KLX Energy Services (KLXE) 10-Q 30 Aug 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	6 Months Ended
	Jul. 31, 2018shares
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 31, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2
Entity Current Reporting Status	Yes
Entity Registrant Name	KLX Energy Services Holdings, Inc.
Entity Central Index Key	1,738,827
Current Fiscal Year End Date	--01-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	0

CONDENSED BALANCE SHEETS (UNAUD

CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions	Jul. 31, 2018	Jan. 31, 2018
Current assets:
Cash and cash equivalents	$ 0	$ 0
Accounts receivable–trade, less allowance for doubtful accounts ($2.8 at July 31, 2018 and $2.3 at January 31, 2018)	84.7	73.9
Inventories, net	11.5	10.2
Other current assets	3.2	2
Total current assets	99.4	86.1
Property and equipment, net of accumulated depreciation ($139.6 at July 31, 2018 and $128.9 at January 31, 2018)	195.5	179.5
Identifiable intangible assets, net	2.7	2.8
Other assets	7.9	5.4
Total assets	305.5	273.8
Current liabilities:
Accounts payable	34.4	31.8
Accrued liabilities	15.1	16.2
Total current liabilities	49.5	48
Other non-current liabilities	1.1	1.2
Commitments, contingencies and off-balance sheet arrangements (Note 7)
Parent company equity:
Parent company investment	1,036.7	1,025.8
Accumulated deficit	(781.8)	(801.2)
Total Parent company equity	254.9	224.6
Total liabilities and equity	$ 305.5	$ 273.8

CONDENSED BALANCE SHEETS (UNAU3

CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions	Jul. 31, 2018	Jan. 31, 2018
CONDENSED BALANCE SHEETS (UNAUDITED)
Accounts receivable - trade, allowance for doubtful accounts	$ 2.8	$ 2.3
Property and equipment, accumulated depreciation	$ 139.6	$ 128.9

CONDENSED STATEMENTS OF EARNING

CONDENSED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017
CONDENSED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)
Service revenues	$ 117.9	$ 73.5	$ 228.2	$ 137
Cost of sales	85.7	63.7	167.7	119.6
Selling, general and administrative	17.9	17.2	39.7	34.8
Research and development costs	0.6	0.4	1.3	0.8
Operating earnings (loss)	13.7	(7.8)	19.5	(18.2)
Income tax expense	0.1	0.1	0.1	0.1
Net earnings (loss)	$ 13.6	$ (7.9)	$ 19.4	$ (18.3)

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions	6 Months Ended
	Jul. 31, 2018	Jul. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$ 19.4	$ (18.3)
Adjustments to reconcile net earnings (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization	18.2	16.9
Non-cash compensation	5.1	5.8
Provision for doubtful accounts	0.5	(1.7)
Loss on disposal of property, equipment and other	0.4	0.4
Changes in operating assets and liabilities:
Accounts receivable	(11.3)	(22)
Inventories	(1.2)	(0.3)
Other current and non-current assets	(3.8)	(5)
Accounts payable	3.6	9.7
Other current and non-current liabilities	(1.2)	0.7
Net cash flows provided by (used in) operating activities	29.7	(13.8)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(35.5)	(21.1)
Net cash flows used in investing activities	(35.5)	(21.1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net transfers from Parent	5.8	34.9
Net cash flows provided by financing activities	5.8	34.9
Net change in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	0	0
Supplemental schedule of non-cash activities:
Accrued property additions	$ 3.8	$ 1.1

