KLX Energy Services Holdings, Inc. (“KLX Energy Services” or the
“Company”) (NASDAQ: KLXE), a leading U.S. onshore provider of
mission critical oilfield services, today reported its third fiscal
quarter ended October 31, 2018 financial results.
During the third quarter of 2018, management completed the
merger of the Aerospace Solutions (“ASG”) business of KLX Inc. with
The Boeing Company, completed the spin-off of the Energy Services
business into an independent public company, the amendment of its
$100 million asset based lending facility, the issuance of $250
million of senior secured notes due 2025 and the acquisition of
Motley Services, LLC (completed on November 5, 2018). The Company
incurred approximately $23 million of one-time costs associated
with these activities and will therefore report both GAAP and
adjusted financial results. The costs associated with the
aforementioned activities are collectively referred to as “Costs as
Defined.”
On a GAAP basis, including the $23 million of Costs as Defined,
for the three-month period ended October 31, 2018, as compared to
the same period of the prior year, revenues increased 38.1 percent
to $123.2 million, while operating loss was $(9.9) million. GAAP
net loss was $(9.9) million and net loss per diluted share was
$(0.49). THIRD QUARTER HIGHLIGHTS
- Revenues increased 38.1 percent to $123.2 million
- Gross profit increased 101.2 percent to $33.0 million, or 26.8
percent of revenues
- Adjusted operating earnings were $13.1 million an increase of
$14.9 million1
- Adjusted EBITDA was $26.6 million, or 21.6 percent of revenues,
and increased $17.4 million, or 189.1%, as compared to the same
period of the prior year1
- Adjusted Net Earnings and Adjusted Net Earnings per diluted
share were $16.6 million and $0.83 per diluted share,
respectively1
1 Excludes approximately $23 million of Costs as Defined.
We have presented Adjusted Net Earnings and Adjusted Net
Earnings per diluted share to reflect net earnings before Costs as
Defined, amortization and non-cash compensation expense (“Adjusted
Net Earnings (loss)” and “Adjusted Net Earnings (loss) per diluted
share”). This release includes “Adjusted operating earnings
(loss),” “Free Cash Flow” and “Return on Invested Capital,” which
exclude Costs as Defined. This release also includes “Adjusted
EBITDA,” which excludes Costs as Defined and non-cash compensation
expense. Each of the aforementioned metrics are “non-GAAP financial
measures” as defined in Regulation G of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). See “Reconciliation of
Non-GAAP Financial Measures.”
THIRD QUARTER CONSOLIDATED RESULTS
On a consolidated basis, revenues increased $34.0 million, or
38.1 percent, to $123.2 million, as compared to the same period in
the prior year. Revenue growth was driven by a 34.4 percent
increase in Rocky Mountains segment revenues, a 66.2 percent
increase in Northeast/Mid-Con segment revenues and a 22.4 percent
increase in Southwest segment revenues, reflecting a higher level
of activity throughout each operating region. On a product line
basis, as compared to the same period in the prior year, completion
revenues grew 52.2 percent, production revenues grew 42.8 percent
and intervention revenues grew 10.9 percent.
Adjusted operating earnings and Adjusted operating margin were
$13.1 million and 10.6 percent, respectively, improvements of $14.9
million and 1,265 basis points, respectively, as compared to the
same period in the prior year. Adjusted EBITDA and Adjusted EBITDA
margin were $26.6 million and 21.6 percent, respectively. Adjusted
Net Earnings and Adjusted Net Earnings per diluted share were $16.6
million and $0.83 per diluted share, increases of $15.5 million and
$0.78 per share, respectively, as compared to the same period in
the prior year. Return on Invested Capital was 23 percent for the
third quarter.
Amin J. Khoury, Chairman and Chief Executive Officer of KLX
Energy Services, commented, “We had an extraordinarily productive
third quarter, with management completing the merger of the ASG
business with The Boeing Company, spinning-off KLX’s Energy
Services business into a public company (“KLXE”), issuing $250
million of senior secured notes due 2025, adding the large diameter
coiled tubing product service line (“PSL”) through the acquisition
of Motley and successfully launching our line of proprietary
dissolvable plugs. During this period, the Company also completed
the establishment of all IT, legal, accounting, tax, treasury, risk
management, internal audit and human resources functions to be able
to operate as a stand-alone public company with robust financial
and operating controls, and independent from our former parent, KLX
Inc.”
THIRD QUARTER SEGMENT RESULTS
On a GAAP basis, for the three month period ended October 31,
2018, Rocky Mountains segment operating loss, including its
allocated share of Costs as Defined of $9.3 million, was $(3.2)
million. Northeast/Mid-Con segment operating loss, including its
allocated share of Costs as Defined of $6.7 million, was $(0.7)
million. Southwest segment operating loss, including its allocated
share of Costs as Defined of $7.0 million, was $(6.0) million.
