KLX Inc. Reports First Quarter Financial Results
OREANDA-NEWS. KLX Inc., the world’s leading distributor and value added service provider of aerospace fasteners and consumables, and a provider of services and products to the oil and gas exploration and production industry, today announced its first fiscal quarter 2016 financial results.
FIRST QUARTER ENDED APRIL 30, 2016 HIGHLIGHTS COMPARED WITH PRIOR YEAR
- Consolidated revenues of $368.2 million declined 14.7 percent
- Aerospace Solutions Group segment (“ASG”) revenues were $331.1 million. Revenues from commercial aerospace manufacturing and aftermarket customers were flat, but revenues from military and business jet customers declined 24 percent, resulting in a 4.9 percent year over year decline. ASG revenues increased 8.2 percent sequentially compared to the immediately preceding quarter
- ASG operating earnings were down 1.5%, and operating margin was 18.1 percent reflecting a 60 basis point improvement as compared to the same period last year
- Energy Services Group segment (“ESG”) revenues of $37.1 million declined 55.6 percent compared to the same quarter last year, and declined 28.8 percent sequentially compared to the fourth quarter of 2015
- Consolidated operating earnings were $29.1 million, net earnings on a GAAP basis were $6.2 million and EBITDA, adjusted to exclude non-cash compensation expense, was $50.5 million
- Adjusted net earnings and adjusted net earnings per diluted share were $21.9 million and $0.42, respectively1. Free cash flow of $22.2 million was 101 percent of adjusted net earnings. GAAP net earnings and net earnings per diluted share were $6.2 million and $0.12 per diluted share, respectively
1Adjusted to exclude non-cash compensation expense and to include the tax benefit from the amortization of tax deductible goodwill.
- On May 17, 2016, the Company acquired Herndon Aerospace & Defense, LLC (“Herndon”), an aftermarket aerospace supply chain management and consumables hardware distributor servicing principally aftermarket military depots, as well as the commercial aerospace aftermarket
Amin J. Khoury, Chairman and Chief Executive Officer of KLX stated, “Our ASG business continues to perform well. In fact, ASG revenues increased 8.2 percent on a sequential quarterly basis. However, comparisons with the prior year period are challenged by the record first half performance of 2015. Year over year comparisons reflect essentially flat revenues from our commercial aerospace manufacturing and aftermarket customers but an approximate 24 percent decline in revenues from our military and business jet customers.”
Mr. Khoury continued, “Our ESG business has been challenged by some of the most extreme market conditions in the history of the oil field services industry. Our customers have cut their capital expenditure budgets by about 75 percent. Working rigs have been reduced by 78 percent year-over-year and reduced by 47 percent on a sequential quarterly basis. Customer spending to maintain production in producing wells has been substantially reduced, and approximately 70 U.S. oil and gas companies have filed for bankruptcy protection, including three during the past 30 days.”
We have presented adjusted net earnings and adjusted earnings per diluted share to reflect net earnings before amortization, non-cash compensation expense and to include the tax benefit from the amortization of tax deductible goodwill (“Adjusted Net Earnings” and “Adjusted Net Earnings per Diluted Share”). See “Reconciliation of Non-GAAP Financial Measures.”
FIRST QUARTER 2016 CONSOLIDATED RESULTS
First quarter 2016 revenues of $368.2 million declined 14.7 percent, as compared to the prior year period. The consolidated results reflect a 4.9 percent decline in ASG’s revenues and a 55.6 percent decline in ESG revenues as compared with the prior year. On a sequential quarterly basis, ASG revenues increased 8.2 percent, while ESG revenues declined 28.8 percent.
Operating earnings were $29.1 million and operating margin was 7.9 percent. EBITDA, adjusted to exclude non-cash compensation expense was $50.5 million, and EBITDA margin on the same basis was 13.7 percent.
First quarter 2016 Adjusted Net Earnings and Adjusted Net Earnings per Diluted Share were $21.9 million and $0.42 per diluted share, respectively. First quarter 2016 free cash flow of $22.2 million was 101 percent of Adjusted Net Earnings. On a GAAP basis, net earnings and net earnings per diluted share were $6.2 million and $0.12 per share, respectively.