Description of Business and Bas

Description of Business and Basis of Presentation	6 Months Ended
	Jul. 31, 2018
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation	Note 1. Description of Business and Basis of Presentation Description of Business On August 24, 2018, the board of directors (the “Board”) of KLX Inc. (the “Parent” or “KLX”) approved the distribution of all of the common stock of KLX Energy Services Holdings, Inc. (the “Company” or “KLX Energy Services”), a wholly-owned subsidiary of KLX, to KLX stockholders as of the spin-off record date as part of a taxable spin-off. Upon completion of the spin-off, KLX stockholders will own 100% of the outstanding shares of common stock of KLX Energy Services. The spin-off of KLX Energy Services will be made as part of a plan approved by the Board to spin off KLX’s energy services business into a stand-alone, publicly-traded company prior to the proposed merger (the “Merger”) of KLX with a wholly-owned subsidiary of The Boeing Company (“Boeing”) pursuant to an agreement and plan of merger, dated as of April 30, 2018, as amended on June 1, 2018, and as it may be further amended from time to time (the “Merger Agreement”). The Company is a provider of completion, intervention and production services and products to the major onshore oil and gas producing regions of the United States. Basis of Presentation The Company’s unaudited condensed financial statements have been derived from the Parent’s condensed consolidated financial statements and accounting records as if it was operated on a stand-alone basis and were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany transactions and account balances within the Company have been eliminated. The condensed statements of earnings (loss) reflect allocations of general corporate expenses from the Parent, including, but not limited to, executive management, finance, legal, information technology, human resources, employee benefits administration, treasury, risk management, procurement and other shared services. The allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenues generated, costs incurred, headcount or other measures. Management of the Company and Parent considers these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, the Company. The allocations may not, however, reflect the expense the Company would have incurred as a stand-alone company for the periods presented. Actual costs that may have been incurred if the Company had been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Parent’s cash has not been assigned to the Company for any of the periods presented because those cash balances are not directly attributable to the Company. The Parent will contribute $50 to the Company in connection with the separation. Parent’s debt obligations and the related interest expense have not been attributed to the Company for any of the periods presented because Parent’s borrowings and the related guarantees on such borrowings are not directly attributable to the businesses that comprise the Company. Parent has historically used a centralized approach to cash management and financing of its operations. Transactions between the Company and Parent are considered to be effectively settled for cash at the time the transaction is recorded. The net effect of these transactions is included in the condensed statements of cash flows as Net transfers from Parent. The Company’s ability to satisfy its liquidity requirements depends on its future operating performance, which is affected by prevailing economic conditions, the level of drilling, completion, intervention and production activity for North American onshore oil and natural gas resources, and financial and business and other factors, many of which are beyond the Company’s control. Due to improvements in the oil and gas industry, cash used in/provided by operating activities improved beginning in mid-2016 and continuing throughout the year ended January 31, 2018. The Company generated cash from operating activities starting in the third quarter of 2017, which continued into the second quarter of 2018. The Company’s reliance on funding from Parent decreased, receiving contributions of $5.8 and $34.9 for the six months ended July 31, 2018 and 2017, respectively, as revenues grew 66.6% for the six months ended July 31, 2018 as compared with the same period in the prior year. Contributions from Parent primarily funded the Company’s capital expenditures of $35.5 for the six months ended July 31, 2018 as compared to $21.1 for the six months ended July 31, 2017. During the six months ended July 31, 2018, exclusive of spin-off costs, the Company used approximately $0.1 in cash from operations less capital expenditures, as compared with a use of cash of approximately $34.9 calculated in the same manner for the same period of the prior year. As noted above, Parent has committed to contribute $50 to the Company at the date of separation to support the Company’s liquidity. In addition, Parent has committed to provide financial support, as needed, to the Company through the date of the spin-off. Any Parent funding, net of cash remitted to Parent, from the date of the Merger Agreement to the distribution date will be required to be reimbursed to Parent after the spin-off. Alternatively, any net cash generated by the Company between the Merger Agreement date and the distribution date will remain with the Company. Management evaluated its liquidity needs for the 12 months following the issuance of these financial statements including consideration of the possible impacts of a significant decline in oil and natural gas prices on the Company’s financial results. On August 10, 2018, the Company entered into a $100 asset based revolving line of credit (see Note 11 – Subsequent Events). As a result, management concluded that the Company will meet its obligations during the next year with cash from operating activities, the contribution of $50 by Parent, the Company’s $100 asset based revolving line of credit and management’s ability to control the timing of capital and other discretionary expenditures in the event of an unexpected downturn. Parent Company Investment – Parent company investment in the condensed balance sheets represents Parent’s historical investment in the Company, the net effect of cost allocations from transactions with Parent and net transfers of cash and assets from Parent. See Note 4 for a further description of the transactions between the Company and Parent. Financial Statement Preparation – The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments which, in the opinion of the Company’s management, are considered necessary for a fair presentation of the results of operations for the periods shown are of a normal recurring nature and have been reflected in the condensed financial statements. The results of operations for the periods presented are not necessarily indicative of the results expected for the full fiscal year or for any future period.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	6 Months Ended
	Jul. 31, 2018
Recent Accounting Pronouncements
Recent Accounting Pronouncements	Note 2. Recent Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-09, Compensation—Stock Compensation (Topic 718). This ASU was issued to provide clarity and reduce diversity in practice regarding the application of guidance on the modification of equity awards. The ASU states that an entity should account for the effects of a modification unless all of the following are met: the fair value, vesting conditions and the classification of the instrument as equity or liability of the modified award is the same as that of the original award immediately before such award is modified. The guidance became effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual reporting periods. The adoption of ASU 2017-09 did not have a material impact on the Company’s condensed financial statements as the Company historically has accounted for all modifications in accordance with Topic 718 and has not been subject to the exception described under this ASU. In January 2017, the FASB issued ASU 2017-01, Business Combinations. This update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of ASU 2017-01 is not expected to have a material impact on the Company’s condensed financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments related to how certain cash receipts and payments are presented and classified in the statement of cash flows. These cash flow issues include debt prepayment or extinguishment costs, settlement of zero-coupon debt, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, with early adoption permitted, and should be applied retrospectively. The Company does not expect a material impact upon adoption of this ASU to its condensed financial statements as the Company’s condensed statements of cash flows are not impacted by the eight issues listed above. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718, Compensation—Stock Compensation. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments, including that excess tax benefits and shortfalls be recorded as income tax benefit or expense in the statement of earnings, rather than equity, and requires excess tax benefits from stock-based compensation to be classified in cash flow from operations. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company does not expect a material impact upon adoption of this ASU to its condensed financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes ASC Topic 840, Leases, and creates a new topic, ASC Topic 842, Leases. This update is effective for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Earlier adoption is permitted. ASU 2016-02 requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. ASU 2016-02 will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the effect of this update on its condensed financial statements. In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which updated the guidance in ASC Topic 606, Revenue Recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB deferred the effective date for implementation of ASU 2014-09 by one year and during 2016, the FASB issued various related accounting standard updates, which clarified revenue accounting principles and provided supplemental adoption guidance. The guidance under ASU 2014-09 is effective for fiscal years beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. To assess the impact of this guidance, the Company has established a cross functional implementation project team, inventoried its revenue streams and contracts with customers and applied the principles of the guidance against a selection of contracts to assist in the determination of potential revenue accounting differences. Based on its preliminary assessment, the Company expects to provide increased disclosures to comply with the ASU but does not expect significant changes to its balance sheet or prior period statements of earnings (loss).

