KLX Energy Services(KLXE) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Second Quarter 2025 Financial and Operational Highlights KLX Energy Services reported solid Q2 2025 results with sequential revenue growth and significant Adjusted EBITDA margin expansion, despite a decline in US land rig count Q2 2025 Financial Highlights | Metric | Q2 2025 | Change from Q1 2025 | | :-------------------------- | :------ | :------------------ | | Revenue | $159 M | +3% | | Net Loss | $(20) M | | | Diluted Loss per Share | $(1.04) | | | Adjusted EBITDA | $19 M | +34% | | Net Loss Margin | (13)% | | | Adjusted EBITDA Margin | 12% | +30% | | Total Liquidity | $65 M | | CEO Commentary CEO Chris Baker attributed solid Q2 2025 revenue and Adjusted EBITDA growth to operational initiatives, anticipating Q3 to be the strongest quarter - Revenue increased by 3.2% and Adjusted EBITDA margin by 260 basis points sequentially, despite a 7.3% decrease in US land rig count[4] - Operational initiatives focused on cost management, asset rotation, pricing stability, and higher-margin work[5] - Significant strength and sequential improvement observed across completions and production portfolios[5] - Q3 expectations include low to mid-single digit sequential revenue increase and continued margin expansion, enhancing market volatility management[5][7] Financial Results Overview Consolidated Financial Performance Q2 2025 saw sequential revenue increase, reduced net loss, and significant improvements in Adjusted EBITDA and its margin, driven by seasonal market activity Consolidated Financial Performance Summary (in millions, except percentage) | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Sequential Change | | :------------------- | :----------- | :----------- | :---------------- | | Revenue | 159.0 | 154.0 | +3.2% | | Net Loss | (19.9) | (27.9) | Improved | | Adjusted Net Loss | (17.0) | (21.9) | Improved | | Adjusted EBITDA | 18.5 | 13.8 | +34.1% | | Adjusted EBITDA Margin | 11.6% | 9.0% | +2.6 pp | - Revenue increase reflects a seasonal market activity increase[8] Q2 2025 Revenue Contribution by Product Line | Product Line | Q2 2025 Revenue Contribution | | :------------- | :--------------------------- | | Drilling | 16% | | Completion | 56% | | Production | 18% | | Intervention | 10% | Segment Results KLX Energy Services operates three geographic segments, with Rocky Mountains and Northeast/Mid-Con showing sequential growth, while Southwest declined - The company reports revenue, operating (loss) income, and Adjusted EBITDA across three geographic segments: Rocky Mountains, Southwest, and Northeast/Mid-Con, plus Corporate and other[10] Rocky Mountains Segment Rocky Mountains segment showed strong Q2 2025 sequential growth in revenue and Adjusted EBITDA, driven by coiled tubing, pressure pumping, and tech services Rocky Mountains Segment Performance (in millions, except percentage) | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Sequential Change | | :---------------- | :----------- | :----------- | :---------------- | | Revenue | 54.1 | 47.8 | +13.2% | | Operating Income | 3.3 | (0.2) | Improved | | Adjusted EBITDA | 10.4 | 6.7 | +55.2% | - Growth driven by coiled tubing, pressure pumping, tech services, and higher utilization[10] Southwest Segment Southwest segment saw a Q2 2025 sequential decline in revenue and Adjusted EBITDA, primarily due to lower Permian basin revenue and increased white space Southwest Segment Performance (in millions, except percentage) | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Sequential Change | | :---------------- | :----------- | :----------- | :---------------- | | Revenue | 58.8 | 65.2 | (9.8)% | | Operating Loss | (1.7) | 3.0 | Declined | | Adjusted EBITDA | 7.2 | 11.7 | (38.5)% | - Decline due to lower Permian basin revenue, mix shift, and increased white space, reflecting the Permian's largest sequential activity decrease in seven quarters[10] Northeast/Mid-Con Segment Northeast/Mid-Con segment showed significant Q2 2025 sequential improvement in revenue and Adjusted EBITDA, driven by improved completions utilization and increased gas-focused activity Northeast/Mid-Con Segment Performance (in millions, except percentage) | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Sequential Change | | :---------------- | :----------- | :----------- | :---------------- | | Revenue | 46.1 | 41.0 | +12.4% | | Operating Loss | (1.3) | (8.1) | Improved by 