KLX reports record revenues for ASG business, ends Q2 with net debt of $782 million

By Lisa Kerner

Charlotte, N.C., Aug. 25 – KLX Inc. ended the first half of 2015 with record revenues for its Aerospace Solutions Group (ASG), offset by weakness in the Energy Services Group (ESG), said chairman and chief executive officer Amin Khoury.

Khoury made his comments during the company’s earnings conference call on Tuesday.

ASG generated record revenues of $700 million for the first half of 2015. Full-year revenues for the segment are expected grow at a constant currency mid-single digit rate, as compared with fiscal year 2014.

The near-term outlook for the financial performance of the ESG business remains “challenged,” according to Khoury.

ASG’s second-quarter revenues were up 5.7% at $352 million for the quarter, while ESG revenues were down 32.5% at $61 million. The decline in ESG revenues was attributed to a 60% decline in oil and gas prices, as well as a roughly 60% decline in drilling rigs.

“Although we expect the market to remain challenging through the balance of this year and well into next year, our current geographical market positions, together with our recent investments, planned future investments and solid management team, position ESG for superior financial performance when industry conditions improve,” Khoury said.

Second-quarter consolidated revenues were down 4.2% year over year at about $413 million.

At July 31, KLX had cash of about $418 million, net debt of about $782 million and a net debt-to-net capital ratio of 23%. The company’s $750 million credit facility remains undrawn and there are no debt maturities until 2022.

Cash flows from operations for the first six months of 2015 totaled about $130 million, while capital expenditures totaled $70 million.

As a result of the change in its year-end from Dec. 31 to a Jan. 31 year-end, KLX said it presented its second fiscal quarter and six-month period ended July 31, 2015, as compared with the three-month and six-month periods ended June 30, 2014.

KLX, a spinoff of B/E Aerospace, Inc., is a Wellington, Fla.-based distributor of aerospace fasteners and consumables and provider of services to the oil and gas industry.

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