Q4 2020 KLX Energy Services Holdings Inc Earnings Call
June
Greetings and welcome to the KLX Energy Services fourth quarter earnings conference call at this time. All participants are in a listen-only mode a brief question-and-answer session will follow the phone. No presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad, as a reminder. This conference is being recorded. It is now my pleasure to assist your host Ken Dennard. Thank you. Mr. You may begin.
Thank you operator and good morning everyone. We appreciate you joining us for the KLX Energy Services conference call and webcast to review fiscal fourth-quarter 2020 results with me today or Chris Baker. Klxe is President and chief executive officer and Kiefer laner Executive Vice President and Chief Financial Officer following my remarks page will provide a high-level commentary on the financial details of the fourth quarter and outlook before opening the call for questions and answers.
They'll be a replay of today's call and it'll be available by webcast on the company's website at KLX energy. They'll also be a telephonic report recorded replay available until April 22nd more information on how to access the replay features are included in yesterday's release. Please note that information reported on this call speaks only as of today April 15th 2021 wage. And therefore you are advised that time-sensitive information. We no longer be accurate as of the time of any replay listing or transcript reading in addition Management's comments may contain forward-looking statements within the meaning of the United States Federal Securities laws, these forward-looking statements reflect the current views of klxe management. However, various risks uncertainties and contingencies could cause actual results performance or achievements to differ materially from those expressed in the statements made by management.
The Listener is encouraged to read the annual report on form 10-K quarterly reports on form 10-q and current reports on form 8-k to understand certain of those risks uncertainties and contingencies off the comments today may also include certain non-gaap Financial measures additional details and reconciliations is the most directly comparable gaap Financial measures are included in the quarterly press release which can be found on galaxy website. And now without further Ado. I turn the call over to Alex. He's president and CEO. Mr. Chris Baker, press five.
Thank you, Ken and good morning everyone. Thank you for joining us today for KLX Energy Services fiscal fourth-quarter twenty-twenty conference call. Let me Begin by giving you all an update on a broader Market environment during the quarter as well as some of the significant themes impacting our results. I will then turn the call over to Kiefer to review our fiscal fourth-quarter financial performance package or returning for some final comments on our strategy and Outlook.
During the fourth quarter.
I'm pleased to say that despite the overhanging issues brought about by COVID-19. We saw a broad-based macroeconomic Improvement that benefited most of our Geo segments off line. It was directly reflected in our financial results.
For the fiscal fourth quarter ended January 31st, if you see I price Rose roughly 43% after having fallen about 11% during the prior fiscal quarter likewise retail Rose 30% over the same period haven't fallen roughly 19% during the preceding quarter the active track spread count has also continued a trend favorably continuing its upward rise from a low of seventy spread during the fiscal third-quarter all the way to approximately 170 spread at the end of the fourth fiscal quarter.
Strengthening Market activity across the drilling and completion Market drove a marketed improvement in our performance as our revenues were up 22% sequentially go down $87 million in our adjusted ebit Outlaw improved to two point six million compared to an adjusted ebitda loss of 5.4 million in Q3.
Earnings to the North American Market, the EMP operators have reprioritize their objectives now focusing on Capital discipline and returned rather than production growth. This practice means that operators have only marginally begun the ramp activity in response to improving commodity prices. And as a result, the service industry is currently running at less than half the activity log seen roughly a year and half ago and Equipment capacity remains oversupply in every service line.
This disconnect between crude pricing and activity along with the overhang of service equipment and lack of consolidation within ofs create a unique Paradigm. Whereby all Service pricing is unsustainably low and can now be regarded as one of the greatest challenges to the sector ofs industry has already early streamlined. It's called structure over an extended amount of time and pricing simply cannot be reduced further and therefore pricing must increase for short medium and long-term sustainability of the service industry without Galaxy and other high-quality Service Company there would not be thirty thousand foot laterals forty well pads and $40 break-even WTI.