Property and Equipment, Net

Property and Equipment, Net	6 Months Ended
	Jul. 31, 2018
Property and Equipment, Net
Property and Equipment, Net	Note 3. Property and Equipment, Net Property and equipment consist of the following: Useful July 31, January 31, Life (Years) 2018 2018 Land, buildings and improvements 3 - 30 $ 31.2 $ 29.6 Machinery 5 - 20 133.3 125.6 Furniture and equipment 5 170.6 153.2 335.1 308.4 Less accumulated depreciation 139.6 128.9 $ 195.5 $ 179.5 Depreciation expense was $9.3 and $8.4 for the three months ended July 31, 2018 and 2017, respectively, and $18.1 and $16.8 for the six months ended July 31, 2018 and 2017, respectively.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jul. 31, 2018
Related Party Transactions
Related Party Transactions	Note 4. Related Party Transactions The condensed statements of earnings (loss) for the three and six months ended July 31, 2018 and 2017 include an allocation of general corporate expenses from KLX. These costs were allocated to the Company on a systematic and reasonable basis utilizing a direct usage basis when identifiable, with the remainder allocated on the basis of costs incurred, headcount or other measures. Allocations for general corporate expenses, including management costs and corporate support services provided to the Company, totaled $5.7 and $4.2 for the three months ended July 31, 2018 and 2017, respectively, and $13.4 and $8.6 for the six months ended July 31, 2018 and 2017, respectively, and were reported in the Company’s selling, general and administrative expenses on its condensed statements of earnings (loss). These amounts include costs for allocations related to Parent’s strategic alternatives review process in the first quarter of 2018, the Company’s spin-off process in the second quarter of 2018 as well as for functions including executive management, finance, legal, information technology, human resources, employee benefits administration, treasury, risk management, procurement and other shared services. The Company has entered into a transition services agreement to receive some or all of the above functions for up to six months. The costs to be charged to the Company will vary depending on the support provided.

Accrued Liabilities

Accrued Liabilities	6 Months Ended
	Jul. 31, 2018
Accrued Liabilities
Accrued Liabilities	Note 5. Accrued Liabilities Accrued liabilities consist of the following: July 31, January 31, 2018 2018 Accrued salaries, vacation and related benefits $ 7.3 $ 6.8 Accrued bonuses 3.7 6.3 Accrued property taxes 2.0 1.1 Other accrued liabilities 2.1 2.0 $ 15.1 $ 16.2

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jul. 31, 2018
Fair Value Measurements
Fair Value Information	Note 6. Fair Value Information All financial instruments are carried at amounts that approximate estimated fair value. The fair value is the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. Assets measured at fair value are categorized based upon the lowest level of significant input to the valuations. Level 1 – quoted prices in active markets for identical assets and liabilities. Level 2 – quoted prices for identical assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical assets and liabilities. Level 3 – unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. The carrying amounts of cash and cash equivalents (which the Company classifies as Level 1 assets), accounts receivable-trade and accounts payable represent their respective fair values due to their short-term nature. There are no financial instruments with Level 2 or Level 3 inputs at any date.

