KLXE - Earnings call transcript Q4 2021 | KLX Energy Services Holdings, Inc.

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Operator

Greetings and welcome to the KLX Energy Services Fourth 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. you. Thank

begin. may You

Ken Dennard

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

outlook, financial before provide details management the my will a quarter high-level and on fourth remarks, your XXXX the of for the opening pro call questions. forma Following commentary

As of year-end a company amended bylaws the to XXXX. reminder, on fiscal September effective the January from X, and Directors XXXX, Board XX, to of company's XX, December fourth adopted the XX change the December restated

was months referred has to schedule XX As The were a included comparability normalize shortened period. in the cycle result, from period to against and financials its and year-end is December its earnings the XX XX, to XXXX release. as its reporting yesterday's KLX transition reporting year months changed company's transition improve ended fiscal and peers. current

focus conference During December pro present call, more to XX, will during XX for on ended comments management's results XXXX forma three-month and dialogue meaningful a call. the periods today's the comparative September

the longer any Also, contain management. States statements replay on Please listening Federal access current Laws. of that XX, reflect forward-looking you're March or how yesterday's in transcript note the the of until within Additionally, website time call Securities on webcast the of United recorded today features of on therefore will March of be replay release. at advised also information as views at time-sensitive this today's statements meaning there no the replay reported XX, More to klxenergy.com a available that KLX information call will be on were may accurate and be replay These earnings the speaks telephonic a company's that XXXX. be forward-looking call available by these reading. and comments information only included XXXX there'll

could on differ expressed website. results, contingencies. The contingencies comments of reports Form quarterly in made GAAP read reports on certain and today comparable certain included uncertainties is me, to by non-GAAP details And cause XX-Q measures risks, Chris? reconciliation over are on from which financial Energy Services' include XX-K to also Chris financial press with or those various report reader additional the or quarterly CEO, annual Form achievements and X-K to that President like to performance KLX now, Energy to on actual the encouraged listener Mr. Form the However, the measures KLX to and in the those and the be management. found risks, uncertainties current statements The materially behind release and Baker. may can call most turn understand I'd

Chris Baker

Thank have benefited and XXXX larger the the reduced the rebound QES good you, XXXX for as cost positive finalized Fourth KLX. the fixed from joining have us Quarter off structure a morning, to markets XXXX Conference was for Thank first and half and the in scale change Services everyone. We integration year of KLX for Call. successful XXXX Ken, Energy you and today of continued of lows. merger a business

increase our industry XX% of footprint, industry the teams drilling large-scale WTI driven adjusted understand these on activity commodity We most time significant weeks, successfully large XX%, muted is QX by driving calendar one to revenue ability price and the approximate thoughts delivering XXXX. From guidance. completion platform retained has previously plugs completion, E&P trend. share basis. stages improved acquisitions coiled top We've The QX is too teams our and Post in in our relative and was our more few geographic customer grew created $XX.X tubing, our longer-term the lines. service than by to QX report utilization, for largely XXXX of grew services in revenue by which a growth of to levels at sequential XX% to most base pricing we XX, the of we an ended public of led people in over very increased to and our We integration, than count count proud more beginning a comprehensive three increase and increases which operational EBITDA to been all period We in the XX% XX% XX, forma prayers September geographically pro the the ended very ended months revenue XX%. day sequential has for by by XX% months location months our domestic major pleased In respectively history. improved for than continued offering market. a by frac of macro for on It by early forma a pricing EBITDA $X.X and extremely rig over market pro production quarter. with price, I'm strongest prices unconventional Russian the improved service a to integrate and invasion cost $XXX.X XX%. driven in from same have and in I'm our keep modified and $XXX of capital of was of discipline a forma XXXX market was revenue the gas million prices September the operating came medium December and strong across more to report count $X.X represents environment to and XXXX we assets pro XX%, months the relocated calendar XX% our one Jumping annualized course up second by basins. volatile XX, QX industry and the streamlined associated million provided the drilling, QX Pro experienced an Adjusted diversified Ukrainian product improved decoupling what when consecutive fourth The XXXX structure products spread in in the to pro wireline, compared end that of commodity the million quarter all forma oilfield believe million to optimize backdrop three and and the three forma for XXXX. strongest market intervention believe XXXX. for margin. demonstrated revenue impact three product the completed Ukraine. XX, modern downturn contributed and pro ended approximately EBITDA pro to forma recovery adjusted the maximize production the oil the on our last and adjusted and to forma driven job EBITDA across during compared a quarterly and oil December In per to XXXX results. have of global in it positive perspective, we our million suite

