On October 31, 2024, KLX Energy Services Holdings Inc (KLXE, Financial) released its 8-K filing for the third quarter of 2024, showcasing a mixed financial performance. The company, a provider of completion, intervention, and production services to the onshore oil and gas industry in the United States, reported a revenue of $189 million, surpassing the analyst estimate of $181.20 million. However, the company posted a net loss of $8 million, translating to a diluted loss per share of $0.51, which exceeded the estimated loss of $0.43 per share.
Company Overview
KLX Energy Services Holdings Inc (KLXE, Financial) operates across various segments, including the Southwest, Rocky Mountains, and Northeast/Mid-Con regions, with the latter contributing the most to its revenue. The company offers a range of services and products, such as surface facilities, pressure control services, wireline services, and engineered products, catering to both conventional and unconventional oil and gas reserves.
Performance and Challenges
The third quarter of 2024 saw KLX Energy Services Holdings Inc (KLXE, Financial) achieving its third-highest quarterly revenue per average US-operated land rig since its merger with QES in 2020. Despite this achievement, the company faced challenges such as market volatility, consolidation among its blue-chip customers, and a decline in rig counts. These factors contributed to the company's net loss and highlight the ongoing difficulties in the oil and gas sector.
Financial Achievements
KLX Energy Services Holdings Inc (KLXE, Financial) reported an adjusted EBITDA of $28 million, with an adjusted EBITDA margin of 15%. The company's liquidity stood at $126 million, comprising $83 million in cash and $43 million in available credit. These financial metrics are crucial for maintaining operational stability and supporting future growth in the volatile oil and gas industry.
Income Statement Highlights
For the third quarter of 2024, KLX Energy Services Holdings Inc (KLXE, Financial) reported a revenue increase of 4.8% from the previous quarter, driven by incremental completion activity. The company's net loss margin was 4%, and its adjusted net loss was $6.4 million. The following table summarizes the revenue, operating income, and adjusted EBITDA for the company's segments:
| Segment | Revenue ($M) | Operating Income ($M) | Adjusted EBITDA ($M) |
|---|---|---|---|
| Rocky Mountains | 67.9 | 9.7 | 16.6 |
| Southwest | 68.6 | 0.7 | 8.7 |
| Northeast/Mid-Con | 52.4 | 2.0 | 10.9 |
Balance Sheet and Cash Flow
As of September 30, 2024, KLX Energy Services Holdings Inc (KLXE, Financial) had total assets of $486.8 million and total liabilities of $484.3 million. The company's net working capital increased by 20.9% from the previous quarter, reflecting higher activity levels. Capital expenditures for the quarter were $21 million, with expectations for full-year capital expenditures to range between $55 million and $60 million.
Analysis and Outlook
KLX Energy Services Holdings Inc (KLXE, Financial) demonstrated resilience in a challenging market environment by achieving strong revenue growth. However, the company's net loss highlights the ongoing pressures in the oil and gas sector. The company's strategic focus on geographic and product diversification, as well as its leading position in extended reach laterals and completion technologies, positions it well for future growth. As the company engages in discussions with customers for 2025 programs, it remains cautiously optimistic about the upcoming year.
Chris Baker, KLX President and CEO, stated, "I am very proud of our entire team for their outstanding performance during the third quarter. Facing continued market volatility, consolidation of our blue-chip customers and persistent rig count declines over the past few years, we generated our third-highest level of quarterly revenue per average US-operated land rig since the KLX-QES merger in 2020."
Explore the complete 8-K earnings release (here) from KLX Energy Services Holdings Inc for further details.
