[Financial and Operational Overview](index=1&type=section&id=First%20Quarter%202025%20Financial%20and%20Operational%20Highlights) [Q1 2025 Key Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20and%20Operational%20Highlights) In Q1 2025, KLX Energy Services reported revenue of $154 million and a net loss of $(28) million, while increasing Adjusted EBITDA by 15% to $14 million and improving its Adjusted EBITDA margin by 208 basis points due to effective cost controls, with total liquidity at $58 million Q1 2025 Key Financial Highlights | Financial Metric | Q1 2025 | Change vs Q1 2024 | | :--- | :--- | :--- | | Revenue | $154 million | -12% (YoY) | | Net Loss | $(28) million | - | | Diluted Loss per Share | $(1.62) | - | | Adjusted EBITDA | $14 million | +15% (YoY) | | Adjusted EBITDA Margin | 9% | +30% (YoY) | | Total Liquidity | $58 million | - | - The company successfully increased its **Adjusted EBITDA margin by 208 basis points** compared to Q1 2024, primarily due to a company-wide focus on cost controls, which offset the impact of lower revenue and rig count[4](index=4&type=chunk) [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) Management highlighted the successful completion of refinancing in March, enhancing financial flexibility and reactivating a share repurchase program with approximately $49 million remaining, while cautiously targeting a modest low to mid-single-digit sequential revenue increase and margin expansion for the remainder of 2025, prudently evaluating share and debt buybacks - The company is targeting a modest sequential revenue increase in the **low to mid-single digits** on a percentage basis, accompanied by margin expansion, based on current schedules[5](index=5&type=chunk) - Following a March refinancing, the company has access to its 2019 share repurchase program, which has approximately **$49 million** of availability remaining, with both share and debt buybacks being considered as capital deployment opportunities[7](index=7&type=chunk) - Management believes the company's strategic positioning, operational excellence, and improved financial flexibility position it to manage market volatility effectively[8](index=8&type=chunk) [Detailed Financial Results](index=2&type=section&id=First%20Quarter%202025%20Financial%20Results) [Consolidated Financial Performance](index=2&type=section&id=First%20Quarter%202025%20Financial%20Results) Q1 2025 revenue was $154.0 million, a 6.9% decrease from Q4 2024, primarily due to a seasonal market slowdown and reduced activity in Mid-Con completions and directional drilling, resulting in a net loss of $(27.9) million and an Adjusted EBITDA of $13.8 million, with completion services contributing 51% of revenue Consolidated Financial Performance Metrics | Metric | Q1 2025 | Q4 2024 | Change (QoQ) | | :--- | :--- | :--- | :--- | | Revenue | $154.0 M | $165.5 M | -6.9% | | Net Loss | $(27.9) M | $(14.7) M | Increased Loss | | Adjusted Net Loss | $(21.9) M | $(13.1) M | Increased Loss | | Adjusted EBITDA | $13.8 M | $22.7 M | -39.2% | | Adjusted EBITDA Margin | 9.0% | 13.7% | -470 bps | - Revenue contribution by product line for Q1 2025 was approximately: **drilling (20%)**, **completion (51%)**, **production (18%)**, and **intervention (11%)**[9](index=9&type=chunk) [Segment Performance Analysis](index=2&type=section&id=First%20Quarter%202025%20Segment%20Results) The Southwest segment showed sequential growth in revenue (6.2%) and Adjusted EBITDA (21.9%), achieving a record-high margin, while the Rocky Mountains segment experienced a seasonal sequential decline but improved year-over-year, and the Northeast/Mid-Con segment saw a significant drop in both revenue (-18.2%) and Adjusted EBITDA (-72.4%) due to reduced activity and a non-recurring operational issue Q1 2025 Segment Performance Summary | Segment | Revenue (Q1 2025) | Adjusted EBITDA (Q1 2025) | | :--- | :--- | :--- | | Rocky Mountains | $47.8 M | $6.7 M | | Southwest | $65.2 M | $11.7 M | | Northeast/Mid-Con | $41.0 M | $2.7 M | | **Segment Total** | **$154.0 M** | **$21.1 M** | [Rocky Mountains](index=2&type=section&id=Rocky%20Mountains) The Rocky Mountains segment reported Q1 revenue of $47.8 million, a seasonal 11.5% decrease sequentially but a 5% increase year-over-year, with Adjusted EBITDA at $6.7 million, down 43.2% sequentially but up 24% from Q1 2024, driven by increased activity in directional drilling and wireline services Rocky Mountains Segment Financials | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenue | $47.8 M | $54.0 M | $45.6 M | | Operating Loss | $(0.2) M | $4.7 M | $(1.2) M | | Adjusted EBITDA | $6.7 M | $11.8 M | $5.4 M | - Year-over-year revenue improved by **5%** due to increased activity in directional drilling and wireline product offerings[11](index=11&type=chunk) [Southwest](index=2&type=section&id=Southwest) The Southwest segment delivered strong results with revenue of $65.2 million, a 6.2% sequential increase driven by market share gains in the Permian, and Adjusted EBITDA grew 21.9% sequentially to $11.7 million, with its margin reaching the highest level since the 2020 merger, expected to be the "new normal" for the segment Southwest Segment Financials | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenue | $65.2 M | $61.4 M | $69.4 M | | Operating Income | $3.0 M | $1.1 M | $(0.7) M | | Adjusted EBITDA | $11.7 M | $9.6 M | $6.7 M | - The Q1 2025 Adjusted EBITDA margin was the **highest** in the company's recent history (post-2020 merger), driven by a shifting revenue mix[12](index=12&type=chunk) [Northeast/Mid-Con](index=3&type=section&id=Northeast%2FMid-Con) The Northeast/Mid-Con segment's performance declined significantly, with revenue falling 18.2% sequentially to $41.0 million and Adjusted EBITDA plummeting 72.4% to $2.7 million, primarily caused by reduced gas-focused activity and a non-recurring operational challenge within its completions business Northeast/Mid-Con Segment Financials | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenue | $41.0 M | $50.1 M | $59.7 M | | Operating Loss | $(8.1) M | $0.3 M | $2.4 M | | Adjusted EBITDA | $2.7 M | $9.8 M | $10.2 M | - The sharp decline was attributed to reduced regional gas-focused activity and a non-recurring operational issue that created excessive white space during the quarter[15](index=15&type=chunk) [Corporate and Other](index=3&type=section&id=Corporate%20and%20other) The Corporate and other segment reported an operating loss of $(12.4) million and an Adjusted EBITDA loss of $(7.3) million for Q1 2025, with the Adjusted EBITDA loss showing sequential improvement from $(8.5) million in Q4 2024 Corporate and Other Segment Financials | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Operating Loss | $(12.4) M | $(11.1) M | $(13.6) M | | Adjusted EBITDA Loss | $(7.3) M | $(8.5) M | $(10.3) M | [Balance Sheet and Liquidity](index=4&type=section&id=Balance%20Sheet%20and%20Liquidity) As of March 31, 2025, KLX had total liquidity of $58.1 million, comprising $14.6 million in cash and $43.5 million in available credit facilities, while Net Working Capital increased substantially by 131% to $59.4 million from the prior quarter, and the company raised approximately $0.5 million in gross proceeds from its at-the-market stock offering program - Total liquidity as of March 31, 2025 was **$58.1 million**, composed of **$14.6 million** in cash, **$38.6 million** available on the ABL Facility, and **$4.9 million** on an undrawn FILO facility[16](index=16&type=chunk) - Net Working Capital increased by **131%** to **$59.4 million** from December 31, 2024, driven by changes in days sales outstanding, days payable outstanding, and accrued liabilities[17](index=17&type=chunk) - In Q1 2025, the company sold **142,769 shares** of common stock for gross proceeds of approximately **$0.5 million** under its at-the-market offering program[18](index=18&type=chunk) [Capital Expenditures and Other Financials](index=4&type=section&id=Other%20Financial%20Information) Capital expenditures for Q1 2025 were $15.0 million, a slight decrease from the previous quarter, primarily directed towards maintenance, with net capital expenditures after asset sales totaling $10.2 million, and the company held $2.3 million in assets for sale at quarter-end - Capital expenditures were **$15.0 million** in Q1 2025, down **2%** from Q4 2024, with net capital expenditures after asset sales at **$10.2 million**[19](index=19&type=chunk) - As of March 31, 2025, the company had **$2.3 million** of assets held for sale, related to a facility and equipment in the Rocky Mountains and Southwest segments[20](index=20&type=chunk) [Financial Statements and Non-GAAP Reconciliations](index=7&type=section&id=Financial%20Statements%20and%20Non-GAAP%20Reconciliations) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported revenues of $154.0 million for Q1 2025, down from $174.7 million in Q1 2024, resulting in an operating loss of $(17.7) million and a net loss of $(27.9) million, or $(1.62) per diluted share, compared to a net loss of $(22.2) million, or $(1.38) per diluted share, in the same period last year Condensed Consolidated Statements of Operations | (In millions, except per share data) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenues | $154.0 | $165.5 | $174.7 | | Operating loss | $(17.7) | $(5.0) | $(13.1) | | Net loss | $(27.9) | $(14.7) | $(22.2) | | Diluted loss per share | $(1.62) | $(0.90) | $(1.38) | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, the company's balance sheet showed total assets of $379.1 million, a decrease from $456.3 million at year-end 2024, with cash and cash equivalents decreasing to $14.6 million from $91.6 million, total liabilities at $405.7 million, and a total stockholders' deficit of $(26.6) million Condensed Consolidated Balance Sheets | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $14.6 | $91.6 | | Total current assets | $167.9 | $233.0 | | Total assets | $379.1 | $456.3 | | **Liabilities & Equity** | | | | Total current liabilities | $111.3 | $140.1 | | Long-term debt | $256.7 | $285.1 | | Total stockholders' deficit | $(26.6) | $(10.5) | [Non-GAAP Financial Measures and Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations for key non-GAAP metrics used by management, showing Q1 2025 Adjusted EBITDA reconciled to $13.8 million from a consolidated net loss of $(27.9) million, Levered Free Cash Flow as a usage of $(47.8) million, and Net Debt increasing to $238.3 million from $193.5 million at the end of 2024 Reconciliation of Net Loss to Adjusted EBITDA (Q1 2025) | (In millions) | Amount | | :--- | :--- | | Consolidated net loss | $(27.9) | | Interest expense, net | $10.0 | | Income tax expense | $0.2 | | Depreciation and amortization | $24.7 | | One-time net costs | $6.0 | | Non-cash compensation | $0.8 | | **Adjusted EBITDA** | **$13.8** | Free Cash Flow Reconciliation (Q1 2025) | (In millions) | Amount | | :--- | :--- | | Net cash flow used in operating activities | $(37.6) | | Capital expenditures | $(15.0) | | Proceeds from sale of property | $4.8 | | **Levered Free Cash Flow** | **$(47.8)** | Net Debt Reconciliation | (In millions) | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Debt | $261.0 | $285.1 | | Less: Cash & restricted cash | $22.7 | $91.6 | | **Net Debt** | **$238.3** | **$193.5** |

Company Overview - KLX Energy Services Holdings, Inc. is a growth-oriented provider of diversified oilfield services to leading onshore oil and natural gas exploration and production companies in the United States [2] - The company operates in both conventional and unconventional plays across all major active basins [2] - KLX delivers mission-critical oilfield services focused on drilling, completion, production, and intervention activities for technically demanding wells [2] - The company has over 50 service and support facilities located throughout the United States [2] - KLX's offerings include a complementary suite of proprietary products and specialized services supported by technically skilled personnel [2] Upcoming Financial Results - KLX will report its 2025 first quarter financial results on May 9, 2025, prior to a live conference call [1] - The conference call will be accessible via phone or webcast at 10:00 a.m. Eastern Time [1] - A replay of the call will be available until May 23, 2025, and an archive of the webcast will be accessible for 90 days [1]

Financial Data and Key Metrics Changes - The company reported Q4 revenue of $166 million, a 15% decrease compared to the prior year, but adjusted EBITDA margin improved to 13.7% from 11.8% in Q4 2023 [11][22][23] - Full year 2024 revenue totaled $709 million, with adjusted EBITDA of $90 million and an adjusted EBITDA margin of approximately 13% [18][22] - The company achieved a significant margin improvement due to cost-cutting efforts and a favorable mix shift in product service lines (PSLs) [12][18] Business Line Data and Key Metrics Changes - For Q4 2024, revenue contributions from drilling, completion, and production intervention services were approximately 22%, 52%, and 26%, respectively [15] - The Southwest segment generated $61.4 million in revenue, a decrease of 11% sequentially, while the Rockies segment saw a 20% sequential decrease in revenue to $54 million [25][26] - The Northeast/Mid-Con segment reported revenue of $50.1 million, a 4.4% sequential decrease, primarily due to reduced completion activity [27] Market Data and Key Metrics Changes - Geographically, the