The following is a tabular summary and commentary of revenues,
Adjusted operating earnings (loss) and Adjusted EBITDA, for the
three month periods ended October 31, 2018 and October 31, 2017 ($
millions):
|
|
|
|
|
|
|
|
|
REVENUES |
|
|
|
|
THREE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
October 31, 2018 |
|
October 31, 2017 |
|
% Change |
Rocky Mountains |
|
$ |
48.1 |
|
|
$ |
35.8 |
|
|
34.4 |
% |
Northeast/Mid-Con |
|
|
36.9 |
|
|
|
22.2 |
|
|
66.2 |
% |
Southwest |
|
|
38.2 |
|
|
|
31.2 |
|
|
22.4 |
% |
Total |
|
$ |
123.2 |
|
|
$ |
89.2 |
|
|
38.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING EARNINGS
(LOSS)1 |
|
|
|
|
THREE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
October 31, 2018 |
|
October 31, 2017 |
|
% Change |
Rocky
Mountains |
|
$ |
6.1 |
|
|
$ |
1.3 |
|
|
369.2 |
% |
Northeast/Mid-Con |
|
|
6.0 |
|
|
|
(1.9 |
) |
|
nm |
|
Southwest |
|
|
1.0 |
|
|
|
(1.2 |
) |
|
nm |
|
Total |
|
$ |
13.1 |
|
|
$ |
(1.8 |
) |
|
nm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA2 |
|
|
|
|
THREE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
October 31, 2018 |
|
October 31, 2017 |
|
% Change |
Rocky
Mountains |
|
$ |
10.9 |
|
|
$ |
5.6 |
|
|
94.6 |
% |
Northeast/Mid-Con |
|
|
10.5 |
|
|
|
1.5 |
|
|
600.0 |
% |
Southwest |
|
|
5.2 |
|
|
|
2.1 |
|
|
147.6 |
% |
Total |
|
$ |
26.6 |
|
|
$ |
9.2 |
|
|
189.1 |
% |
|
|
|
|
|
|
1 Excludes Costs as
Defined |
|
|
|
|
|
|
2 Excludes
Costs as Defined and non-cash compensation expense |
|
|
|
|
|
|
|
|
|
|
|
The third quarter 34.4 percent increase in Rocky Mountains
segment revenues was driven primarily by a higher level of
completion activity. Rocky Mountain segment gross profit was $13.5
million, an increase of $5.2 million, or 62.7 percent, on the 34.4
percent increase in revenues, while Adjusted operating earnings
increased $4.8 million to $6.1 million, reflecting increased
operating leverage and solid demand for higher margin PSLs.
Adjusted EBITDA was $10.9 million, an increase of $5.3 million, or
94.6 percent, on the 34.4 percent increase in revenues.
The third quarter 66.2 percent increase in Northeast/Mid-Con
segment revenues was driven by increases in intervention,
production and completion activity of approximately 68.5 percent,
67.8 percent and 64.2 percent, respectively. Northeast/Mid-Con
segment gross profit was $12.3 million, an increase of $8.3
million, or 207.5 percent, on the 66.2 percent increase in
revenues. Northeast/Mid-Con segment Adjusted operating earnings
were $6.0 million, an increase of $7.9 million in the third
quarter, reflecting increased operating leverage and solid demand
for higher margin PSLs. Adjusted EBITDA was $10.5 million, an
increase of $9.0 million, or 600.0 percent, on the 66.2 percent
increase in revenues.
The third quarter 22.4 percent increase in revenues in the
Southwest segment was driven by increases in production, completion
and intervention revenues of approximately 37.8 percent, 26.3
percent and 7.6 percent, respectively. Southwest segment gross
profit was $7.2 million, an increase of $3.1 million, or 75.6
percent, on the 22.4 percent increase in revenues. Southwest’s
Adjusted operating earnings increased $2.2 million to $1.0 million
in the third quarter, reflecting increased operating leverage and
solid demand for higher margin PSLs. Adjusted EBITDA was $5.2
million, an increase of $3.1 million, or 147.6 percent, on the 22.4
percent increase in revenues. Although Southwest segment revenues
increased 22.4 percent year over year, the segment’s revenues were
impacted by the Texas floods. Seventeen consecutive days of rain
and the attendant floods, road and highway closures and impassable
mud negatively impacted revenues by approximately $6 million.
NINE MONTH CONSOLIDATED RESULTS
For the nine months ended October 31, 2018, revenues were $351.4
million, an increase of $125.2 million, or 55.3 percent, as
compared to the same period in the prior year, while gross profit
increased 176.6 percent, on the 55.3 percent increase revenues.