The other related Dynamic having a material impact on the service industry today is that EMP operators are consolidating at a more rapid pace and in the oil field services space which means that there will ultimately be a smaller Universe of operators controlling larger positions within key petroleum basins and we're seeing this play out in the Permian today except expect similar tracks across all bases.
This will driving.
Continue to shift and recount and completions activity with the larger operators taking a larger share of the overall onshore activity based.
As they execute on amalgamating these larger corporations, we expect that our customers will begin to pursue additional supply chain savings leveraging their economies of scale and developing additional operational efficiencies by drilling larger pads with further extended laterals, and we believe that klxe is the ideal provider to provide the high level of technical service necessary to execute on this song.
We also expect that these larger operators will operate via centralized Supply Chain management infrastructure for purchasing the vendor selection decision, which has ultimately benefit companies Choice klxe which is able to offer a broad high quality product and service offering under a single MSA across multiple basis is also likely that we would see our customers make a greater push towards ESG initiatives with operators increasingly incorporating ESG into it's been there selection process.
Earnings safety. We are extremely proud that our twenty-twenty safety performance yielded an all-time low trir of 0.57 continuing a trend of improvement in each of the past five years. We continue to advance initiative around real-time monitoring and believe these Solutions will ultimately provide us with the opportunity to predict down hole and surface fatigue and failures. And as a result reduced in-person interaction with dangerous job functions, which will further improve our industry-leading safety metrics and being a differentiator in the marketplace.
To proactively address these a permission market trends we affected the klxe qes merger in July 2020 which facilitated the creation of a leading Diversified provider of drilling completion production and intervention services Galaxy now has a leading blue-chip customer base made up of large independent and major oil and gas companies and they represent the majority the largest operators in the US the very same group that is leading the consolidation effort on the e&p side.
With our strong presence in all key basins across the in our established relationships with larger better capitalized Blue Chip companies. We are well-positioned to grow as the mark covers and we not only have a balance geographical presence, but also a balance product line offering as well and puts us into contact with nearly all aspects of The Well of life cycle drilling to completion to production and intervention. We have an equipment Fleet comprised of modern high-quality equipment and proprietary technology supporting our diverse Revenue base wage offers a wealth of cross-selling opportunities in new customers.
I'm also pleased to report that the integration of our operations has been successfully completed ahead of schedule with the closure of our Florida Legacy corporate headquarters in the relocation of all key functions to Houston office. I've been being completed in Q3. We then focused on eliminating redundancies and duplicative functions throughout our operation in Q4. We recently sublet the Legacy Q F headquarters and within a week move the entire corporate office to the Legacy klxe location eliminating redundant office space in Houston.
I can May 2020. We stated that we expected to generate annualized costs energies of forty million within 12 months during Q3. We identified an additional six million and cost savings and now has been successfully largely completed the integration process and realize the full $46 million and projected savings well ahead of schedule.
I'd like to thank the tireless efforts all of our employees and bringing the integration to a successful conclusion. This truly was a team effort and everyone played a part in making both emerged in integration a success that we can be proud of.
I mean executed complex transaction during challenging times such as this as well as the 2015 acquisition of the Archer. Well entity. Our management team has been a wealth of experience and expertise in finding compatible companies that can add meaningful value and extracting efficiencies and synergies to help Drive shareholder value.
Let me know it will our primary integration effort is completed. We are still working through optimization and rationalization of idle facilities and we're always evaluating and improving all aspects of our organization to enhance efficiency and add value whether it is an operation sales HR accounting and so forth in short the advancement in a moment of our organization is a continual process that will remain a critical part of our strategy regardless of the market environment.
So overall, I'm excited about our strengthened position within the industry and believe it will position Galaxy to better compete in this rapidly evolving Market.
With that I'll now turn the call over at keeper who will review Q4 Financial results, Kiefer.
Thank you, Chris before I begin. Let me remind you that during our third quarter. We changed our methodology for the allocation of our corporate costs which directly impacts our segment presentation 10:00 to 3. We have allocated the geographic segment. Only those corporate costs that directly tied to their operations. Whereas the remaining unallocated balance now appears as a separate line item in Arkansas in financial statements with that said I'll now discuss our fourth quarter 2020 Consolidated results.