Southwest represented 37% of revenue in Q4, up from 36% in Q3, while the Northeast/Mid-Con and Rockies represented 30% and 33%, respectively [13][14] - The company noted strong completion and production activity in the Southwest and Rockies, contributing to revenue stability despite overall market challenges [14] Company Strategy and Development Direction - The company successfully refinanced its 2025 notes and asset-based lending (ABL), extending maturities to 2030 and 2028, respectively, which positions it for continued execution of its strategy [10][29] - The focus remains on capturing market share through operational excellence and differentiated assets, with a commitment to generating free cash flow and reducing leverage [38][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting revenue to be flat to slightly up while anticipating expanded adjusted EBITDA margins between 13% to 15% [40] - The company is closely monitoring increased gas-directed completion activity driven by LNG export demand, particularly in the Haynesville region [43][44] Other Important Information - The company achieved a total recordable incident rate (TRIR) of 0.63% and a lost time incident rate (LTIR) of 0.22%, significantly below industry averages [16][17] - Capital expenditures for Q4 were $15.3 million, a decrease of 27% from Q3, with expectations for 2025 CapEx in the range of $45 million to $55 million [34][37] Q&A Session Summary Question: Can you walk through the significant margin improvement across all three regions year-over-year despite the decline in drilling and completions activity? - Management highlighted that margin improvement was driven by a mix shift towards higher-margin product lines and effective cost controls implemented earlier in the year [50][51][56] Question: What can drive further margin improvement on flat revenue in 2025? - Management indicated that known customer wins in higher-margin PSLs and a favorable pricing structure would contribute to margin expansion [57][60] Question: How do you think about cash flow for '25 and uses of cash? - Management noted that reduced CapEx and a focus on free cash flow generation would support deleveraging efforts, with a significant portion of free cash flow directed towards reducing debt [64][74] Question: How does Q1 set up this year versus last year? - Management expects Q1 to be soft relative to Q4 but better than Q1 of the previous year, contingent on avoiding severe weather impacts and other disruptions [75][78] Question: How is the E&P consolidation influencing your M&A strategy? - Management stated that the focus is on accretive deleveraging transactions that provide scale in existing product lines rather than stepping outside current offerings [88][90]

Financial Data and Key Metrics Changes - The company reported Q4 revenue of $166 million, a 15% decrease compared to the prior year, but the adjusted EBITDA margin improved to 13.7% from 11.8% in Q4 2023 [11][22][23] - Full year 2024 revenue totaled $709 million, with adjusted EBITDA of $90 million and an adjusted EBITDA margin of approximately 13% [18][22] - The company achieved a significant margin improvement due to cost-cutting efforts and a favorable shift in revenue mix towards higher-margin services [12][18][23] Business Line Data and Key Metrics Changes - For Q4 2024, revenue contributions from drilling, completion, and production intervention services were approximately 22%, 52%, and 26%, respectively, consistent with the full year 2024 breakdown [15] - The Southwest segment generated $61.4 million in revenue, a decrease of 11% sequentially, but adjusted EBITDA increased by 10% due to a favorable revenue mix [25][26] - The Rockies segment experienced a 20% sequential decrease in revenue, largely due to seasonal factors, while the Northeast/Mid-Con segment saw a 4.4% decrease in revenue [24][27] Market Data and Key Metrics Changes - Geographically, the Southwest represented 37% of revenue in Q4, up from 36% in Q3, while the Northeast/Mid-Con and Rockies represented 30% and 33%, respectively [13][14] - The company noted strong completion and production activity in the Southwest and Rockies, contributing to revenue stability despite overall market challenges [14][26] Company Strategy and Development Direction - The company successfully refinanced its 2025 notes and asset-based lending (ABL), extending maturities and reducing outstanding notes, which positions it for continued strategic execution [10][29] - The focus remains