KLX Energy Services (KLXE) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $180.2 million, up 3.1% sequentially but down 23% year-over-year, with Adjusted EBITDA of $27 million (15% margin) and a net loss of $8.0 million; results marked a return to normalized profitability after Q1 was impacted by non-recurring items and seasonality.

• For the six months ended June 30, 2024, revenue was $354.9 million, a 25.1% decrease year-over-year, with a net loss of $30.2 million.

• Revenue per rig increased 10% sequentially and 27% compared to Q2 2022, reflecting market share gains.

• $16 million in annualized cost savings were implemented, primarily from operational streamlining, driving margin improvement.

• The company maintains a strong presence in major U.S. shale basins, serving large independent and major oil and gas companies.

Financial highlights

• Q2 2024 cost of sales was $136.0 million (75.5% of revenue), and SG&A expenses were $19.3 million (10.7% of revenue), both up as a percentage year-over-year due to lower leverage of fixed costs.

• Tech services and rentals revenues increased 20% and 17% sequentially, respectively.

• Net cash flow from operations for the first half of 2024 was $11.4 million, with levered free cash flow of $10.2 million in Q2.

• Capital expenditures for the first half of 2024 were $28.8 million, with full-year 2024 capex expected between $50.0 and $55.0 million, 80%+ for maintenance.

• Cash and cash equivalents at June 30, 2024 were $86.9 million, with $34.1 million available under the ABL Facility, totaling $121.0 million in liquidity.

Outlook and guidance

• Q3 2024 revenue expected between $175 million and $190 million, with Adjusted EBITDA margin projected at 13% to 16% and revenue/margins expected to be flat to slightly up.

• Full-year 2024 capital expenditures are projected at $50.0–$55.0 million, focused on maintenance.

• Management anticipates increased activity in 2025 as customers complete integration from industry consolidation and gas-directed activity rises.

• The company expects to fund operations and planned capex for at least the next twelve months with current liquidity and cash flows.

• Focus remains on maximizing margin, free cash flow, and maintaining a robust asset base.