Commitments, Contingencies and

Commitments, Contingencies and Off-Balance Sheet Arrangements	6 Months Ended
	Jul. 31, 2018
Commitments, Contingencies and Off-Balance Sheet Arrangements
Commitments, Contingencies and Off-Balance-Sheet Arrangements	Note 7. Commitments, Contingencies and Off-Balance-Sheet Arrangements Lease Commitments – The Company finances its use of certain facilities and equipment under committed lease arrangements provided by various institutions. Since the terms of these arrangements meet the accounting definition of operating lease arrangements, the aggregate sum of future minimum lease payments is not reflected on the condensed balance sheets. At July 31, 2018, future minimum lease payments under these arrangements approximated $36.4, of which $21.8 is related to long-term real estate leases. Litigation – The Company is a defendant in various legal actions arising in the normal course of business, the outcomes of which, in the opinion of management, neither individually nor in the aggregate are likely to result in a material adverse effect on the Company’s condensed financial statements. Indemnities, Commitments and Guarantees – During its normal course of business, the Company has made certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities include indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease and indemnities to other parties to certain acquisition agreements. The duration of these indemnities, commitments and guarantees varies, and in certain cases, is indefinite. Many of these indemnities, commitments and guarantees provide for limitations on the maximum potential future payments the Company could be obligated to make. However, the Company is unable to estimate the maximum amount of liability related to its indemnities, commitments and guarantees because such liabilities are contingent upon the occurrence of events that are not reasonably determinable. Management believes that any liability for these indemnities, commitments and guarantees would not be material to the accompanying condensed financial statements. Accordingly, no significant amounts have been accrued for indemnities, commitments and guarantees. The Company has employment agreements with certain key members of management expiring on various dates. The Company’s employment agreements generally provide for certain protections in the event of a change of control. These protections generally include the payment of severance and related benefits under certain circumstances in the event of a change of control. Pursuant to the distribution agreement, the Company will indemnify KLX to the extent that KLX determines that it has recognized any gain on the distribution, as calculated in the manner described in the distribution agreement.

Accounting for Stock-Based Comp

Accounting for Stock-Based Compensation	6 Months Ended
	Jul. 31, 2018
Accounting for Stock-Based Compensation
Accounting for Stock-Based Compensation	Note 8. Accounting for Stock-Based Compensation The Parent has a Long-Term Incentive Plan (“LTIP”) under which its Compensation Committee granted stock options, stock appreciation rights, restricted stock, restricted stock units or other forms of equity based or equity related awards. Compensation cost is generally recorded on a straight-line basis over the vesting term of the shares based on the grant date value using the closing trading price. Share based compensation of $2.5 and $3.0 was recorded in selling, general and administrative expense for the three months ended July 31, 2018 and 2017, respectively, and $4.9 and $5.7 for the six months ended July 31, 2018 and 2017, respectively, including both the amounts related specifically to the Company’s employees and the corresponding expense allocated by the Parent to the Company as previously discussed in the related party transaction footnote above. Unrecognized compensation cost related to these grants was $9.0 at July 31, 2018. The Company will recognize a charge equal to the then unrecognized compensation cost of the grants resulting from the acceleration of shares under the Parent’s LTIP upon the closing of the sale of the Parent to Boeing. The Parent has established a qualified Employee Stock Purchase Plan, the terms of which allow for qualified employees (as defined in the Plan) to participate in the purchase of designated shares of the Parent’s common stock at a price equal to 85% of the closing price on the last business day of each semi-annual stock purchase period. The fair value of the employee purchase rights represents the difference between the closing price of KLX’s shares on the date of purchase and the purchase price of the shares. Compensation cost was not material for the three months ended July 31, 2018 and 2017, respectively, and $0.1 and $0.1 for the six months ended July 31, 2018 and 2017, respectively.

Income Taxes

Income Taxes	6 Months Ended
	Jul. 31, 2018
Income Taxes
Income Taxes	Note 9. Income Taxes The effective income tax rate varies from the federal statutory rate of 21% in 2018 (35% in 2017) primarily due to the fact that the Company has a full valuation allowance against its net deferred tax asset. The 2018 federal statutory rate is lower than the prior year as a result of recently enacted tax legislation.