84.0% | | Adjusted EBITDA | 7.2 | 2.7 | +166.7% | - Improvement due to improved KLX completions utilization, increased regional gas-focused activity, and decreased white space[10] Corporate and Other Segment Corporate and other segment reported reduced operating and Adjusted EBITDA losses in Q2 2025, primarily due to lower overhead and fixed costs Corporate and Other Segment Performance (in millions) | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Sequential Change | | :-------------------- | :----------- | :----------- | :---------------- | | Operating Loss | (9.0) | (12.4) | Improved | | Adjusted EBITDA Loss | (6.3) | (7.3) | Improved | - Operating loss decreased due to lower overhead and fixed costs[11] Balance Sheet & Liquidity Liquidity Position As of June 30, 2025, total liquidity was $65.4 million, with expectations for lower cash balances and improving liquidity due to the new ABL Facility Total Liquidity as of June 30, 2025 (in millions) | Metric | As of June 30, 2025 ($M) | | :------------------------------------ | :----------------------- | | Cash and cash equivalents | 16.7 | | ABL Facility availability | 48.7 | | Total Liquidity | 65.4 | - The company expects to operate with a lower cash balance due to the flexibility of the new ABL Facility[14] - Liquidity is expected to improve throughout the remainder of the year[14] Net Working Capital Net Working Capital decreased 23% sequentially to $45.9 million as of June 30, 2025, driven by increased days payable outstanding and non-recurring payrolls Net Working Capital Trend (in millions, except percentage) | Metric | As of June 30, 2025 ($M) | As of March 31, 2025 ($M) | Sequential Change | | :---------------- | :----------------------- | :------------------------ | :---------------- | | Net Working Capital | 45.9 | 59.4 | (23)% | - Decrease driven by a 19% increase in days payable outstanding and the non-recurrence of two extra payrolls from Q1[14] Other Financial Information Capital Expenditures Q2 2025 capital expenditures decreased sequentially, primarily due to maintenance, but increased net of asset sales Capital Expenditures Summary (in millions, except percentage) | Metric | Q2 2025 ($M) | Q1 2025 ($M) | Sequential Change | | :-------------------------------- | :----------- | :----------- | :---------------- | | Capital expenditures | 12.7 | 15.0 | (15)% | | Capital expenditures net of asset sales | 11.1 | 10.2 | +9% | - Capital spending in Q2 was primarily driven by maintenance capital expenditures across segments[15] Assets Held for Sale As of June 30, 2025, $2.2 million in assets were held for sale, comprising two facilities and equipment in Rocky Mountains and Southwest segments Assets Held for Sale as of June 30, 2025 (in millions) | Metric | As of June 30, 2025 ($M) | | :---------------- | :----------------------- | | Assets held for sale | 2.2 | - Assets held for sale relate to two facilities and select equipment in the Rocky Mountains and Southwest segments[16] Company Information & Forward-Looking Statements Conference Call Details KLX Energy Services scheduled its Q2 2025 conference call for August 7, 2025, at 10:00 a.m. ET, with dial-in and webcast access - Conference call for Q2 2025 results scheduled for Thursday, August 7, 2025, at 10:00 a.m. Eastern Time[17] - Access available via dial-in (1-201-389-0867, passcode 13754590 for replay) or **webcast (https://investor.klx.com/events-and-presentations/events)**[17](index=17&type=chunk) About KLX Energy Services Holdings, Inc. KLX Energy Services is a growth-oriented provider of diversified oilfield services to onshore oil and natural gas E&P companies across major US basins - KLX is a growth-oriented provider of diversified oilfield services to onshore oil and natural gas exploration and production companies across all major US basins[18] - Services focus on drilling, completion, production, and intervention activities for technically demanding wells, supported by over 60 service and support facilities[18] - The company offers a complementary suite of proprietary products and specialized services, backed by skilled personnel and innovative in-house manufacturing, repair, and maintenance capabilities[18] Forward-Looking Statements and Cautionary Statements This report contains forward-looking statements subject to significant risks and uncertainties, and actual results may differ materially due to various factors - Forward-looking statements reflect