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 full fiscal
year and fourth fiscal quarter ended January 31, 2019 financial
results.
KLX Energy Services is recognized as a premium service provider
of a broad range of services to top tier E&P operators. The
Company’s expanding footprint of high quality, differential
equipment and highly competent personnel enables the Company to
deliver best-in-class solutions across all major U.S. onshore
geographic regions, and allows customers to simplify their
operational planning and execution by sourcing from one
provider.
During 2018, management completed the merger of the Aerospace
Solutions business of KLX Inc. with The Boeing Company, 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 (“Motley”). The
Company incurred approximately $30 million of one-time costs
associated with these activities, approximately $2 million of which
was incurred in the fourth quarter. The Company will therefore
report both GAAP and adjusted financial results. The costs
associated with the aforementioned activities are collectively
referred to as “Costs as Defined.”
For the full year 2018, the Company delivered strong revenue
growth of 54.5 percent as compared to the same period last year,
driven primarily by a double-digit percentage increase in the
number of new customers, a significant increase in the breadth of
services provided to existing customers and the introduction of a
number of new proprietary product service lines (“PSLs”). This
resulted in a significant earnings turnaround, with the Company
reporting GAAP operating earnings of $22.1 million, an increase of
$46.1 million, and GAAP net earnings and net earnings per diluted
share of $14.4 million and $0.71 per diluted share, increases of
$38.5 million and $1.91 per share, respectively. Adjusted Net
Earnings and Adjusted Net Earnings per diluted share were $56.8
million and $2.81 per diluted share, increases of $65.4 million and
$3.24 per share, respectively, as compared to the prior year. In
addition, the Company ended the year with approximately $164
million in cash, an undrawn $100 million credit facility and
delivered a return on invested capital of 16 percent.
FULL YEAR HIGHLIGHTS (EXCLUSIVE OF COSTS AS
DEFINED) As compared to the prior year
- Revenues increased 54.5 percent to $495.3 million
- Gross profit increased 143.0 percent to $124.9 million
- Adjusted operating earnings were $52.7 million, an increase of
$73.1 million1
- Adjusted EBITDA was $107.0 million, or 21.6 percent of
revenues, and increased $82.4 million, or 335.0 percent2
- Adjusted Net Earnings and Adjusted Net Earnings per diluted
share were $56.8 million and $2.81 per diluted share, increases of
$65.4 million and $3.24 per diluted share, respectively3
- Return on Invested Capital (“ROIC”) was 16 percent1
1 Excludes Costs as Defined 2 Excludes Costs as Defined and
non-cash compensation expense 3 Excludes Costs as Defined and
amortization and non-cash compensation expense
Adjusted Net Earnings and Adjusted Net Earnings per diluted
share are presented 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),” and “Return on Invested Capital,” which excludes 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.”
FULL YEAR CONSOLIDATED RESULTS
For the year ended January 31, 2019, revenues were $495.3
million, an increase of $174.8 million, or 54.5 percent, as
compared to the same period in the prior year. Revenue growth
reflected a double-digit percentage increase in the number of new
customers and a significant increase in the breadth of services
provided to existing customers. Gross profit increased 143.0
percent, on the 54.5 percent increase in revenues. Revenue growth
was driven by a 41.5 percent increase in Rocky Mountains segment
revenues, a 54.0 percent increase in Northeast/Mid-Con segment
revenues and a 70.0 percent increase in Southwest segment revenues.
On a product line basis, revenue growth for completion, production
and intervention services was 77.2 percent, 50.4 percent and 21.0
percent, respectively.
Operating earnings and operating margin, adjusted to exclude
Costs as Defined, were $52.7 million and 10.6 percent, improvements
of $73.1 million and approximately 1,700 basis points,
respectively, as compared to the same period in the prior year.
Adjusted EBITDA and Adjusted EBITDA margin were $107.0 million and
21.6 percent, respectively. Adjusted Net Earnings and Adjusted Net
Earnings per diluted share were $56.8 million and $2.81 per diluted
share, respectively.