Segment Reporting

Segment Reporting	6 Months Ended
	Jul. 31, 2018
Segment Reporting
Segment Reporting	Note 10. Segment Reporting The Company is organized on a geographic basis. The Company’s reportable segments, which are also its operating segments, are comprised of the Southwest (the Permian Basin and Eagle Ford Shale), the Rocky Mountains (the Bakken formation, Williston, DJ, Uinta and Piceance Basins and Niobrara Shale) and the Northeast (the Marcellus and Utica Shales as well as the Mid-Continent STACK and SCOOP and Haynesville). The segments regularly report their results of operations and make requests for capital expenditures and acquisition funding to the Company’s chief operational decision-making group (“CODM”). This group is comprised of the Chairman and Chief Executive Officer and the Senior Vice President and Chief Financial Officer. As a result, the CODM has determined the Company has three reportable segments. The following table presents revenues and operating earnings (losses) by reportable segment: Three Months Ended Six Months Ended July 31, July 31, July 31, July 31, 2018 2017 2018 2017 Revenues Southwest $ 40.6 $ 24.8 $ 80.4 $ 45.9 Rocky Mountains 47.8 29.0 88.0 54.8 Northeast 29.5 19.7 59.8 36.3 Total revenues 117.9 73.5 228.2 137.0 Operating earnings (loss)(1) Southwest 3.1 (3.8) 5.2 (9.2) Rocky Mountains 5.3 (0.7) 6.5 (1.8) Northeast 5.3 (3.3) 7.8 (7.2) Earnings (loss) before income taxes $ 13.7 $ (7.8) $ 19.5 $ (18.2) (1) Operating earnings (loss) include an allocation of employee benefits and general and administrative costs primarily based on each segment’s percentage of total revenues for the three and six months ended July 31, 2018 and 2017. The following table presents revenues by service offering by reportable segment: Three Months Ended July 31, 2018 July 31, 2017 Rocky Rocky Southwest Mountains Northeast Total Southwest Mountains Northeast Total Completion revenues $ 22.5 $ 25.3 $ 13.9 $ 61.7 $ 13.8 $ 10.4 $ 8.6 $ 32.8 Intervention revenues 11.3 10.6 7.7 29.6 7.1 10.3 5.2 22.6 Production revenues 6.8 11.9 7.9 26.6 3.9 8.3 5.9 18.1 Total revenues $ 40.6 $ 47.8 $ 29.5 $ 117.9 $ 24.8 $ 29.0 $ 19.7 $ 73.5 Six Months Ended July 31, 2018 July 31, 2017 Rocky Rocky Southwest Mountains Northeast Total Southwest Mountains Northeast Total Completion revenues $ 45.3 $ 44.5 $ 29.7 $ 119.5 $ 25.2 $ 19.7 $ 16.0 $ 60.9 Intervention revenues 22.2 21.9 15.6 59.7 13.6 20.7 10.5 44.8 Production revenues 12.9 21.6 14.5 49.0 7.1 14.4 9.8 31.3 Total revenues $ 80.4 $ 88.0 $ 59.8 $ 228.2 $ 45.9 $ 54.8 $ 36.3 $ 137.0 The following table presents capital expenditures by reportable segment: Three Months Ended Six Months Ended July 31, July 31, July 31, July 31, 2018 2017 2018 2017 Southwest $ 4.5 $ 2.6 $ 7.3 $ 4.4 Rocky Mountains 4.9 6.2 13.3 12.1 Northeast 7.0 2.8 14.9 4.6 $ 16.4 $ 11.6 $ 35.5 $ 21.1 Capital expenditures for the administrative office and functions have been allocated to the above segments based on each segment’s percentage of total capital expenditures. The following table presents total assets by reportable segment: July 31, January 31, 2018 2018 Southwest $ 71.3 $ 68.8 Rocky Mountains 139.0 124.9 Northeast 95.2 80.1 $ 305.5 $ 273.8 Assets for the administrative office and functions have been allocated to the above segments based on each segment’s percentage of total assets.

Subsequent Events

Subsequent Events	6 Months Ended
	Jul. 31, 2018
Subsequent Events
Subsequent Events	Note 11. Subsequent Events On August 10, 2018, the Company entered into a $100 million asset-based revolving credit facility with JPMorgan Chase Bank, National Association as administrative agent and the lenders party thereto (the “ABL Facility”). The ABL Facility will become available for borrowing upon the completion of the spin-off. The ABL Facility is secured by, among other things, a first priority lien on our accounts receivable and inventory and