Revenue growth was driven by a 50.2 percent increase in Rocky
Mountains revenues, a 65.3 percent increase in Northeast/Mid-Con
revenues and a 53.8 percent increase in Southwest revenues. On a
product line basis, revenue growth for completion, production and
intervention services was 77.9 percent, 51.2 percent and 25.1
percent, respectively.
For the nine months ended October 31, 2018, Adjusted operating
earnings and Adjusted operating margin were $38.3 million and 10.9
percent, improvements of $58.3 million and 1,974 basis points,
respectively, as compared to the same period in the prior year.
Adjusted EBITDA and Adjusted EBITDA margin were $75.1 million and
21.4 percent, respectively. Adjusted Net Earnings and Adjusted Net
Earnings per diluted share were $46.5 million and $2.30 per diluted
share.
NINE MONTH SEGMENT RESULTS
On a GAAP basis, for the nine month period ended October 31,
2018, Rocky Mountains segment operating earnings, including its
allocated share of Costs as Defined of $11.5 million, were $3.3
million. Northeast/Mid-Con segment operating earnings, including
its allocated share of Costs as Defined of $8.2 million, were $7.1
million. Southwest segment operating loss, including its allocated
share of Costs as Defined of $9.0 million, was $(0.8) million. The
following is a tabular summary and commentary of revenues, Adjusted
operating earnings (loss) and Adjusted EBITDA, for the nine month
periods ended October 31, 2018 and October 31, 2017 ($
millions):
|
|
|
|
|
|
|
|
|
REVENUES |
|
|
|
|
NINE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
October 31, 2018 |
|
October 31, 2017 |
|
% Change |
Rocky Mountains |
|
$ |
136.1 |
|
$ |
90.6 |
|
|
50.2 |
% |
Northeast/Mid-Con |
|
|
96.7 |
|
|
58.5 |
|
|
65.3 |
% |
Southwest |
|
|
118.6 |
|
|
77.1 |
|
|
53.8 |
% |
Total |
|
$ |
351.4 |
|
$ |
226.2 |
|
|
55.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING EARNINGS
(LOSS)1 |
|
|
|
|
NINE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
October 31, 2018 |
|
October 31, 2017 |
|
% Change |
Rocky Mountains |
|
$ |
14.8 |
|
$ |
(0.5 |
) |
|
nm |
|
Northeast/Mid-Con |
|
|
15.3 |
|
|
(9.1 |
) |
|
nm |
|
Southwest |
|
|
8.2 |
|
|
(10.4 |
) |
|
nm |
|
Total |
|
$ |
38.3 |
|
$ |
(20.0 |
) |
|
nm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA2 |
|
|
|
|
|
NINE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
October 31, 2018 |
|
October 31, 2017 |
|
% Change |
Rocky Mountains |
|
$ |
29.0 |
|
$ |
11.9 |
|
|
143.7 |
% |
Northeast/Mid-Con |
|
|
27.3 |
|
|
1.5 |
|
|
1,720.0 |
% |
Southwest |
|
|
18.8 |
|
|
0.3 |
|
|
6,166.7 |
% |
Total |
|
$ |
75.1 |
|
$ |
13.7 |
|
|
448.2 |
% |
|
|
|
|
|
|
|
1 Excludes Costs as
Defined |
|
|
|
|
|
|
2 Excludes
Costs as Defined and non-cash compensation expense |
|
|
|
|
|
|
|
|
|
The nine month year to date 50.2 percent increase in Rocky
Mountains segment revenues was driven by increases in completion
and production activity of approximately 103.5 percent and 41.9
percent, respectively. Rocky Mountains segment gross profit was
$36.0 million, an increase of $16.8 million, or 87.5 percent, on
the 50.2 percent increase in revenues. Rocky Mountains’ segment
Adjusted operating earnings, excluding Costs as Defined, were $14.8
million, an increase of $15.3 million. Adjusted EBITDA was $29.0
million or a 21.3 percent of revenues, an increase of $17.1 million
on the $45.5 million increase in revenues.
The nine month year to date 65.3 percent increase in
Northeast/Mid-Con segment revenues was driven by increases in
completion, intervention and production activity of approximately
77.0 percent, 55.3 percent and 55.4 percent, respectively.
Northeast/Mid-Con segment gross profit was $30.7 million, an
increase of $22.2 million, or 261.2 percent, on the 65.3 percent
increase in revenues. Northeast/Mid-Con segment Adjusted operating
earnings, excluding Costs as Defined, were $15.3 million, an
increase of $24.4 million. Adjusted EBITDA was $27.3 million, or
28.2 percent of revenues, an increase of $25.8 million on the $38.2
million increase in revenues.