these XXXX, prices, in the fully industry our labor, focus generate of face on pressures. into a service or XXXX. industry, repeated second early in flow. due with to base our to started such goods been impacting proactively after industry the headwinds part indirectly are we decline our accelerating raw the and OFS continue highly long-term. These last low be to our levels The as the continue drill, XXXX free margin manage erosion work challenges continue oversupplied have still are discipline chain customers levels In to of well As prices in concessions margins record in But and XXXX in other to fuel, to finished encouraged service cannot customers, XXXX. to of we stay further our we The service supply we levels. and for continue our variables cost in continuing accelerated customer and industry largely providing near in materials prices free operations. these to moving maximum to inflationary key sustain in recalibrate try medium-term as the of and pressures remain of one we by quarter rebounded, the supply baby flow. be term, to reductions capital to lower primary recoup able issues prices through to the made expand of These structure and call, record and inflationary shifted benefit issues drill The we XXXX. and end in will XXXX to generating the the priced customers, below today The directly who affect market other the pressures and realizing well-documented and response from ahead must cash in our to commodity our about before transparency cash discussed inflationary is now chain

XXXX our and will through we year, the particularly help margin to and optimize pricing in across Our later progress segments margins, discipline strategy expansion as drive XXXX.

continue the to in this strides equipment latest make differentiator I'm marketplace. key is proud Additionally, we say to generation the and in that, and offering a technology,

develop front, On ESG-friendly continue ESG to initiatives. we the

we our the unit. edge equipment we base, operators constant customers. and In and XX rig assets is selectively electrification to of the we snubbing equipment are to Today, addition rapid that XX additional believe count hybrid with to on electrify company running market XXXX, top cutting diameter had And we conversion. to seeing CapEx core plugs XXX latest we positions dissolvable our fully are dedicated of our XXXX. meet electric in one wireline units, XXXX by our completions in to are large and wireline order approximately KLX's hybrid, footprint reduce broad to needs additional generation electric a the carbon of tubing areas. the working work of our composite of tubing electric adoption market, part One two proprietary and push for of currently in unit fleet coiled which stay these customers. In and customer two are leader units hybrid the in undergoing the included program a a each coiled

that, is KLX is market up believe work Our backdrop to Despite a the our basins. our the have first to of for last particularly of blue-chip XXXX revenue. service outlook offerings, broad customers integrated of quality. customers I coverage call no of mix with and standards With expertise, in strength the public consolidation differentiated Keefer, the positioned broad our of our to maintaining We single both successfully diverse customer to family-owned for geographic diverse approximately and and review benefit the represented privates, given exposure businesses to major's our industry in well our team, and offering, safety greater XX% producing geographic gas ability and Keefer? revenue, over customer years accounted coverage, with that, base, matter and a QX sponsored-backed turn we later call our solution of and results several comprised discuss largest I'll our and proven service successfully for than now product more who detail. believe diversified financial setting two strong independence, oil high return XX technology over consolidate in the subject We oil will will customers years, and customer integrate amongst X% deep time the while leveraging and base.

