8-K: KLX Energy Services Refinances Debt with $232 Million Senior Secured Notes and New $125 Million ABL Facility

KLX Energy Services Holdings, Inc. refinances its existing debt by issuing $232 million in senior secured notes due March 2030 and entering into a new $125 million ABL credit facility due March 2028.

Summary

• KLX Energy Services Holdings, Inc. has entered into agreements to refinance its existing 2025 senior secured notes.
• The company will issue approximately $232 million of senior secured notes due March 2030.
• KLX has also entered into a new ABL credit facility due March 2028 with a $125 million commitment, a first-in-last-out facility with a $10 million commitment, and a committed incremental loan option with a $25 million commitment.
• The closing of the refinancing is expected to occur on or about March 11, 2025, subject to certain closing conditions.
• KLX expects 2024 fourth quarter revenue to come in at the midpoint of previously disclosed guidance.
• Adjusted EBITDA margin is expected to exceed the high-end of previously disclosed guidance.
• The company will hold a conference call on March 14, 2025, to discuss the results.
• The company was advised on the refinancing transactions by TPH&Co. and Vinson & Elkins LLP.

Sentiment

Score: 8

Explanation: The announcement is positive due to the successful refinancing, extended debt maturity, and expected strong Q4 2024 performance. The management's comments are optimistic, and the company appears well-positioned for future growth.

Positives

• The refinancing extends the company's debt maturity profile.
• The new ABL provides enhanced financial flexibility.
• The company is well-positioned to capitalize on opportunities to delever and grow.
• KLX expects a strong finish to 2024 with revenue at the midpoint of guidance and Adjusted EBITDA margin exceeding the high-end of guidance.

Risks

• The closing of the refinancing is subject to certain closing conditions.
• The forward-looking statements involve significant risks, contingencies and uncertainties.

Future Outlook

The company is well-positioned to capitalize on opportunities to delever and grow while delivering value to its shareholders.

Management Comments

• Chris Baker, KLX President and Chief Executive Officer, stated that the company finished the year strong despite typical seasonal headwinds and fourth quarter budget exhaustion driven by customer frac holidays.
• Keefer Lehner, EVP and Chief Financial Officer, stated that the refinancing marks a significant milestone in the company's ongoing efforts to continue to strengthen KLXs financial position.
• Keefer Lehner, EVP and Chief Financial Officer, stated that the refinancing provides the company with enhanced financial flexibility to execute its strategic initiatives, including accretive, deleveraging M&A via a supportive lender group along with enhanced liquidity features in the ABL.

Industry Context

The announcement highlights KLX's ability to sustain strong performance despite a decrease in the U.S. rig count, indicating a successful weighting towards completion and production and intervention business lines.

Comparison to Industry Standards

• The refinancing allows KLX to align its capital structure with industry peers that have longer debt maturity profiles.
• The enhanced financial flexibility from the ABL facility positions KLX to pursue strategic initiatives, including M&A, similar to strategies employed by other companies in the oilfield services sector.

Stakeholder Impact

• Shareholders: The refinancing is expected to deliver value to shareholders.
• Creditors: The new debt structure provides clarity and extends the maturity profile.
• Customers: The enhanced financial flexibility allows KLX to better serve its customers.

Next Steps

• The closing of the refinancing is expected to occur on or about March 11, 2025, subject to certain closing conditions.
• KLX will report 2024 fourth quarter and year end financial results and hold a conference call on March 14, 2025.

Key Dates