KLX Energy Services Holdings Inc (KLXE) Reports Flat Sequential Margins and Strong Operating ...
KLXE reports Q3 2023 revenue of $221 million and net income of $8 million
Cash balance increased by $8 million sequentially and $49 million compared to Q3 2022
Net debt reduced by 4% sequentially, ending the quarter with a net debt balance of $194 million
Successful integration of Greenes and implementation of $3 million in annual cost synergies
On November 6, 2023, KLX Energy Services Holdings Inc (NASDAQ:KLXE) released its financial results for the third quarter ended September 30, 2023. Despite a 10% sequential decline in rig count, the company managed to maintain flat sequential margins and strong operating cash flow.
Financial Highlights
KLXE reported a revenue of $221 million for Q3 2023. The net income stood at $8 million, with a net income margin of 3%, and diluted earnings per share of $0.47. The adjusted net income was also $8 million, with adjusted diluted earnings per share of $0.51. The company reported an adjusted EBITDA of $37 million and an adjusted EBITDA margin of 17%.
The company ended the quarter with a cash balance of $90 million, an increase of $8 million sequentially and $49 million compared to Q3 2022. The total debt balance was $284 million, with a 4% sequential reduction in net debt, ending the quarter with a net debt balance of $194 million and a Last Twelve Months Net Leverage Ratio of 1.3x.
Operational Achievements
KLXE successfully integrated Greenes and fully implemented $3 million in annual cost synergies. The company also launched and commercialized its latest generation downhole tools and products. KLXE's President and CEO, Chris Baker, stated that the company's new products and dedication to developing leading-edge technology will be material differentiators for KLXE in 2024 and beyond.
Outlook
Despite weaker seasonal activity and operator budget exhaustion typical of the fourth quarter, KLXE anticipates that fourth quarter margins will hold up well. As a result, the company expects strong full year 2023 adjusted EBITDA between $140 million to $150 million.
Financial Tables
The company's financial tables reveal a consistent revenue of $220.6 million in Q3 2023, which was on par with Q3 2022 revenue of $221.6 million. The net income for Q3 2023 was $7.6 million, compared to Q3 2022 net income of $11.1 million. Adjusted EBITDA for Q3 2023 decreased 1% to $36.7 million, compared to Q3 2022 adjusted EBITDA of $37.1 million.
As of September 30, 2023, KLXE's total debt outstanding was $284.1 million, with cash and cash equivalents totaling $90.4 million. The company's liquidity as of the same date was $154.8 million, including availability of $64.4 million on the September 2023 ABL Facility borrowing base certificate.
Explore the complete 8-K earnings release (here) from KLX Energy Services Holdings Inc for further details.
This article first appeared on GuruFocus.
