KLXE - Earnings call transcript Q1 2022 | KLX Energy Services Holdings, Inc.

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Operator

Greetings, and welcome to the KLX Energy Services First Quarter 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. I would now like to turn this conference over to your host, Mr. Relations. Investor Dennard, Ken Mr. you, Thank Dennard.

may begin. You

Ken Dennard

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

Also this today, you're earnings time-sensitive as reported note turning only will be replay financial telephonic longer and be website replay call time on information at the of remarks, therefore, recorded features management and replay reading. provide the call before KLX transcript Federal meaning Laws. details call yesterday's States on statements the were available made speaks statements XXXX, the accurate the of the within of how my XXXX. commentary a release. klxenergy.com. the a a of or questions. until the Following on that available listening, on be that the XX, advised to may contain may of included May forward-looking in XXth, no These any call as quarter Securities also of current first outlook United by webcast replay this be There the views over More high-level will will on today's reflect these There access company's forward-looking information information Please will comments to management. that May of

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

the website. most Services like the turn directly measures now, can Energy KLX the are Baker. President to reconciliations and on Energy comparable Chris the included to CEO, financial Mr. and in I'd which And KLX release, found press details Additional Chris. over GAAP call to be

Chris Baker

have And KLX joining Services’ X% everyone. is returning you first the The continues response and continue a gas they $X.XX for as you, positive barrel, we approximately in capital capital quarter Energy on per during as U.S. their as Thank fundamental to Ken. was Crude to discipline $XX call. spread QX. up and for natural seen one up averaged years. market The base our customer backdrop shareholders. approximately XX% backdrop today XXXX us somewhat morning, count was good prices over MMBTU. conference rig Thank improve focus throughout caveat by averaged quarter. Frac muted per count The to continued be sequentially. broader to

year. financial that guidance. to our for prior at a to the with line start slow I $XXX were past this approximately quarter, pleased million, was results our was X% sequentially our in It Looking which revenues to up am report

exited monthly board. throughout across on improved and results improved, pricing high a as and quarter in improved the Utilization we the However, the has March. activity both note quarter

of high are running sold lines, utilization. we now tubulars, spreads several the out including many units, very sizes effectively are in We and frac service common accommodations two are BLPs, experiencing

perspective. QX pricing we these pricing on line. capacity equation, in exited the drilling, utilization fleet the improved accelerating, is and and from into tubing, with service of portfolio deploy materially service pricing becomes our of for wire As providing improvements to XX% and directional to market and asset XX%, was lines side for across coiled as other for into warranted we to additional it depending early increases respectively, offerings, QX low the service the experienced service double-digit percentage core us the sequential the range pace line pricing the Jumping XX%, of a QX returns high-single our and as

coiled in XX% QX. tubing pricing was example, For up

is revenue QX across lines. product was EBITDA impacted start positive associated forward, in weather-related the was impact, being adjusted COVID February, $X.X with the goods. pressures at QX the quarantine for finished fourth service expected activity reset by Looking general slower preparation pressures cost majority materials, the and impacting inflationary in again higher labor, our the of quarter. pricing March early consecutive year, million inflection, of issues and for raw adjusted of negatively QX seasonally EBITDA the

and rate, As new QX $XX a second to With that the and over normal monthly through a of we pricing, March continue on in new closing and a QX million the annualized high XXXX, activity, note, will we work revenue as improve. quarter. we merger generating to high margin our through a QES look approximately the adjusted $XX.X work to baseline respectively million QX that not just continue quarter expect setting $XXX said, record since as million, EBITDA exit at stand and we was the exited and sets March alone revenue of

for first backdrop We Looking on customer our offerings, geographic particularly coverage, service and market the will industry the run XXXX OFS believe considerable the the customer conversations from is KLX in we and technology, approach a And position diverse differentiated of positioned well and chip of believe, we broad strength to time years. second positions product up. QX that given how shape blue current for base. strong quarter, the the towards second rate, the giving remainder a exited optimism us quarter

customers the people With expect supply and personnel to in our that, call QX demand discuss I I'll to later industry. to return over will in greater now review results, service our Keefer, be will turn financial and who base assets facing Keefer. and call required and the challenges to detail. outlook due our asset the even in to higher quality the our chain the have We