current expectations and projections about future results, performance, and prospects, identified by specific keywords[19] - These statements are based on current expectations and assumptions but are not assurances of future performance, and actual results could differ materially[21] - Material factors causing actual results to differ include service demand decline, industry volatility, commodity price volatility, inflation, interest rate increases, geopolitical events, supply chain issues, and general economic conditions[21] Condensed Consolidated Financial Statements (GAAP) Condensed Consolidated Statements of Operations Statements of Operations detail revenues, costs, and expenses, leading to net loss for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024 Condensed Consolidated Statements of Operations (in millions, except per share data) | | Three Months Ended | | | | :-------------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Revenues | $ 159.0 | $ 154.0 | $ 180.2 | | Costs and expenses: | | | | | Cost of sales | 125.6 | 123.8 | 136.0 | | Depreciation and amortization | 23.7 | 24.7 | 23.1 | | Selling, general and administrative | 18.0 | 21.6 | 19.3 | | Research and development costs | 0.4 | 0.4 | 0.3 | | Loss on debt extinguishment | — | 1.2 | — | | Impairment and other charges | — | — | 0.1 | | Operating (loss) income | (8.7) | (17.7) | 1.4 | | Non-operating expense: | | | | | Interest income | 0.0 | (0.3) | (0.6) | | Interest expense | 11.0 | 10.3 | 9.8 | | Net loss before income tax | (19.7) | (27.7) | (7.8) | | Income tax expense | 0.2 | 0.2 | 0.2 | | Net loss | $ (19.9) | $ (27.9) | $ (8.0) | | Net loss per common share: | | | | | Basic | $ (1.04) | $ (1.62) | $ (0.49) | | Diluted | $ (1.04) | $ (1.62) | $ (0.49) | | Weighted average common shares: | | | | | Basic | 19.2 | 17.2 | 16.2 | | Diluted | 19.2 | 17.2 | 16.2 | Condensed Consolidated Balance Sheets Balance Sheets present the company's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (in millions) | | As of | | | :-------------------------------------------------- | :-------------- | :-------------- | | | June 30, 2025 | December 31, 2024 | | ASSETS | | | | Current assets: | | | | Cash and cash equivalents | $ 16.7 | $ 91.6 | | Restricted cash | 0.6 | — | | Accounts receivable–trade, net of allowance | 106.0 | 96.9 | | Inventories, net | 32.0 | 31.0 | | Prepaid expenses and other current assets | 17.4 | 13.5 | | Total current assets | 172.7 | 233.0 | | Property and equipment, net | 171.1 | 197.1 | | Operating lease assets | 18.1 | 19.6 | | Intangible assets, net | 1.3 | 1.5 | | Other assets | 6.3 | 5.1 | | Total assets | $ 369.5 | $ 456.3 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Current liabilities: | | | | Accounts payable | $ 69.7 | $ 74.4 | | Accrued interest | 0.4 | 4.5 | | Accrued liabilities | 39.8 | 41.3 | | Current portion of long-term debt | 4.5 | — | | Current portion of operating lease obligations | 7.0 | 6.9 | | Current portion of finance lease obligations | 17.7 | 13.0 | | Total current liabilities | 139.1 | 140.1 | | Long-term debt | 254.2 | 285.1 | | Long-term operating lease obligations | 11.7 | 13.5 | | Long-term finance lease obligations | 10.6 | 26.4 | | Other non-current liabilities | 1.1 | 1.7 | | Stockholders' equity: | | | | Common stock | 0.2 | 0.2 | | Additional paid-in capital | 569.0 | 557.5 | | Treasury stock, at cost | (6.2) | (5.8) | | Accumulated deficit | (610.2) | (562.4) | | Total stockholders' deficit | (47.2) | (10.5) | | Total liabilities and stockholders' deficit | $ 369.5 | $ 456.3 | Non-GAAP Financial Measures & Reconciliations Non-GAAP Definitions This section defines key non-GAAP financial measures like Adjusted EBITDA, Adjusted Net Loss, Free Cash Flow, Net Working Capital, and Net Debt, used for performance and liquidity evaluation - Adjusted EBITDA is net loss before interest, taxes, depreciation, and amortization, adjusted for specific non-recurring or non-cash items[28] - Adjusted Net Loss is consolidated net loss adjusted for goodwill/asset impairment, restructuring charges, transaction/integration costs, and other non-recurring expenses[31] - Unlevered Free Cash Flow is operating cash flow less capital expenditures and asset sales proceeds plus cash interest expense; Levered Free Cash Flow excludes cash interest expense[33] - Net Working Capital is current assets (excluding cash) less current liabilities (excluding accrued interest