8-K
Koil Energy Solutions, Inc. (KLNG)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) ofthe
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May11, 2023
KOIL ENERGY SOLUTIONS, INC.
(Exact name of registrant as specified in itscharter)
| Nevada | 000-30351 | 75-2263732 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission File Number) | (I.R.S. Employer<br><br> <br>Identification No.) |
1310Rankin Road, Houston, TX 77073
(Address of principal executive offices) (Zip Code)
(281) 517-5000
Registrant’s telephone number, including area code
Deep Down, Inc.
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| N/A | N/A | N/A |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934 |
Emerging growth company ☐
| If an emerging growth company, indicate by check mark if the registrant<br>has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant<br>to Section 13(a) of the Exchange Act. ☐ |
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SECTION 2 – FINANCIAL INFORMATION
| ITEM 2.02 | Results of Operations and Financial Condition. |
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On May 11, 2023, Koil Energy Solutions, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS
| ITEM 9.01 | Financial Statements and Exhibits. |
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(d) Exhibits:
| 99.1 | Press Release issued by Koil Energy Solutions, Inc. dated March 30, 2023. |
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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 11, 2023
| KOIL ENERGY SOLUTIONS, INC. | |
|---|---|
| By: | /s/ Charles K. Njuguna |
| Charles K. Njuguna | |
| President, Chief Executive Officer and Chief Financial Officer |
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Exhibit 99.1
Koil Energy Solutions,Inc. Announces First Quarter 2023 Results
Houston, TX – May 11, 2023 – Koil Energy Solutions, Inc. (OTCQB: KLNG) (“Koil Energy” or the “Company”), a specialist in deepwater production and distribution equipment and services, today reported results for the quarter ended March 31, 2023.
Koil Energy at a Glance:
| Share Price†: | $0.65 | Cash*: | $1.5M |
|---|---|---|---|
| 52-Week Range†: | $0.42 - $0.80 | Book Value*: | $7.0M |
| Shares Out.†: | 11.9M | Price / Book Value: | 1.1x |
| Market Cap†: | $7.7M | TTM Revenue: | $13.1M |
| *As of 03/31/23;<br><br> <br>†As of 05/10/23 |
Charles Njuguna, Koil Energy’s CEO, commented, “Our top-line results for the first quarter of 2023 are reflective of the positive trends in offshore activity that we are currently experiencing. We remain constructive on our outlook on the energy markets for 2023 and beyond and believe that we are currently in the midst of a ramp up in offshore investment. Participation in this upcycle is essential for our business to achieve a sustained level of growth, so we have been busy with building and maintaining relationships to strengthen our customer base. We are committed to engaging with our customers on a deeper level to better understand their offshore needs, and these efforts have instigated an increased level of bidding requests from our customers. As a result, our project backlog has increased approximately ten percent when compared to this time last year.
“After successfully transitioning the Company’s operations to our newly leased premises in the fourth quarter of 2022, we are excited that our new headquarters will enrich our team’s ability to further support the needs of our clients as well as allow us to expand our core competencies beyond our traditional core products and services.
“As we focus on the growth of our business, managing cash flow and preserving liquidity remains of critical importance. Bidding and project activity remain strong, and we are confident our streamlined operations and continued focus on our core strengths will enable us to be the primary choice for our customers. We also remain cautiously optimistic that we are positioned for further success in the renewable energy segments as the opportunities continue to build.”
Operating Results
Koil Energy’s revenues for the three months ended March 31, 2023 (“Q1 2023”) increased 3 percent to $3.7 million compared to $3.6 million for the three months ended March 31, 2022 (“Q1 2022”), primarily due to heightened offshore project activity led by customer demand for our support services and rental solutions.
Gross profit for Q1 2023 was $1.6 million, or 44 percent of revenues, compared to Q1 2022 gross profit of $1.4 million, or 39 percent of revenues. The increase in gross profit percentage was due to higher revenues and lower rent expenses for the three months ended March 31, 2023.
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Operating expenses were $1.7 million, or 47 percent of revenues, in Q1 2023 compared to $1.7 million, or 48 percent of revenues, in Q1 2022. Comparatively, there was a slight increase in operating expenses during Q1 2023, which was mainly driven by increased research & development costs.