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jul. 31, 2018
Description of Business and Basis of Presentation
Basis of Presentation	Basis of Presentation The Company’s unaudited condensed financial statements have been derived from the Parent’s condensed consolidated financial statements and accounting records as if it was operated on a stand-alone basis and were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany transactions and account balances within the Company have been eliminated. The condensed statements of earnings (loss) reflect allocations of general corporate expenses from the Parent, including, but not limited to, executive management, finance, legal, information technology, human resources, employee benefits administration, treasury, risk management, procurement and other shared services. The allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenues generated, costs incurred, headcount or other measures. Management of the Company and Parent considers these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, the Company. The allocations may not, however, reflect the expense the Company would have incurred as a stand-alone company for the periods presented. Actual costs that may have been incurred if the Company had been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Parent’s cash has not been assigned to the Company for any of the periods presented because those cash balances are not directly attributable to the Company. The Parent will contribute $50 to the Company in connection with the separation. Parent’s debt obligations and the related interest expense have not been attributed to the Company for any of the periods presented because Parent’s borrowings and the related guarantees on such borrowings are not directly attributable to the businesses that comprise the Company. Parent has historically used a centralized approach to cash management and financing of its operations. Transactions between the Company and Parent are considered to be effectively settled for cash at the time the transaction is recorded. The net effect of these transactions is included in the condensed statements of cash flows as Net transfers from Parent. The Company’s ability to satisfy its liquidity requirements depends on its future operating performance, which is affected by prevailing economic conditions, the level of drilling, completion, intervention and production activity for North American onshore oil and natural gas resources, and financial and business and other factors, many of which are beyond the Company’s control. Due to improvements in the oil and gas industry, cash used in/provided by operating activities improved beginning in mid-2016 and continuing throughout the year ended January 31, 2018. The Company generated cash from operating activities starting in the third quarter of 2017, which continued into the second quarter of 2018. The Company’s reliance on funding from Parent decreased, receiving contributions of $5.8 and $34.9 for the six months ended July 31, 2018 and 2017, respectively, as revenues grew 66.6% for the six months ended July 31, 2018 as compared with the same period in the prior year. Contributions from Parent primarily funded the Company’s capital expenditures of $35.5 for the six months ended July 31, 2018 as compared to $21.1 for the six months ended July 31, 2017. During the six months ended July 31, 2018, exclusive of spin-off costs, the Company used approximately $0.1 in cash from operations less capital expenditures, as compared with a use of cash of approximately $34.9 calculated in the same manner for the same period of the prior year. As noted above, Parent has committed to contribute $50 to the Company at the date of separation to support the Company’s liquidity. In addition, Parent has committed to provide financial support, as needed, to the Company through the date of the spin-off. Any Parent funding, net of cash remitted to Parent, from the date of the Merger Agreement to the distribution date will be required to be reimbursed to Parent after the spin-off. Alternatively, any net cash generated by the Company between the Merger Agreement date and the distribution date will remain with the Company. Management evaluated its liquidity needs for the 12 months following the issuance of these financial statements including consideration of the possible impacts of a significant decline in oil and natural gas prices on the Company’s financial results. On August 10, 2018, the Company entered into a $100 asset based revolving line of credit (see Note 11 – Subsequent Events). As a result, management concluded that the Company will meet its obligations during the next year with cash from operating activities, the contribution of $50 by Parent, the Company’s $100 asset based revolving line of credit and management’s ability to control the timing of capital and other discretionary expenditures in the event of an unexpected downturn. Parent Company Investment – Parent company investment in the condensed balance sheets represents Parent’s historical investment in the Company, the net effect of cost allocations from transactions with Parent and net transfers of cash and assets from Parent. See Note 4 for a further description of the transactions between the Company and Parent. Financial Statement Preparation – The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments which, in the opinion of the Company’s management, are considered necessary for a fair presentation of the results of operations for the periods shown are of a normal recurring nature and have been reflected in the condensed financial statements. The results of operations for the periods presented are not necessarily indicative of the results expected for the full fiscal year or for any future period.

Property and Equipment, Net (Ta

Property and Equipment, Net (Tables)	6 Months Ended
	Jul. 31, 2018
Property and Equipment, Net
Property and Equipment	Useful July 31, January 31, Life (Years) 2018 2018 Land, buildings and improvements 3 - 30 $ 31.2 $ 29.6 Machinery 5 - 20 133.3 125.6 Furniture and equipment 5 170.6 153.2 335.1 308.4 Less accumulated depreciation 139.6 128.9 $ 195.5 $ 179.5

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	6 Months Ended
	Jul. 31, 2018
Accrued Liabilities
Accrued Liabilities	July 31, January 31, 2018 2018 Accrued salaries, vacation and related benefits $ 7.3 $ 6.8 Accrued bonuses 3.7 6.3 Accrued property taxes 2.0 1.1 Other accrued liabilities 2.1 2.0 $ 15.1 $ 16.2

Segment Reporting (Tables)