For the fourth quarter ended January 31st, 2021 revenues were eighty six point eight million dollars an increase of 15.8 million dollars or 22% as compared to the revenue for fiscal third quarter of 2020. Once again, the revenue increase reflects the impact of improving Market activity across most of our markets and product lines particularly the Rockies game or drilling coiled tubing and fishing and rentals product lines.
Adjusted operating law was twenty point eight million dollars for the quarter adjusted ebitda loss and adjusted ebitda. Margin were negative 2.6 million dollars and negative 30% respectively the adjusted ebitda loss and proved by roughly 2.8 million dollars compared to the fiscal third-quarter loss of five point four million dollars and a pro form of fiscal second-quarter loss of nineteen point three million dollars. The material decrease in our adjusted ebit Outlaws was the results of both higher Revenue driven by activity and utilization increases and fixed costs energy associated with the merger flowing through the system given the increase in Revenue was largely utilization driven. We expect incremental margins to improve further once pricing increases gain traction.
I'll begin the segment review with the Rockies Rocky Mountain segment fiscal fourth-quarter revenue of 29.4 million dollars increased by eleven point two million dollars with 62% off as compared with the fiscal third quarter of 2020.
The sequential increase in Revenue was primarily driven by a material uptick and fishing rentals and other completion oriented Services adjusted operating income for the fiscal fourth-quarter was 1 million dollars as compared with adjusted operating law of three point eight million dollars in the fiscal third quarter of 2020 adjusted ebitda was six point five million dollars as compared to the fiscal third-quarter adjusted ebitda of $500,000 and the strong margin realized and the fourth quarter was driven by Revenue mix with a higher concentration of our higher-margin margin service.
Now moving to our Southwest segment Southwest segment generated revenues of 30.1 million dollars an increase the 5.3 million dollars or 21% as compared to the fiscal third Cup 2022 significant increase in Revenue was driven by meaningful increases in Directional Drilling and completion rental activities.
You for adjusted operating loss with six point four million dollars compared to fiscal third-quarter adjusted operating loss of eight point five million dollars and adjusted ebitda was one point $1,000 compared to fiscal third-quarter adjusted ebitda loss of two point two million dollars round out the segment of discussion with the Northeast and midcon took a quarter revenues were twenty seven point three million dollars and we're largely consistent with the fiscal third quarter of 2020 adjusted operating loss for the fiscal fourth-quarter was ten point four million dollars as compared with adjusted operating loss of two point four million dollars in the fiscal third quarter of 2020 adjusted ebitda loss was five point four million dollars as compared to the fiscal third-quarter adjusted ebitda of one point five million dollars.
The decrease in adjusted ebitda was largely driven by a 4.6 million dollar accounts receivable Reserve recognized in response to a recent customer bankruptcy. We performed Well Services to bring an offshore shallow water. Well under control, the customer has an operator's extra expense insurance policy, which we believe to ultimately cover a material Porsche of the amount owed.
our adjusted
Corporate and other even a loss for the fiscal fourth-quarter was four point eight million dollars a decrease of $400,000 or 8% compared to five point two million dollars for the third quarter wage demonstrates the speed with which we were able to implement corporate fixed cost synergies.
Now, let me review our Consolidated financial position KLX continues to have one of the strongest what did he positions in the small to mid-cap ofs face as of January 31st 2021 a cash on hand was approximately $47 and total liquidity was $82 million dollars preserving cash and liquidity remains a priority as the market improves and we continue to proactively manage our cost structure to return the business the positive unlevered free cash flow as soon as possible.
Our long-term debt of $244 billion dollars less cash resulted in net debt, as of the end of the fourth quarter of approximately $197. There were no borrowings outstanding under the company's $100 credit facility with thirty-five million dollars of net availability when factoring in the $10 liquidity hold back tied to the fixed charge coverage ratio in our abl your continued to be no near-term debt maturities with our abl maturing and the fall of 2023 and our bonds not maturing until November 2025.
