KLXE KLX Energy Services Holdings Inc

HOUSTON, March 12, 2025 /PRNewswire/ -- KLX Energy Services Holdings, Inc. (Nasdaq: KLXE) ("KLX", the "Company", "we", "us" or "our") today reported financial results for the fourth quarter ended December 31, 2024.

Full Year 2024 Financial Highlights

• Revenue of $709 million
• Net loss of $(53) million, net loss margin of (7)% and diluted loss per share of $(3.27)
• Adjusted EBITDA of $90 million
• Adjusted EBITDA margin of 13%
• Subsequent to year end, KLX closed on refinancing its existing 2025 senior secured notes and closed on a new ABL credit facility

Fourth Quarter 2024 Financial Highlights

• Revenue of $166 million
• Net loss of $(15) million, net loss margin of (9)% and diluted loss per share of $(0.90)
• Adjusted EBITDA of $23 million and Adjusted EBITDA margin of 14%

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 Diluted Earnings (Loss) per share, Unlevered and Levered Free Cash Flow, Net Working Capital, Net Debt and their reconciliations 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 reconciliations are not available without unreasonable efforts.

Chris Baker, KLX President and Chief Executive Officer, stated, "We finished the year strong despite typical seasonal headwinds. 2024 fourth quarter revenue was $166 million, the midpoint of our guidance, and Adjusted EBITDA margin came in above our prior guidance. Our companywide focus on cost controls enabled us to increase our 2024 fourth quarter Adjusted EBITDA margin by 187 basis points over last year's fourth quarter, despite revenue and rig count being down 15% and 5%, respectively, over the same period.

"We have seen solid consistency in our market-leading tech services, rentals and coiled tubing businesses, which have led to improved and sustainable profitability," added Baker. "We are closely monitoring potential opportunities for increased gas-directed activity, driven by LNG export and datacenter/AI demand. US LNG export capacity is expected to approximately double by 2030 and, we believe, this increase will drive incremental natural gas-directed activity within the US onshore market that will ultimately support and lift OFS pricing and utilization across all basins.

"Additionally, KLX is extremely pleased to have successfully completed our refinancing efforts, which will provide increased financial flexibility as we move forward. Looking forward to full year 2025, we expect annual revenue to be flat to up slightly and anticipate our Adjusted EBITDA margin to range between 13% to 15%. As we navigate the evolving energy landscape, our strategic positioning, operational excellence, and financial resilience position us to capitalize on emerging opportunities and deliver sustainable value to our shareholders in the years ahead," concluded Baker.

Fourth Quarter 2024 Financial Results

Revenue for the fourth quarter of 2024 totaled $165.5 million, a decrease of 12.4% compared to third quarter revenue of $188.9 million. The decrease in revenue reflects a decrease in activity in addition to the expected seasonal decline in the fourth quarter. On a product line basis, drilling, completion, production and intervention services contributed approximately 22%, 52%, 16% and 10%, respectively, to revenues for the fourth quarter 2024.

Net loss for the fourth quarter of 2024 was $(14.7) million, compared to fourth quarter 2023 net loss of $(9.2) million. Adjusted net loss for the fourth quarter of 2024 was $(13.1) million, compared to fourth quarter 2023 adjusted net loss of $(8.7) million. Adjusted EBITDA for the fourth quarter of 2024 was $22.7 million, compared to fourth quarter 2023 Adjusted EBITDA of $23.0 million. Adjusted EBITDA margin for the fourth quarter of 2024 was 13.7%, compared to fourth quarter 2023 Adjusted EBITDA margin of 11.8%.

Fourth Quarter 2024 Segment Results

The Company reports revenue, operating income (loss) and Adjusted EBITDA through three geographic business segments: Rocky Mountains, Southwest and Northeast/Mid-Con. The Company reports operating activities not attributable to an individual geographic business segment through the Corporate and other segment. Segment results are reported after inter-segment eliminations.

• Rocky Mountains: Revenue, operating income and Adjusted EBITDA for the Rocky Mountains segment was $54.0 million, $4.7 million and $11.8 million, respectively, for the fourth quarter of 2024. Fourth quarter revenue represents a 20.5% decrease over the third quarter of 2024 largely due to winter holiday seasonality and budget exhaustion, which affected all of our regional completion and intervention offerings, including coiled tubing, frac rentals and wireline services. Segment operating income and Adjusted EBITDA decreased 51.5% and 28.9%, respectively, as a function of the seasonal decrease in activity, which is expected to correct as we exit the first quarter of 2025.
  
  
• Southwest: Revenue, operating income and Adjusted EBITDA for the Southwest segment, which includes the Permian and South Texas, was $61.4 million, $1.1 million and $9.6 million, respectively, for the fourth quarter of 2024. Fourth quarter revenue represents a 10.5% decrease over the third quarter of 2024 largely due to annual seasonality due to budget exhaustion and winter holiday breaks, which affected all product service lines in the region, including our directional drilling and flowback services. Segment operating income and Adjusted EBITDA increased 57.1% and 10.3%, respectively, due largely to a shift in revenue mix and reduced overhead, including headcount and vehicle fleet.
  