FULL YEAR SEGMENT RESULTS
On a GAAP basis, for the year ended January 31, 2019, including
each geographic segment’s allocated share of the approximate $30
million of Costs as Defined, Rocky Mountains segment operating
earnings were $5.5 million. Northeast/Mid-Con segment operating
earnings were $13.4 million. Southwest segment operating earnings
were $3.2 million. The following is a tabular summary and
commentary of revenues, Adjusted operating earnings and Adjusted
EBITDA for the twelve month periods ended January 31, 2019 and
January 31, 2018 ($ millions):
|
|
|
|
|
|
|
|
REVENUES |
|
|
|
YEAR ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
January 31, 2019 |
|
January 31, 2018 |
|
% Change |
Rocky
Mountains |
|
$ |
179.7 |
|
$ |
127.0 |
|
|
|
41.5 |
% |
Northeast/Mid-Con |
|
|
129.4 |
|
|
84.0 |
|
|
|
54.0 |
% |
Southwest |
|
|
186.2 |
|
|
109.5 |
|
|
|
70.0 |
% |
Total |
|
$ |
495.3 |
|
$ |
320.5 |
|
|
|
54.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING EARNINGS
(LOSS)1 |
|
|
|
YEAR ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
January 31, 2019 |
|
January 31, 2018 |
|
$ Change |
Rocky
Mountains |
|
$ |
17.4 |
|
$ |
0.6 |
|
|
$ |
16.8 |
|
Northeast/Mid-Con |
|
|
21.9 |
|
|
(9.4 |
) |
|
|
31.3 |
|
Southwest |
|
|
13.4 |
|
|
(11.6 |
) |
|
|
25.0 |
|
Total |
|
$ |
52.7 |
|
$ |
(20.4 |
) |
|
$ |
73.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA2 |
|
|
|
YEAR ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
January 31, 2019 |
|
January 31, 2018 |
|
% Change |
Rocky
Mountains |
|
$ |
36.8 |
|
$ |
17.2 |
|
|
|
114.0 |
% |
Northeast/Mid-Con |
|
|
38.7 |
|
|
4.9 |
|
|
|
689.8 |
% |
Southwest |
|
|
31.5 |
|
|
2.5 |
|
|
|
1,160.0 |
% |
Total |
|
$ |
107.0 |
|
$ |
24.6 |
|
|
|
335.0 |
% |
|
|
|
|
|
|
|
1 Excludes Costs as
Defined |
|
|
|
|
|
|
2 Excludes
Costs as Defined and non-cash compensation expense |
|
|
|
|
For the year ended January 31, 2019, the Rocky Mountains segment
delivered revenue growth of approximately 41.5 percent, driven
primarily by significant increases in both the number of active
customers and the breadth of services provided to existing
customers. Gross profit increased 70.7 percent on the 41.5 percent
increase in revenues. Adjusted operating earnings, excluding Costs
as Defined, were $17.4 million, an increase of $16.8 million.
Adjusted EBITDA was $36.8 million, or 20.5 percent of revenues, an
increase of $19.6 million.
For the year ended January 31, 2019, the Northeast/Mid-Con
segment delivered revenue growth of approximately 54.0 percent,
also driven primarily by significant increases in both the number
of active customers and the breadth of services provided to
existing customers. Gross profit increased 162.4 percent on the
54.0 percent increase in revenues. Adjusted operating earnings,
excluding Costs as Defined, were $21.9 million, an increase of
$31.3 million. Adjusted EBITDA was $38.7 million, or 29.9 percent
of revenues, an increase of $33.8 million.
For the year ended January 31, 2019, Southwest segment revenues
increased 70.0 percent, driven primarily by significant increases
in both the number of active customers and the breadth of services
provided to existing customers. The Southwest segment also
benefited from the addition of Motley’s large diameter coiled
tubing business. Gross profit increased 308.1 percent on the 70.0
percent increase in revenues. Adjusted operating earnings,
excluding Costs as Defined, were $13.4 million, an increase of
$25.0 million. Adjusted EBITDA was $31.5 million, or 16.9 percent
of revenues, an increase of $29.0 million.
FOURTH QUARTER (GAAP) As compared to the prior
year
On a GAAP basis, including Costs as Defined, as compared to the
fourth quarter of the prior year, operating earnings increased
$16.5 million to $12.5 million. GAAP net earnings and net earnings
per diluted share increased $8.9 million and $0.44 per share to
$4.9 million and $0.24 per diluted share, respectively.