For the 3 months ended January 31st, 2021 cash flow used in operations with $29 and free cash flow is -30 million dollars the sequential Decline and hours of operations is largely driven. I have $15 semi annual interest payment made in November as well as a $3 payment to the ownership group of Motley, which was the final page to the group from the fall 2018 acquisition. There was also an approximately $14 investment in net working capital during the fiscal fourth-quarter compared to eight million dollars in the third quarter. This is largely associated with accounts receivable growth as Revenue expanded by 22% sequentially.
Capital expenditures for the quarter were approximately 1.1 million most of which was primarily tied to maintenance spending. We continue to expect total capex for 20 21 to be in the range of 15 to 20 million dollars with that. I will now turn the call back to Chris.
Thanks, keeper looking back at a highly tumultuous year. It's saddled us with numerous challenges. I'm thrilled that we were able to rise above the hardship to make Galaxy a much stronger company in the office like the site fully executing on our plans and the merger was curious is successfully integrating our operations in such a short period of time we've been able to expedite substantial cost savings and synergies while also building out our product offerings and Geographic reach the cement our position as a premier provider of asset-light, oilfield Solutions.
Despite having a strong balance.
She ample liquidity and no near-term debt maturities. We will continue to explore opportunities to deliver during 2021.
It's clear that we made great strides over the past year in creating a leaner more efficient organization. The weather of the challenges of the ever turbulent oil and gas market that I should be a size that despite our many cost reduction actions and asset sales. We still remain strongly levered to recovery as we have a well-positioned asset-based enabling to quickly provide a wealth of cost-effective solution to serve not just our current base of customers, but also new customers looking to ramp up their activity.
Dispositions klxe for the future regardless of what may come and it appears that fundamentals and the Outlook are becoming more favorable with crude prices up more than 14% off as of early April there appears to be a solid foundation for a more constructive Outlook and it meaningful increase in activity for half later. This year are in 2022.
As we look at the supply and demand picture we have greater numbers of people being vaccinated against COVID-19 as well as a return to economic normalcy from many areas of the US and globally albeit at a rate which will drive increased demand for crude over the course of 2021 and 2022 on the supply side. We have a core production based in the US that is being depleted. It has had declining investment over 20 20 at the same time. OPEC plus has taken for active supply-side measures to preserve a constructive oil price all in all this makes a compelling case for a potential economic recovery is such a recovery with further spur energy demand within the US and globally and ultimately a greater level of investment in activity in the job market.
In the interim, it is critical that our industry is a meaningful pricing gains wherever possible and in the case of klxe. Our deployment of additional equipment will be contingent on higher price as it now stands there continues to be a good deal of irrational pricing Behavior by some competitors and we coupled with the significant oversupply of equipment in the marketplace creating an unsustainable market dynamics. We further believe that consolidation within ofs along with current macroeconomic trends continuing should allow the industry to come to better balance off.
As we've often emphasized in the past one of these adjustments will be the overarching issue of consolidation.
Reducing the overcapacity and inefficiency in the market via consolidation will be critically important to the long-term health of the industry and the oilfield service industry will have to keep up with a faster Pace off of m&a set by the EMP industry.
With our own merger now completed. We are well-positioned to continue leading the effort to consolidate the Oilfield Services industry, given our history of successfully executing emergers and Acquisitions. Do we know that we can increase economies of scale enhance operating efficiency and drive meaningful shareholder value through consolidation simply put it remains a fundamental part of our strategy become a low cost structure provider a high-quality drilling completion and Production Services.
Also want wanted to touch on q1 and our outlook for 2021.
So far in our q1 which for klxe begins in February, we were materially impacted a winter storm Yuri that ripped through the central us hitting Texas particularly hard in February.
The Mid-Continent region had been hit quite hard the cold weather for most of the month in the cold cold this Regional weather in 30 plus years got oil production roughly three million barrels per day long will shut is flowline outages and disrupted Road transportation in response to the storm our customers. Shut and weld is split out there Drilling and completion schedules. We certainly get the effect of winter storm Yuri on our own operation seeing significant whitespace in our calendar losing 7 plus Revenue days in February.
