KLX Energy Services — Q3 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue was $186 million, representing an 11% increase year-over-year compared to Q3 2025.
• Q3 2026 Adjusted EBITDA was approximately $25 million, with an Adjusted EBITDA margin of 13%.
• LTM (Last Twelve Months) revenue as of September 30, 2026, was $654 million.
• LTM Adjusted EBITDA as of September 30, 2026, was $77 million.
• As of September 30, 2026, total debt was $188.1 million and cash and cash equivalents were $5.0 million, resulting in Net Debt of $183 million.
• Total liquidity as of September 30, 2026, was $78 million.
• Q3 2026 Levered Free Cash Flow was $(4.1) million, while Unlevered Free Cash Flow was $(1.5) million.
• Consolidated net loss for Q3 2026 was $(15.5) million, with a consolidated net loss margin of 8.4%.
• Adjusted SG&A margin for Q3 2026 was 8.9%.
• Segment operating income margins for Q3 2026 were: Rockies (12.6%), Southwest (0.8%), and Northeast/Mid-Con (8.7%).
• Segment Adjusted EBITDA margins for Q3 2026 were: Rockies (21.5%), Southwest (12.4%), and Northeast/Mid-Con (21.7%).

Guidance and Future Outlook:

• Q4 2026 revenue guidance is set between $172 million and $184 million.
• The company aims to continue de-levering through EBITDA growth, free cash flow generation, debt reduction, and consolidation.
• Management projects $2.5 million+ in fixed cost synergies from the WolfPack acquisition to be realized within the next twelve months, with the majority expected in the first six months.
• The company intends to expand certain product service lines geographically and redeploy/expand its asset base where returns warrant.
• Management believes KLX is the partner of choice for consolidation and aims to maximize long-term shareholder value via synergistic consolidation.

Business Segments and Product Lines:

• Completion: Accounts for 50% of Q3 2026 revenue; includes 19 modern large-diameter Coiled Tubing Units, 46 Wireline Units, 200,000+ frac horsepower, and proprietary tools.
• Drilling: Accounts for 25% of Q3 2026 revenue; includes 94 measurement-while-drilling kits, 460+ latest generation mud motors, and 800+ accommodation trailers.
• Production & Intervention: Accounts for 25% of Q3 2026 revenue; includes 1,000+ rental BOPs, 20 small diameter Coiled Tubing Units, and 30+ rig-assisted Snubbing Units.
• WolfPack Acquisition: Completed for a total consideration of $17 million ($14 million at closing, $3 million deferred); adds ~350 accommodations trailers and expands presence in East Texas, Louisiana, South Texas, West Texas, and the Northeast.
• Proprietary Technology: KLX introduced the VISION suite of Downhole Completion tools, including the Oracle SRT Extended Reach Tool (two patents issued, two pending) and proprietary K-Series mud motors.
• Geographic Diversity: Q3 2026 revenue split was 38% Southwest, 32% Rockies, and 30% Northeast/Mid-Con.
• Commodity Diversity: Q3 2026 revenue split was 84% Oil and 16% Natural Gas.

Market and Competitive Landscape:

• KLX maintains relationships with ~550 unique customers in 2025, with no single customer accounting for more than 10% of 2025 revenue.
• The top 10 customers drove revenue in 2025.
• The company demonstrates significant operating leverage to a rising rig count environment, with revenue per rig count and Adjusted EBITDA per rig count tracked against US Land Rig Count data.
• KLX operates in major US oil and gas basins including Permian, Eagle Ford, Marcellus, Utica, STACK, SCOOP, Haynesville, Bakken, Williston, DJ, Uinta, Powder River, Piceance, and Niobrara.
• The company holds 41 patents supporting proprietary products and services.

Risks and Challenges:

• Risks include a decline in demand for services, declining commodity prices, overcapacity, and competitive factors affecting the industry.
• The cyclical nature and volatility of the oil and gas industry impact exploration, production, and development spending patterns.
• Inflation, increases in interest rates, and ongoing conflicts in Ukraine and Israel may affect global trade and operations.
• Supply chain issues and the ability to renew and refinance debt are identified as potential risks.
• Actual results may differ materially from forward-looking statements due to uncertainties regarding operating cash flows, liquidity, and the timing of strategic initiatives.

Management Commentary and Tone:

• Management emphasizes a strategy of "Next Level Readiness," focusing on operational excellence, balance sheet strength, technology, and consolidation.
• The WolfPack acquisition is described as a "win-win transaction" providing liquidity for private oil service businesses and a conduit to scale.
• CEO Chris Baker and Interim CFO Geoff Stanford lead a team with an average of 30+ years of industry experience.
• Management highlights a focus on pricing, cost structure, and utilization to drive margins, alongside expanding share of wallet with top customers.
• The company maintains a "Performance culture" with KPI tracking, data-driven decision-making, and a strong safety culture.

Other Key Points:

• Capital Structure Transaction: A pro forma transaction provides $125 million of deleveraging, reducing the Net Debt multiple from 4.1x to 1.91x and lowering the annual cash interest burden from $36 million to $23 million.
• Ownership Change: Following the transaction, existing shareholders and ERO participation hold 43.9% of the company, while backstopping noteholders hold 56.1%.
• Acquisition Funding: The WolfPack deal was funded via a $10 million term capital lease line ($7 million drawn), $6 million of contributed A/R wrapped into the ABL facility, and $800,000 from the balance sheet.
• Employee Count: The company has approximately 1,650 employees as of September 30, 2026.
• Credit Rating: Moody's rating is Caa1.
• Market Cap: Equity market capitalization was $117 million as of October 31, 2026, with an Enterprise Value of $307 million.
• Run-Rate EBITDA: Q3 2026 Run-Rate Adjusted EBITDA is calculated at $100 million (annualized).