FOURTH QUARTER HIGHLIGHTS (EXCLUSIVE OF COSTS AS
DEFINED) As compared to the prior year
- Revenues increased 52.6 percent to $143.9 million
- Gross profit increased 78.4 percent to $31.4 million
- Adjusted operating earnings were $14.4 million, an increase of
$14.8 million1
- Adjusted EBITDA was $31.9 million, or 22.2 percent of revenues,
and increased $21.0 million, or 192.7 percent2
- Adjusted Net Earnings and Adjusted Net Earnings per diluted
share were $11.2 million and $0.55 per diluted share,
respectively3
- Successful broad scale introduction of downhole production
solutions (“DHPS”) product line, including dissolvable plugs
- Completed the integration of Motley
1 Excludes Costs as Defined 2 Excludes Costs as Defined and
non-cash compensation expense 3 Excludes Costs as Defined and
amortization and non-cash compensation expense FOURTH
QUARTER CONSOLIDATED RESULTS
On a consolidated basis, revenues increased $49.6 million, or
52.6 percent, to $143.9 million, as compared to the same period in
the prior year. Revenue growth was driven by a 19.8 percent
increase in Rocky Mountains segment revenues, a 28.2 percent
increase in Northeast/Mid-Con segment revenues and a 108.6 percent
increase in Southwest segment revenues. Southwest segment revenues
benefited from the November 5, 2018 acquisition of Motley. On a
product line basis, as compared to the same period in the prior
year, completion revenues grew 75.6 percent, production revenues
grew 48.1 percent and intervention revenues grew 9.6 percent.
Adjusted operating earnings and Adjusted operating margin were
$14.4 million and 10.0 percent, improvements of $14.8 million and
approximately 1,040 basis points, respectively, as compared to the
same period in the prior year. Adjusted EBITDA and Adjusted EBITDA
margin were $31.9 million and 22.2 percent, respectively. Adjusted
Net Earnings and Adjusted Net Earnings per diluted share were $11.2
million and $0.55 per diluted share, increases of $8.5 million and
$0.42 per share, respectively, as compared to the same period in
the prior year.
Amin J. Khoury, Chairman and Chief Executive Officer of KLX
Energy Services, commented, “During the fourth quarter, we
successfully completed the integration of the recently acquired
Motley business and made important progress in the
commercialization of our newly launched proprietary tools. Fourth
quarter organic DHPS revenues, including dissolvable plugs,
debris-less flotation collars, composite plugs, wet shoe bypass
sub, toe sleeves and liner hangers increased approximately 43
percent over the same period in the prior year, and increased
approximately 16 percent on a sequential quarterly basis. During
the quarter, we also completed the divestiture of certain excess
assets in our Northeast/Mid-Con segment, resulting in an
approximate $4 million gain on the sale, which was largely offset
by new product introduction and Motley integration costs.”
“Revenue growth from newly introduced PSLs including the DHPS
PSL, the Tempress HydroPull™ tool in combination with our patented
Havok motor bearing assembly, along with the addition of Motley’s
large diameter coiled tubing business, helped offset the impact of
the reduction in fourth quarter completion activity, which was
brought about by the 44 percent decline in oil prices from $76 per
barrel on October 3rd down to $42 per barrel on December 24th.
Notwithstanding these fourth quarter headwinds, the Company turned
in a solid fourth quarter performance, with revenues up
approximately 53 percent, including Motley, and Adjusted EBITDA up
approximately 193 percent, as compared to the same period in the
prior year,” said Mr. Khoury.
Mr. Khoury concluded, “As we look ahead to 2019, we are highly
confident that our expanding portfolio of products and services,
complemented by our newly introduced proprietary PSLs, will
continue to drive growth in both our customer base and in share of
our customers’ expenditures.”
FOURTH QUARTER SEGMENT RESULTS
On a GAAP basis, including their allocated shares of Costs as
Defined, for the three month period ended January 31, 2019, Rocky
Mountains segment operating earnings were $2.2 million.
Northeast/Mid-Con segment operating earnings were $6.3 million.
Southwest segment operating earnings were $4.0 million.