We expect this Revenue to be made up over the course of twenty. Twenty-One is our customers are not changing their budgets and we do not expect to be able to make up for this lost work during q1 wage closing. Let me again thank our employees have been critical in helping us execute and Achieve our strategic goal and move forward during these challenging times their efforts have enabled klxe to successfully adapt to the new realities of the market and execute a milestone transaction that makes us stronger both operationally and financially and positions us very well for the future as the baptistery recovers. We would also like to thank our customers the value our customer service and execution in the field.
With that we will now take your questions operator.
Thank you. We will have a good doctor your question and answer session. If you'd like to ask you a question of a person or one on your telephone keypad a confirmation total indicator light is in the question too long. You may press start to if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of in McPherson with Simmons energy. Please proceed with your question.
Good morning, Chris Kiefer. Thanks for the comments.
Good morning to you. Yeah, hi. I was I wanted to probe a little more with you know, given were pretty late into your your fiscal q1, maybe a little more wage from the Outlook, uh for
Titan Consolidated top-line growth and ebitda Improvement this quarter notwithstanding the loss of the week. I think that we all see, you know, quite hot Drilling and completion indicators which you know would suggest that you would you would have sequential Improvement of a good magnitude. But God, I don't know how much of that has been offset by the weather. So if you could maybe just put a little more specifics around the April quarter Outlook and then if you could also talk about how April compares to the January one and Thursdays is to help us frame up the run-rate going into your YouTube.
Yeah, sure.
Or good morning. Appreciate your question, you know look is that stated in the prepared remarks? We have to make that we lost about seven Revenue days, you know a number of material district. And so I think all of our peers have already commented on the situation and as you well know that incremental Revenue those 7 days is essentially margin because when a situation like that comes out, you can't really touch your cost structure Fuel and some of your variable is a way to find larger cost for that month is fixed compounding that situation is exactly what you alluded to which was horizontal directional rig count was up approximately what time the storm hit from your end. So that's about a 12% increase therefore the industry our company et cetera was in a bit of a minor ramp-up situation for your cost structures am actually increasing and then the activity comes to a halt. So I guess what I say is the last point this one's from a scheduling perspective is as you well know wage.
Faces the bane of all existence at this point in your calendar and your calendar never lined up perfectly. So you always end up stacking up days as you come out of those situation and so often that created a slow start in February, but we're working every day to mitigate that slow start. I think it's a little too early to tell or clearly starting from behind in February. So we'll see how the quarter plays out overall like Jeff activity and revenue is continuing to rant we believe it will do so going into early summer and then ultimately as you know, the margin output will depend on the ability to drive through the middle price and maintained utilization but I would say that our run rate Revenue coming out of March at least was north of that January run rate Revenue, so we are seeing that the rack it's just a matter of mitigating the loss in February.
Understood thanks. Chris given given the the healthier base line of of activity now and I think probably just a shared sense of wage stability better levels. You still want better price than what you have today, but we completely, you know operating on a on a higher plane and a better plan than you were six months ago. Does that make you may encourage an optimistic with regard to consummating another transformative combination that as you point out needs to happen, you know for you Thursday for the industry. Do you think that consolidation for small-cap ofs is becoming more actionable now, uh at these activity levels
So I guess I'll hit just quickly look pricing. We definitely seen an improvement in commodity prices. There's a historical disconnect. As you know between our pricing is dead think we were $58 WTI this morning but kind of that $60 level and what you would have thought about normalized historical activity from a regular Factory perspective. So we have seen that marginal uptick off. The reality though is that our customers are solely focused on free cash flow and return dividends to their shareholders as you well know and so at this point in time and especially going through the fourth quarter quarter of last year during a unique Paradigm where ofs pricing is completely unsustainable and it's really one of the major threats to the industry. We have streamlined wage structure as have most of our peers over an extended downturn and so pricing really can't be reduced any further and has the increase relative sustainability. We yep,
Why some of the irrational pricing behave?
