KLX Energy Services(KLXE) - 2024 Q4 - Annual Results

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]