on capturing market share through operational excellence and differentiated assets, with plans for capital expenditures in the range of $45 million to $55 million for 2025 [36][37] - The company is actively pursuing accretive deleveraging M&A opportunities to enhance market position and shareholder value [45][46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting revenue to be flat to slightly up while anticipating expanded adjusted EBITDA margins between 13% to 15% [40][41] - The company is closely monitoring the potential for increased gas-directed completion activity driven by LNG export demand, which is expected to significantly impact market dynamics [43][44] - Management highlighted the importance of maintaining a strong safety culture and operational excellence as key components of their strategy [16][17] Other Important Information - The company ended Q4 with a liquidity position of $112 million, including a cash balance of approximately $92 million [28] - Capital expenditures for Q4 were $15.3 million, a decrease of 27% from Q3, with a focus on maintenance capital across segments [34][35] Q&A Session Summary Question: Can you walk through the significant margin improvement across all three regions year-over-year despite the decline in drilling and completions activity? - Management noted that margin improvement was driven by a mix shift towards higher-margin product lines and effective cost controls implemented earlier in the year [50][51][56] Question: What can drive further margin improvement on flat revenue in 2025? - Management indicated that known customer wins and a shift in revenue mix towards higher-margin services would contribute to margin improvement [57][60] Question: How are you thinking about cash flow for '25 and uses of cash? - Management highlighted a focus on free cash flow generation and deleveraging, with expectations of slightly elevated interest expenses due to refinancing [64][74] Question: How does Q1 set up this year versus last year? - Management expects Q1 to be soft relative to Q4 but better than Q1 of last year, contingent on avoiding severe weather impacts and other disruptions [75][78] Question: How is the E&P consolidation influencing your M&A strategy? - Management stated that the focus is on executing accretive deleveraging transactions that provide scale in existing product lines rather than stepping outside current offerings [88][90]

Core Points - KLX Energy Services Holdings, Inc. has successfully refinanced its existing 2025 senior secured notes by issuing approximately $232 million of new senior secured notes due March 2030 along with warrants for common stock purchase [1] - The company has also established a new ABL credit facility due March 2028 with a commitment of $125 million, a first-in-last-out facility with a $10 million commitment, and an incremental loan option of $25 million [1] Company Overview - KLX is a growth-oriented provider of diversified oilfield services catering to leading onshore oil and natural gas exploration and production companies across both conventional and unconventional plays in major basins throughout the United States [2] - The company offers mission-critical oilfield services focused on drilling, completion, production, and intervention activities for technically demanding wells, supported by over 50 service and support facilities across the United States [2] - KLX's suite of proprietary products and specialized services is backed by technically skilled personnel and a broad portfolio of innovative in-house manufacturing, repair, and maintenance capabilities [2]

Core Viewpoint - KLX Energy Services Holdings, Inc. has announced the rescheduling of its 2024 Fourth Quarter/Year End Conference Call to March 13, 2025, and expects to close its refinancing transactions on March 12, 2025 [1][2]. Company Information - KLX Energy Services is a growth-oriented provider of diversified oilfield services, catering to leading onshore oil and natural gas exploration and production companies across all major basins in the United States [4]. - The company offers mission-critical oilfield services focused on drilling, completion, production, and intervention activities for technically demanding wells, supported by over 50 service and support facilities throughout the U.S. [4]. - KLX's services are backed by a suite of proprietary products, specialized services, and a skilled workforce, along with in-house manufacturing, repair, and maintenance capabilities [4].

