KLX Energy Services (NASDAQ:KLXE) reported first-quarter 2026 revenue of $145 million and adjusted EBITDA of $11.1 million, with management describing the period as the likely low point for the fiscal year due to seasonal headwinds, weather disruptions and customer delays.
President and Chief Executive Officer Chris Baker said the quarter followed the company’s typical first-quarter pattern, including customer budget resets and the restart of completion programs after the holidays. He also cited Winter Storm Fern and customer drilling issues that delayed completion jobs late in March.
“We expect Q1 to be the low point for the 2026 fiscal year, as it has been in prior fiscal years,” Baker said.
First-Quarter Results Reflect Seasonal Pressure
Interim Chief Financial Officer Geoff Stanford said first-quarter revenue declined about 6% from the year-earlier period, compared with an estimated 12% decline in the average U.S. rig count. Adjusted EBITDA margin was approximately 8%, which Stanford said was broadly consistent with the mid- to high-single-digit margin range KLX has delivered in prior first quarters.
The company reported a net loss of approximately $24 million, or $1.23 per share. Selling, general and administrative expenses were $15.4 million, down about 29% from the prior year, reflecting cost actions taken over recent quarters.
Stanford said management is reviewing costs closely and is aiming for full-year SG&A to come in below 2025 levels if possible. He noted that SG&A totaled $68.5 million in 2025 and $79.6 million in 2024.
Northeast Mid-Con Leads Segment Performance
KLX’s Northeast Mid-Con segment was the strongest performer in the quarter, supported by gas-focused activity. Segment revenue increased 28% year over year to $52.5 million, while adjusted EBITDA rose to $10.9 million. Stanford said segment adjusted EBITDA margin expanded to approximately 21% from roughly 7% in the prior-year period.
Baker said dry gas revenue was up approximately 45% year over year, although it declined about 4% sequentially, its first sequential decline in five quarters. He attributed the decline primarily to weather delays in the Haynesville.
The Rocky Mountain segment posted revenue of $38.6 million, an operating loss of about $3.8 million and adjusted EBITDA of approximately $2.1 million. Revenue declined about 19% year over year, reflecting lower activity across product lines and typical winter impacts.
The Southwest segment recorded revenue of $53.6 million, an operating loss of $3.4 million and adjusted EBITDA of $4.6 million. Revenue fell about 18% from the prior year, which Stanford attributed to reduced oil-directed activity in the Permian that began in the second quarter of 2025.
In response to an analyst question, Baker said Southwest margins were compressed by a mix shift away from completion activity and by staffing for completion work that slipped later into the quarter. He said internal April results showed a “material improvement” in segment-level margin compared with the first quarter.
Second-Quarter Revenue Expected to Rebound
KLX forecast second-quarter revenue of $162 million to $172 million, with a midpoint of $167 million. That midpoint would be $22 million higher than the first quarter and 5% above the second quarter of 2025.
Baker said the company expects revenue to increase in all three segments and in nearly every product service line during the second quarter. He said the Rockies should benefit from a seasonal rebound as winter impacts ease, while the Southwest is expected to improve gradually as Permian activity stabilizes. The Northeast Mid-Con is expected to continue contributing solid results.
Management also expects adjusted EBITDA margin to expand sequentially due to higher activity and better overhead absorption. Baker said revenue per average operating rig is expected to rise above $310,000 in the second quarter, depending on the average rig count, compared with $273,000 in the first quarter.
Looking beyond the second quarter, Baker said KLX’s historical pattern is for the third quarter to be its strongest period of the year. He said operator commentary points to a robust second half, especially as smaller independent and private operators increase activity.
Commodity Volatility Shapes Outlook
Baker described the macro environment as “highly volatile but constructive.” He said commodity prices continue to trade in a wide range amid the ongoing Middle East conflict and macroeconomic developments.
On the oil side, Baker said KLX has seen larger operators accelerating drilled but uncompleted wells, or DUCs, and independent operators pulling forward activity in response to elevated spot prices. He said the second half of the year appears likely to be stronger than the first half based on operator discussions, public commentary and macro tailwinds.
On the natural gas side, Baker said the forward strip remains supportive, though some operators in the Haynesville have become more cautious as natural gas prices move near the mid-$2 range. He said some customers are considering shifting incremental programs into the second half of the year.
During the question-and-answer session, Baker said he expects second-quarter incremental revenue growth to come primarily from the Rockies, with the Southwest and Mid-Con also contributing. In the second half, he said the rate of change may shift back toward oilier basins, particularly the Permian, while also citing South Texas, the Bakken and the Uinta as areas with incremental opportunity.
Capital Spending, Liquidity and Interest Plans
KLX reported first-quarter capital expenditures of approximately $8.7 million, with net capital expenditures of about $5.3 million after $3.4 million of asset sale proceeds. Stanford said spending was primarily maintenance-oriented and focused on rentals, coiled tubing, through-tubing and pressure pumping assets.
The company previously guided to roughly $40 million of gross capital expenditures and $30 million to $35 million of net capital expenditures for 2026. Stanford said spending is currently tracking below that original framework, though management expects to refine the range at midyear based on market conditions and potential incremental activity.
KLX generated approximately $300,000 of net cash from operating activities in the first quarter. Unlevered free cash flow was negative $1.4 million, and leveraged free cash flow was negative $5 million. Stanford said working capital was a use of cash, consistent with the company’s typical first-quarter pattern.
At quarter-end, total debt was approximately $275.8 million, and total liquidity was $48 million, including about $6 million of cash and cash equivalents and approximately $42 million of availability under the company’s March 2026 asset-based lending facility, including undrawn FILO capacity.
Stanford said KLX expects a slight reduction in liquidity at the end of the second quarter because of working capital needs tied to higher activity. He said liquidity and cash generation should improve through the year as receivables convert to cash.
Regarding the company’s notes, Stanford said KLX paid 25% of interest in cash and 75% in payment-in-kind, or PIK, for the first two months of the quarter, then elected to PIK 100% in March. He said the company expects to PIK 100% of interest for the second and third quarters of 2026 before moving to a 50/50 cash and PIK mix in the fourth quarter, subject to market conditions, leverage and liquidity.
About KLX Energy Services (NASDAQ:KLXE)
KLX Energy Services is a provider of completion tools and pumping equipment for the upstream oil and gas sector, offering high-pressure pumping systems, pressure control equipment, solids control services and downhole rental tools. The company supports well completion and stimulation operations by supplying, installing and maintaining critical equipment used in hydraulic fracturing, coiled tubing interventions and associated wellsite activities.
The firm’s product portfolio includes deck-mounted and portable fracturing pumps, high-pressure manifolds, flowback and well testing units, filtration and separation systems, and wellsite automation solutions.
