HOUSTON - KLX Energy Services Holdings, Inc. (NASDAQ:KLXE) revealed its preliminary financial outcomes for the second quarter ending June 30, 2024, showing an estimated revenue between $178 million and $182 million, a sequential increase of roughly 3%. This comes despite a 7% decrease in rig count during the same timeframe.
The company implemented approximately $16 million in annualized cost reductions, primarily through operational efficiencies, insurance, and professional fee cuts. The estimated net loss ranged from $7 million to $11 million, while the estimated Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and Adjusted EBITDA Margin are expected to be between $24 million to $27 million and 14% to 15%, respectively, marking a significant sequential improvement.
KLX Energy Services' President and CEO, Chris Baker, expressed pride in the company's second-quarter performance. He attributed the improved Adjusted EBITDA and margins to the non-recurrence of first-quarter issues, cost optimization, better crew utilization, reduced payroll tax exposure, and a shift towards higher-margin segments and services, particularly in the Rockies and Southwest.
Looking forward, Baker anticipates third-quarter 2024 revenue to be flat or slightly up compared to the second quarter, with similar margins. The company's cash balance has increased by $2 million sequentially to approximately $87 million, with total debt and net debt approximately at $285 million and $198 million, respectively. The estimated liquidity stands at about $126 million.
The preliminary financial results also showed an estimated net cash flow from operating activities ranging from $18 million to $22 million and an estimated levered free cash flow between $5 million to $11 million.
KLX Energy Services is a provider of diversified oilfield services to the onshore oil and natural gas exploration and production industry across major U.S. basins. The company emphasized that the preliminary financial results are based on management's estimates and are subject to change.
This article is based on a press release statement and aims to provide a factual report of KLX Energy Services Holdings, Inc.'s preliminary financial results for the second quarter of 2024.
In other recent news, KLX Energy Services has seen some notable developments. Piper Sandler adjusted its outlook on KLX Energy Services, reducing the price target from the previous $11.50 to $6.50. The adjustment was based on the company's financial projections and medium-term industry multiples.
The firm's analyst cited a recalibration of price targets based on 2024 and 2025 financial estimates, applying a 4 times multiple on the expected 2025 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).
In terms of earnings and revenue, KLX Energy Services reported a decrease in first-quarter revenue for 2024, attributing the 10% decrease from the previous quarter to severe weather and new safety initiatives.
Despite this, the company anticipates an upturn in the second quarter, with cost-cutting measures expected to improve margins and generate positive free cash flow. KLX Energy ended Q1 with $128 million in liquidity and a net debt balance of $200 million.
These are some of the recent developments for KLX Energy Services. The company's future actions will likely be influenced by several factors, including the broader oil and gas market dynamics, operational service sector overcapacity and fragmentation, environmental, social, and governance (ESG) challenges, and the company's balance sheet leverage.
InvestingPro Insights
KLX Energy Services Holdings, Inc. (NASDAQ:KLXE) has shown resilience in its second-quarter performance, navigating through a challenging environment with a modest increase in revenue and significant improvements in their Adjusted EBITDA. As investors consider the company's recent achievements and future prospects, it's essential to examine some key metrics and insights from InvestingPro to gain a deeper understanding of KLXE's financial position and market performance.
InvestingPro Data highlights a market capitalization of $93.61 million, reflecting the company's size and investor valuation in the current market. Despite the positive revenue trajectory reported, KLXE's revenue has experienced a decline of 5.22% over the last twelve months as of Q1 2024, indicating pressures that may have affected their top-line growth. Moreover, the Price / Book ratio stands at 5.52, suggesting that the stock might be trading at a premium compared to the company's book value.
An InvestingPro Tip worth noting is that KLXE has demonstrated a significant return over the last month, with a 25.53% increase in price total return. This could signal a growing investor confidence or a market reaction to the recent positive developments within the company. However, it is important to bear in the mind that analysts are not expecting KLXE to be profitable this year, and the stock price has been quite volatile.
For investors seeking a comprehensive analysis and further insights, there are additional InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/KLXE. These tips can provide valuable guidance for making informed decisions about investments in KLXE.
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