The following is a tabular summary and commentary of revenues,
operating earnings and EBITDA, adjusted to exclude Costs as
Defined, for the three month periods ended January 31, 2019 and
January 31, 2018 ($ millions):
|
|
|
|
|
|
|
|
REVENUES |
|
|
|
THREE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
January 31, 2019 |
|
January 31, 2018 |
|
% Change |
Rocky
Mountains |
|
$ |
43.6 |
|
$ |
36.4 |
|
|
|
19.8 |
% |
Northeast/Mid-Con |
|
|
32.7 |
|
|
25.5 |
|
|
|
28.2 |
% |
Southwest |
|
|
67.6 |
|
|
32.4 |
|
|
|
108.6 |
% |
Total |
|
$ |
143.9 |
|
$ |
94.3 |
|
|
|
52.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING EARNINGS
(LOSS)1 |
|
|
|
THREE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
January 31, 2019 |
|
January 31, 2018 |
|
$ Change |
Rocky
Mountains |
|
$ |
2.6 |
|
$ |
1.1 |
|
|
$ |
1.5 |
|
Northeast/Mid-Con |
|
|
6.6 |
|
|
(0.3 |
) |
|
|
6.9 |
|
Southwest |
|
|
5.2 |
|
|
(1.2 |
) |
|
|
6.4 |
|
Total |
|
$ |
14.4 |
|
$ |
(0.4 |
) |
|
$ |
14.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA2 |
|
|
|
THREE MONTHS ENDED |
|
|
|
|
|
|
|
|
|
Segment |
|
January 31, 2019 |
|
January 31, 2018 |
|
% Change |
Rocky
Mountains |
|
$ |
7.8 |
|
$ |
5.3 |
|
|
|
47.2 |
% |
Northeast/Mid-Con |
|
|
11.4 |
|
|
3.4 |
|
|
|
235.3 |
% |
Southwest |
|
|
12.7 |
|
|
2.2 |
|
|
|
477.3 |
% |
Total |
|
$ |
31.9 |
|
$ |
10.9 |
|
|
|
192.7 |
% |
|
|
|
|
|
|
1 Excludes Costs as
Defined |
|
|
|
|
|
|
2 Excludes
Costs as Defined and non-cash compensation expense |
|
|
|
|
The fourth quarter 19.8 percent increase in Rocky Mountains
segment revenues was driven primarily by significant increases in
both the number of active customers and the breadth of services
provided to existing customers. Rocky Mountains segment gross
profit increased 27.0 percent on the 19.8 percent increase in
revenues. Adjusted EBITDA was $7.8 million, an increase of $2.5
million, or 47.2 percent, on the 19.8 percent increase in
revenues.
The fourth quarter 28.2 percent increase in Northeast/Mid-Con
segment revenues was also driven primarily by significant increases
in both the number of active customers and the breadth of services
provided to existing customers. Adjusted EBITDA was $11.4 million,
an increase of $8.0 million, or 235.3 percent, on the 28.2 percent
increase in revenues.
The fourth quarter 108.6 percent increase in revenues in the
Southwest segment benefited from the Motley acquisition.
Notwithstanding the fourth quarter commodity price decline and
Permian takeaway constraints, the Southwest segment was able to
generate a gross profit increase of 257.9 percent, and Adjusted
EBITDA of $12.7 million, an increase of $10.5 million, or 477.3
percent, as compared to the same period in the prior year.
LIQUIDITY
As of January 31, 2019, cash on hand was approximately $164
million. Total long-term debt of $250 million less cash, resulted
in a net debt of approximately $86 million, and the Company’s net
debt to net capital ratio was approximately 20 percent. There were
no borrowings outstanding under the Company’s $100 million credit
facility. For the year ended January 31, 2019, net cash flow
provided by operations was $62.0 million. Capital expenditures
(“Capex”) were $78.8 million, excluding approximately $5.2 million
in deposits on equipment to be received in 2019. Capex spending
reflects the Company’s strategy to expand its footprint in each
geographic segment.
GUIDANCE
The Company is confirming its prior 2019 guidance. The Company’s
guidance assumes an average WTI oil price of $55 per barrel, and a
range of $50 per barrel to $60 per barrel for the full year 2019.
The guidance also assumes an average price of natural gas of
$2.75/mmbtu.
During 2018, management completed the merger of the Aerospace
Solutions business of KLX Inc. with The Boeing Company, 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. The Company incurred
approximately $30 million of one-time costs associated with these
activities. As a result, the Company reported both GAAP and
financial results adjusted to exclude these one-time costs. In
2019, the Company does not expect to report financial results
adjusted for one-time costs. Rather, the Company will report GAAP
results, as well as EBITDA, adjusted to exclude non-cash
compensation expense, and net earnings, adjusted to exclude
non-cash compensation and amortization expense.
For full year 2019, the Company is focused on broadening out its
PSL footprint in each geographic region, and rolling out its
higher-margin proprietary PSLs and newly acquired large diameter
coiled tubing PSL and related complementary services. The roll-out
of these services will impact both operating costs, as the Company
hires and trains personnel in advance of the specific regional
service launches, and also capital expenditures especially, as the
Company adds new large diameter coiled tubing spreads in its
Mid-Con and Rocky Mountains segments.