Keefer Lehner

that XXXX, being the XX, QX with has December as Please its One XXXX Company macro Thank fiscal you, year jumping our changed the with align end Due Chris. two that three. to our to comment of of before year with quarter the quarter in. discussing period, note fourth calendar QX three-month prior XXXX the focus I will ended forma I'll comparisons of XX, December result the begin consolidated P&L. instead truncated by pro XXXX results first months XXXX. this

for geographic forma For as in $XXX.X or the Revenue roughly drilling, by intervention the products X.X% first revenue completion, first $X.X were EBITDA XX%, by majority across basis, intervention XX, quarter. respectively services approximately the of respectively. Adjusted and our revenue EBITDA and forma first was line XX%, $X.X production, production, contributed driven Adjusted of fourth core fourth million. XX%, On and operating for was a million product of decreased quarter and compared EBITDA broad XXXX, activity and compared Adjusted revenues loss XX% the an XXXX. million, pro for to ended March increases adjusted and million, $X.X margin pro completion, $X.X X%, growth drilling, increase quarter markets. the to million was to quarter our quarter.

prepared expense March QX pressures, sequential Chris start of fixed the in the a seasonality, negatively believe and quarantines, of of QX inflationary in fourth Total we cost and approximately the period accounted was cost prior cost the two edition. up SG&A we stand two-thirds activity and for which OFS X.X% QX merger in and from equates roughly January, to the further slow and in items as fixed levels integration, our payroll pro call, million, the when efficient recognized As payroll in most compared on related industry, our QX. reinstated inflection. approximately with forma and annual one was to only QES for COVID and These structures costs we Further, decline pro weather December, very QX, Post our for G&A quarter. adjusted was now can taxes $XX EBITDA has we price which pro scale revenue. and impacted general additional to minimal current costs KLX by one XXXk mentioned, we discussed match, personnel burdened QX and reset forma XXXX relative to forma

to our results. a segment Turning review of

resulting me in dissolvable quarter. pro plugs, Adjusted operating adjusted operating by and pro DJ loss loss as rentals, adjusted increased and or and $XXX,XXX forma and EBITDA EBITDA across seasonally first $XX.X which in increase Let driven $X.X higher offset with quarter. sequential primarily Dakota was of in pro The Rockies. the of incremental the utilization million. $X.X $X.X DJ Rockies, the million for million an for Central quarter million revenue the fiscal with fourth $X service the lines slow was in margins XX% Adjusted most market. Rocky begin in wireline, more adjusted increase approximately the in segment, for driven segment. a The as quarter tubing, fishing, as revenue the EBITDA EBITDA adjusted quarter Basin, XX% first was by forma forma was year increase than to to in pricing of coiled with compared The prominently million compared margin by fourth fourth in start compared North the

drilling, and improvement driven Moving onto in pro our X% the pro Southwest was only million forma increases frac increase and sequential an line was quarter forma by quarter or first with as The of generated fourth primarily rentals, revenue largely to directional in fourth compared of $XX.X experiencing revenue results, $X.X segment million segment. The quarter. fishing. in

operating quarter loss First forma to quarter segment was compared adjusted fourth the of operating for $XXX,XXX. loss adjusted $XXX,XXX pro

the adjusted adjusted quarter of to was segment fourth pro-forma loss First operating operating loss $XXX,XXX compared $XXX,XXX. quarter for

in First quarter which fourth was quarter. $X.X was pro-forma adjusted line with EBITDA million,

Now, with to discussion wrap Northeast up the the and segment Mid-Con. the

to EBITDA QX, compared $XX.X rebound decline the $X.X operating dissolvable in was EBITDA I'll strong but in segment Adjusted corresponding in sheet of sequentially fourth pro to our primarily for as the loss adjusted we the quarter. sales of turn decline to of to Adjusted activity million margin we expect flow. was revenue segment driven and EBITDA directional and adjusted decrease adjusted to forma fourth was revenue The adjusted income given decrease and backlog. $X.X $X.X forma QX led operating a as drilling million through margin a region. sequential for down EBITDA the by quarter quarter quarter and first in and pro $XXX,XXX now balance The compared million with million. first First cash QX, as to the from in quarter $X.X revenue frac million. progress in

The by capital balance QX. cash matures decreased that get largely QX Notes, $X.X an XXXX investment million maturity on constant in the and million a in bit was million of when compared with million both capital I'll $XX.X Debt $XXX remained spending, QX to of which to decrease call. later in million into ABL working Secured cash Our as on facility by with drawn the Senior $XXX $XX outstanding in of quarter, fourth the and fall XXXX. driven our

discussions Given ABL of facility beginning have various amendment matures including our we're options, fall in with refinance around lenders extend. XXXX, the to