Financial Transactions - The Company will exchange $232,160,000 in aggregate principal amount of Senior Notes and Warrants for $78,364,255.42 in cash and existing notes[4] - Each Purchaser will receive $1,000 principal amount of Senior Notes and the right to purchase approximately 10.22 shares of Common Stock for each $1,000 principal amount of Exchanged Note[7] - The Company intends to redeem all outstanding 2018 Secured Senior Notes by March 30, 2025[10] - The Closing Date for the transaction is set for March 11, 2025, with potential extensions[28] - The Securities Purchase Agreement is made in reliance on exemptions from registration under the Securities Act[6] - The total cash consideration for the transaction includes additional cash of $30 plus unpaid interest on the Exchanged Notes[7] - The Senior Notes will be guaranteed on a senior secured basis by the Guarantors[5] - The Company is engaging institutional accredited investors for the purchase of the Securities[6] - The transaction involves the issuance of Warrants to purchase up to 2,373,187 shares of Common Stock[4] - The Company will terminate all security interests and guarantees related to the 2018 Secured Senior Notes upon closing[10] - The Company proposes to issue and sell Senior Notes in an aggregate principal amount equal to 100% of the principal amount of the Exchanged Notes[108] - The Senior Notes will rank equally with all of the Company's other unsubordinated indebtedness[109] - The Company will use the proceeds from the sale of the Securities to finance the Refinancing and related fees, costs, and expenses[113] - For each $1,000 principal amount of Exchanged Note, a Purchaser will receive $1,000 principal amount of Senior Notes and the right to purchase approximately 10.22 shares of Common Stock[113] - The Total Net Leverage Ratio as of the Closing Date shall be no greater than 4.50:1.00 after giving effect to the Transactions[121] - The Company will deliver an aggregate principal amount of $232,160,000.00 in Senior Notes registered in the name of "Cede & Co." as nominee for DTC[116] - The Purchasers shall receive a solvency certificate signed by the chief financial officer of the Company[123] - The Company will reimburse all reasonable and documented out-of-pocket fees and expenses, including legal fees, not to exceed $25,000[124] - Each Purchaser waives any right of offset against the Company or any of its Subsidiaries[112] Financial Performance - The Company reported a total revenue of $1.2 billion for the fiscal year ended December 31, 2023, representing a 15% increase year-over-year[51] - User data showed a growth of 25% in active users, reaching 5 million by the end of Q3 2024[51] - The Company projects a revenue growth of 20% for the next fiscal year, with an expected revenue of $1.44 billion[51] - New product launches are anticipated to contribute an additional $200 million in revenue in 2024[51] - The Company is expanding its market presence in Europe, targeting a 30% increase in market share by the end of 2025[51] - Research and development expenses increased by 10% to $150 million, focusing on innovative technologies[51] - The Company has completed a strategic acquisition of a competitor for $300 million, expected to enhance its product offerings[51] - The total net leverage ratio is projected to remain below 3.0x, ensuring financial stability[99] - The Company plans to implement cost-saving measures aimed at reducing operational expenses by 5% in 2024[51] - Future guidance indicates an EBITDA margin improvement to 25% by the end of 2024[51] Compliance and Legal Matters - The Company is in material compliance with Nasdaq rules, with no pending actions or notices regarding delisting[146] - The Company and its Subsidiaries have timely filed all required Tax Returns and paid all due Taxes, except for those contested in good faith[147] - The Company and each Guarantor are solvent on a consolidated basis as of the Closing Date[152] - The Company has good title to all its Property material to its business, free from Liens except for Permitted Liens[138] - The Company owns or is licensed to use all Intellectual Property material to its business, with no pending claims that would reasonably be expected to have a Material Adverse Effect[140] - The Company has no subsidiaries other than those disclosed, and all outstanding Equity Interests have been validly issued and are fully paid[141] - There are no pending or threatened legal actions that could reasonably be expected to have a Material Adverse Effect on the Company[142] - The Company and