KLX Inc. (the “Company”) (NASDAQ:KLXI), a 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 reported its first
fiscal quarter ended April 30, 2018 financial results.
On a GAAP basis, for the three-month period ended April 30,
2018, as compared to the same period of the prior year, revenues
increased 21.3 percent to $499.1 million, while operating earnings
increased 25.9 percent to $61.2 million. GAAP net earnings of $31.7
million and net earnings per diluted share of $0.62, increased 72.3
percent and 72.2 percent, respectively, as compared to the
three-month period ended April 30, 2017. During the first quarter
of 2018, the Company incurred approximately $14.3 million of
one-time costs associated with the strategic alternatives review,
which resulted in the Company’s announcement that it has reached an
agreement to sell its Aerospace Solutions Group (“ASG”) business to
The Boeing Company and to spin-off its Energy Services Group
(“ESG”) business to shareholders, and the transition to ASG’s new
global distribution and operations center. The costs associated
with the announced review of strategic alternatives and the new
facility transition are collectively referred to as “Costs as
Defined.” FIRST QUARTER HIGHLIGHTS
- Consolidated revenue growth of 21.3 percent to $499.1
million
- Consolidated Adjusted operating earnings of $75.5 million
increased 55.3 percent1
- Adjusted Net Earnings and Adjusted Net Earnings per diluted
share were $57.0 million and $1.12 per diluted share, respectively,
representing increases of 63.8 percent and 67.2 percent,
respectively
1 Excludes approximately $14.3 million of costs and expenses
related to the strategic alternatives review and the transition to
ASG’s new global distribution and operations center
We have presented Adjusted Net Earnings and Adjusted Net
Earnings per diluted share to reflect net earnings before Costs as
Defined and amortization and 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”). This release includes “Adjusted operating
earnings,” “ASG Adjusted operating earnings” and “ESG Adjusted
operating earnings,” which exclude Costs as Defined. This release
also includes “Adjusted EBITDA,” “ASG Adjusted EBITDA” and “ESG
Adjusted EBITDA” which exclude Costs as Defined and non-cash
compensation expense. Each of the aforementioned metrics are
“non-GAAP financial measures” as defined in Regulation G of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
See “Reconciliation of Non-GAAP Financial Measures.”
FIRST QUARTER CONSOLIDATED RESULTS
On a consolidated basis, revenues increased 21.3 percent to
$499.1 million, driven by an approximate 11.7 percent increase in
ASG revenues and an approximate 74.0 percent increase in ESG
revenues. Adjusted operating earnings and Adjusted operating margin
were $75.5 million and 15.1 percent, respectively. Adjusted Net
Earnings and Adjusted Net Earnings per diluted share increased 63.8
percent and 67.2 percent, to $57.0 million and $1.12 per diluted
share, respectively.
“We are pleased to report that 2018 is off to a strong start as
both consolidated revenues and operating earnings increased
strongly in the first quarter as compared to the same period in the
prior year. Our ASG segment delivered solid year-over-year revenue
growth, driven by an approximate double-digit percentage increase
in both commercial aerospace manufacturing and aftermarket
revenues, while our ESG segment continued to generate strong
revenue growth and margin expansion on both a year-over-year and
sequential quarterly basis,” said Amin J. Khoury, Chairman and
Chief Executive Officer of KLX.
FIRST QUARTER SEGMENT RESULTS
For the three months ended April 30, 2018, our ASG segment
generated revenues of $388.1 million, an increase of approximately
11.7 percent compared to the same period in the prior year, driven
by approximately 5.9 percent organic revenue growth. On a channel
basis, aftermarket organic revenue growth of 6.6 percent was
particularly strong, driven by a substantial increase in aircraft
maintenance activity among MROs, repair shops and airlines in the
Americas, Asia and Europe. Revenues from our OEM channel increased
5.4 percent on an organic basis, driven by an increase in activity
from commercial aerospace manufacturing customers and initial
revenues from the ramp-up of new programs. On a GAAP basis, ASG
operating earnings were $54.7 million and operating margin was 14.1
percent. ASG’s Adjusted operating earnings, adjusted to exclude
one-time costs related to the strategic alternatives review and the
transition to ASG’s new global distribution and operations center,
were $65.2 million, or 16.8 percent of revenues. ASG Adjusted
EBITDA of $76.1 million was 19.6 percent of revenues.
For the three months ended April 30, 2018, as compared to the
same period of the prior year, ESG revenues of $111.0 million
reflected organic revenue growth of approximately 74.0 percent.
