KLX Energy Services (KLXE) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $167.3 million, up 16% sequentially and 5.2% year-over-year, with adjusted EBITDA of $18.7 million (68% sequential increase) and margin improvement to 11.2%.

• Net loss improved to $8.4 million from $24 million in Q1 and $19.9 million YoY, with operating income of $2.1 million, a turnaround from a $8.7 million loss YoY.

• Wolf Pack acquisition closed June 2, 2026, contributing $3.4 million in June revenue, $0.3 million in net income (excluding one-time gains), and a $6.5 million bargain purchase gain; annual synergy targets raised to $2.5 million.

• Announced a $125 million backstop equity rights offering to reduce debt, improve liquidity, and strengthen the capital structure, with up to $94 million reduction in 2030 Senior Notes principal.

• Total liquidity at quarter end was $53 million, including $7.9 million in cash and $45.4 million in credit facility availability.

Financial highlights

• Revenue increased by $22.6 million from Q1, with base business (excluding Wolf Pack) growing over 13% sequentially.

• Adjusted EBITDA margin rose to 11.2% from 7.7% in Q1; net loss margin improved to (5.0)% from (12.5)% in Q1.

• Operating loss improved to $4.4 million from $12.1 million in Q1, excluding a $6.5 million non-recurring bargain purchase gain.

• Levered free cash flow was $4.1 million, up from $(5.0) million in Q1; net working capital at quarter end was $46 million.

• Capital expenditures were $8.6 million, primarily maintenance, slightly down from $8.7 million in Q1.

Outlook and guidance

• Q3 2026 revenue expected between $176 million and $188 million, with mid-single digit sequential growth in the base business.

• Margins anticipated to continue expanding due to higher activity and better fixed cost absorption.

• Pro forma for the equity rights offering, net leverage ratio expected to improve to approximately 2.7x.

• Management expects continued cautious capital allocation by customers amid volatile oil prices and geopolitical uncertainty.

• Full-year 2026 capital expenditures expected to be approximately $40 million.