Company Raises 2022 Third Quarter
Guidance
HOUSTON, Sept. 28,
2022 /PRNewswire/ -- KLX Energy Services Holdings,
Inc. (NASDAQ: KLXE) ("KLX" or the "Company") announced today that
the Company has entered into a Third Amendment to the Credit
Agreement, with certain of its subsidiaries party thereto, as
guarantors, JPMorgan Chase Bank, N.A. ("JPM"), as administrative
agent and the lender party thereto (the "Amendment"), which amends
that certain Credit Agreement, dated as of August 10, 2018, with JPM, as administrative
agent, collateral agent and an issuing lender and the other lenders
and issuing lenders party thereto from time to time (as amended,
the "Credit Agreement").
The Amendment, among other things, (i) extends the maturity date
of the Credit Agreement by a year from September 14, 2023 to September 15, 2024, (ii) increases the applicable
margin by 0.50%, (iii) replaces LIBOR as the benchmark rate with
Term SOFR, (iv) provides the Company with the ability to redeem,
repurchase, defease or otherwise satisfy its outstanding senior
secured notes using proceeds of equity issuances or by converting
or exchanging such secured notes for equity, (v) resets
consolidated EBITDA solely for purposes of calculating the
springing fixed charge coverage ratio ("FCCR") to be annualized
beginning with the fiscal quarter ended as of June 30, 2022, until the fourth fiscal quarter
ended thereafter (provided that fixed charges will continue to be
calculated on a trailing-twelve month basis), (vi) requires that,
after giving effect to any borrowing and the use of proceeds
thereof, the Company not have more than $35,000,000 in excess cash on its balance sheet
and (vii) increases the amount of availability required to avoid a
cash dominion event.
Keefer Lehner, EVP and Chief
Financial Officer, stated, "We are very pleased to announce a
one-year extension with improved terms on our ABL facility. We have
an extremely supportive group of ABL lenders and appreciate their
continued partnership with KLX as our underlying business continues
to return to historical levels of activity and profitability. We
believe this amendment enables KLX to continue to participate in
the ongoing recovery in our industry by augmenting liquidity and
positions KLX to generate free cash flow and ultimately reduce net
debt."
After giving effect to the Amendment, we believe KLX will be
greater than 1.0:1.0 on the springing FCCR, which on a pro forma
basis would have improved KLX's liquidity by $14 million to $71
million as of June 30, 2022.
Further, the Company ended August 31,
2022, with approximately $39
million in cash and pro forma $84
million of liquidity, including $45
million of pro forma availability on the August 2022 borrowing base certificate (Pro Forma
for Amendment).
($ in
millions)
|
June 30,
2022
As
Reported
|
|
June 30,
2022
Pro Forma for
Amendment
|
|
August 31,
2022
|
|
August 31,
2022
Pro Forma for
Amendment
|
Cash
|
$
32
|
|
$
32
|
|
$
39
|
|
$
39
|
ABL
Availability
|
39
|
|
39
|
|
45
|
|
45
|
Less: FCCR
Holdback
|
14
|
|
0
|
|
15
|
|
0
|
Net
Availability
|
25
|
|
39
|
|
30
|
|
45
|
Available
Liquidity
|
$
57
|
|
$
71
|
|
$
69
|
|
$
84
|
Third Quarter 2022 Updated
Guidance
KLX's management is highly encouraged by the advances in pricing
and utilization that have meaningfully improved the Company's
financial performance, which has only accelerated in the third
quarter. After a preliminary review of KLX's performance so far in
the current quarter, the Company is raising third quarter 2022
guidance as described in the following table and re-affirms prior
guidance of returning to positive free cash flow in the second half
of 2022.
|
Q3 2022
Guidance
|
|
|
Prior
|
|
Updated
|
Q3 2022 Sequential
Revenue Growth
|
9% - 13%
|
|
16% - 18%
|
Q3 2022 Adj EBITDA
Margin
|
10% - 12%
|
|
14% - 16%
|
Chris Baker, President and CEO,
added, "I am extremely proud of our team. In the past 24 months we
have collectively overcome the challenges of integrating two
competing public companies, COVID and its impact on the demand for
oilfield services, and a transitioning labor force. Through
realized synergies, re-alignment of our deployed assets, and the
push towards normalized pricing for our services, we are on pace to
deliver our best pro forma quarterly performance since 2019.
We are confident that our third quarter results will illustrate the
significant operating leverage embedded in our business and the
power of consolidation that yields permanent synergy
realization."
This financial guidance could be affected by external factors
that are outside of the Company's control, such as changes in its
clients' schedules, inflationary pressures, commodity price
volatility and adverse weather, as well as other factors described
in "Forward-Looking Statements and Cautionary Statements". The
Company expects to report actual 2022 third quarter results on or
before November 11, 2022.
About KLX Energy
Services
KLX Energy 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 60 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) 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), 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 ongoing 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 E&P 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; 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
Transition 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.
Contacts:
KLX Energy Services
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
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SOURCE KLX Energy Services Holdings, Inc.