The nine month year to date 53.8 percent increase in Southwest
segment revenues was driven by increases in production, completion
and intervention activity of approximately 64.7 percent, 57.8
percent and 40.8 percent, respectively. Southwest segment gross
profit was $26.8 million, an increase of $20.7 million, or 339.3
percent, on the 53.8 percent increase in revenues. Southwest
segment Adjusted operating earnings, excluding Costs as Defined,
were $8.2 million, an increase of $18.6 million. Adjusted EBITDA
was $18.8 million, an increase of $18.5 million. As mentioned
earlier, Southwest region revenues were severely impacted by the
Texas floods, which impacted revenues by approximately $6 million
during the third quarter.
DISSOLVABLE PLUGS
Mr. Khoury stated, “Recognizing the continued trend towards
extended reach laterals and plug & perf style completions, our
R&D team has been partnering with an engineering firm to
co-develop a magnesium alloy based line of dissolvable plugs. The
dissolvable plugs reduce the need to mill-out composite plugs,
which results in improved capital efficiency through reduction of
total operational days from spud to production sales.”
Mr. Khoury concluded, “To date, we have
completed extensive field trials in 26 well bores with 520 units in
the Permian, Mid-Con and Rockies regions with excellent results.
Commercialization is currently underway with excellent customer
reception. Our DHPS PSL including our debris-less flotation collar,
our liner hanger, our toe sleeve and our line of dissolvable plugs
has begun to significantly impact our revenues.”
LIQUIDITY
As of October 31, 2018, cash on hand was approximately $313.2
million (approximately $174 million adjusted for the completion of
the Motley acquisition on November 5, 2018). During the current
period, our former parent contributed $50 million in cash prior to
the spin-off. In addition, the Company completed the sale of $250
million of senior secured notes due 2025, which generated
approximately $243 million of net proceeds. There were no
borrowings outstanding under the Company’s $100 million ABL
facility at October 31, 2018.
UPDATED GUIDANCE/PRELIMINARY OUTLOOK
Mr. Khoury commented, “We are updating our full year 2018
guidance which reflects our proprietary PSL additions, including
particularly our line of dissolvable plugs and proprietary fishing
and thru-tubing tools, as well as expected growth in Southwest
segment revenues arising from access to Motley’s customer base. In
addition, our 2018 guidance now includes revenues from our large
diameter coiled tubing PSL, as a result of the Motley
acquisition.”
The Company’s Fiscal Year 2018 guidance is as
follows:
- As compared to the prior year, full year 2018 revenues are
expected to increase by approximately 62 percent to approximately
$520 million
- Fourth quarter organic revenue growth is expected to reflect a
high single digit percentage increase, as compared to the third
quarter
- Adjusted EBITDA is expected to increase approximately 360
percent to approximately $114 million, representing a 21.9 percent
Adjusted EBITDA margin
- Return on Invested Capital is expected to be approximately 18
percent
Our fiscal year 2018 updated guidance excludes integration costs
associated with the Motley acquisition, which we expect to incur in
the fourth quarter.
The Company’s Fiscal Year 2019 preliminary outlook is
based upon the assumption of stable oil and gas prices at current
levels and is as follows:
- Revenues are expected to increase by approximately 45 percent
to approximately $750 million
- Adjusted EBITDA is expected to increase approximately 65
percent to approximately $190 million, representing an approximate
25 percent EBITDA margin
- Adjusted Net Earnings and Adjusted Net Earnings per diluted
share are expected to be approximately $97 million and
approximately $4.50 per diluted share, respectively
- Capital expenditures are expected to be approximately $100
million
- Free Cash Flow is expected to be approximately $60 million, or
approximately 8 percent of revenues
- Return on Invested Capital is expected to be approximately 22
percent
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Exchange Act. Such forward-looking
statements involve risks and uncertainties. The Company’s actual
experience and results may differ materially from the experience
and results anticipated in such statements. Factors that might
cause such a difference include those discussed in the Company’s
filings with the SEC, which include its Registration Statement on
Form 10, Quarterly reports on Form 10-Q and Current Reports on Form
8-K. For more information, see the section entitled
“Forward-Looking Statements” contained in the Company’s
Registration Statement on Form 10 and in other filings. The
forward-looking statements included in this news release are made
only as of the date of this news release and, except as required by
federal securities laws and rules and regulations of the SEC, the
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
About KLX Energy Services
KLX Energy Services is a leading U.S. onshore
provider of mission critical oilfield services focused on
completion, intervention and production activities for the most
technically demanding wells. KLX Energy Services’ experienced and
technically skilled personnel are supported by a broad portfolio of
specialized tools and equipment, including innovative proprietary
tools developed by the Company’s in-house R&D team. KLX Energy
Services supports its customers on a 24/7 basis from over 35
service facilities located in the major onshore oil and gas
producing regions of the United States. For more information, visit
the KLX Energy Services website at www.klxenergy.com.
