KLXE Looks At A Subdued Q1: During Q4 2023, KLX Energy Services (KLXE) commercialized multiple offerings and acquired Greene’s Energy Group. KLXE’s management expects Q1 performance to deteriorate due to seasonality and safety standdowns. However, it expects constructive forward natural gas strip following higher LNG offtake demand to benefit the company’s performance in 2025 and 2026. Read more about KLXE in our recent article here.

Revenue And Margin Contracted In Q4: Quarter-over-quarter, KLXE’s revenues decreased by 12% in Q4, while its adjusted EBITDA margin dipped by 480 basis points, or 37%. Lower rig count and seasonality adversely affected its regional drilling, completion, and production offerings in the Rocky Mountains. The company’s flowback, wireline, tech services, and coiled tubing offerings in Southwest saw lower demand. Its revenues from Northeast/Mid-Con remained steady from Q3 to Q4.

KLXE’s Cash Flows And Leverage: KLXE’s cash flow from operations and free cash flow turned positive in FY2023 compared to a year ago. Net debt declined by 24% in the past year. However, due to low shareholders’ equity (accumulated deficit), its debt-to-equity was high at 7.3x as of December 31, 2023.

Thanks for reading the KLXE Take Three, designed to give you three critical takeaways from KLXE’s earnings report.  Soon, we will present a second update on KLXE’s earnings, highlighting its current strategy, news, and notes we extracted from our deeper dive.