GAAP operating earnings increased $16.6 million, from a loss of
$(10.1) million during the first quarter of last year, to a
positive $6.5 million in the current quarter, which includes the
aforementioned one-time costs. Exclusive of such costs, ESG’s
Adjusted operating earnings were $10.3 million in the first
quarter, a $20.4 million improvement over the same period last
year. Adjusted EBITDA of $22.0 million improved by $20.7 million.
As compared to the fourth quarter of 2017, revenues increased by
17.8 percent, Adjusted operating earnings improved by $9.1 million
from $1.2 million to $10.3 million and Adjusted EBITDA improved by
$9.3 million, or 73.2 percent, to $22.0 million, or approximately
20 percent of revenues.
OUTLOOK
As a result of the pending sale of the Aerospace Solutions Group
(ASG) to Boeing, the Company will no longer be providing ASG
segment level guidance.
The Company increased its 2018 ESG guidance for revenues,
Adjusted operating earnings and Adjusted EBITDA. The Company’s
Fiscal 2018 ESG outlook excludes costs related to the strategic
alternatives review, including spin-off related expenses.
- 2018 revenues are expected to increase by approximately 55
percent to approximately $500 million
- Adjusted operating earnings are expected to increase
approximately $84 million to approximately $65 million
- Adjusted EBITDA is expected to increase approximately 300
percent to approximately $110 million, or 22 percent of
revenues
- The Company expects continued strong organic growth in revenues
and earnings in 2019
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Exchange Act. Such forward-looking
statements involve risks and uncertainties. The Company’s actual
experience and results may differ materially from the experience
and results anticipated in such statements. Factors that might
cause such a difference include those discussed in the Company’s
filings with the Securities and Exchange Commission (“SEC”), which
include its Annual Report on Form 10-K and Current Reports on Form
8-K. For more information, see the section entitled
“Forward-Looking Statements” contained in the Company’s Annual
Report on Form 10-K and in other filings. The forward-looking
statements included in this news release are made only as of the
date of this news release and, except as required by federal
securities laws and rules and regulations of the SEC, the Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
About KLX Inc. KLX Inc., through its two
operating segments, provides mission critical products and complex
logistical solutions to support its customers’ high value assets.
KLX serves its customers in demanding environments that face high
cost of downtime and require dependable, high quality just-in-time
customer support. The Aerospace Solutions Group is a leading
distributor and value added service provider of aerospace fasteners
and consumables offering the broadest range of aerospace hardware
and consumables and inventory management services worldwide. The
Energy Services Group provides vital services and products to oil
and gas exploration and production companies on an episodic, 24/7
basis. For more information, visit the KLX website at
www.klx.com.
KLX INC. |
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED) |
(In Millions, Except Per Share
Data) |
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
April 30, 2018 |
|
April 30, 2017 |
|
|
|
|
|
|
Revenues |
$ |
499.1 |
|
$ |
411.3 |
|
Cost of sales |
|
359.7 |
|
|
298.4 |
|
Selling, general and
administrative |
|
78.2 |
|
|
64.3 |
|
|
|
|
|
|
Operating earnings |
|
61.2 |
|
|
48.6 |
|
|
|
|
|
|
Interest expense |
|
18.9 |
|
|
19.0 |
|
|
|
|
|
|
Earnings before income
taxes |
|
42.3 |
|
|
29.6 |
|
|
|
|
|
|
Income tax expense |
|
10.6 |
|
|
11.2 |
|
|
|
|
|
|
Net earnings |
$ |
31.7 |
|
$ |
18.4 |
|
|
|
|
|
|
Net earnings per common
share: |
|
|
|
|
Basic |
$ |
0.63 |
|
$ |
0.36 |
|
Diluted |
$ |
0.62 |
|
$ |
0.36 |
|
|
|
|
|
|
Weighted average common
shares: |
|
|
|
|
Basic |
|
50.1 |
|
|
51.1 |
|
Diluted |
|
50.9 |
|
|
51.8 |
|
|
|
|
|
|
KLX INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) |
|
(In Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
