ChampionX Corp (CHX) Q3 2023 Earnings: Robust Growth and Strong Cash Flow Generation
Revenue of $939.8 million, decreased 8% year-over-year but increased 1% sequentially
Net income attributable to ChampionX of $77.7 million, increased 237% year-over-year
Adjusted EBITDA of $189.5 million, increased 14% year-over-year
Returned 52% of cash from operating activities and 74% of free cash flow to shareholders
ChampionX Corp (NASDAQ:CHX) released its third-quarter 2023 earnings report on October 24, 2023. Despite an 8% year-over-year decrease in revenue to $939.8 million, the company reported significant increases in net income and adjusted EBITDA. Net income attributable to ChampionX was $77.7 million, a 237% increase year-over-year, while adjusted EBITDA was $189.5 million, a 14% increase year-over-year.
Financial Highlights
ChampionX's income before income taxes margin was 11.7%, an increase of 802 basis points year-over-year. The adjusted EBITDA margin was 20.2%, a 391 basis point increase year-over-year. The company generated $163.0 million in cash from operating activities and $114.6 million in free cash flow. ChampionX also repurchased $68.1 million of common stock and returned 52% of cash from operating activities and 74% of free cash flow to shareholders.
CEO Commentary
We delivered adjusted EBITDA growth and robust free cash flow generation during the third quarter and once again demonstrated our commitment to return excess cash to our shareholders through our regular cash dividend and share repurchases. Our ongoing focus on price realization and productivity contributed to strong year-over-year profitability improvement. We remain focused on shareholder value creation and our disciplined framework of capital allocation. I am grateful to our employees around the world for their tireless dedication to serving our customers and communities well, ChampionXs President and Chief Executive Officer Sivasankaran Soma Somasundaram said.
Business Segment Performance
ChampionX's Production Chemical Technologies segment reported revenue of $604.3 million in Q3 2023, a 5% sequential increase. The Production & Automation Technologies segment reported revenue of $256.1 million, a 1% sequential increase. The Drilling Technologies segment reported a 4% sequential decrease in revenue to $54.9 million, while the Reservoir Chemical Technologies segment reported a 5% sequential increase in revenue to $25.1 million.
Looking Ahead
For the fourth quarter, ChampionX expects revenue to be between $930 million and $970 million and adjusted EBITDA of $187 million to $197 million. The company remains committed to converting at least 50% of its adjusted EBITDA to free cash flow and returning at least 60% of its free cash flow to shareholders for the year.
This article first appeared on GuruFocus.