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
CONDENSED STATEMENTS OF (LOSS) EARNINGS
(UNAUDITED) |
(In Millions, Except Per Share
Data) |
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
NINE MONTHS ENDED |
|
October 31, 2018 |
|
October 31, 2017 |
|
October 31, 2018 |
|
October 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
123.2 |
|
|
$ |
89.2 |
|
|
$ |
351.4 |
|
$ |
226.2 |
|
Cost of sales |
|
90.2 |
|
|
|
72.8 |
|
|
|
257.9 |
|
|
192.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
33.0 |
|
|
|
16.4 |
|
|
|
93.5 |
|
|
33.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
42.3 |
|
|
|
17.4 |
|
|
|
82.0 |
|
|
52.2 |
|
Research and
development |
|
0.6 |
|
|
|
0.8 |
|
|
|
1.9 |
|
|
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
earnings |
|
(9.9 |
) |
|
|
(1.8 |
) |
|
|
9.6 |
|
|
(20.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
- |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings before
income taxes |
|
(9.9 |
) |
|
|
(1.8 |
) |
|
|
9.6 |
|
|
(20.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
- |
|
|
|
- |
|
|
|
0.1 |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
earnings |
$ |
(9.9 |
) |
|
$ |
(1.8 |
) |
|
$ |
9.5 |
|
$ |
(20.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.49 |
) |
|
$ |
(0.09 |
) |
|
$ |
0.47 |
|
$ |
(1.00 |
) |
Diluted |
$ |
(0.49 |
) |
|
$ |
(0.09 |
) |
|
$ |
0.47 |
|
$ |
(1.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
20.1 |
|
|
|
20.1 |
|
|
|
20.1 |
|
|
20.1 |
|
Diluted |
|
20.1 |
|
|
|
20.1 |
|
|
|
20.2 |
|
|
20.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
CONDENSED BALANCE SHEETS
(UNAUDITED) |
(In Millions) |
|
|
|
|
|
|
|
|
|
October 31, |
|
January 31, |
|
2018 |
|
2018 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
313.2 |
|
$ |
- |
Accounts
receivable, net |
|
87.4 |
|
|
73.9 |
Inventories, net |
|
13.8 |
|
|
10.2 |
Other
current assets |
|
8.8 |
|
|
2.0 |
Total
current assets |
|
423.2 |
|
|
86.1 |
Long-term assets |
|
218.0 |
|
|
187.7 |
|
$ |
641.2 |
|
$ |
273.8 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities |
$ |
68.5 |
|
$ |
48.0 |
Total
long-term liabilities |
|
244.4 |
|
|
1.2 |
Total
stockholders' equity |
|
328.3 |
|
|
224.6 |
|
$ |
641.2 |
|
$ |
273.8 |
|
|
|
|
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
(In Millions) |
|
|
|
|
|
NINE MONTHS ENDED |
|
October 31, 2018 |
|
October 31, 2017 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
9.5 |
|
|
$ |
(20.1 |
) |
Adjustments to reconcile net earnings (loss) to net cash |
|
|
|
|
|
|
|
flows
provided by (used in) operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
28.3 |
|
|
|
25.1 |
|
Non-cash
compensation |
|
19.2 |
|
|
|
8.6 |
|
Provision
for doubtful accounts |
|
(0.1 |
) |
|
|
(2.0 |
) |
Loss on
disposal of property, equipment and other |
|
1.7 |
|
|
|
0.4 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts
receivable |
|
(13.4 |
) |
|
|
(36.1 |
) |
Inventories |
|
(3.6 |
) |
|
|
0.3 |
|
Other
current and non-current assets |
|
(9.3 |
) |
|
|
(7.5 |
) |
Accounts
payable |
|
7.1 |
|
|
|
12.0 |
|
Other
current and non-current liabilities |
|
12.2 |
|
|
|
6.1 |
|
Net cash flows provided
by (used in) operating activities |
|
51.6 |
|
|
|
(13.2 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Capital
expenditures |
|
(55.0 |
) |
|
|
(33.7 |
) |
Net cash flows used in
investing activities |
|
(55.0 |
) |
|
|
(33.7 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Proceeds
from long-term debt |
|
250.0 |
|
|
|
- |
|
Debt
origination |
|
(8.3 |
) |
|
|
- |
|
Capital
Contribution from Former Parent |
|
50.0 |
|
|
|
- |
|
Net
transfers from Former Parent |
|
24.9 |
|
|
|
46.9 |
|
Net cash flows provided
by financing activities |
|
316.6 |
|
|
|
46.9 |
|
|
|
|
|
|
|
|
|
Net change in
cash and cash equivalents |
|
313.2 |
|
|
|
- |
|
Cash and cash
equivalents, beginning of period |
|
- |
|
|
|
- |
|
Cash and cash
equivalents, end of period |
$ |
313.2 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
This release includes Adjusted Net Earnings and Adjusted Net
Earnings per diluted share to reflect net earnings before Costs as
Defined, amortization and non-cash compensation expense (“Adjusted
Net Earnings (loss)” and “Adjusted Net Earnings (loss) per diluted
share”). This release includes “Adjusted operating earnings
(loss),” “Free Cash Flow” and “Return on Invested Capital,” which
exclude Costs as Defined. This release also includes “Adjusted
EBITDA,” which excludes Costs as Defined and non-cash compensation
expense. Each of the aforementioned metrics are “non-GAAP financial
measures” as defined in Regulation G of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”).