  
• Northeast/Mid-Con: Revenue, operating income and Adjusted EBITDA for the Northeast/Mid-Con segment was $50.1 million, $0.3 million and $9.8 million, respectively, for the fourth quarter of 2024. Fourth quarter revenue represents a 4.4% decrease over the third quarter of 2024 driven largely by decreased completion activity due to budget exhaustion and winter holiday breaks. Segment operating income and Adjusted EBITDA decreased 85.0% and 10.1%, respectively, as a function of the decrease in activity.
  
  
• Corporate and other: Operating loss and Adjusted EBITDA loss for the Corporate and other segment were $11.1 million and $8.5 million, respectively, for the fourth quarter of 2024. Segment operating loss and Adjusted EBITDA loss remained largely in line with prior quarter.

The following is a tabular summary of revenue, operating income (loss) and Adjusted EBITDA (loss) for the fourth quarter ended December 31, 2024, the third quarter ended September 30, 2024 and the fourth quarter ended December 31, 2023 ($ in millions).

Balance Sheet and Liquidity

Total debt outstanding as of December 31, 2024 was $285.1 million. As of December 31, 2024, cash and cash equivalents totaled $91.6 million. Available liquidity as of December 31, 2024 was $112.0 million, including availability of $20.4 million on the December 2024 asset-based revolving credit facility (the "Prior ABL Facility") borrowing base certificate. The senior secured notes bear interest at an annual rate of 11.5% (the "2025 Senior Notes"), payable semi-annually in arrears on May 1^st and November 1^st. Accrued interest as of December 31, 2024 was $4.5 million for the 2025 Senior Notes and $0.0 million related to the ABL Facility.

On March 7, 2025, the Company and certain of its subsidiaries entered into a Securities Purchase Agreement with certain holders (the "Investors") of its 2025 Senior Notes, pursuant to which the Company agreed to issue and sell to the Investors (a) approximately $232.2 million in aggregate principal amount of 2030 Senior Notes and (b) warrants to purchase, in the aggregate, up to 2,373,187 shares of the Company's common stock, at an exercise price of $0.01 per share, subject to adjustment (the "Warrants") in exchange for (i) approximately $78.4 million in aggregate cash consideration and (ii) approximately $143.6 million aggregate principal amount of the 2025 Senior Notes, which will be cancelled by the Company upon receipt (collectively, the "Refinancing"). The Company completed the Refinancing on March 12, 2025, and deposited with the trustee under the 2025 Senior Notes indenture $97.1 million in trust and instructed the trustee to apply such funds to redeem the remaining 2025 Senior Notes plus accrued interest. Upon deposit of the redemption amount, the 2025 Senior Notes indenture was satisfied and discharged in accordance with its terms and the Company has been released from its obligations under the 2025 Senior Notes indenture except with respect to those provisions of such indenture that, by their terms, survive the satisfaction and discharge.

In connection with the Refinancing, the Company also entered into a Credit Agreement, dated as of March 7, 2025 (the "New ABL Facility"), with the Company, as borrower, Eclipse Business Capital LLC, as administrative agent, as collateral agent and as FILO administrative agent and the lenders party thereto. The initial funding under the New ABL Facility occurred on March 12, 2025, and the proceeds were used to repay the Company's Prior ABL Facility in full. 

Net working capital as of December 31, 2024 was $25.7 million, a 46% decrease from December 31, 2023 driven by reduced activity and revenue and a reduction in days sales outstanding due to improved collections.

Other Financial Information

Capital expenditures were $15.3 million during the fourth quarter of 2024, out of which $3.3 million was opportunistic and $12.0 million was recurring spend. Fourth quarter capital expenditures decreased by $5.7 million or 27.1% compared to capital expenditures of $21.0 million in the third quarter of 2024. Capital spending during the fourth quarter was driven primarily by maintenance capital expenditures across our segments.

As of December 31, 2024, we had $2.3 million of assets held for sale related to one facility and select equipment in the Rocky Mountains and Southwest segments.

Conference Call Information

KLX will conduct its fourth quarter 2024 conference call, which can be accessed via dial-in or webcast, on Thursday, March 13, 2025 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) by dialing 1-201-389-0867 and asking for the KLX conference call at least 10 minutes prior to the start time, or by logging onto the webcast at https://investor.klx.com/events-and-presentations/events. For those who cannot listen to the live call, a replay will be available through March 27, 2025, and may be accessed by dialing 1-201-612-7415 and using passcode 13751933#. Also, an archive of the webcast will be available shortly after the call at https://investor.klx.com/events-and-presentations/events for 90 days. 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.klx.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 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 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 the Middle East; 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.
Additional Selected Operating Data
(Unaudited)

Non-GAAP Financial Measures

This release includes Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) per share, Unlevered and Levered Free Cash Flow, Net Working Capital and Net Debt 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 and (v) 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 supplement the GAAP measures in order 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 supplement the GAAP measures in order 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 and (iv) 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 Diluted Earnings (Loss) per share as the quotient of adjusted net income (loss) and diluted weighted average common shares. We believe that Adjusted Diluted Earnings (Loss) 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. 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 Unlevered and 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 each of Unlevered and Levered Free Cash Flow provide useful information to investors because it is an important indicator of the Company's liquidity, including our ability to reduce Net Debt and make strategic investments.

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.

The following tables present a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures for the periods indicated:

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SOURCE KLX Energy Services Holdings, Inc.