and finance lease obligations); Net Debt is total debt less cash and cash equivalents and restricted cash[34] Consolidated Non-GAAP Reconciliations This section reconciles key consolidated non-GAAP financial measures, including Adjusted EBITDA, Net Loss Margin, Adjusted Net Loss, Free Cash Flow, Net Working Capital, and Net Debt, to their GAAP equivalents Adjusted EBITDA and Net Loss Margin Reconciliations detail Adjusted EBITDA and Net Loss Margin calculations, adjusting consolidated net loss for non-cash and one-time items to clarify operational performance Adjusted EBITDA Reconciliation (in millions) | | Three Months Ended | | | | :-------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Consolidated net loss | $ (19.9) | $ (27.9) | $ (8.0) | | Income tax expense | 0.2 | 0.2 | 0.2 | | Interest expense, net | 11.0 | 10.0 | 9.2 | | Operating (loss) income | (8.7) | (17.7) | 1.4 | | Impairment and other charges | — | — | 0.1 | | One-time net costs | 2.9 | 6.0 | 1.4 | | Adjusted operating (loss) income | (5.8) | (11.7) | 2.9 | | Depreciation and amortization | 23.7 | 24.7 | 23.1 | | Non-cash compensation | 0.6 | 0.8 | 1.0 | | Adjusted EBITDA | $ 18.5 | $ 13.8 | $ 27.0 | Consolidated Net Loss Margin (in millions, except percentage) | | Three Months Ended | | | | :-------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Consolidated net loss | $ (19.9) | $ (27.9) | $ (8.0) | | Revenue | 159.0 | 154.0 | 180.2 | | Consolidated net loss margin percentage | (12.5)% | (18.1)% | (4.4)% | Adjusted EBITDA Margin (in millions, except percentage) | | Three Months Ended | | | | :-------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Adjusted EBITDA | $ 18.5 | $ 13.8 | $ 27.0 | | Revenue | 159.0 | 154.0 | 180.2 | | Adjusted EBITDA Margin Percentage | 11.6 % | 9.0 % | 15.0 % | Adjusted Net Loss and Adjusted Diluted Loss per Share This reconciliation details adjustments to consolidated net loss to derive Adjusted Net Loss and Adjusted Diluted Loss per Share, excluding impairment and one-time costs Adjusted Net Loss and Adjusted Diluted Loss per Share Reconciliation (in millions, except per share data) | | Three Months Ended | | | | :------------------------------------ | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Consolidated net loss | $ (19.9) | $ (27.9) | $ (8.0) | | Impairment and other charges | — | — | 0.1 | | One-time costs | 2.9 | 6.0 | 1.4 | | Adjusted Net Loss | $ (17.0) | $ (21.9) | $ (6.5) | | Diluted weighted average common shares | 19.2 | 17.2 | 16.2 | | Adjusted Diluted Loss per share | $ (0.88) | $ (1.27) | $ (0.40) | Free Cash Flow Free Cash Flow reconciliation shows the impact of capital expenditures, asset sales, and cash interest expense on the company's liquidity Free Cash Flow Reconciliation (in millions) | | Three Months Ended | | | | :-------------------------------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Net cash flow provided by (used in) operating activities | $ 19.1 | $ (37.6) | $ 22.2 | | Capital expenditures | (12.7) | (15.0) | (15.3) | | Proceeds from sale of property and equipment | 1.6 | 4.8 | 3.3 | | Levered Free Cash Flow | 8.0 | (47.8) | 10.2 | | Add: Cash interest expense, net | 3.9 | 10.0 | 9.2 | | Unlevered Free Cash Flow | $ 11.9 | $ (37.8) | $ 19.4 | Net Working Capital This reconciliation details Net Working Capital calculation by adjusting current assets and liabilities for cash, restricted cash, debt, accrued interest, and lease obligations Net Working Capital Reconciliation (in millions) | | As of | | | | :-------------------------------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | December 31, 2024 | | Current assets | $ 172.7 | $ 167.9 | $ 233.0 | | Less: Cash and cash equivalents and restricted cash | 17.3 | 22.7 | 91.6 | | Net current assets | 155.4 | 145.2 | 141.4 | | Current liabilities | 139.1 | 111.3 | 140.1 | | Less: Current portion of long-term debt | 4.5 | 4.3 | — | | Less: Accrued interest | 0.4 | 1.9 | 4.5 | | Less: Operating lease obligations | 7.0 | 7.0 | 6.9 | | Less: Finance lease obligations | 17.7 | 12.3 | 13.0 | | Net current liabilities | 109.5 | 85.8 | 115.7 | | Net Working Capital | $ 45.9 | $ 59.4 | $ 25.7 | Net Debt Net Debt reconciliation shows total debt adjusted for cash, cash equivalents, and restricted cash, indicating the company's indebtedness Net Debt Reconciliation (in millions) | | As of | | | | :------------------------------------ | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | December 