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What were the key takeaways from Klx Energy Services's earnings call?

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What factors drove the changes in Klx Energy Services's revenue and profit?

- **Revenue & Margin Growth**: Q3 revenue up 5% to $167 million, adjusted EBITDA margin expands to 13% (100 bps Q/Q).
- **Segment Standout**: Northeast Mid-Con segment revenue surges 29%, driven by completions activity and reduced white space.
- **Cost Efficiency**: SG&A expenses down 30% YoY, with 2025 guidance for 9-10% of revenue.
- **Natural Gas Growth**: Dry gas revenue up 15% Q/Q, aligning with Haynesville rig count rebound and LNG export expansion.
- **Q4 Outlook**: Mid-single-digit revenue decline, but stable margins supported by cost controls and fleet turnover.
- **Balance Sheet Health**: $65 million liquidity, with Q4 free cash flow expected to improve due to working capital unwind.

**【CEO Summary Section】**
- **Q3 Revenue Growth**: $167 million (5% sequential increase), driven by a 29% surge in Northeast Mid-Con segment revenue.
- **Adjusted EBITDA**: $21 million (14% sequential increase), with margin expanding 100 basis points to 13%.
- **Segment Performance**: 
  - **Northeast Mid-Con**: Outperformed with 29% revenue growth, benefiting from reduced white space and completions activity.
  - **Southwest**: Revenue declined 4% (vs. 9% rig count drop), outperforming industry trends.
  - **Rockies**: Revenue down 6%, impacted by delayed completions and refrac activity decline.
- **Operational Efficiency**: Q3 revenue and EBITDA per rig ($318k, $40k) were 20% and 227% higher than Q4 2021 levels, reflecting cost optimization.
- **2026 Outlook**: Anticipates stable demand, margin resilience, and benefits from natural gas demand growth (e.g., LNG exports).

**【CFO Financial Commentary】**
- **Cost Control**: Adjusted SG&A expenses reduced 30% year-over-year to $14.8 million, with 2025 guidance of 9-10% of revenue.
- **Balance Sheet**: 
  - Total debt: $259.2 million (unchanged Q/Q), with $65 million liquidity ($8.3 million cash, $56.9 million ABL availability).
  - Q3 interest PIK: $6 million, with 100% cash payment in Q3.
- **Cash Flow**: Q3 free cash flow: $11 million, with Q4 expected to improve due to working capital unwind.
- **Capital Efficiency**: Q3 CapEx: $12 million (6% sequential decline), with 2025 net CapEx guidance of $30-35 million.

**【Q&A Highlights】**
- **Northeast Mid-Con Strength**: 15% Q/Q dry gas revenue growth, driven by Haynesville activity rebound (6 rigs added) and market share gains.
- **Rockies Challenges**: Margin pressure from episodic completions delays, highlighting negative operating leverage.
- **Q4 Guidance**: Mid-single-digit revenue decline (less severe than 2024's 13% drop), with stable margins supported by cost controls and fleet turnover.
- **2026 Outlook**: Optimism around natural gas demand (11 Bcf/d new LNG capacity) and consolidation-driven opportunities, with recent RFQ wins.
- **Balance Sheet Flexibility**: Liquidity maintained at $65 million, with Q4 asset sales and prudent PIK decisions to manage leverage.

KLX Energy Services Holdings, Inc. (KLXE) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

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Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

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Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

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Interest Income

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Income Tax Expense

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Income Tax Adjustments

Net Income from Continuing Operations

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Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

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Other Comprehensive Income

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Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

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Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

KLXE

KLXE fundamentals

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