ChampionX(CHX) - 2025 Q1 - Quarterly Results

Financial & Operational Highlights ChampionX reported Q1 2025 results, including a sequential revenue decrease, strong adjusted EBITDA margin, and announced its acquisition by SLB Q1 2025 Performance Summary ChampionX reported Q1 2025 revenue of $864.5 million, a 5% sequential decrease, alongside $85.8 million net income, $190.9 million adjusted EBITDA, and $38.6 million positive free cash flow Q1 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Revenue | $864.5 million | | Net Income Attributable to ChampionX | $85.8 million | | Adjusted EBITDA | $190.9 million | | Adjusted EBITDA Margin | 22.1% | | Diluted EPS | $0.44 | | Adjusted Diluted EPS | $0.50 | | Cash from Operating Activities | $66.8 million | | Free Cash Flow | $38.6 million | - The sequential revenue decrease of 5% to $864 million was in line with company expectations, primarily driven by a typical seasonal decline in international operations[4] - The company maintained a strong financial position, ending the quarter with approximately $1.2 billion of liquidity, including $527 million in cash[5] CEO Commentary CEO Soma Somasundaram highlighted the portfolio's resilience, strong adjusted EBITDA margin, consistent positive free cash flow, and strategic positioning to aid operators while mitigating tariff impacts - The first quarter demonstrated portfolio resilience, delivering strong adjusted EBITDA and margin, and positive free cash flow[3] - ChampionX is well-positioned to assist operators in maximizing producing asset value, especially as the industry shifts towards capital discipline and moderating spending[6] - The company is leveraging its global supply chain, supplier partnerships, pricing adjustments, and productivity initiatives to mitigate the impact of tariffs[7] Agreement to be Acquired by SLB ChampionX entered a definitive agreement to be acquired by SLB in an all-stock transaction, approved by stockholders and pending regulatory review, leading to discontinued quarterly guidance - SLB and ChampionX announced a definitive merger agreement for SLB to acquire ChampionX in an all-stock transaction[8] - The transaction was approved by ChampionX stockholders on June 18, 2024, and is subject to regulatory approvals and other customary closing conditions[8] - Due to the pending acquisition, ChampionX has discontinued providing quarterly guidance and will not host a conference call to discuss its Q1 2025 results[9] Business Segment Performance This section details the Q1 2025 financial performance and key operational highlights for each of ChampionX's four business segments Production Chemical Technologies Production Chemical Technologies reported $523.4 million revenue, an 8% sequential decrease due to lower international sales, resulting in a reduced adjusted EBITDA margin of 20.8% Production Chemical Technologies Q1 2025 Performance | Metric | Q1 2025 | Q4 2024 | Sequential Change | | :--- | :--- | :--- | :--- | | Revenue | $523.4M | $569.7M | -8% | | Operating Profit Margin | 15.7% | 18.2% | -248 bps | | Adjusted EBITDA Margin | 20.8% | 23.4% | -259 bps | - The sequential decrease in revenue, operating profit margin, and adjusted EBITDA margin was primarily driven by lower sales volumes[10][11] - Key business wins include first fill contracts in the Middle East, a major capital project in the Gulf of America, and hydrate inhibitor deliveries for a new FPSO in Australia[17] Production & Automation Technologies Production & Automation Technologies saw a slight 2% sequential revenue decrease to $264.4 million, but improved its adjusted EBITDA margin to 26.6% through productivity gains and strong digital solution adoption Production & Automation Technologies Q1 2025 Performance | Metric | Q1 2025 | Q4 2024 | Sequential Change | | :--- | :--- | :--- | :--- | | Revenue | $264.4M | $269.6M | -2% | | Operating Profit Margin | 14.2% | 14.5% | -27 bps | | Adjusted EBITDA Margin | 26.6% | 26.2% | +34 bps | - Revenue from digital products was $57.8 million, a sequential decrease of 7%, driven by seasonally lower customer activity in North America[12] - Awarded a multi-year contract for production optimization software in Indonesia, successfully migrating over 4,000 wells to the XSPOC® platform[20] - The segment continues to see strong market adoption of new digital technologies, including SmartSpin® wireless sensors and SMARTEN™ Lite rod pump controllers[20] Drilling Technologies Drilling Technologies experienced a 3% sequential revenue decrease to $50.5 million, primarily due to lower North American sales volumes, significantly impacting its adjusted EBITDA margin to 20.3% Drilling Technologies Q1 2025 Performance | Metric | Q1 2025 | Q4 2024 | Sequential Change | | :--- | :--- | :--- | :--- | | Revenue | $50.5M | $51.9M | -3% | | Operating Profit Margin | 16.2% | 20.6% | -440 bps | | Adjusted EBITDA Margin | 20.3% | 23.7% | -346 bps | - The sequential revenue decline was driven primarily by lower North America sales volumes, which also caused the decrease in margins[14] Reservoir Chemical Technologies Reservoir Chemical Technologies achieved strong 23% sequential revenue growth to $26.9 million, driven by higher sales and a favorable product mix, significantly boosting its adjusted EBITDA margin to 23.6% Reservoir Chemical Technologies Q1 2025 Performance | Metric | Q1 2025 | Q4 2024 | Sequential Change | | :--- | :--- | :--- | :--- | | Revenue | $26.9M | $21.9M | +23% | | Operating Profit Margin | 