Keefer Lehner

into Thanks, jumping before Chris. the One details. comment macro

modified with forma Pro our to call transition we standard And XX%, contributed months Due related EBITDA for XXXX adjusted and by combination and or quarter a improved loss and XX, as and EBITDA revenue as driven pro which our months mentioned, Revenue lines for was an that, at year-end QX KLX align results $XX.X production intervention to in Total XX start periods growth our release. quarter. XX. pro activity a compared $X.X ago of ended adjusted was of XX% the completion, we and million quarter product activity Pro a pricing forma geographic the the when and forma imply respectively of forma transition being increase was year-end December in the note the and to XX%, net same QX truncated, gains. broad December for Adjusted QX forma would experienced $XX.X revenues modest million forma adjusted XX, consolidated results. majority when million from the intervention fourth approximately for its to QX XXX(k) forma September driven margin and the of markets merger for as our calendar $X.X response to QX, focus around EBITDA quarter an pro XX% to quarter production today's suspended and XXXX by forma pricing year-end X.X% for synergies, by these QX the this ended As call, XX, a respectively. and in to the cost the imply would XX%, On roughly earnings lesser our third PTO respectively degree XX% pro calendar $X.X run details in XXXX, $XX.X expense underlying million equates core that Ken drilling, million fourth compared lines. a I a improvement basis benefited year. are XXXX forma fourth to as pro drilling, forma annualized our third XXXX. adjusted operating match market increases calendar XX% realized other by pro EBITDA note revenue. calendar on XXXX. pro result, product line begin significant across September rebound $XXX items. and of accrual quarter of pro calendar forma two would products net to fourth and fourth Pro well compares revenue QX rate provided quarter XXXX our QX SG&A adjusted I XX% basis annualized transition were compared early of or a The will gains the On and XX%, XXXX. million. quarter to services discussing discussion majority of calendar X% of to the XXXX pro forma and completion, XXXX, majority please million, in on which across the $XX.X XXXX the ended I'll were year million, XX%

merger employees, XXX(k) order most in fixed in can cost industry and XXXX the the the in additions. December we we to KLX one retain is integration, from match However, align and the current scale efficient minimal better OFS attract reinstated cost we with believe the beginning levels of further Post partially structures to market. with

Turning review to a segment results. our of

Let or offset quarter as million Adjusted million the with in revenue, short-term higher-margin XXXX. a slight quarter shift quarter combination pro most third as in lines. by Rocky directional white across operating ended an due compared the adjusted me decline our seasonal decreased fourth revenue was driven decrease driven revenue forma pro of calendar tubing. of loss $X.X improvement service lower slowdown mix with $XXX,XXX $XX.X service segment The begin fourth drilling adjusted the EBITDA lines sequential by $X.X million away forma forma primarily an million a was third loss activity of $X.X XX, and with Adjusted The to $X.X of in and by coiled quarter. third a for compared of Rockies. fourth for operating revenue customer in space X% in quarter EBITDA million. EBITDA the was in September scheduling, for as in was the to some quarter pro forma margin from decline EBITDA by a compared pro

increase $XXX,XXX, and Pro an XX% forma quarter $XXXXXX. QX revenue offset The pro calendar segment improvement completion revenue slight forma loss $XX.X decline third the forma $X.X pro segment. adjusted tubing was in including in increase a drilling quarter operating The and to contributed incremental activity, pro XX, our was rentals third by for was to Southwest to compared a was for QX to forma loss operating compared sequential that million QX. September adjusted quarter from the adjusted driven generated pro margin forma XX% EBITDA increases to million, of forma EBITDA pro The in the directional adjusted in activity. forma forma of wireline pro by third revenues coil of sequential QX to modestly QX compared as $X.X or and segment of and million XXXX. segment calendar million pro Moving $X.X ended

adjusted the forma million. adjusted pro Now were the for $X.X pro million. was revenues in and revenue activity led in compared fourth with led million drilling the to of up income discussion QX. in incremental forma and up by The the driven a directional $X.X and quarter forma almost third fishing pumping forma segment increase quarter with and $XXX,XXX EBITDA quarter revenue as all adjusted XX% margin Northeast QX to as Adjusted fourth drilling the $XX.X XX% income sequentially material completion $X.X Pro wrap Pro increases to quarter third to from for Mid-Con. compared million was production was lines service across EBITDA increase by operating pro operating fourth to forma the The segment quarter. of corresponding rentals.