Segment Reporting (Tables)	6 Months Ended
	Jul. 31, 2018
Segment Reporting
Revenues and Operating Earnings (Losses) Based on Originating Location	Three Months Ended Six Months Ended July 31, July 31, July 31, July 31, 2018 2017 2018 2017 Revenues Southwest $ 40.6 $ 24.8 $ 80.4 $ 45.9 Rocky Mountains 47.8 29.0 88.0 54.8 Northeast 29.5 19.7 59.8 36.3 Total revenues 117.9 73.5 228.2 137.0 Operating earnings (loss)(1) Southwest 3.1 (3.8) 5.2 (9.2) Rocky Mountains 5.3 (0.7) 6.5 (1.8) Northeast 5.3 (3.3) 7.8 (7.2) Earnings (loss) before income taxes $ 13.7 $ (7.8) $ 19.5 $ (18.2) (1) Operating earnings (loss) include an allocation of employee benefits and general and administrative costs primarily based on each segment’s percentage of total revenues for the three and six months ended July 31, 2018 and 2017.
Schedule of revenues by service offering by reportable segment	Three Months Ended July 31, 2018 July 31, 2017 Rocky Rocky Southwest Mountains Northeast Total Southwest Mountains Northeast Total Completion revenues $ 22.5 $ 25.3 $ 13.9 $ 61.7 $ 13.8 $ 10.4 $ 8.6 $ 32.8 Intervention revenues 11.3 10.6 7.7 29.6 7.1 10.3 5.2 22.6 Production revenues 6.8 11.9 7.9 26.6 3.9 8.3 5.9 18.1 Total revenues $ 40.6 $ 47.8 $ 29.5 $ 117.9 $ 24.8 $ 29.0 $ 19.7 $ 73.5 Six Months Ended July 31, 2018 July 31, 2017 Rocky Rocky Southwest Mountains Northeast Total Southwest Mountains Northeast Total Completion revenues $ 45.3 $ 44.5 $ 29.7 $ 119.5 $ 25.2 $ 19.7 $ 16.0 $ 60.9 Intervention revenues 22.2 21.9 15.6 59.7 13.6 20.7 10.5 44.8 Production revenues 12.9 21.6 14.5 49.0 7.1 14.4 9.8 31.3 Total revenues $ 80.4 $ 88.0 $ 59.8 $ 228.2 $ 45.9 $ 54.8 $ 36.3 $ 137.0
Capital Expenditures by Reportable Segment	Three Months Ended Six Months Ended July 31, July 31, July 31, July 31, 2018 2017 2018 2017 Southwest $ 4.5 $ 2.6 $ 7.3 $ 4.4 Rocky Mountains 4.9 6.2 13.3 12.1 Northeast 7.0 2.8 14.9 4.6 $ 16.4 $ 11.6 $ 35.5 $ 21.1
Total Assets by Reportable Segment	July 31, January 31, 2018 2018 Southwest $ 71.3 $ 68.8 Rocky Mountains 139.0 124.9 Northeast 95.2 80.1 $ 305.5 $ 273.8

Description of Business and B21

Description of Business and Basis of Presentation (Details) - USD ($) $ in Millions	Aug. 24, 2018	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017	Aug. 10, 2018	Jan. 31, 2018
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Parent company investment	$ 50	$ 1,036.7		$ 1,036.7			$ 1,025.8
Contribution from parent				$ 5.8	$ 34.9
Percentage of revenue				66.60%
Capital expenditures		$ 16.4	$ 11.6	$ 35.5	21.1
Cash from operations less capital expenditures				$ 0.1	$ 34.9
KLX Inc
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Ownership percentage after transaction	100.00%
Asset based revolving line of credit | Subsequent Event
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Maximum borrowing capacity						$ 100

Property and Equipment, Net (Pr

Property and Equipment, Net (Property and Equipment) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017	Jan. 31, 2018
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 335.1		$ 335.1		$ 308.4
Less accumulated depreciation	139.6		139.6		128.9
Property, Plant and Equipment, Net, Total	195.5		195.5		179.5
Depreciation expense	9.3	$ 8.4	18.1	$ 16.8
Land, buildings and improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	31.2		$ 31.2		29.6
Land, buildings and improvements | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful lives (years)			3 years
Land, buildings and improvements | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful lives (years)			30 years
Machinery
Property, Plant and Equipment [Line Items]
Property and equipment, gross	133.3		$ 133.3		125.6
Machinery | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful lives (years)			5 years
Machinery | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful lives (years)			20 years
Furniture and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, useful lives (years)			5 years
Property and equipment, gross	$ 170.6		$ 170.6		$ 153.2

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017
Transition services agreement maximum period			6 months
Selling, general and administrative expenses
Allocations for general corporate expenses, including management costs and corporate support services	$ 5.7	$ 4.2	$ 13.4	$ 8.6

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Millions	Jul. 31, 2018	Jan. 31, 2018
Accrued Liabilities
Accrued salaries, vacation and related benefits	$ 7.3	$ 6.8
Accrued bonuses	3.7	6.3
Accrued property taxes	2	1.1
Other accrued liabilities	2.1	2
Total accrued liabilities	$ 15.1	$ 16.2

Commitments, Contingencies an25

Commitments, Contingencies and Off-Balance Sheet Arrangements (Details) $ in Millions	Jul. 31, 2018USD ($)
Future minimum lease payments	$ 36.4
Real Estate
Future minimum lease payments	$ 21.8

Accounting for Stock-Based Co26

Accounting for Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 9		$ 9
Qualified employees purchase of stock at a price equal to percentage of closing price			85.00%
Selling, general and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation	$ 2.5	$ 3	$ 4.9	$ 5.7
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation			$ 0.1	$ 0.1