April 30, |
|
April 30, |
|
|
2018 |
|
2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
298.4 |
|
$ |
255.3 |
|
Accounts
receivable |
|
355.8 |
|
|
316.1 |
|
Inventories, net |
|
1,408.3 |
|
|
1,407.9 |
|
Other
current assets |
|
46.9 |
|
|
51.7 |
|
Total
current assets |
|
2,109.4 |
|
|
2,031.0 |
|
Long-term
assets |
|
1,747.7 |
|
|
1,759.0 |
|
|
$ |
3,857.1 |
|
$ |
3,790.0 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Total
current liabilities |
$ |
330.4 |
|
$ |
287.5 |
|
Total
long-term liabilities |
|
1,233.1 |
|
|
1,232.6 |
|
Total
stockholders' equity |
|
2,293.6 |
|
|
2,269.9 |
|
|
$ |
3,857.1 |
|
$ |
3,790.0 |
|
|
|
|
|
|
KLX INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
(In Millions) |
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
April 30, 2018 |
|
April 30, 2017 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net
earnings |
$ |
31.7 |
|
|
$ |
18.4 |
|
|
Adjustments to reconcile net earnings to net cash |
|
|
|
|
flows provided by (used in) operating activities: |
|
|
|
|
Depreciation and amortization |
|
19.3 |
|
|
|
16.5 |
|
|
Deferred
income taxes |
|
9.4 |
|
|
|
9.7 |
|
|
Non-cash
compensation |
|
5.2 |
|
|
|
5.9 |
|
|
Provision
for inventory reserve |
|
3.9 |
|
|
|
4.7 |
|
|
Change in
allowance for doubtful accounts and sales returns |
|
(0.4 |
) |
|
|
(2.2 |
) |
|
Loss on
disposal of property and equipment |
|
0.3 |
|
|
|
0.4 |
|
|
Amortization of deferred financing fees |
|
1.1 |
|
|
|
1.1 |
|
|
Changes
in operating assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
(39.3 |
) |
|
|
(43.0 |
) |
|
Inventories |
|
(4.3 |
) |
|
|
(15.9 |
) |
|
Other
current and non-current assets |
|
2.5 |
|
|
|
(8.3 |
) |
|
Accounts
payable |
|
32.1 |
|
|
|
16.1 |
|
|
Other
current and non-current liabilities |
|
11.9 |
|
|
|
16.6 |
|
|
Net cash flows provided
by operating activities |
|
73.4 |
|
|
|
20.0 |
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Capital
expenditures |
|
(27.0 |
) |
|
|
(14.5 |
) |
|
Net cash flows used in
investing activities |
|
(27.0 |
) |
|
|
(14.5 |
) |
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Purchase
of treasury stock and other |
|
(0.2 |
) |
|
|
(14.5 |
) |
|
Net cash flows used in
financing activities |
|
(0.2 |
) |
|
|
(14.5 |
) |
|
Effect of foreign exchange rate changes on cash and |
|
|
|
|
|
|
|
|
cash
equivalents |
|
(3.1 |
) |
|
|
0.8 |
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
43.1 |
|
|
|
(8.2 |
) |
|
Cash and cash
equivalents, beginning of period |
|
255.3 |
|
|
|
277.3 |
|
|
Cash and cash
equivalents, end of period |
$ |
298.4 |
|
|
$ |
269.1 |
|
|
|
|
|
|
|
KLX
INC.RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
This release includes “Adjusted Net Earnings” and “Adjusted Net
Earnings per diluted share” to reflect net earnings before the
non-cash charge associated with the revaluation of the Company’s
deferred tax assets, Costs as Defined, and the amortization and
non-cash compensation expense, and to include the tax benefit from
the amortization of tax-deductible goodwill. This release includes
“Adjusted operating earnings,” “ASG Adjusted operating earnings”
and “ESG Adjusted operating earnings,” which excludes Costs as
Defined. This release also includes “Adjusted EBITDA,” “ASG
Adjusted EBITDA” and “ESG Adjusted EBITDA,” which excludes non-cash
compensation expense and Costs as Defined, which are “non-GAAP
financial measures” as defined in Regulation G of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
The Company uses the above described adjusted measures to
evaluate and assess the operational strength and performance of the
business and of particular segments of the business. The Company
believes these financial measures are relevant and useful for
investors because it allows investors to have a better
understanding of the Company’s actual operating performance
unaffected by the impact of the Costs as Defined. These
financial measures should not be viewed as a substitute for, or
superior to, operating earnings, net earnings or net cash flows
provided by operating activities (each as defined under GAAP), the
most directly comparable GAAP measures, as a measure of the
Company’s operating performance.