31, 2024 | | Total Debt | $ 258.7 | $ 261.0 | $ 285.1 | | Cash and cash equivalents and restricted cash | 17.3 | 22.7 | 91.6 | | Net Debt | $ 241.4 | $ 238.3 | $ 193.5 | Segment Non-GAAP Reconciliations This section provides detailed reconciliations of segment operating income (loss) to Adjusted EBITDA and segment Adjusted EBITDA margin for each geographic business segment Rocky Mountains Segment Rocky Mountains segment reconciliation shows Adjusted EBITDA calculation from operating income and its margin, adjusting for one-time costs, depreciation, amortization, and non-cash compensation Rocky Mountains Segment Adjusted EBITDA Reconciliation (in millions) | | Three Months Ended | | | | :------------------------------------ | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Rocky Mountains operating income (loss) | $ 3.3 | $ (0.2) | $ 10.5 | | One-time costs | 0.5 | — | — | | Adjusted operating income (loss) | 3.8 | (0.2) | 10.5 | | Depreciation and amortization expense | 6.5 | 6.8 | 6.7 | | Non-cash compensation | 0.1 | 0.1 | — | | Rocky Mountains Adjusted EBITDA | $ 10.4 | $ 6.7 | $ 17.2 | Rocky Mountains Segment Adjusted EBITDA Margin (in millions, except percentage) | | Three Months Ended | | | | :-------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Rocky Mountains Adjusted EBITDA | $ 10.4 | $ 6.7 | $ 17.2 | | Revenue | 54.1 | 47.8 | 61.4 | | Adjusted EBITDA Margin Percentage | 19.2 % | 14.0 % | 28.0 % | Southwest Segment Southwest segment reconciliation details Adjusted EBITDA calculation from operating loss and its margin, including adjustments for one-time costs, depreciation, amortization, and non-cash compensation Southwest Segment Adjusted EBITDA Reconciliation (in millions) | | Three Months Ended | | | | :------------------------------------ | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Southwest operating (loss) income | $ (1.7) | $ 3.0 | $ 2.6 | | One-time costs | 0.5 | 0.3 | 0.4 | | Adjusted operating (loss) income | (1.2) | 3.3 | 3.0 | | Depreciation and amortization expense | 8.4 | 8.3 | 7.4 | | Non-cash compensation | — | 0.1 | — | | Southwest Adjusted EBITDA | $ 7.2 | $ 11.7 | $ 10.4 | Southwest Segment Adjusted EBITDA Margin (in millions, except percentage) | | Three Months Ended | | | | :-------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Southwest Adjusted EBITDA | $ 7.2 | $ 11.7 | $ 10.4 | | Revenue | 58.8 | 65.2 | 69.9 | | Adjusted EBITDA Margin Percentage | 12.2 % | 17.9 % | 14.9 % | Northeast/Mid-Con Segment Northeast/Mid-Con segment reconciliation illustrates Adjusted EBITDA calculation from operating loss and its margin, with adjustments for one-time costs, depreciation, amortization, and non-cash compensation Northeast/Mid-Con Segment Adjusted EBITDA Reconciliation (in millions) | | Three Months Ended | | | | :------------------------------------ | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Northeast/Mid-Con operating loss | $ (1.3) | $ (8.1) | $ (2.5) | | One-time costs | 0.1 | 1.8 | 0.2 | | Adjusted operating loss | (1.2) | (6.3) | (2.3) | | Depreciation and amortization expense | 8.4 | 9.0 | 8.6 | | Non-cash compensation | — | — | 0.1 | | Northeast/Mid-Con Adjusted EBITDA | $ 7.2 | $ 2.7 | $ 6.4 | Northeast/Mid-Con Segment Adjusted EBITDA Margin (in millions, except percentage) | | Three Months Ended | | | | :-------------------------- | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Northeast/Mid-Con Adjusted EBITDA | $ 7.2 | $ 2.7 | $ 6.4 | | Revenue | 46.1 | 41.0 | 48.9 | | Adjusted EBITDA Margin Percentage | 15.6 % | 6.6 % | 13.1 % | Corporate and Other Segment Corporate and other segment reconciliation shows Adjusted EBITDA loss from operating loss, including adjustments for impairment, one-time costs, depreciation, amortization, and non-cash compensation Corporate and Other Segment Adjusted EBITDA Reconciliation (in millions) | | Three Months Ended | | | | :------------------------------------ | :---------------- | :---------------- | :---------------- | | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | Corporate and other operating loss | $ (9.0) | $ (12.4) | $ (9.2) | | Impairment and other charges | — | — | 0.1 | | One-time costs | 1.8 | 3.9 | 0.8 | | Adjusted operating loss | (7.2) | (8.5) | (8.3) | | Depreciation and amortization expense | 0.4 | 0.6 | 0.4 | | Non-cash compensation | 0.5 | 0.6 | 0.9 | | Corporate and other Adjusted EBITDA loss | $ (6.3) | $ (7.3) | $ (7.0) |