The Company uses the above described adjusted measures to
evaluate and assess the operational strength and performance of the
business and of particular segments of the business. The Company
believes these financial measures are relevant and useful for
investors because they allow investors to have a better
understanding of the Company’s actual operating performance
unaffected by the impact of the Costs as Defined. These
financial measures should not be viewed as a substitute for, or
superior to, operating earnings, net earnings or net cash flows
provided by operating activities (each as defined under GAAP), the
most directly comparable GAAP measures, as a measure of the
Company’s operating performance.
Pursuant to the requirements of Regulation G of the Exchange
Act, we are providing the following tables that reconcile the above
mentioned non-GAAP financial measures to the most directly
comparable GAAP financial measures:
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF NET (LOSS)
EARNINGS |
TO ADJUSTED NET EARNINGS (LOSS) PER DILUTED
SHARE |
(In Millions, Except Per Share
Data) |
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
NINE MONTHS ENDED |
|
|
October 31, 2018 |
|
October 31, 2017 |
|
October 31, 2018 |
|
October 31, 2017 |
Net (loss) earnings |
|
$ |
(9.9 |
) |
|
$ |
(1.8 |
) |
|
$ |
9.5 |
|
$ |
(20.1 |
) |
Amortization expense |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
0.2 |
|
Non-cash
compensation1 |
|
|
3.4 |
|
|
|
2.8 |
|
|
|
8.5 |
|
|
8.6 |
|
Income
taxes |
|
|
- |
|
|
|
- |
|
|
|
0.1 |
|
|
0.1 |
|
Costs as
Defined 2 |
|
|
23.0 |
|
|
|
- |
|
|
|
28.7 |
|
|
- |
|
Adjusted earnings
(loss) before tax expense |
|
|
16.6 |
|
|
|
1.1 |
|
|
|
47.0 |
|
|
(11.2 |
) |
Income
taxes |
|
|
- |
|
|
|
- |
|
|
|
0.5 |
|
|
0.1 |
|
Adjusted net earnings
(loss) |
|
$ |
16.6 |
|
|
$ |
1.1 |
|
|
$ |
46.5 |
|
$ |
(11.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings
(loss) per diluted share |
|
$ |
0.83 |
|
|
$ |
0.05 |
|
|
$ |
2.30 |
|
$ |
(0.56 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares |
|
|
20.1 |
|
|
|
20.1 |
|
|
|
20.2 |
|
|
20.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Excludes
non-cash compensation expense which are a part of Costs as
Defined. |
|
|
|
|
|
2 Excludes Costs as Defined, which includes costs associated
with the merger of KLX Inc.'s ASG business with The Boeing Company,
including $10.7 million of non-cash compensation expense related to
the acceleration of unvested shares held by KLX Energy employees,
the spin-off of the KLX Energy Services business, the amendment of
the ABL facility, the issuance of the $250 million senior secured
notes due 2025 and the acquisition of Motley (completed on November
5, 2018). |
|
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF CONSOLIDATED OPERATING
(LOSS) EARNINGS |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
NINE MONTHS ENDED |
|
October 31, 2018 |
|
October 31, 2017 |
|
October 31, 2018 |
|
October 31, 2017 |
Operating (loss)
earnings |
$ |
(9.9 |
) |
|
$ |
(1.8 |
) |
|
$ |
9.6 |
|
|
$ |
(20.0 |
) |
Costs as
defined (1) |
|
23.0 |
|
|
|
- |
|
|
|
28.7 |
|
|
|
- |
|
Adjusted
operating earnings (loss) |
|
13.1 |
|
|
|
(1.8 |
) |
|
|
38.3 |
|
|
|
(20.0 |
) |
Depreciation and amortization |
|
10.1 |
|
|
|
8.2 |
|
|
|
28.3 |
|
|
|
25.1 |
|
Non-cash
compensation (2) |
|
3.4 |
|
|
|
2.8 |
|
|
|
8.5 |
|
|
|
8.6 |
|
Adjusted EBITDA |
$ |
26.6 |
|
|
$ |
9.2 |
|
|
$ |
75.1 |
|
|
$ |
13.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF ROCKY MOUNTAINS OPERATING
(LOSS) EARNINGS |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
