KLX Energy Services Holdings, Inc. Q1 FY2025 earnings call

• Q1 2025 saw improved adjusted EBITDA and margin despite lower rig count; March was best month. Southwest had strongest quarter since Q3 2023. - Segment revenue contributions: Southwest 42%, Rockies 31%, Northeast/Mid-Con 27%. End markets: Completion services 51%, production/intervention 29%, drilling 20%. - Assessing tariff impacts on supply chain and cost structure; many PSL components made in USA. Balance sheet strengthened via March refinancing, allowing PIK interest. - Gen 2 Oracle SRT tool in development with over 0.5 million running feet downhole; diversified offering and strong customer relationships differentiate KLX.

Rockies segment: Revenue was $47.8 million, operating loss was $200,000 and adjusted EBITDA was $6.7 million. Sequential revenue and adjusted EBITDA declined 11% and 43%, respectively, primarily due to seasonality but were higher Y/Y. Southwest segment: Revenue, operating income and adjusted EBITDA were $65.2 million, $3 million and $11.7 million, respectively. Q1 revenue increased 6% sequentially with operating income and adjusted EBITDA up 173% and 22%, respectively. Northeast/Mid-Con segment: Revenue was $41 million, operating loss was $8.1 million and adjusted EBITDA was $2.7 million. Sequential revenue decrease of 18% driven by white space, adjusted EBITDA declined 72% sequentially due to completions white space. Corporate: Operating loss and adjusted EBITDA loss for Q1 were $12.4 million and $7.3 million, respectively.

• Expect revenue and adjusted EBITDA growth in Q2, building on March's momentum. Southwest expected to remain strong, Rockies to bounce back, Mid-Con to recover from Q1 issue. - Bullish on US natural gas macro story; exposure to gas basins positions well for activity uptick. - Focus on strategic M&A for consolidation, but market makes financing difficult; OFS market needs consolidation.

• Macro environment volatility: OPEC+ production, US tariff policy causing commodity price volatility and recessionary risk. - Operational issues: Mid-Con completions white space due to non-recurring operational issue in Q1. - Market uncertainty: Difficulty in forecasting due to episodic project delays and commodity price whipsaws.

Q: Please provide thoughts on the 2Q guide and impact of lower oil prices.

A: Chris mentioned it's hard to provide full year guide; Q2 revenue expected to increase low to mid-single digits. Lower oil prices affect smaller operators more, leading to project delays.

Q: Discuss M&A strategy and geographic focus.

A: Current market driving deal capitulation; looking for deleveraging transactions. Not necessarily geographically focused; opportunistic and focused on managing cycles