Here that we sold late last year and even early into January it kind of abated and feels like we found the floor the question becomes how soon is when can you push and you have to push as you know home based off of customer service performance and the value proposition we bring and we we try to do that every single day of the week with regards to consolidation.
So it's not like there was some capitulation last year we talked about this I think on both the third and fourth quarter earnings call where it felt like especially when the private side people are realizing. They wanted to be a part of a larger more scalable platform. I would say as all price ramped-up. We probably saw a bit of a lull in Deal flow from the private side in the last couple months and I think part of that is they view it as an opportunity to strengthen their financial statements, whether their profit-and-loss statement or their balance sheets and and try to improve upon overall deal economically seen that slow a little bit. I would say we're still seeing inbounds from some of the other small and mid-cap companies and we'll just have to see how that plays out ultimate.
Understood. Thank you. Chris. Appreciate the comments.
Yes, sir. Appreciate it, and thank you.
I was reminder it is star one to ask you a question question comes in the line of John Daniel with Daniel Energy Partners. Please proceed with your question. Follow ends last question just on the imminent Chris. What do you think is actually preventing video from happening right now cuz everyone talks about the need for it was just really seem to get it done.
Look, I appreciate that, that understand. I'm not sure that I fully cannot find on all the roadblocks. I think you know most parties are off about ultimate shareholder value and all stakeholders. And you know, you've seen a lot of our peers go through various forms of liability management Etc. I would say if you if you asked that question that you know years ago or even six months ago social issues ETC always seem to get in the way. I think when you go through the steps of the troll that we've been through everybody else actively trying to right the ship and and you know fix their cost structures quickly as they can and they're becomes disagreements upon the ultimate value and trajectory of each company, right? So the reality of the situation is we've shown the ability to strip out an enormous amount of costume am very impressed and proud of our team. We've now Club
An idol, I think twenty facilities now twenty facilities get in what we did with the corporate office last week. We just Consolidated corporate office here in Houston, but we close those twenty facilities actualize those within nine months achieved the $46 Synergy Target basically six million over the original estimate in one Order ahead of our original timeline. And so right the synergies are there the impetus to get something done is there it's just a matter of bringing some of the Consolidated players. I think to the table. Okay. I'm just going to continue on this fits. Okay, but as you assuming you're looking at companies, but assuming you do how much is the PPP loan situation and emptied in the ability to get deals done.
Have you?
Run into that at all. We have run into it. We've seen it. I think the the PPP loans in especially last year a portion of the irrational pricing behavior in the market of people were grabbing Personnel our market share. Unfortunately, we've seen a recent Spate of that a little bit within certain business lines. We have looked at some place where there's you know, a pretty sizable unknown as to how that is going to be handled. Right? So I think it's called the mid-cap company that typically not an issue but on the private side definitely seen that on their balance sheet got it a fair enough and then I guess last one. Well, we got two more sets Okay for Kiefer. Can you just give us your thoughts on the bank market and you know having for you know, if you guys did do a deal when required, you know financing, what's that market like right now?
Yeah, good question. I mean we we've got an existing credit facility in place. So it's not a market that that we've been active in. Okay, certainly we some public disclosure from some of the larger Volkswagen around alignment and ESG alignment. So I think broadly there seems to be some questions in the market about continued support and activity from some bank for the oil and gas sector in general. But unlikely, I think that probably creates a void in the market that some of the larger Regional window and the oil and gas-producing stays, Texas Oklahoma and others may be able to still but I'm speaking not from from birth experience on that start feeling I was just looking for Big Picture. Last one would be just on the the line the service lines you guys have. Can you provide any?
And some of the specific service lines of the posted that Geographic Thomas.
Elevation anything like that, and if you can't that's fine, but I'm I'm just closing remarks obviously in the violence as well.
Our next question comes from the line of Jaime Perez with RF Lafferty and Company. Please proceed with your question.