NINE MONTHS ENDED |
|
October 31, 2018 |
|
October 31, 2017 |
|
October 31, 2018 |
|
October 31, 2017 |
Rocky Mountains
operating (loss) earnings |
$ |
(3.2 |
) |
|
$ |
1.3 |
|
|
$ |
3.3 |
|
|
$ |
(0.5 |
) |
Costs as
defined (1) |
|
9.3 |
|
|
|
- |
|
|
|
11.5 |
|
|
|
- |
|
Adjusted
Rockies operating earnings (loss) |
|
6.1 |
|
|
|
1.3 |
|
|
|
14.8 |
|
|
|
(0.5 |
) |
Depreciation and amortization |
|
3.9 |
|
|
|
3.1 |
|
|
|
11.3 |
|
|
|
8.9 |
|
Non-cash
compensation (2) |
|
0.9 |
|
|
|
1.2 |
|
|
|
2.9 |
|
|
|
3.5 |
|
Rocky Mountains
Adjusted EBITDA |
$ |
10.9 |
|
|
$ |
5.6 |
|
|
$ |
29.0 |
|
|
$ |
11.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NORTHEAST/MID-CON OPERATING
(LOSS) EARNINGS |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
NINE MONTHS ENDED |
|
October 31, 2018 |
|
October 31, 2017 |
|
October 31, 2018 |
|
October 31, 2017 |
Northeast/Mid-Con
operating (loss) earnings |
$ |
(0.7 |
) |
|
$ |
(1.9 |
) |
|
$ |
7.1 |
|
|
$ |
(9.1 |
) |
Costs as
defined (1) |
|
6.7 |
|
|
|
- |
|
|
|
8.2 |
|
|
|
- |
|
Adjusted
Northeast operating earnings (loss) |
|
6.0 |
|
|
|
(1.9 |
) |
|
|
15.3 |
|
|
|
(9.1 |
) |
Depreciation and amortization |
|
3.5 |
|
|
|
2.7 |
|
|
|
9.7 |
|
|
|
8.4 |
|
Non-cash
compensation (2) |
|
1.0 |
|
|
|
0.7 |
|
|
|
2.3 |
|
|
|
2.2 |
|
Northeast Adjusted
EBITDA |
$ |
10.5 |
|
|
$ |
1.5 |
|
|
$ |
27.3 |
|
|
$ |
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF SOUTHWEST OPERATING
LOSS |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
NINE MONTHS ENDED |
|
October 31, 2018 |
|
October 31, 2017 |
|
October 31, 2018 |
|
October 31, 2017 |
Southwest operating
loss |
$ |
(6.0 |
) |
|
$ |
(1.2 |
) |
|
$ |
(0.8 |
) |
|
$ |
(10.4 |
) |
Costs as
defined (1) |
|
7.0 |
|
|
|
- |
|
|
|
9.0 |
|
|
|
- |
|
Adjusted
Southwest operating earnings (loss) |
|
1.0 |
|
|
|
(1.2 |
) |
|
|
8.2 |
|
|
|
(10.4 |
) |
Depreciation and amortization |
|
2.7 |
|
|
|
2.4 |
|
|
|
7.3 |
|
|
|
7.8 |
|
Non-cash
compensation (2) |
|
1.5 |
|
|
|
0.9 |
|
|
|
3.3 |
|
|
|
2.9 |
|
Southwest Adjusted
EBITDA |
$ |
5.2 |
|
|
$ |
2.1 |
|
|
$ |
18.8 |
|
|
$ |
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Excludes Costs as Defined, which includes costs associated with the
merger of KLX Inc.'s ASG business with The Boeing Company, the
spin-off of the KLX Energy Services business, the amendment of the
ABL facility, the issuance of the $250 million senior secured notes
due 2025 and the acquisition of Motley (completed on November 5,
2018). |
(2) Excludes one-time costs associated with non-cash
compensation expense, which are included in Costs as Defined. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF ROIC
CALCULATIONS |
(In Millions) |
|
|
|
Three Months Ended |
|
|
October 31, 2018 |
Net loss |
$ |
(10 |
) |
Amortization |
|
0 |
|
Non-Cash
Compensation Expense |
$ |
3 |
|
Costs as
Defined1 |
|
23 |
|
Adjusted Net
Earnings |
$ |
17 |
|
|
|
Adjusted Net
Earnings |
$ |
17 |
|
Amortization |
|
0 |
|
Non-Cash
Compensation Expense |
|
(3 |
) |
Interest
Expense |
|
- |
|
Adjusted
operating earnings |
$ |
13 |
|
|
|
Adjusted operating
earnings |
|
13 |
|
Income
tax expense |
|
- |
|
After-tax net operating
profit |
$ |
13 |
|
|
|
Average
Capital |
$ |
236 |
|
|
|
Return on
invested capital2 |
|
23 |
% |
|
|
1 Excludes Costs as Defined |
2 Excludes $243 million of net proceeds from the issuance of
the $250 million senior secured notes. Annualized third quarter
after-tax net operating profit. |
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF 2018 GUIDANCE; OPERATING
EARNINGS |
TO ADJUSTED OPERATING EARNINGS AND ADJUSTED
