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• Revenue: $154 million in Q1 2025, a 7% sequential decline and 12% lower than Q1 2024.

• Adjusted EBITDA: $13.8 million with a 9% margin, up from 7% in Q1 2024.

• SG&A Expenses: Total SG&A was $21.6 million; adjusted SG&A was $16.5 million, a 12% reduction versus Q1 2024.

• Southwest Segment Revenue: $65.2 million, with adjusted EBITDA at $11.7 million.

• Rockies Segment Revenue: $47.8 million, with adjusted EBITDA of $6.7 million.

• Northeast, Mid-Con Segment Revenue: $41 million, with adjusted EBITDA of $2.7 million.

• Liquidity: $58.1 million, consisting of $14.6 million in cash and $43.5 million in credit facility availability.

• CapEx: $15 million gross and $10.2 million net of asset sales for Q1 2025.

• Cash Flow: Cash declined over $60 million from year-end due to refinancing costs and working capital changes.

• Warning! GuruFocus has detected 5 Warning Signs with KLXE.

Release Date: May 09, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• KLX Energy Services Holdings Inc (NASDAQ:KLXE) reported improved adjusted EBITDA and adjusted EBITDA margin in Q1 2025 compared to Q1 2024, despite a lower rig count environment.

• The Southwest segment posted its strongest quarterly results since Q3 of 2023, with a significant increase in revenue and adjusted EBITDA.

• KLXE's focus on cost controls enabled a 208 basis point increase in adjusted EBITDA margin over the previous year, despite a decline in revenue and rig count.

• The company has developed a Gen 2 version of its Oracle SRT tool, which is gaining market acceptance and positioning KLXE well in gas basins.

• KLXE strengthened its balance sheet by reducing notes outstanding and increasing flexibility through refinancing, allowing for interest payments in kind to enhance liquidity.

Negative Points

• Q1 2025 revenue was down 12% compared to Q1 2024, and adjusted EBITDA margin decreased from 13.7% in Q4 2024 to 9% in Q1 2025.

• The macro environment remains volatile, with OPEC+ production increases and US tariff policy driving recessionary risks and commodity price volatility.

• The Northeast, Mid-Con segment experienced an 18% sequential decrease in revenue due to operational issues, resulting in a 72% decline in adjusted EBITDA.

• KLXE's cash flow was impacted by $33 million in refinancing costs, working capital normalization, and seasonality, leading to a significant decline in cash from year-end.

• The company faces challenges in the current market backdrop, making financing transactions difficult and requiring creativity for potential M&A opportunities.