The Company’s Fiscal Year 2019 outlook, as compared to
the same period of the prior year, is as follows:
- Revenues are expected to increase by approximately 50 percent
to approximately $750 million
- EBITDA, adjusted to exclude non-cash compensation expense, is
expected to increase approximately 75 percent to approximately $190
million, representing an approximate 25 percent EBITDA margin
- Net Earnings and Net Earnings per diluted share, adjusted to
exclude non-cash compensation and amortization expense, are
expected to increase approximately 70 percent and approximately 60
percent to approximately $97 million and approximately $4.50 per
diluted share, respectively
- Capital expenditures are expected to be approximately $100
million, reflecting investments to broaden the Company’s footprint
in each geographic region, including the roll out of its large
diameter coiled tubing and related services to the Mid-Con and
Rockies geographic regions, thereby enabling each geographic
segment to offer the broader range of services required by our
customers
- Return on Invested Capital is expected to be approximately 20
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 Annual Report on Form 10-K,
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 Annual Report on Form 10-K
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. |
STATEMENTS OF EARNINGS (LOSS)
(UNAUDITED) |
(In Millions, Except Per Share
Data) |
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
YEARS ENDED |
|
January 31, 2019 |
|
January 31, 2018 |
|
January 31, 2019 |
|
January 31, 2018 |
|
|
|
|
|
|
|
|
Revenues |
$ |
143.9 |
|
$ |
94.3 |
|
|
$ |
495.3 |
|
$ |
320.5 |
|
Cost of sales |
|
112.5 |
|
|
76.7 |
|
|
|
370.4 |
|
|
269.1 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
31.4 |
|
|
17.6 |
|
|
|
124.9 |
|
|
51.4 |
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
18.4 |
|
|
21.2 |
|
|
|
100.4 |
|
|
73.4 |
|
Research and
development |
|
0.5 |
|
|
0.4 |
|
|
|
2.4 |
|
|
2.0 |
|
|
|
|
|
|
|
|
|
Operating earnings
(loss) |
|
12.5 |
|
|
(4.0 |
) |
|
|
22.1 |
|
|
(24.0 |
) |
|
|
|
|
|
|
|
|
Interest expense,
net |
|
7.1 |
|
|
- |
|
|
|
7.1 |
|
|
- |
|
|
|
|
|
|
|
|
|
Earnings (loss) before
income taxes |
|
5.4 |
|
|
(4.0 |
) |
|
|
15.0 |
|
|
(24.0 |
) |
|
|
|
|
|
|
|
|
Income tax
expense |
|
0.5 |
|
|
- |
|
|
|
0.6 |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
Net earnings
(loss) |
$ |
4.9 |
|
$ |
(4.0 |
) |
|
$ |
14.4 |
|
$ |
(24.1 |
) |
|
|
|
|
|
|
|
|
Net earnings (loss) per
common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.24 |
|
$ |
(0.20 |
) |
|
$ |
0.72 |
|
$ |
(1.20 |
) |
Diluted |
$ |
0.24 |
|
$ |
(0.20 |
) |
|
$ |
0.71 |
|
$ |
(1.20 |
) |
|
|
|
|
|
|
|
|
Weighted average common
shares: |
|
|
|
|
|
|
|
Basic |
|
20.2 |
|
|
20.1 |
|
|
|
20.1 |
|
|
20.1 |
|
Diluted |
|
20.2 |
|
|
20.1 |
|
|
|
20.2 |
|
|
20.1 |
|
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
BALANCE SHEETS (UNAUDITED) |
(In Millions) |
|
|
|
|
|
|
|
|
|
January 31, |
|
January 31, |
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
163.8 |
|
$ |
- |
Accounts
receivable, net |
|
119.6 |
|
|
73.9 |
Inventories,
net |
|
15.4 |
|
|
10.2 |
Other current
assets |
|
9.5 |
|
|
2.0 |
Total
current assets |
|
308.3 |
|
|
86.1 |
Long-term