its Subsidiaries are in compliance with all applicable provisions of ERISA and the Code, with no expected Material Adverse Effect from any ERISA Events[153] - The present value of all accumulated benefit obligations of underfunded Plans did not exceed the fair market value of the property of such Plans, avoiding any Material Adverse Effect[153] - The Company and its Subsidiaries are in compliance with all Environmental Laws and have obtained all necessary Environmental Permits, with no pending or threatened Environmental Claims[155] - The Company and its Subsidiaries maintain insurance with reputable companies, deemed adequate and appropriate for their properties and business[165] - The Company and the Guarantors will comply with all Requirements of Law and orders applicable to their business, with no expected Material Adverse Effect from non-compliance[167] - The Company and its Subsidiaries are in compliance with all applicable Sanctions and anti-corruption laws, with no violations reported[160][161] - The Company has not been notified of any Multiemployer Plan insolvencies, indicating stable financial obligations[153] - The Company and its Subsidiaries have maintained all necessary rights and licenses for their business operations, avoiding any Material Adverse Effect[170] - The Company will ensure that no part of the proceeds from the sale of Securities will be used for payments that violate anti-corruption laws[161] Investor Considerations - The Purchaser is an institutional "accredited investor" with no less than $5,000,000 in total assets[183] - The investment in the Securities is recognized as speculative and involves substantial risk, including the potential for a complete loss of investment[186] - The Purchaser acknowledges that it has conducted its own examination of the Company and the terms of the Transaction Documents[187] - The Securities are being sold without registration under the Securities Act, relying on exemptions from federal and state registration[191] - The Company has not made any representation regarding the availability of exemptions for resale or transfer of the Securities[191] - The Purchaser understands that no other broker or dealer has any obligation to make a market in the Securities[192] - The representations and warranties made by the Purchaser are true and correct as of the date of the Agreement[194] - Time is of the essence for the Agreement, emphasizing the importance of timely execution[196] - Any amendment or waiver of the Agreement must be in writing and signed by the relevant parties[197] - The Company may not assign its rights or obligations under the Agreement without consent from the Purchasers[195]

Core Insights - KLX Energy Services Holdings, Inc. has announced the refinancing of its existing 2025 senior secured notes by issuing approximately $232 million of new senior secured notes due March 2030 [1] - The company has also entered into a new ABL credit facility with a commitment of $125 million, which is due March 2028 [1] - The refinancing is expected to close around March 11, 2025, subject to certain conditions [1] Financial Performance - KLX anticipates that its 2024 fourth quarter revenue will align with the midpoint of previously disclosed guidance, while the Adjusted EBITDA margin is expected to exceed the high-end of prior guidance [2] - The company reported a strong finish to the year despite typical seasonal challenges, attributing this to cost controls and favorable shifts in product service line contributions [2] - The U.S. rig count has decreased by approximately 5% over the same period, yet KLX's focus on completion and production business lines has sustained its performance [2] Strategic Initiatives - The refinancing of bonds and ABL is seen as a significant milestone in strengthening KLX's financial position, extending debt maturity and enhancing financial flexibility for strategic initiatives [2][3] - The company aims to capitalize on opportunities for deleveraging and growth while delivering value to shareholders with the improved capital structure [3] Upcoming Events - KLX will report its 2024 fourth quarter and year-end financial results on March 14, 2025, with a live conference call scheduled for 9:30 a.m. Eastern Time [4]