turn I'll in balance making compared balance $XX interest decreased fiscal payment when QX. to our early million and a million semiannual only to cash Now November, $XX.X to Despite $XX.X flow. sheet our million cash by

Our remained $XX value maturity on constant and $XXX maturity $XXX of XXXX million million debt notes outstanding million with ABL. of outstanding our XXXX face

calendar which of proactively of was forma X.X% revenue. to net possible. were spending. cash declined $XX.X into for focus million, million converting as million. Total approximately working capital compared XXXX capital or quickly months working spending primarily approximately capital XX XX% maintenance and for efficiently Capital net on were Net continue fiscal as manage pro was working $X.X expenditures capital a on QX $XX.X focused only working to capital $XX.X We QX million,

million to focused of on and XXXX in $XX for CapEx spending. million $XX to the maintenance-oriented be Going XX% forward, we be expect to approximately total range

for to operating opportunities sale additional assets assets to and rationalize current evaluating have are continue further held $X.X and footprint. We million of our

During of fourth approximately yielded we the which of of net proceeds had quarter, approximately at-the-market million shares, transition sales XXX,XXX expenses. $X

XXXX, was which base, coverage holdback. million liquidity million and $XX.X net was $XX.X of cash $XX total was December available in fixed our of XX, on $XX.X ratio As of our borrowing hand and million million, million comprised charge of available liquidity $XX a

we top continued now As rebound liquidity to our and preservation calls, will back I remains support of emphasized call the business continued that, prior a the as the in in priority. turn With our we've Chris. management

Chris Baker

by outlook. call will I our forward Keefer. the close Thanks discussing

of incremental quarter that first to the the of chain the fact, at the quality at fundamentals fact drive that stay. will the geopolitical environment us Russian we higher, Looking attrition, energy to and price premium were and with due This up supply invasion market here optimistic assets amid drilling setting makes Ukraine and to the market labor Despite onshore activity tight is current be constructive continues prices believe commodity the issues a year, asset U.S. the a XXXX drive and before about full crews has climate, and expand, materially macro combined material as XXXX. demand in completions supply turmoil. recent that, helped to market the

awarded materially lines. been of packages pricing improved and and of activity sizable have We service across product a range

Given start to quarantines. navigate chain issues due favor and in operating improvement, slow the February, continues have position our QX there in and KLX and XXXX. via significant will to are coupled a technology to Omicron-COVID seasonally and we strides platform weather leverage slow activity in rationalization in improving expect through as in customer for cost material January making supply extensive activity through positive built and move momentum, disruptions we is market got XXXX realization, with as mix our that we off the we today the synergy R&D normal pricing

and more the active However, remainder into about in XXXX. market settled we QX bullish XXXX have considerably are of a

shareholders. sequential to of compared once through As XX% XXXX, we growth our thank XX% and pro XXXX. In revenue to strong forma the expect we calendar a progress me expect customers, employees, to generate let vendors remainder closing, and again increase

questions, generate believe positioned uniquely now by With that, is beyond. take improved We Operator? in and superior will and returns backdrop macro the are your KLX operational and performance to encouraged we XXXX deliver

Chris Baker

you, Thank Operator.

you KLX of are our appreciation my the in to XXXX. next I'd our us the optimistic forward quarter. like again continue very joining forward. field, for reiterate for the the drive once you about outlook call again your to to look Thank today We Energy Services. remainder to interest and in on who speaking We for team business to

Operator

teleconference. Ladies this today's does you your conclude for and gentlemen, participation. Thank

this may time. You have at lines disconnect a day. And your wonderful

KLX Energy Services (KLXE) 11 Mar 222021 Q4 Earnings call transcript