Klx Energy Services Holdings ((KLXE)) has held its Q2 earnings call. Read on for the main highlights of the call.
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KLX Energy Services Holdings recently held its earnings call, revealing a generally positive sentiment despite facing some challenges. The company reported growth in revenue and EBITDA, effective cost management, and a promising outlook for the third quarter. However, concerns were raised regarding the decline in the Southwest segment, commodity price volatility, and issues related to debt and liquidity.
Revenue and EBITDA Growth
KLX Energy Services reported a revenue of $159 million for Q2 2025, marking a 3% increase from the previous quarter. The adjusted EBITDA also saw a significant rise of 34%, reaching $19 million. The EBITDA margin improved by 260 basis points to 12%, showcasing the company’s robust financial performance.
Geographic Performance
The Rockies segment demonstrated a strong performance, with its revenue increasing from 31% to 34% of the total revenue. This segment experienced a 13% revenue increase and a 55% rise in EBITDA, indicating a strong sequential rebound.
Improved Market Positioning
KLX’s Q2 revenue and adjusted EBITDA per rig were $286,000 and $33,000, respectively. These figures were 8% and 172% ahead of Q4 2021 results, highlighting the company’s improved market share since 2021.
Cost Management and SG&A Reduction
The company successfully reduced its adjusted SG&A expenses by 12% compared to Q2 2024 and 8% compared to Q1 2025. This reflects KLX’s effective cost structure changes and management strategies.
Positive Outlook for Q3
KLX Energy Services expressed optimism for Q3, expecting a sequential revenue increase of low to mid-single digits and continued margin expansion. This positive outlook is driven by customer completions programs restarting and strong operational execution.
Southwest Segment Challenges
The Southwest segment faced challenges, with revenue decreasing by 10% sequentially and EBITDA down by 38%. These declines were mainly due to customer completion holidays and increased white space.
Commodity Price Volatility Impact
The company faced challenges from persistent commodity price volatility and a decrease in oil rig and frac spread counts. The U.S. land rig count was down 7%, and the frac spread count dropped by 14% during the period.
Debt and Interest Concerns
KLX reported a total debt of $259 million as of June 30, with $7.1 million of interest paid in kind in Q2. This raised concerns about the company’s leverage and financial stability.
Restricted Cash and Liquidity
The company’s restricted cash decreased from $8.1 million in Q1 to $600,000, indicating efforts to manage liquidity but also highlighting ongoing financial constraints.
Forward-Looking Guidance
Looking ahead, KLX Energy Services anticipates continued revenue growth in Q3, with expectations of low to mid-single-digit increases and further margin expansion. The company aims to leverage strong customer alignments and operational efficiency across the U.S. onshore markets. Additionally, KLX reduced its total debt by 1% compared to Q1 and maintained a liquidity position of approximately $65 million by the end of Q2 2025.
In conclusion, KLX Energy Services Holdings’ earnings call presented a mixed yet optimistic picture. While the company celebrated revenue and EBITDA growth and effective cost management, it also acknowledged challenges such as the Southwest segment’s decline and commodity price volatility. The forward-looking guidance suggests a positive trajectory, with expectations of continued growth and operational efficiency in the upcoming quarter.