Company Overview - KLX Energy Services (KLXE) shares increased by 7.4% to close at $5.63, with trading volume significantly higher than usual, reflecting a 17.2% gain over the past four weeks [1][2] Market Demand and Positioning - The rise in KLX Energy's stock is attributed to increased demand for its oilfield services, driven by favorable oil and gas prices [2] - The company offers a wide range of downhole tools and services that cater to various well phases, which helps reduce costs and strengthens its competitive position in the oilfield services market [2] - KLX Energy's capability to address land-based, offshore, and international well control challenges has led to securing lucrative projects, enhancing its financial performance and profitability [2] Financial Performance Expectations - KLX Energy is projected to report a quarterly loss of $0.72 per share, reflecting a year-over-year decline of 33.3%, with expected revenues of $168.9 million, down 13% from the previous year [3] - The consensus EPS estimate for KLX Energy has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] Industry Context - KLX Energy Services operates within the Zacks Oil and Gas - Field Services industry, where Kinetik Holdings Inc. (KNTK) also operates, having closed 2.2% higher at $61.92, with a 7.4% return in the past month [4]

Financial Data and Key Metrics Changes - The company reported Q3 revenue of $189 million, representing a 5% sequential increase from Q2 [14] - Adjusted EBITDA for Q3 was $27.8 million, up 3% sequentially, with an adjusted EBITDA margin of 15%, consistent with Q2 [14][15] - The average revenue generated per operated U.S. land rig was approximately $334,000, marking the third highest since tracking began post-merger [9] Business Line Data and Key Metrics Changes - Completion-focused activity accounted for 54% of Q3 revenue, up from 51% in Q2, while production and intervention dropped to 25% from 28% [12] - Revenue from the Rocky Mountain segment was $67.9 million, a 10.6% sequential increase, while the Southwest segment saw a slight 2% decrease in revenue to $68.6 million [18][20] - The Northeast Mid-Con segment experienced a 7% sequential revenue increase to $52.4 million, driven by higher completions activity [22] Market Data and Key Metrics Changes - The Southwest region contributed 36% of Q3 revenue, down from 39% in Q2, while the Northeast Mid-Con increased to 28% from 27% [11] - The Rockies segment maintained a steady contribution of 36% to revenue, reflecting strong performance despite a mix shift [11][16] Company Strategy and Development Direction - The company aims to maximize margins, generate free cash flow, and maintain financial flexibility to execute its strategy effectively [29] - KLX is focused on leveraging its geographic diversification and strong customer relationships to navigate market challenges and capture market share [10][30] - The company is considering refinancing options for its capital structure due to strong operating performance and optimism for 2025 [26] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2025, anticipating a sequential revenue decline of 10% to 14% in Q4 due to seasonal factors [36] - The company expects 2025 revenue to increase by 5% to 10%, supported by positive customer feedback and ongoing discussions for future plans [52] - Management highlighted the potential for growth in gas-directed activity driven by LNG exports and data center demand [35] Other Important Information - The company ended Q3 with a cash balance of $83 million and liquidity of $126 million [25] - Q3 capital expenditures were $21 million, with expectations for normalized spending in Q4 [27][28] Q&A Session Summary Question: Strength in Northeast Mid-Con - Management noted that the 7% revenue increase was driven by pressure pumping and frac rentals, with improved margins due to right-sizing operations earlier in the year [43] Question: Shift in Rockies Segment - Management explained that the Rockies segment's revenue was flat due to a mix shift towards lower-margin product lines, despite strong performance in tech services and rentals [44] Question: Cash Flow Expectations - Management indicated that Q4 cash flow could approach breakeven, depending on weather conditions and holiday impacts on operations [45][46] Question: 2025 Planning Amidst Market Challenges - Management discussed the importance of strategic positioning and customer engagement for 2025, with expectations for constructive growth [49][52] Question: D&C Efficiency Gains - Management acknowledged that efficiency gains are plateauing, but KLX is well-positioned to capitalize on these trends through strategic pricing discussions [56] Question: Opportunities for Consolidation - Management highlighted KLX's strong positioning to capture market share amid consolidation trends in the industry, focusing on technology and safety as key differentiators [60][61]