20.5% | 10.5% | +1008 bps | | Adjusted EBITDA Margin | 23.6% | 17.1% | +647 bps | - The significant increase in margins was driven by higher sales volumes and a more favorable product mix[16] - The segment completed its second RENEWIQ® joint offering for frac treating and was awarded work for its PROE® completion chemistry to enhance production in the Permian Basin[17] Financial Statements This section provides detailed consolidated financial statements, including income, balance sheets, and cash flows, along with segment-specific financial data Condensed Consolidated Statements of Income ChampionX reported Q1 2025 revenue of $864.5 million and net income attributable to ChampionX of $85.8 million, or $0.44 per diluted share Q1 2025 Income Statement Highlights (in thousands) | Account | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenue | $864,464 | $912,037 | $922,141 | | Gross Profit | $291,526 | $311,883 | $299,204 | | Income Before Income Taxes | $104,412 | $118,115 | $139,756 | | Net Income Attributable to ChampionX | $85,797 | $82,766 | $112,923 | | Diluted EPS | $0.44 | $0.43 | $0.58 | Condensed Consolidated Balance Sheets As of March 31, 2025, ChampionX reported total assets of $3.50 billion, with cash and cash equivalents at $526.6 million, and stockholders' equity at $1.92 billion Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $526,559 | $507,681 | | Total current assets | $1,768,789 | $1,563,897 | | Total assets | $3,500,390 | $3,470,252 | | Total current liabilities | $784,896 | $785,872 | | Long-term debt | $590,746 | $591,453 | | ChampionX stockholders' equity | $1,916,726 | $1,846,437 | Condensed Consolidated Statements of Cash Flows For Q1 2025, net cash provided by operating activities was $66.8 million, with a net increase in cash and cash equivalents of $18.9 million for the period Cash Flow Highlights (in thousands) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash flows provided by operating activities | $66,802 | $173,508 | | Net cash used for investing activities | $(28,246) | $(10,794) | | Net cash used for financing activities | $(20,149) | $(64,093) | | Net increase in cash and cash equivalents | $18,878 | $97,460 | Business Segment Data This section provides detailed quarterly revenue and adjusted EBITDA data for each of ChampionX's four business segments, highlighting their individual contributions Q1 2025 Segment Revenue (in thousands) | Segment | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Production Chemical Technologies | $523,390 | $569,662 | $590,108 | | Production & Automation Technologies | $264,377 | $269,568 | $252,614 | | Drilling Technologies | $50,530 | $51,942 | $55,206 | | Reservoir Chemical Technologies | $26,926 | $21,937 | $24,705 | Q1 2025 Segment Adjusted EBITDA (in thousands) | Segment | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Production Chemical Technologies | $109,065 | $133,475 | $118,031 | | Production & Automation Technologies | $70,269 | $70,739 | $60,340 | | Drilling Technologies | $10,237 | $12,321 | $16,074 | | Reservoir Chemical Technologies | $6,347 | $3,751 | $5,346 | Non-GAAP Financial Measures & Reconciliations This section provides reconciliations of GAAP financial measures to non-GAAP measures, including adjusted net income, adjusted EBITDA, and free cash flow Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP net income to non-GAAP adjusted net income of $96.0 million and adjusted EBITDA of $190.9 million for Q1 2025, detailing key adjustments Reconciliation of Net Income to Adjusted EBITDA (Q1 2025, in thousands) | Description | Amount | | :--- | :--- | | Net income attributable to ChampionX | $85,797 | | Pre-tax adjustments (Merger costs, restructuring, etc.) | $13,205 | | Tax impact of adjustments | $(2,971) | | Adjusted net income attributable to ChampionX | $96,031 | | Add back: Tax impact, Noncontrolling interest, D&A, Taxes, Interest | $94,838 | | Adjusted EBITDA | $190,869 | - Adjusted diluted EPS for Q1 2025 was $0.50, compared to the GAAP diluted EPS of $0.44 The largest adjustment was for merger transaction costs, which added $0.05 per share[33] Free Cash Flow Reconciliation Free cash flow for Q1 2025 was $38.6 million, derived from operating cash flow less capital expenditures, resulting in a 4% free cash flow to revenue ratio Free Cash Flow Calculation (Q1 2025, in thousands) | Description | Amount | | :--- | :--- | | Cash flows from operating activities | $66,802 | | Less: Capital expenditures, net of proceeds | $(28,246) | | Free cash flow | $38,556 | Free Cash Flow Ratios (Q1 2025) | Ratio | Value | | :--- | :--- | | Free cash flow to revenue ratio | 4% | | Free cash flow to adjusted EBITDA ratio | 20% | Other Information This section includes important disclosures regarding forward-looking statements, outlining associated risks and the company's policy on updates Forward-Looking Statements This section outlines forward-looking statements regarding the proposed SLB transaction, business outlook, and market trends, emphasizing inherent risks and uncertainties - The report contains forward-looking statements related to the SLB transaction, company objectives, operating trends, and financial projections[22] - Key risks include the ultimate outcome of the SLB transaction, business disruptions, difficulties in retaining employees, and the ability to achieve anticipated synergies[22] - The company does not undertake any obligation to update forward-looking statements, except as required by law[24]