expense,
net
|
8.5
|
|
8.5
|
|
9.0
|
Unlevered free cash
flow
|
$
21.1
|
|
$
55.8
|
|
$
20.3
|
|
The following table presents a reconciliation of the non-GAAP
financial measure of net working capital to the most directly
comparable GAAP financial measure for the periods indicated:
KLX Energy Services
Holdings, Inc.
|
Reconciliation of
Current Assets and Current Liabilities to Net Working
Capital
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
As of
|
|
September 30,
2023
|
|
June 30,
2023
|
|
December 31,
2022
|
Current
assets
|
$
287.4
|
|
$
288.5
|
|
$
254.7
|
Less: Cash
|
90.4
|
|
82.1
|
|
57.4
|
Net current
assets
|
197.0
|
|
206.4
|
|
197.3
|
Current
liabilities
|
152.9
|
|
162.6
|
|
154.4
|
Less: Accrued
interest
|
11.5
|
|
4.7
|
|
4.8
|
Less: Operating lease
obligations
|
14.1
|
|
14.4
|
|
14.2
|
Less: Finance lease
obligations
|
15.7
|
|
13.2
|
|
10.2
|
Net current
liabilities
|
111.6
|
|
130.3
|
|
125.2
|
Net working
capital
|
$
85.4
|
|
$
76.1
|
|
$
72.1
|
|
The following table presents a reconciliation of the non-GAAP
financial measure of net debt:
KLX Energy Services
Holdings, Inc.
|
Reconciliation of
Net Debt(1)
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
As of
September 30, 2023
|
|
As of June 30,
2023
|
|
As of
December 31, 2022
|
Total Debt
|
$
284.1
|
|
$
283.8
|
|
$
283.4
|
Cash
|
90.4
|
|
82.1
|
|
57.4
|
Net Debt
|
$
193.7
|
|
$
201.7
|
|
$
226.0
|
|
(1) Net
debt is defined as total debt less cash and cash
equivalents.
|
|
The following table presents a reconciliation of the non-GAAP
financial measure of net leverage ratio:
KLX Energy Services
Holdings, Inc.
|
Reconciliation of
Net Leverage Ratio(1)
|
(In millions of
U.S. dollars)
|
(Unaudited)
|
|
|
Quarter
Annualized
|
|
Last Twelve
Months
|
|
As of
September 30, 2023
|
|
As of June 30,
2023
|
|
Ended
September 30, 2023
|
Adjusted
EBITDA
|
$
36.7
|
|
$
39.7
|
|
$
151.9
|
Multiply by four
quarters
|
4
|
|
4
|
|
N/A
|
Annualized Adjusted
EBITDA
|
146.8
|
|
158.8
|
|
151.9
|
Net Debt
|
$
193.7
|
|
$
201.7
|
|
$
193.7
|
Net Leverage
Ratio
|
1.3
|
|
1.3
|
|
1.3
|
|
(1) Net
leverage ratio is defined as net debt divided by quarterly
annualized adjusted EBITDA or adjusted EBITDA over the last twelve
months
|
Contacts:
KLX Energy Services Holdings,
Inc.
Keefer M.
Lehner, EVP &
CFO
832-930-8066
IR@klxenergy.com
Dennard Lascar Investor
Relations
Ken
Dennard / Natalie
Hairston
713-529-6600
KLXE@dennardlascar.com
View original
content:https://www.prnewswire.com/news-releases/klx-energy-services-holdings-inc-reports-third-quarter-2023-results-301979125.html
SOURCE KLX Energy Services Holdings, Inc.