For the third quarter of 2021, KLX Energy Services (NASDAQ:KLXE) announced a GAAP loss per share of $4.56, missing consensus by $.09 per share. Exceeding consensus by $13 million, total revenues for the quarter were $70.9 million, an increase of 30.1% compared to the prior quarter. The company reported an Adjusted EBITDA loss of $5.4 million, which improved from the previous quarter by $13.9 million on a proforma basis.
Despite a challenging North American oil market, KLXE’s improved financial results were attributed to a rebound in well completion activity with modest contributions from production and well intervention compared to the second quarter.
Specifically, Rocky Mountains revenues were flat sequentially, with Northeast/Mid-Con revenues increasing by 99.3%. Southwest (Permian & South Texas) revenues rose by 490.5% from the prior quarter.
Cash at the end of October 31, 2020, the company had long-term debt of $243.6 million and $79.8 million in cash. Liquidity at the end of the third quarter was $106.2 million, including the availability of an undrawn ABL Facility.
We are maintaining our Buy rating and $12 per share price target for KLX Energy. Our price target assumes a 7.5x multiple on our new 2022E Adjusted EBITDA estimate of $35 million.
Our assumptions reflect mild optimism throughout the next few quarters as producers increase their completion activities to offset their production decline rates. Despite the possibility of a second wave of COVID, we expect the economic impact to be less severe than 2020.
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