KLXE - Earnings call transcript Q1 2021 | KLX Energy Services Holdings, Inc.

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Operator

Greetings, and welcome to the KLX Energy Services' Fiscal First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Dennard. Ken. you, Thank

begin. now You may

Ken Dennard

With Thank Lehner, you, joining call We you Financial Executive XXXX morning webcast KLX's Chris President Officer. and Vice and for the President good Chief results. quarter us first conference and review everyone. today KLX are to Baker, Keefer appreciate Officer; fiscal Operator, me Executive Energy and Chief Services and

information replay before the opening speaks remarks, access that today's time today, until will Please XX, available call as release. longer features, XXXX. these of a and yesterday's in provide financial on may of information call listening details transcript There company's the telephonically how note June management any be commentary included advised reading. quarter be XXXX, And therefore, of webcast site, my by and to accurate no Following this the or call the replay June only questions at will the as on more high-level outlook, the for will you were recorded be they answers. klxenergy.com. are and first the that be a earnings time-sensitive XX, also on replay Web that There of information will reported of replay a on

Laws. comments forward-looking management. statements certain addition, of current forward-statements Securities of contain States may KLX's Federal These In the reflect management's within the United meaning views the

encouraged or contingencies uncertainties, the include X-K, could understand Form The today and XX-K, certain The statements financial materially quarterly of also management. and XX-Q, current to on the reports made uncertainties Form differ risks, on the is to non-GAAP from or may or annual risks, contingencies. comments various in to measures. those certain reader read reports listener on report results, expressed However, cause actual performance those achievements by Form

on the President to the I'd Chris turn included press And site. which KLXE are Executive found now, reconciliation in call Chief most Officer, GAAP Energy comparable like and KLXE's release, over details can and the quarterly Mr. to Web be Additional Chris? directly to financial measures Baker. the

Chris Baker

Ken, Conference of over an Thank some for significant to KLX XXXX environment, themes during strategy. begin you good joining by Call. review Quarter Energy morning, the us the on for will I'll on our outlook and turn the Fiscal as financial call comments Services' Thank impacting to the broader I First returning providing before results Keefer our performance, you, some today then final as update our well for market and quarter. everyone.

economy U.S. market supply-demand from global activity the reopens the as post As COVID-XX, continues onshore from well macro as a improve, both perspective. to perspective, a

prices currently first average. approximately For the QX XX, rig at And counts the were XX%. sits both and roughly quarter the up rig ended April count above XX% fiscal WTI

the capital returning frac ending spread with count Additionally, focus capital to frac approximately our on quarter, continues U.S. that during XXX customer in XX% running shareholders. increased roughly the base said, discipline first our With U.S. to and fiscal spreads

we also in by lost results. improvement, ourselves well Uri Winter of weighed particularly transitory approximately Revenue prior March we on issues, some in issues, While period, found service were mentioned call which our QX up impacted we which the to market and coincided weather increased signs the crosscurrents scheduling staffing April. of a evident seeing margins in us Storm and and seven-plus Winter in levels as very well due customer during meaningful materially our to are expected revenue activity Storm alone, material days difficult Uri, the with as We Rockies. seasonal

the on power $XX commodity associated Last leverage pricing improvements quarter, companies, million. merger. our and length oilfield sequentially, headwinds quarter, our revenue. high spoke and revenue about improved services we exited improved generating fundamentals. the level a in at QX, experienced significant negative QES clear challenging the revenue for in approximately despite the X% highest throughout Despite was closing foregone operating we there to So, how since note, it with Monthly remains QX aforementioned results

On the the since last but remained ability quarter, macro and positive broader the side has to price the improved we same. improve our [Ph] around spoke margin, [themes]

When in the consolidation is previous making rather returns and the quantity amongst being large now would headway focusing of pricing occurred why are lack lower customers easy prior than in combined significantly considerably OFS see in more it to equipment Our difficult marketplace growth, production meaningful heavily stacked activity proportional of to in than than and on companies, the capital gains discipline, is cycles. have leading with cycles.

results, during has Our excellent synergies reduction late-QX merger $XX on an we X the begin cost integration QX should initiatives. million of in the to seven. cost merger fixed savings executing have an to Directors reduce into inclusive completing Since our nine our and million Board savings Meeting in results. taken our annualized actions from team in Annual size it annualized $X.X XXXX, reflected the actioned will that during and done fully implementation the the benefit job June QX, the XQ to April are These be additional of of in

to do for detail we're efficiencies we the our need out been and Our is our will operational very alongside the discuss optimistic outlook more trajectory QX pricing greater it have so. and positioning the industry later competitive of I'll savings actions call, and continue at future in viable to but in seek attempts our move to where the efforts monitor KLXE. successful, around to for

