ChampionX (CHX) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $893.3 million, down 3% sequentially and 4% year-over-year, mainly due to lower sales in Mexico and Latin America, partially offset by international growth.

• Net income attributable to ChampionX was $52.6 million for Q2 2024, with diluted EPS at $0.27; adjusted net income was $71.2 million and adjusted EBITDA was $183.2 million with a 20.5% margin.

• Cash flow from operations was $67.6 million in Q2 and $241.1 million for H1 2024, supporting liquidity and capital allocation priorities.

• The company entered into a merger agreement with SLB, with each ChampionX share to be converted into 0.735 shares of SLB; closing is expected in Q4 2024 or Q1 2025, pending regulatory approvals.

• Completed the acquisition of RMSpumptools, enhancing the Production and Automation Technologies portfolio and international presence.

Financial highlights

• Q2 2024 revenue was $893.3 million, gross profit was $279.8 million, and diluted EPS was $0.27; adjusted diluted EPS was $0.37.

• Adjusted EBITDA margin was 20.5%; income before income taxes margin was 9.3%.

• For the first six months of 2024, revenue was $1.82 billion and net income attributable to ChampionX was $165.5 million.

• Ended Q2 with $1.1 billion in liquidity, including $393 million in cash and $672 million available on the revolver.

• Free cash flow to adjusted EBITDA ratio was 21% for Q2 2024.

Outlook and guidance

• Management expects to generate sufficient cash from operations to fund business needs and capital expenditures, projecting 2024 capital spending at 3.5% of revenue.

• Order activity in Mexico expected to resume toward year-end; confident in achieving at least 50% adjusted EBITDA to free cash flow conversion for 2024.

• No further quarterly guidance due to pending SLB acquisition.

• Productivity and cost control initiatives are expected to support profit margins despite inflationary pressures.

• The company anticipates continued volatility in oil prices and rig counts, with global demand expected to increase moderately through year-end.