Morning, how you doing? Everybody? Most of my questions have been asked and answered. Thank you.
Okay. Thank you. Jamie. Appreciate you and it is
Let us know if this does conclude today's teleconference. I'd like to pass the call back to management for closing remarks.
Thank you once again for joining us on this call and thank you for your interest in KLX Energy Services. We look forward to talking to you again next quarter.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
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Greetings and welcome to the KLX Energy Services fourth quarter earnings conference call at this time. All participants are in a listen-only mode a brief question-and-answer session will follow the fog presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad, as a reminder. This conference is being recorded. It is now my pleasure to assist your host ten Dinars. Thank you, mister Jenner, you may begin
Thank you operator. Good morning, everyone.
We appreciate you joining us for the KLX Energy Services conference call and webcast to review fiscal fourth-quarter 2020 results with me today or Chris Baker these president and chief executive officer and Kiefer laner Executive Vice President and Chief Financial Officer following my remarks management will provide a high level commentary on the financial details of the fourth quarter and outlook before opening the call for questions and answers. They'll be a replay of today's call and it'll be available by webcast on the company's website at KLX energy to also be a telephonic report recorded replay available until April 22nd more information on how to access the replay features are included in yesterday's release. Please note that information reported on this call speaks only as of today April 15th, 2021. And therefore you are advised that time-sensitive information. We no longer be accurate as of the time of any replay listing or Thursday.
Good 3D in addition Management's comments may contain forward-looking statements within the meaning of the United States Federal Securities laws. These forward-looking statements reflect the current views of galaxies management. However, various risks uncertainties and contingencies could cause actual results performance or achievements to differ materially from those expressed in the statements made by management page listener is encouraged to read the annual report on form 10-K early reports on form 10-q and current reports on form 8-k to understand certain of those risks uncertainties and contingencies off the comments today may also include certain non-gaap Financial measures additional details and reconciliations of the most directly comparable gaap Financial measures are included in the quarterly press release which can be found on the Galaxy websites, and now without further Ado wage.
I turn the call over to Alex. He's president and CEO. Mr. Chris Baker Chris.
Thanks again and good morning everyone. Thank you for joining us today for KLX Energy Services fiscal fourth-quarter twenty-twenty conference call. Let me Begin by giving you all an update on a broader Market environment during the quarter as well as some of the significant themes impacting our results. I will then turn the call over to keeper to review our fiscal fourth-quarter financial performance package or returning for some final comments on our strategy and Outlook.
During the fourth quarter. I'm pleased to say that despite the overhanging issues brought about by COVID-19. We saw a broad-based macroeconomic Improvement that benefited most of our life of segments and product lines. It was directly reflected in our financial results.
For the fiscal fourth quarter ended January 31st by PTI price Rose roughly 43% after having fallen about 11% during the prior fiscal quarter likewise rig count Rose 30% over the same period haven't fallen roughly 19% during the preceding quarter. The active fracs spread count has also continued to Trend favorably continuing its upward ride from a low of seventy spreads during the fiscal third-quarter all the way to approximately 170 spread at the end of the fourth fiscal quarter.
Sprint
Market activity across the drilling and completion Market drove a marketed improvement in our performance and our revenues were up 22% sequentially to approximately eighty seven billion in our adjusted ebit Outlaw improved to two point six million compared to an adjusted ebitda loss of 5.4 million in Q3.
Earnings to the North American Market, the EMP operators have reprioritize their objectives now focusing on Capital discipline and returned rather than production growth. This Focus off that operators have only marginally begun the ramp activity in response to improving commodity prices. And as a result, the service industry is currently running at less than half the activity levels and roughly a year and half ago and Equipment capacity remains oversupply in every service line.
This disconnect between crude pricing and activity along with the overhang of service equipment and lack of consolidation within ofs create a unique Paradigm. Whereby all Service pricing is unsustainably low and can now be regarded as one of the greatest challenges to the sexist ofs industry has already thoroughly streamlined. It's called structure over an extended amount of time and pricing simply cannot be reduced further and therefore pricing must increase for short medium and long-term sustainability of the service industry without Galaxy and other high-quality Service Company there would not be thirty thousand foot laterals forty well pads and $40 break-even WTI.