We to days QX we spending. QX, $X.X compared increase supply reduction days on continue cash was as into Net manage primarily capital, to in sequential was convert million working was offset proactively first approximately in capital XX XX of worked to million quarter risks. The the $XX.X capital mitigate in of working focused and the Capital in quickly QX. reduction This maintenance a expenditures driven was $XX.X by possible. for working were as balance largely million. DSO DPO working by sheet from as chain to and as capital net net a

deliveries be so of approximately chain we improve forward, maintenance expect $XX the $XX of spending. items total navigate XXXX. the million, Supply remainder expect quarter, issues million this CapEx and Going to continue trend but to focused far as for in of capex be to XXXX through XX% in first slowed the on we to have to range we

million we the for XXst, March assets obsolete our $X.X near We're held monetize of have facilities those of the bulk in account. sale As current of term. in options continue asset to working through to to assets

back. streamline our monetize continued but have $X the and of we obsolete for $X incremental to of $XX million sale which Total million further real driven liquidity liquidity in in those assets. and XXst $XX.X $XX.X addition, assets, $XX.X of availability QX, was million comprised do property cash charge footprint million borrowing-based monetizing $XX.X of timing coverage our efforts not identified million, borrowing early by assets on March XXst million was holds to In available the we March in yet as an fixed net know our and certificate, was ratio of million

subsequently Our April April was $XX.X our million, made balance on Note, payment million, was of million. available our availability XXth XXth, certificate. cash $XX.X we including borrowing-based interest May $XX.X and liquidity Xst,

calls, our preservation As rebound continued management continued as prior and the priority. the a in support of we've remains in the top liquidity business we emphasized on the past

and mentioned, As EBITDA Chris exited $X.X adjusted approximately QX and March revenue respectively. of we generating $XX million million

you of $XX.X revenue run If these it implies approximately million. rate EBITDA results, $XXX rate run and an annualize million a of adjusted

We trajectory results, to see expect will turn March the of our and will strong I current incremental expect who Chris, performance to now margins call coming from outlook. strong some color additional off incremental the QX our business. back given QX the provide on to

Chris Baker

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

second in full persist. backdrop will the believe year, Looking of a XXXX, the constructive at quarter we macro

of This upcycles. disproportionately expense of largely available pricing in EMP nature of surplus the I of power bay. services companies have know, as benefited the at fragmented about you spoken industry prices equipment come As the commodity at kept early oilfield the stages the market past have the companies in has rising and how

a where are power past. labor that cannot we are and the to keep of possible attain result, available force recent levels able is a However, the greater were now and at point as we equivalent in with supply pricing demand, available up

settled levels our margins As maintain the technologically-advanced remainder a in services has got our slow normalized will Ultimately, investment the for much order generate late we're in the hopeful continue bit to QX summary, are more about to in to bullish quickly we and and to more for pricing for very and off industry In XXXX. a towards required return start, drive XXXX. have prospects space efficiencies OFS the that assets market, the XXXX while to returns, returns sufficient to into near-term; safe a of customers. to active XXXX of historic

see across deployed into uptick range the increase where For in utilization expect again gains the the driven the with market service by with be coupled lines the improved revenue we lines, is XX% a service in additional Second to XX% Quarter, to assets market further of pricing with sequential the tightest. to

be range margin adjusted to of expect in EBITDA to We the X%. X%

we in and remainder expect both improvement improvement sequential the as to pricing in growth utilization progress XXXX. EBITDA compress forward Going whitespace, QX in of continued adjusted drive strong revenue to we and in through

XXXX our as the earlier, I As a is the to revenue guidance stated quarter and further $XXX expect we mentioned which previously exited see on progresses. above million run improvement for rate, year

and is me guidance potential on revenue believe million support. still shareholders updated budget exhaustion. into full-year their Our $XXX our $XXX and conservatism there's built let closing, million for estimate, some XXXX to employees, customers, this depending vendors thank and fourth-quarter In for seasonality

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

Chris Baker

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

Operator

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

a this lines your disconnect at now wonderful time, may You day. and have

KLX Energy Services (KLXE) 13 May 222022 Q1 Earnings call transcript