KLX Energy Services to Acquire Motley Services; Previews Third Quarter Financial Results
October 22 2018 - 6:30AM
KLX Energy Services Holdings, Inc. (“KLX Energy Services” or the
“Company”) (NASDAQ: KLXE), a leading U.S. onshore provider of
mission critical oilfield services, announced today it has entered
into a definitive agreement to acquire Motley Services, LLC
(“Motley”), a leading large diameter coiled tubing (“CT”) service
provider, serving customers primarily in the Southwestern U.S.
Motley, a premier provider of well completion
services, is primarily focused on providing high-quality large
diameter coiled tubing services specializing in complex, longer
lateral horizontal wells. Motley also provides wireline and
thru-tubing services, which are complementary to KLX Energy
Services’ existing service offerings. Motley’s third quarter 2018
revenues and EBITDA guidance, on an annualized basis based on the
mid-point of the guidance, are approximately $136 million and $46
million, respectively.
Amin J. Khoury, Chairman, Chief Executive
Officer and President of KLX Energy Services stated, “The
acquisition of Motley represents an entry into the coiled tubing
market for KLXE, and significantly strengthens the Company’s
current portfolio of well completion services. Motley’s business
will enhance our integrated platform by adding large diameter
coiled tubing services initially into the Company’s Southwest
region, and then rolling it out to the rest of our geographic
regions.”
Mr. Khoury concluded, “The acquisition price of
$148 million represents a multiple of approximately 3.2x the
mid-point of Motley’s third quarter 2018 EBITDA guidance, on an
annualized basis. The acquisition is expected to close in late
October or early November 2018 and to be strongly accretive to KLX
Energy Services earnings in 2018 and 2019.”
Under the terms of the agreement, KLX Energy
Services will pay Motley total consideration of $148 million,
consisting of $139 million in cash and $9 million of KLX Energy
Services common stock. The Company intends to fund the cash portion
of the purchase price with the net proceeds of a debt
financing.
The transaction is subject to certain
closing conditions, including approvals from regulatory
authorities. There can be no assurance that the transaction
will be completed.
KLX Energy Services is providing third quarter
2018 revenue and Adjusted EBITDA guidance of approximately $120
million and approximately $26.5 million, respectively, representing
increases of approximately 35 percent and approximately 188
percent, respectively, as compared to the same period of the prior
year. Motley is providing third quarter 2018 revenues and EBITDA
guidance of approximately $33 to $35 million and $11 to $12
million, respectively.1 Combined company guidance for third quarter
2018 revenues, Adjusted EBITDA and Adjusted Earnings Per Share are
expected to be approximately $154.1 million, $38.0 million (24.7
percent of sales) and $0.96 per diluted share, respectively.2
Freshfields Bruckhaus Deringer US LLP is acting
as legal counsel to KLX Energy Services. Simmons & Company
International, Energy Specialists for Piper Jaffray, are acting as
the exclusive financial advisor to Motley and Locke Lord LLP is
acting as legal advisor to Motley.
The Company will host a conference call to
discuss the acquisition at 9:45 a.m. Eastern on Monday, October 22,
2018. A live audio broadcast of the conference call, along with a
supplemental presentation, will be available on the investor
relations page of the KLX Energy Services website at
www.klxenergy.com.
About KLX Energy Services
KLX Energy Services is a leading U.S. onshore
provider of mission critical oilfield services focused on
completion, intervention and production activities for the most
technically demanding wells. KLX Energy Services’ experienced and
technically skilled personnel are supported by a broad portfolio of
specialized tools and equipment, including innovative proprietary
tools developed by the Company’s in-house R&D team. KLX Energy
Services supports its customers on a 24/7 basis from over 35
service facilities located in the major onshore oil and gas
producing regions of the United States. For more information, visit
the KLX Energy Services website at www.klxenergy.com.
Forward-Looking Statements
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 Securities Exchange Act of 1934, as
amended. Such forward-looking statements, including those
regarding the timing and consummation of the transactions described
herein, 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 Registration Statement on Form 10, Quarterly Report on
10-Q and Current Reports on Form 8-K. For more information, see the
sections entitled “Risk Factors” and “Forward-Looking Statements”
contained in the Company’s Form 10 and in its 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
the federal securities laws and the 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.
1 Motley’s fiscal third quarter ends September 30, KLXE’s fiscal
third quarter ends October 31 2 Combined Adjusted Earnings Per
Share includes $6.5 million of interest expense to reflect the
issuance of the notes. Motley’s data used in combined results based
on mid-point of their third quarter 2018 guidance
KLX ENERGY SERVICES
HOLDINGS, INC. |
PRO FORMA RECONCILIATION OF CONSOLIDATED
OPERATING EARNINGS |
TO ADJUSTED OPERATING EARNINGS AND ADJUSTED
EBITDA |
(In Millions) |
|
|
|
THREE MONTHS
ENDED |
|
October 31,
2018 |
Operating earnings |
$ |
4.6 |
|
Costs related to
one-time post-spin-off related activities |
|
17.9 |
|
Adjusted operating earnings |
|
22.5 |
|
Depreciation and
amortization |
|
12.0 |
|
Non-cash
compensation |
|
3.5 |
|
|
|
Adjusted EBITDA |
$ |
38.0 |
|
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
RECONCILIATION OF OPERATING
EARNINGS |
TO ADJUSTED OPERATING EARNINGS AND ADJUSTED
EBITDA |
(In Millions) |
|
|
|
THREE MONTHS
ENDED |
|
October 31,
2018 |
Operating earnings |
$ |
(4.9 |
) |
Costs related to
one-time post-spin-off related activities |
|
17.9 |
|
Adjusted operating earnings |
|
13.0 |
|
Depreciation and
amortization |
|
10.0 |
|
Non-cash
compensation |
|
3.5 |
|
|
|
Adjusted EBITDA |
$ |
26.5 |
|
|
|
|
KLX ENERGY SERVICES HOLDINGS,
INC. |
PRO FORMA RECONCILIATION OF NET
EARNINGS |
TO ADJUSTED NET EARNINGS PER DILUTED
SHARE |
(In Millions, Except Per Share
Data) |
|
|
|
|
|
|
|
|
|
THIRD QUARTER 2018
GUIDANCE |
Net earnings |
|
|
|
$ |
(1.9 |
) |
Non-cash
compensation |
|
|
|
|
3.5 |
|
Income
taxes |
|
|
|
|
- |
|
Costs related to one-time post-spin-off related
activities |
|
|
|
|
17.9 |
|
Adjusted earnings
before tax expense |
|
|
|
|
19.5 |
|
Income
taxes |
|
|
|
|
- |
|
Adjusted income
taxes |
|
|
|
|
- |
|
Adjusted net
earnings |
|
|
|
$ |
19.5 |
|
|
|
|
|
|
Adjusted net earnings
per diluted share |
|
|
|
$ |
0.96 |
|
|
|
|
|
|
Diluted weighted
average shares |
|
|
|
|
20.3 |
|
|
|
|
|
|
CONTACT:Michael PerlmanTreasurer
and Senior Director, Investor RelationsKLX Energy Services
Holdings, Inc.(561) 273-7148
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