assets |
|
364.5 |
|
|
187.7 |
|
$ |
672.8 |
|
$ |
273.8 |
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Total current
liabilities |
$ |
85.2 |
|
$ |
48.0 |
Total long-term
liabilities |
|
246.9 |
|
|
1.2 |
Total
stockholders' equity |
|
340.7 |
|
|
224.6 |
|
$ |
672.8 |
|
$ |
273.8 |
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
STATEMENTS OF CASH FLOWS
(UNAUDITED) |
(In Millions) |
|
|
|
|
|
YEAR ENDED |
|
January 31, 2019 |
|
January 31, 2018 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net earnings
(loss) |
$ |
14.4 |
|
|
$ |
(24.1 |
) |
Adjustments to
reconcile net earnings (loss) to net cash |
|
|
|
flows
provided by (used in) operating activities: |
|
|
|
Depreciation and amortization |
|
41.5 |
|
|
|
33.5 |
|
Non-cash compensation |
|
23.5 |
|
|
|
12.5 |
|
Amortization of deferred financing fees |
|
0.3 |
|
|
|
- |
|
Provision for inventory reserve |
|
1.6 |
|
|
|
1.2 |
|
Change in allowance for doubtful accounts |
|
0.8 |
|
|
|
(0.4 |
) |
(Gain) loss on disposal of property, equipment and other |
|
(2.1 |
) |
|
|
0.9 |
|
Changes in
operating assets and liabilities |
|
|
|
Accounts receivable |
|
(23.2 |
) |
|
|
(43.0 |
) |
Inventories |
|
(6.8 |
) |
|
|
(2.1 |
) |
Other current and non-current assets |
|
(5.5 |
) |
|
|
(6.3 |
) |
Accounts payable |
|
3.7 |
|
|
|
12.6 |
|
Other current and non-current liabilities |
|
13.8 |
|
|
|
5.8 |
|
Net cash flows provided
by (used in) operating activities |
|
62.0 |
|
|
|
(9.4 |
) |
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Capital
expenditures |
|
(84.0 |
) |
|
|
(49.4 |
) |
Proceeds from
sale of assets |
|
9.9 |
|
|
|
0.6 |
|
Acquisitions,
net of cash acquired |
|
(140.0 |
) |
|
|
- |
|
Net cash flows used in
investing activities |
|
(214.1 |
) |
|
|
(48.8 |
) |
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Proceeds from
long-term debt |
|
250.0 |
|
|
|
- |
|
Debt origination
costs |
|
(9.3 |
) |
|
|
- |
|
Capital
contribution from Former Parent |
|
50.0 |
|
|
|
- |
|
Net transfers
from Former Parent (pre spin-off) |
|
25.2 |
|
|
|
58.2 |
|
Net cash flows provided
by financing activities |
|
315.9 |
|
|
|
58.2 |
|
|
|
|
|
Net change in
cash and cash equivalents |
|
163.8 |
|
|
|
- |
|
Cash and cash
equivalents, beginning of period |
|
- |
|
|
|
- |
|
Cash and cash
equivalents, end of period |
$ |
163.8 |
|
|
$ |
- |
|
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)”
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 EARNINGS
(LOSS) |
|
TO ADJUSTED NET EARNINGS (LOSS) PER DILUTED
SHARE |
|
(In Millions, Except Per Share
Data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
YEAR ENDED |
|
|
|
January 31, 2019 |
|
January 31, 2018 |
|
January 31, 2019 |
|
January 31, 2018 |
|
Net earnings
(loss) |
|
$ |
4.9 |
|
$ |
(4.0 |
) |
|
$ |
14.4 |
|
$ |
(24.1 |
) |
|
Amortization
expense |
|
|
0.7 |
|
|
0.2 |
|
|
|
0.8 |
|
|
0.3 |
|
|
Non-cash
compensation1 |
|
|
4.3 |
|
|
2.9 |
|
|
|
12.8 |
|
|
11.5 |
|
|
Income
taxes |
|
|
0.5 |
|
|
- |
|
|
|
0.6 |
|
|
0.1 |
|
|
Costs as
Defined2 |
|
|
1.9 |
|
|
3.6 |
|
|
|
30.6 |
|
|
3.6 |
|
|
Adjusted
earnings (loss) before tax expense |
|
12.3 |
|
|
2.7 |
|
|
|
59.2 |
|
|
(8.6 |
) |
|
Income
taxes3 |
|
|
1.1 |
|
|
- |
|
|
|
2.4 |
|
|
- |
|
|
Adjusted Net Earnings
(loss) |
|
$ |