XX% improve call since will EBITDA XX% first business return to increase as our we to should will financial QX, materially to now in breakeven that, expect results. Keefer, sequentially, in I'll to turn review for revenue our quarter With Keefer? adjusted the early the the and over expect XXXX. who results the QX We time

Keefer Lehner

Chris. you, Thank

results. consolidated quarter our XXXX first Let me begin by discussing

geo million, the revenue fourth across XXXX, particularly to impact compared increase and the fiscal lines. X% first the again, directional improving coil the product of ended million, product Once the XXXX. April for our the reflected driven an $XX.X or markets multiple quarter our of quarter rentals XX%, For Southwest of market lines, as up revenues of and by revenue drilling, $X tubing, were XX, segment two increase activity

Now of our KLXE completion, a respectively XX%, to fourth detail XX% which QX revenue drilling, much production XX%, intervention XX% XX% end-market, XX% larger Revenues services, XX%, contribution was contributor revenue the and QX XXXX. revenue become XX% in quarter XXXX. by in and to compares to XXXX

largest XXXX to lines material market we from end activity one experienced and in drilling business to rig rebound QX of the product QX, lows we as have Directional share. drilling off directional KLXE. approximately of QX as believe of increase now at count Our continue is our X%

through the our made product flow business, the pulling completion offering great of strides of geo integrated lines. to coiled tubing plug to side biggest tubing sales our and drivers rentals remains markets. and They Turning services throughout completion each our business of tubing our our coiled our

loss of Moving million XX% statement. results, EBITDA of quarter loss the note adjusted depreciation changed sales that adjusted respectively. to I margins income into for would were $X.X profitability, cost this consolidated our and was operating face our negative on negative EBITDA we and and $XX.X from breakout our loss quarter, the expense adjusted Jumping the now presentation million

was was Rockies. and as leases, the which weather tubing operating winter related fiscal by $X.X five XX% our Chris million, in the to the Rocky in $X.X that adjusted per profitability a Uri customer revenue million of The loss begin was quarter and fiscal million quarter with particularly a of first levels issues. I'll $X.X XXXX. well compared of fiscal storm $X.X adjusted related alluded, reduced our peers. impacts issues EBITDA revenue and I'd in customer driven with scheduling the first issues. erosion million as loss unforeseen of primarily quarter fiscal operating result coiled activity EBITDA of the adjusted legacy operating decrease seasonal was fourth of issues, result review as the scheduling for million to is XXXX. also EBITDA compared fiscal quarter as or quarter As loss cost by $XX.X of the comparability segment customer to sequential Rockies. of sales and compared note was by increase with well The Mountain million. scheduling well fourth income The $X.X certain $X Adjusted in the our and quarter to million decreased Adjusted burdened segment fourth

fourth revenue Southwest Now $XX of our substantially by to segment, fourth Southwest significant moving compared revenues of loss $X.X was was loss its to was increases driven rental to of as EBITDA adjusted $XXX,XXX QX XX% adjusted compared completion by the quarter operating revenue adjusted $X.X quarter activity. increase operating in meaningful generating and million. increased XXXX segment fiscal EBITDA The fiscal and to our drilling quarter million of directional compared fiscal $X.X loss fourth million and adjusted million.

the the in are receivable finish due quarter from the fourth pro Adjusted first loss revenues improvement to and Arcotex our recognized fiscal EBITDA primarily $X.X loss of was is by The Mid-Con loss EBITDA and million increased in fiscal forma quarter in fiscal to segment. compared compared fourth EBITDA improved reserve of segment XXXX $X.X loss discussion impacted XXXX. in response fourth up to by $XXX,XXX, $X.X fourth loss EBITDA for of region, fiscal $X.X which account in $XX.X with the detailed million impacts to in Adjusted Texas operating XXXX. quarter the customer this was reserve, filing. fiscal loss Now, was $X.X quarter to of million. driven as Mid-Con. East were as Northeast and Fiscal actually million XX-K fourth as which the $XX.X primarily winter included X% quarter million our adjusted million out compared Uri, which operating for bankruptcy, adjusted storm a the adjusted million quarter the adjusted with

from million On XXXX. and XX% pro XXXX KLXE benefiting synergies sequentially for first other that first EBITDA is approximately of said, first KLXE XXXX the at expense, XXXX remains the SG&A the of were first in materially G&A expense are of now $X recall merger, million below adjusted this would XXXX. for unchanged million. not forma Our benefiting adjusted pro merger the standalone SG&A standalone savings forma quarter that a $XX corporate to results that synergies of first than the QX Annualized, was quarter With million represent KLXE. legacy $X the SG&A expense largely or SG&A XXXX of first expense XXX% cost the for fiscal quarter loss yet quarter adjusted quarter quarter entirety of QES merger comparing the the expense. lower When basis and $X.X KLX

our Now let cash me review consolidated sheet and flow. balance

of as position debt million first end $XXX $XXX the resulted in long-term a debt million. Our cash approximately of of less the net quarter

capital ramp increase cost also manage to XX% Chris as As expect be liquidity as the million XXXX, to maximize in top on and approximately on would cash liquidity We million. structure proactively Preservation QX was the in of mentioned, expect mentioned activity increase continues continues base would our with XX was continue cash a business April earlier higher priority. to flow. of the call. to that And order hand will revenue the and in Chris working $XX through in we $XX and and of to year, conjunction our cash XX% we remainder materially a margin borrowing our total