EBITDA |
(In Millions) |
|
|
|
2018 Guidance |
|
(Approximate Amounts) |
Operating earnings |
$ |
31 |
Costs as
Defined1 |
|
29 |
Adjusted operating
earnings |
|
60 |
Depreciation and amortization |
|
41 |
Non-cash
compensation |
|
13 |
Adjusted EBITDA |
$ |
114 |
|
1 Excludes
Costs as Defined, which includes costs associated with the merger
of KLX Inc.'s ASG business with The Boeing Company, the spin-off of
the KLX Energy Services business, the amendment of the ABL
facility, the issuance of the $250 million senior secured notes due
2025 and the acquisition of Motley (completed on November 5,
2018) |
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF ROIC
CALCULATIONS |
(In Millions) |
|
|
|
FY 2018 Guidance |
|
|
|
Net Earnings |
$ |
24 |
|
Amortization |
|
1 |
|
Non-Cash
Compensation Expense |
|
13 |
|
Costs as
Defined1 |
|
29 |
|
Adjusted Net
Earnings |
$ |
66 |
|
|
|
Adjusted Net
Earnings |
$ |
66 |
|
Amortization |
|
(1 |
) |
Non-Cash
Compensation Expense |
|
(13 |
) |
Interest
Expense |
|
7 |
|
Adjusted
operating earnings |
$ |
60 |
|
|
|
Adjusted operating
earnings |
|
60 |
|
Income
tax expense |
|
- |
|
After-tax net
operating profit |
$ |
60 |
|
|
|
Average total
capital |
$ |
339 |
|
|
|
Return on
invested capital |
|
18 |
% |
|
|
|
|
1 Excludes Costs as Defined, which includes costs associated
with the merger of KLX Inc.'s ASG business with The Boeing Company,
the spin-off of the KLX Energy Services business, the amendment of
the ABL facility, the issuance of the $250 million senior secured
notes due 2025 and the acquisition of Motley (completed on November
5, 2018). |
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF 2019 OUTLOOK; OPERATING
EARNINGS |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
2019 Outlook |
|
(Approximate Amounts) |
Operating earnings |
$ |
115 |
|
Depreciation and amortization |
|
56 |
|
Non-cash
compensation |
|
19 |
|
Adjusted EBITDA |
$ |
190 |
|
|
|
Net cash flows provided
by operating activities |
|
160 |
|
Capital
expenditures |
|
(100 |
) |
Free cash flow |
$ |
60 |
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF 2019 OUTLOOK; NET
EARNINGS |
TO ADJUSTED NET EARNINGS AND ADJUSTED NET
EARNINGS PER DILUTED SHARE |
(In Millions, Except Per Share
Data) |
|
|
|
|
|
2019
Outlook |
|
|
(Approximate Amounts) |
Net earnings |
|
$ |
78 |
Amortization expense |
|
|
2 |
Non-cash
compensation |
|
|
19 |
Income
taxes |
|
|
9 |
Adjusted earnings
before tax expense |
|
|
108 |
Income
taxes |
|
|
11 |
Adjusted Net
Earnings |
|
$ |
97 |
Adjusted Net
Earnings |
|
|
per
diluted share |
|
$ |
4.50 |
|
|
|
Diluted weighted
average shares |
|
|
21.5 |
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF ROIC
CALCULATIONS |
(In Millions) |
|
|
|
FY 2019 Outlook |
|
(Approximate Amounts) |
|
|
Net earnings |
$ |
78 |
|
Amortization |
|
2 |
|
Non-cash
compensation expense |
|
19 |
|
Income
taxes |
|
9 |
|
Adjusted earnings
before tax expense |
$ |
108 |
|
Income
taxes |
|
11 |
|
Adjsuted Net
Earnings |
$ |
97 |
|
|
|
Adjusted Net
Earnings |
$ |
97 |
|
Amortization |
|
(2 |
) |
Non-cash
compensation expense |
|
(19 |
) |
Interest
expense |
|
30 |
|
Income
tax expense |
|
9 |
|
Operating
earnings |
$ |
115 |
|
|
|
Operating earnings |
|
115 |
|
Income
tax expense |
|
11 |
|
After-tax net
operating profit |
$ |
104 |
|
|
|
Average total
capital |
$ |
464 |
|
|
|
Return on
invested capital |
|
22 |
% |
|
|
CONTACT:Michael PerlmanTreasurer and Senior
Director, Investor RelationsKLX Energy Services Holdings, Inc.(561)
273-7148
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