11.2 |
|
$ |
2.7 |
|
|
$ |
56.8 |
|
$ |
(8.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Net Earnings (loss) per diluted share |
$ |
0.55 |
|
$ |
0.13 |
|
|
$ |
2.81 |
|
$ |
(0.43 |
) |
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares |
|
|
20.2 |
|
|
20.1 |
|
|
|
20.2 |
|
|
20.1 |
|
|
|
|
|
|
|
|
|
|
|
|
1 Adjusted
to exclude one-time costs associated with non-cash compensation
expense, which are included in Costs as Defined. |
|
|
|
2 Costs as Defined 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
credit facility, the issuance of $250 million senior secured notes
due 2025 and the acquisition of Motley. |
|
|
3 Income
taxes are calculated at each respective periods effective tax
rate. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF ROIC
CALCULATIONS |
(In Millions) |
|
|
|
FY 2018 |
|
|
|
|
Net earnings |
$ |
14 |
|
Amortization |
|
1 |
|
Costs as
Defined1 |
|
31 |
|
Non-cash compensation expense2 |
|
13 |
|
Income
taxes |
|
1 |
|
Adjusted earnings
before tax expense |
|
59 |
|
Income
taxes |
|
(2 |
) |
Adjusted Net
Earnings |
$ |
57 |
|
|
|
Adjusted Net
Earnings |
$ |
57 |
|
Amortization |
|
(1 |
) |
Non-cash
compensation expense |
|
(13 |
) |
Interest
expense |
|
7 |
|
Income
tax expense |
|
2 |
|
Adjusted
operating earnings |
$ |
53 |
|
|
|
Adjusted operating
earnings |
$ |
53 |
|
Income
tax expense |
|
(1 |
) |
After-tax net
operating earnings |
$ |
52 |
|
|
|
Average total
capital |
$ |
326 |
|
|
|
Return on
invested capital |
|
16 |
% |
|
|
1 Costs as
Defined includes costs associated with the merger of KLX Inc.'s
Aerospace Solutions business with The Boeing Company, the spin-off
of the KLX Energy Services business into an independent public
company, costs associated with the issuance of $250 million senior
secured notes due 2025 and costs associated with the acquisition of
Motley. |
|
|
2 Adjusted
to exclude one-time costs associated with non-cash compensation
expense, which are included in Costs as Defined. |
KLX ENERGY SERVICES HOLDINGS,
INC. |
|
RECONCILIATION OF CONSOLIDATED OPERATING
EARNINGS (LOSS) |
|
TO ADJUSTED EBITDA |
|
(In Millions) |
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
YEAR ENDED |
|
|
January 31, 2019 |
|
January 31, 2018 |
|
January 31, 2019 |
|
January 31, 2018 |
|
Operating earnings
(loss) |
$ |
12.5 |
|
$ |
(4.0 |
) |
|
$ |
22.1 |
|
$ |
(24.0 |
) |
|
Costs as
Defined1 |
|
1.9 |
|
|
3.6 |
|
|
|
30.6 |
|
|
3.6 |
|
|
Adjusted
operating earnings (loss) |
|
14.4 |
|
|
(0.4 |
) |
|
|
52.7 |
|
|
(20.4 |
) |
|
Depreciation and
amortization |
|
13.2 |
|
|
8.4 |
|
|
|
41.5 |
|
|
33.5 |
|
|
Non-cash
compensation2 |
|
4.3 |
|
|
2.9 |
|
|
|
12.8 |
|
|
11.5 |
|
|
Adjusted EBITDA |
$ |
31.9 |
|
$ |
10.9 |
|
|
$ |
107.0 |
|
$ |
24.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF ROCKY MOUNTAINS OPERATING
EARNINGS (LOSS) |
|
TO ADJUSTED EBITDA |
|
(In Millions) |
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
YEAR ENDED |
|
|
January 31, 2019 |
|
January 31, 2018 |
|
January 31, 2019 |
|
January 31, 2018 |
|
Rocky Mountains
operating earnings (loss) |
$ |
2.2 |
|
$ |
(0.3 |
) |
|
$ |
5.5 |
|
$ |
(0.8 |
) |
|
Costs as
Defined1 |
|
0.4 |
|
|
1.4 |
|
|
|
11.9 |
|
|
1.4 |
|
|
Adjusted Rockies
operating earnings |
|
2.6 |
|
|
1.1 |
|
|
|
17.4 |
|
|
