KLX Energy Services Holdings, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance

• Revenue totaled $185.6 million, a 10.9% increase from $167.3 million in the second quarter of 2026 and a 11.3% increase from $166.7 million in the third quarter of 2025.
• Net loss was $(15.5) million, compared to a net loss of $(8.4) million in the second quarter of 2026 and $(14.3) million in the third quarter of 2025.
• Diluted loss per share was $(0.68), compared to $(0.41) in the second quarter of 2026 and $(0.74) in the third quarter of 2025.
• Adjusted net loss was $(10.1) million, an improvement from $(13.2) million in the second quarter of 2026 and $(14.0) million in the third quarter of 2025.
• Adjusted diluted loss per share was $(0.44), compared to $(0.64) in the second quarter of 2026 and $(0.73) in the third quarter of 2025.
• Adjusted EBITDA was $24.9 million, a 33% increase from $18.7 million in the second quarter of 2026 and a 18.1% increase from $21.1 million in the third quarter of 2025.
• Adjusted EBITDA margin was 13.4%, up from 11.2% in the second quarter of 2026 and 12.7% in the third quarter of 2025.
• Net loss margin was (8.4)%, compared to (5.0)% in the second quarter of 2026 and (8.6)% in the third quarter of 2025.
• Total liquidity was $78.4 million, consisting of $5.0 million in cash and cash equivalents and $73.4 million available under the 2028 ABL Facility.
• Net Working Capital was $54.7 million as of September 30, 2026, a 19% increase from $46.0 million as of June 30, 2026.
• Net Debt was $183.1 million as of September 30, 2026, down from $281.0 million as of June 30, 2026.
• Capital expenditures were $12.6 million, up 47% from $8.6 million in the second quarter of 2026.
• Levered Free Cash Flow was $(4.1) million, compared to $4.1 million in the second quarter of 2026 and $5.7 million in the third quarter of 2025.
• Unlevered Free Cash Flow was $(1.5) million, compared to $6.6 million in the second quarter of 2026 and $10.8 million in the third quarter of 2025.

Guidance and Future Outlook

• For the fourth quarter of 2026, the Company expects revenue between $172 million and $184 million.
• The midpoint of the fourth quarter guidance represents approximately 14% growth over the prior-year period.
• Management priorities include protecting margins during the historical seasonal slowdown, turning earnings into cash, and building on third-quarter momentum.
• The Company expects to operate with a lower cash balance than in prior years due to the flexibility provided by the 2028 ABL Facility and a strategy to minimize interest expense.

Business Segments and Product Lines

• Rocky Mountains: Revenue was $58.6 million (up 15.4% sequentially), operating income was $7.4 million (up 2,366.7% sequentially), and Adjusted EBITDA was $12.6 million (up 100.0% sequentially). Growth was driven by wireline, rentals, and technical services.
• Southwest: Revenue was $70.9 million (up 9.9% sequentially), operating income was $0.6 million (up 500.0% sequentially), and Adjusted EBITDA was $8.8 million (up 15.8% sequentially). Growth was driven by accommodations and technical services.
• Northeast/Mid-Con: Revenue was $56.1 million (up 7.9% sequentially), operating income was $4.9 million (down 3.9% sequentially), and Adjusted EBITDA was $12.2 million (down 2.4% sequentially). Performance was impacted by slightly lower utilization.
• Corporate and Other: Operating loss was $(11.0) million and Adjusted EBITDA loss was $(8.7) million. The increase in operating loss compared to the prior quarter was due to the absence of a $6.5 million bargain purchase gain from the Wolf Pack Acquisition recognized in the second quarter.
• Product line revenue contribution for the quarter: Completion (50%), Drilling (25%), Production (16%), and Intervention (9%).
• Primary revenue growth drivers included accommodations, technical services, rentals, and wireline.
• The Company substantially completed the integration of Wolf Pack and remains on track to deliver $2.5 million in projected annual cost synergies.

Market and Competitive Landscape

• Revenue growth of 11% sequentially outpaced the 7% increase in the average Lower 48 land rig count.
• All three geographic segments delivered sequential revenue growth.
• The Company operates in all active major basins throughout the United States with over 60 service and support facilities.

Risks and Challenges

• Forward-looking statements note risks including a decline in demand for services due to overcapacity, the cyclical nature of the oil and gas industry, and volatility in crude oil and gas commodity prices.
• Risks include inflation, changes in interest rates, supply chain issues, and geopolitical tensions such as the war in Ukraine and conflicts in the Middle East.
• The Company faces risks related to the ability to maintain acceptable pricing, sustain utilization, and execute its long-term growth strategy.

Management Commentary and Tone

• CEO Chris Baker stated that results demonstrate the earnings potential of the KLX platform when activity, mix, and execution align.
• Management highlighted the successful strengthening of the balance sheet through the Backstopped Rights Offering.
• Baker noted that incremental margins were approximately 34% for the quarter.
• The tone emphasized discipline in capital allocation and the ability to drive revenue and margin growth above expectations.

Other Key Points

• On September 29, 2026, the Company closed a Backstopped Rights Offering, converting $87.8 million of debt to equity and raising $37.2 million in new equity purchases.
• $6.2 million of the new equity proceeds was used to redeem additional debt after the end of the quarter.
• The offering resulted in approximately $100 million less total debt than at the end of the second quarter.
• As of September 30, 2026, the Company had $2.0 million of assets held for sale related to two facilities and other equipment.
• The Company reported a $0.2 million bargain purchase gain in the third quarter, compared to a $6.5 million gain in the second quarter.
• A loss on debt extinguishment of $3.8 million was recorded in the third quarter, compared to a gain of $0.3 million in the second quarter.
• The Company will hold a conference call on November 6, 2026, at 9:00 a.m. Eastern Time to discuss results.