Pursuant to the requirements of Regulation G of the Exchange
Act, we are providing the following tables that reconcile the above
mentioned non-GAAP financial measures to the most directly
comparable GAAP financial measures:
KLX INC. |
RECONCILIATION OF NET EARNINGS |
TO ADJUSTED NET EARNINGS PER DILUTED
SHARE |
(In Millions, Except Per Share
Data) |
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
April 30, 2018 |
|
April 30, 2017 |
Net earnings |
|
$ |
31.7 |
|
$ |
18.4 |
Amortization expense |
|
|
5.0 |
|
|
4.8 |
Non-cash
compensation |
|
|
5.2 |
|
|
5.9 |
Income
taxes |
|
|
10.6 |
|
|
11.2 |
Costs as
defined 1 |
|
|
14.3 |
|
|
- |
Adjusted
earnings before tax expense |
|
66.8 |
|
|
40.3 |
Income
taxes |
|
|
16.8 |
|
|
15.2 |
Less: impact of goodwill deduction 2 |
|
7.0 |
|
|
9.7 |
Adjusted income
taxes |
|
|
9.8 |
|
|
5.5 |
Adjusted net
earnings |
|
$ |
57.0 |
|
$ |
34.8 |
|
|
|
|
|
Adjusted
net earnings per diluted share |
$ |
1.12 |
|
$ |
0.67 |
|
|
|
|
|
Diluted weighted
average shares |
|
|
50.9 |
|
|
51.8 |
|
|
|
|
|
1 Costs and expenses related to review of strategic
alternatives and transitioning to ASG's new global distribution and
operations center. |
|
2 For purposes of this calculation, tax benefit of goodwill
deduction is limited to income tax at current effective rate for
periods ended April 30, 2018 and April 30, 2017 of ~25.1% and
~37.7%, respectively. |
KLX INC. |
RECONCILIATION OF CONSOLIDATED OPERATING
EARNINGS |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
April 30, 2018 |
|
April 30, 2017 |
|
Operating earnings |
$ |
61.2 |
|
$ |
48.6 |
|
|
Costs as
defined (1) |
|
14.3 |
|
|
- |
|
|
Adjusted
operating earnings |
|
75.5 |
|
|
48.6 |
|
|
Depreciation and amortization |
|
17.4 |
|
|
16.5 |
|
|
Non-cash
compensation |
|
5.2 |
|
|
5.9 |
|
|
Adjusted EBITDA |
$ |
98.1 |
|
$ |
71.0 |
|
|
|
|
|
|
|
|
RECONCILIATION OF AEROSPACE SOLUTIONS GROUP
OPERATING EARNINGS |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
April 30, 2018 |
|
April 30, 2017 |
|
ASG operating
earnings |
$ |
54.7 |
|
$ |
58.7 |
|
|
Costs as
defined (1) |
|
10.5 |
|
|
- |
|
|
Adjusted
ASG operating earnings |
|
65.2 |
|
|
58.7 |
|
|
Depreciation and amortization |
|
8.3 |
|
|
7.9 |
|
|
Non-cash
compensation |
|
2.6 |
|
|
3.1 |
|
|
Adjusted EBITDA |
$ |
76.1 |
|
$ |
69.7 |
|
|
|
|
|
|
|
|
RECONCILIATION OF ENERGY SERVICES GROUP
OPERATING EARNINGS (LOSS) |
TO ADJUSTED EBITDA |
(In Millions) |
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
April 30, 2018 |
|
April 30, 2017 |
|
ESG operating earnings
(loss) |
$ |
6.5 |
|
$ |
(10.1 |
) |
|
Costs as
defined (1) |
|
3.8 |
|
|
- |
|
|
Adjusted
ESG operating earnings (loss) |
|
10.3 |
|
|
(10.1 |
) |
|
Depreciation and amortization |
|
9.1 |
|
|
8.6 |
|
|
Non-cash
compensation |
|
2.6 |
|
|
2.8 |
|
|
Adjusted EBITDA |
$ |
22.0 |
|
$ |
1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Costs and expenses related to review of strategic
alternatives and transitioning to ASG's new global distribution and
operations center |
|
|
|
|
|
|
|
|
KLX ENERGY SERVICES |
RECONCILIATION OF 2018 OUTLOOK; CONSOLIDATED
OPERATING EARNINGS |
TO ADJUSTED OPERATING EARNINGS AND ADJUSTED
EBITDA |
(In Millions) |
|
|
|
2018 Outlook |
|
(Approximate Amounts) |
Operating earnings |
$ |
61 |
|
Costs as
defined (to date) |
|
4 |
|
Adjusted operating
earnings |
|
65 |
|
Depreciation and amortization |
|
35 |
|
Non-cash
compensation |
|
10 |
|
Adjusted EBITDA |
$ |
110 |
|
|
|
CONTACT:Michael PerlmanDirector, Investor
RelationsKLX Inc.(561) 791-5435
Grafico Azioni KLX Inc. (NASDAQ:KLXI)
Storico
Da Ago 2024 a Set 2024
Grafico Azioni KLX Inc. (NASDAQ:KLXI)
Storico
Da Set 2023 a Set 2024