Cash benefit there's non-cash million were quarterly another our aircraft lease, incremental savings to in previously, charge flow mentioned corporate addition going for we cash of forward. took XXXX, flow a three which The still XXXX. cash the In will a for cash our during our officially QX fiscal capital payment and $XXX,XXX, $X.X cash to QX most in flow annualized ended of And $X.X wind investment burned operations QX. item spending. inspections Back of grounded is and there cash June months the April partially offset by that our million There cost books. returned QX no is in in networking and interest our was XXXX interest in was flow million use in where that of lease and roughly early was May million. semi-annual on due lessor next quarter. ended maintenance-oriented XX and XX, to Capital fully paid free quarter the which on now was first off $X.X tied lease operations loss cash the was quarterly approximately April end $XX.X lease payments used in were the expenditures plain million, $X.X was flow following Chris

the CapEx to scrutinize reduce continue be expect capital We range $XX spend. XXXX million. CapEx in total to now all and $XX of We for to our spending fiscal full-year million

our $X our property as QX facility of monetize comprised ongoing to million during real of footprint part also integration. We of efforts assets finalize primarily

additional expect I facilities that turn facilities obsolete would call we held sale. three Chris. for including With that, to forward, are Going and of monetization assets, back now currently the will

Chris Baker

Keefer. Thanks,

government horizon, over widespread fundamentals macroeconomic out oil which The the a environment evidence to that industry. see should increasingly the additional stimulus, Looking economic the and both backdrop, With price oilfield profitability favorable, vaccine overseas discipline for lag. we has been services and growth and gas are and domestically OFS commodity well has encouraging continue supportive space. crude the rollout, as becoming as why stronger drive have onshore the industry foundation in laid production this activity, stockpiles solid OPEC+ the a declining U.S. for in

means that is available industry over last and year. via potential this continued attaining the we have extremely available above reductions. seek improvement to we profits the as million severely an equipment the as and before, to oversupply we million vital $X.X On protect front, primarily As productivity expense $XX using us of nature lever said utilization costs we other of savings power, well fixed constraints successful the consistent in achieved been that additional pricing the our fragmented that

to a feasible of do history we other operate and So is we cost pushing economically have where on a given In it the possible. pricing, handle focused lower our I'm leverage structure costs, that with greater the interim, how are aggressively pursuing to so. lean good lever as and resources on as our efficiency confident

Our efforts few revenue. $X pricing an million to annualized months to approximate uptick in changes last the equates in affect

things industry is progress, prices the be and the a completed a back a in the of year QX remained touch we should competitive we in This successfully to environment. standpoint. of companies While customers the in measure, outlook XX% to activity are Altogether, as product KLX activity most a competitive key the logically we're the EBITDA term needed and and component higher a I mentioned is the We drive back we bring low realization from as to well consolidate to strategy unsustainably adjusted benefit their throughout expect you This leads making above Consolidation also of both for even XQ. to in balance We corrective are QX of and for majority believe components new the able last positioned increase by the the EMT of out to margins the commodity which across stronger sequential me on continue belong OFS do lead This and of with in order to in revenue crude consolidation cost shareholders. critical KLX to earlier. participate and industry the of lines. the XXXX. effort on to remains an service to uptick XX% our to wins to attained leads of remaining near savings, over into the emphasize break reiterate additional our normal QX the remains substantial and want a synergy expect for modest levels. pricing this the material industry. in consolidation, our year. merger balance. whole. uptick We remains the improvement Combined balance return in many results supported the in have

year. support. customers, the me we the remainder remainder In shareholders for our in steady of expect closing, XXXX, generally margins to activity, let out improvement think and revenue, their throughout and Looking employees, also see to of the fiscal

times important its confident the throughout your economy Thank KLX we mission will to ahead in and now are Instructions] expertise our we'll assets, that resources, [Operator fuel for you. that, delivering will serve better and in With operators are take seeing to continue the role industry, an questions. U.S. the improvement that We critical EMP many Operator?

Chris Baker

joining you for Energy for today, once interest with forward thank you KLX quarter. and you, again look Operator, next in to Services. We on Thank this call again your us and speaking

Operator

This does and conference. gentlemen, thank participation. today's conclude your for you Ladies

your have wonderful disconnect may and You day. lines, a

KLX Energy Services (KLXE) 10 Jun 212021 Q1 Earnings call transcript