0.6 |
|
|
Depreciation and
amortization |
|
4.1 |
|
|
3.2 |
|
|
|
15.4 |
|
|
12.1 |
|
|
Non-cash
compensation2 |
|
1.1 |
|
|
1.0 |
|
|
|
4.0 |
|
|
4.5 |
|
|
Rocky Mountains
Adjusted EBITDA |
$ |
7.8 |
|
$ |
5.3 |
|
|
$ |
36.8 |
|
$ |
17.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NORTHEAST/MID-CON OPERATING
EARNINGS (LOSS) |
|
TO ADJUSTED EBITDA |
|
(In Millions) |
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
YEAR ENDED |
|
|
January 31, 2019 |
|
January 31, 2018 |
|
January 31, 2019 |
|
January 31, 2018 |
|
Northeast/Mid-Con
operating earnings (loss) |
$ |
6.3 |
|
$ |
(1.3 |
) |
|
$ |
13.4 |
|
$ |
(10.4 |
) |
|
Costs as
Defined1 |
|
0.3 |
|
|
1.0 |
|
|
|
8.5 |
|
|
1.0 |
|
|
Adjusted
Northeast operating earnings (loss) |
|
6.6 |
|
|
(0.3 |
) |
|
|
21.9 |
|
|
(9.4 |
) |
|
Depreciation and
amortization |
|
3.9 |
|
|
2.9 |
|
|
|
13.6 |
|
|
11.3 |
|
|
Non-cash
compensation2 |
|
0.9 |
|
|
0.8 |
|
|
|
3.2 |
|
|
3.0 |
|
|
Northeast Adjusted
EBITDA |
$ |
11.4 |
|
$ |
3.4 |
|
|
$ |
38.7 |
|
$ |
4.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF SOUTHWEST OPERATING EARNINGS
(LOSS) |
|
TO ADJUSTED EBITDA |
|
(In Millions) |
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
YEAR ENDED |
|
|
January 31, 2019 |
|
January 31, 2018 |
|
January 31, 2019 |
|
January 31, 2018 |
|
Southwest operating
earnings (loss) |
$ |
4.0 |
|
$ |
(2.4 |
) |
|
$ |
3.2 |
|
$ |
(12.8 |
) |
|
Costs as
Defined1 |
|
1.2 |
|
|
1.2 |
|
|
|
10.2 |
|
|
1.2 |
|
|
Adjusted
Southwest operating earnings (loss) |
|
5.2 |
|
|
(1.2 |
) |
|
|
13.4 |
|
|
(11.6 |
) |
|
Depreciation and
amortization |
|
5.2 |
|
|
2.3 |
|
|
|
12.5 |
|
|
10.1 |
|
|
Non-cash
compensation2 |
|
2.3 |
|
|
1.1 |
|
|
|
5.6 |
|
|
4.0 |
|
|
Southwest Adjusted
EBITDA |
$ |
12.7 |
|
$ |
2.2 |
|
|
$ |
31.5 |
|
$ |
2.5 |
|
|
|
|
|
|
|
|
|
|
|
1 Costs as Defined 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
credit facility, the issuance of $250 million senior secured notes
due 2025 and the acquisition of Motley. |
|
|
|
2 Adjusted to exclude one-time costs associated with non-cash
compensation expense, which are included in Costs as Defined. |
|
|
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF 2019 GUIDANCE; OPERATING
EARNINGS |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
2019 Guidance |
|
(Approximate Amounts) |
Operating earnings |
$ |
117 |
Depreciation and
amortization |
|
54 |
Non-cash
compensation |
|
19 |
Adjusted EBITDA |
$ |
190 |
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF 2019 GUIDANCE; NET
EARNINGS |
TO ADJUSTED NET EARNINGS AND ADJUSTED NET
EARNINGS PER DILUTED SHARE |
(In Millions, Except Per Share
Data) |
|
|
|
|
|
2019 Guidance |
|
|
(Approximate Amounts) |
Net earnings |
|
$ |
78 |
|
Amortization |
|
|
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 |
) |
Adjusted Net
Earnings |
$ |
97 |
|
|
|
Adjusted Net
Earnings |
$ |
97 |
|
Amortization |
|
(2 |
) |
Non-cash
compensation expense |
|
(19 |
) |
Interest
expense |
|
30 |
|
Income
tax expense |
|
11 |
|
Operating
earnings |
$ |
117 |
|
|
|
Operating earnings |
$ |
117 |
|
Income
tax expense |
|
(11 |
) |
After-tax net
operating earnings |
$ |
106 |
|
|
|
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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