The other related Dynamic having a material impact on the service industry today is that EMP operators are consolidating at a more rapid pace and in the oil field services space which means that there will ultimately be a smaller Universe of operators controlling larger positions within key petroleum basins and we're seeing this play out in the Permian today the except expect similar track from all bases.
This will drive it continued shift and recount and completions activity with the larger operators taking a larger share of the overall onshore activity based.
They execute on amalgamating these larger corporations. We expect that our customers will begin to pursue additional supply chain savings leveraging their economies of scale and developing additional operating efficiencies by drilling larger pads with further extended laterals, and we believe the klxe is the ideal provider to provide the high level of technical service necessary to extract on this strategy.
We also expect that these larger operators will operate via centralized Supply Chain management infrastructure for purchasing a vendor selection decisions, which has ultimately benefit companies such as klxe month, which is able to offer a broad high quality product and service offering under a single MSA across multiple places is also likely that we will see our customers make a greater push for ESG initiative with operators increasingly incorporating ESG into it's been there selection process.
earnings
Safety, we are extremely proud that our twenty-twenty safety performance yielded an all-time low trir of 0.57 continuing a trend of improvement in terms of the past five years. We continue to advance initiative around real-time monitoring and believe these Solutions will ultimately provide us with the opportunity to predict down hole and suck and failures and as a result reduced in-person interaction with dangerous job functions, which will further improve our industry-leading safety metrics and be a key differentiator in the market.
To proactively address these effort mentioned market trends we affected the klxe qef merger in July 2020 which facilitated the creation of a leading Diversified provider of drilling completion production and intervention services Galaxy now has a leading Blue Chip customer base made up of large independent and Major Oil and Gas come back and they represent the majority the largest operators in the well the very same group that is leading the consolidation effort on the EMP side.
With our strong presence in all key basins across the in our established relationships with larger better capitalized Blue Chip companies. We are well-positioned to grow as the mark covers and we not only have a balance geographical presence, but also a balance product line offering as well and puts us into contact with nearly all aspects of The Well of life cycle drilling to completion to production and intervention. We have an equipment Fleet comprised of modern high-quality equipment and proprietary technology supporting our diverse Revenue base wage offers a wealth of cross-selling opportunities in new customers.
I'm also pleased to report that the integration of our operations has been successfully completed ahead of schedule with the closure of our Florida Legacy corporate headquarters in the relocation of all key functions to Houston may have been being completed in Q3. We then focused on eliminating redundancies and duplicative functions throughout our operations in Q4. We recently sublet the Legacy QE borders and within a week move the entire corporate office to the Legacy klxe location eliminating redundant office space in Houston.
I can May 2020. We stated that we expected to generate annualized costs energies a $40 million within 12 months during Q3. We identified an additional six million and called savings and now has been successfully largely completed the integration process and realize the full $46 million in projected savings well ahead of schedule.
I'd like to thank the tireless efforts all of our employees and bringing the integration to a successful conclusion. This truly was a team effort and everyone played a part in making both the merger and integration a success that we can be proud of.
NEX
Security complex transaction during challenging times such as this as well as the 2015 acquisition of the Archer. Well entity our management team has developed a wealth of experience and expertise in finding compatible companies that can add meaningful value and extracting efficiencies and synergies to help Drive shareholder value.
Let me know if it will our primary integration effort is completed. We are still working through optimization and rationalization of idle facilities and we're always evaluating and improving all aspects of our organization to enhance efficiency and add value whether it is an operations sales HR accounting and so forth in short the advancement in life of our organization is a continual process that will remain a critical part of our strategy regardless of the market environment.
So overall, I'm excited about our strengthened position within the industry and believe it will position klxe to better compete in this rapidly evolving Market.
With that I'll now turn the call over at keeper will review Q4 Financial results, Kiefer.
Thank you, Chris before I begin. Let me remind you that.