Income Taxes (Details)

Income Taxes (Details)	6 Months Ended	12 Months Ended
	Jul. 31, 2018	Jan. 31, 2018
Income Taxes
Effective U.S. federal income tax rate	21.00%	35.00%

Segment Reporting (Revenues and

Segment Reporting (Revenues and Operating Earnings (Losses) by Reportable Segment) (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2018USD ($)	Jul. 31, 2017USD ($)	Jul. 31, 2018USD ($)segment	Jul. 31, 2017USD ($)
Reportable Segments [Abstract]
Number of reportable segments | segment			3
Revenues
Revenues	$ 117.9	$ 73.5	$ 228.2	$ 137
Operating earnings (loss)
Operating earnings (loss)	13.7	(7.8)	19.5	(18.2)
Earnings before income taxes	13.7	(7.8)	19.5	(18.2)
Southwest
Revenues
Revenues	40.6	24.8	80.4	45.9
Operating earnings (loss)
Operating earnings (loss)	3.1	(3.8)	5.2	(9.2)
Rocky Mountains
Revenues
Revenues	47.8	29	88	54.8
Operating earnings (loss)
Operating earnings (loss)	5.3	(0.7)	6.5	(1.8)
Northeast
Revenues
Revenues	29.5	19.7	59.8	36.3
Operating earnings (loss)
Operating earnings (loss)	$ 5.3	$ (3.3)	$ 7.8	$ (7.2)

Segment Reporting (Revenues by

Segment Reporting (Revenues by Service Offering by Reportable Segment) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017
Segment Reporting Information [Line Items]
Revenues	$ 117.9	$ 73.5	$ 228.2	$ 137
Southwest
Segment Reporting Information [Line Items]
Revenues	40.6	24.8	80.4	45.9
Rocky Mountains
Segment Reporting Information [Line Items]
Revenues	47.8	29	88	54.8
Northeast
Segment Reporting Information [Line Items]
Revenues	29.5	19.7	59.8	36.3
Completion revenues
Segment Reporting Information [Line Items]
Revenues	61.7	32.8	119.5	60.9
Completion revenues | Southwest
Segment Reporting Information [Line Items]
Revenues	22.5	13.8	45.3	25.2
Completion revenues | Rocky Mountains
Segment Reporting Information [Line Items]
Revenues	25.3	10.4	44.5	19.7
Completion revenues | Northeast
Segment Reporting Information [Line Items]
Revenues	13.9	8.6	29.7	16
Intervention revenues
Segment Reporting Information [Line Items]
Revenues	29.6	22.6	59.7	44.8
Intervention revenues | Southwest
Segment Reporting Information [Line Items]
Revenues	11.3	7.1	22.2	13.6
Intervention revenues | Rocky Mountains
Segment Reporting Information [Line Items]
Revenues	10.6	10.3	21.9	20.7
Intervention revenues | Northeast
Segment Reporting Information [Line Items]
Revenues	7.7	5.2	15.6	10.5
Production revenues
Segment Reporting Information [Line Items]
Revenues	26.6	18.1	49	31.3
Production revenues | Southwest
Segment Reporting Information [Line Items]
Revenues	6.8	3.9	12.9	7.1
Production revenues | Rocky Mountains
Segment Reporting Information [Line Items]
Revenues	11.9	8.3	21.6	14.4
Production revenues | Northeast
Segment Reporting Information [Line Items]
Revenues	$ 7.9	$ 5.9	$ 14.5	$ 9.8

Segment Reporting (Capital Expe

Segment Reporting (Capital Expenditures by Reportable Segment) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017
Property, Plant and Equipment [Line Items]
Capital expenditures	$ 16.4	$ 11.6	$ 35.5	$ 21.1
Southwest
Property, Plant and Equipment [Line Items]
Capital expenditures	4.5	2.6	7.3	4.4
Rocky Mountains
Property, Plant and Equipment [Line Items]
Capital expenditures	4.9	6.2	13.3	12.1
Northeast
Property, Plant and Equipment [Line Items]
Capital expenditures	$ 7	$ 2.8	$ 14.9	$ 4.6

Segment Reporting (Total Assets

Segment Reporting (Total Assets by Reportable Segment) (Details) - USD ($) $ in Millions	Jul. 31, 2018	Jan. 31, 2018
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	$ 305.5	$ 273.8
Southwest
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	71.3	68.8
Rocky Mountains
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	139	124.9
Northeast
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	$ 95.2	$ 80.1

Subsequent Events (Details)

Subsequent Events (Details) $ in Millions	Aug. 10, 2018USD ($)
Subsequent Event | Asset based revolving line of credit
Subsequent Event [Line Items]
Revolving credit facility	$ 100