Due to the factors discussed above, Koil Energy reported a Q1 2023 net loss of $97 thousand, or a $0.01 loss per diluted share, compared to a Q1 2022 net loss of $264 thousand, or $0.02 per diluted share. Per share results for Q1 2023 and Q1 2022 are based on 11.89 million and 12.16 million weighted average shares outstanding, respectively.
Koil Energy reported a modified EBITDA of $90 thousand in Q1 2023 compared to a negative modified EBITDA of $57 thousand in Q1 2022. The comparative increase in modified EBITDA was primarily due to the increase in support services revenues and decrease in cost of sales during Q1 2023 as compared to Q1 2022.
Financial Strength
At March 31, 2023, Koil Energy had working capital of $3.9 million, which includes cash of $1.5 million and net receivables of $4.3 million. Total shareholders’ equity was $7.0 million, or approximately $0.59 per common share. Given the Company’s current capital structure, Koil Energy remains in a strong financial position for continued growth.
Conference Call
Koil Energy will not be hosting an investor conference call to review its first quarter 2023 results.
About Koil Energy Solutions, Inc. (www.koilenergy.com)
Koil Energy is a leading energy services company that provides equipment and support services to the world’s energy and offshore industries. We provide innovative solutions to complex customer challenges presented between the production facility and the energy source. Our core services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, and related services. Additionally, Koil Energy's highly experienced professionals can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world.
Forward-Looking Statements
Any forward-looking statements in the preceding paragraphs of this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties in that actual results may differ materially from those projected in the forward-looking statements. In the course of operations, we are subject to certain risk factors, competition and competitive pressures, sensitivity to general economic and industrial conditions, international political and economic risks, availability and price of raw materials and execution of business strategy. For further information, please refer to the Company's filings with the Securities and Exchange Commission, copies of which are available from the Company without charge.
Investor Relations:
Trevor Ashurst
ir@koilenergy.com
281-862-2201
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KOIL ENERGY, INC.
SUMMARY FINANCIAL DATA
(UNAUDITED)
Comparative Condensed Consolidated Income Statement
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| (In thousands, except per share amounts) | ||||||
| Revenues | $ | 3,724 | $ | 3,601 | ||
| Cost of sales | 2,081 | 2,187 | ||||
| Gross profit | 1,643 | 1,414 | ||||
| Total operating expenses | 1,738 | 1,726 | ||||
| Operating loss | (95 | ) | (312 | ) | ||
| Total other (income) expense | 1 | (53 | ) | |||
| Loss before income tax expense | (96 | ) | (259 | ) | ||
| Income tax expense | 1 | 5 | ||||
| Net loss | $ | (97 | ) | $ | (264 | ) |
| Net loss per share, basic and diluted | $ | (0.01 | ) | $ | (0.02 | ) |
| Weighted-average shares outstanding, basic and diluted | 11,888 | 12,157 |
Comparative Condensed Consolidated Balance Sheets
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2023 | 2022 | |||
| (In thousands) | ||||
| Assets: | ||||
| Cash | $ | 1,519 | $ | 2,353 |
| Other current assets | 5,865 | 4,532 | ||
| PP&E, net | 3,232 | 3,305 | ||
| Other non-current assets | 6,326 | 6,425 | ||
| Total assets | $ | 16,942 | $ | 16,615 |
| Liabilities: | ||||
| Current liabilities | 3,501 | 2,989 | ||
| Other long-term liabilities | 6,406 | 6,518 | ||
| Total liabilities | 9,907 | 9,507 | ||
| Stockholders' equity | 7,035 | 7,108 | ||
| Total liabilities and stockholders' equity | $ | 16,942 | $ | 16,615 |
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KOIL ENERGY, INC.
SUMMARY FINANCIAL DATA, CONTINUED
(UNAUDITED)
Modified EBITDA:
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| (In thousands) | ||||||
| Net loss | $ | (97 | ) | $ | (264 | ) |
| Add: Interest expense, net | 2 | 3 | ||||
| Add: Income tax expense | 1 | 5 | ||||
| Add: Depreciation and amortization | 152 | 196 | ||||
| Add: Share-based compensation | 24 | 57 | ||||
| Deduct: Gain on sale of asset | (1 | ) | (54 | ) | ||
| Add: Relocation costs | 9 | – | ||||
| Modified EBITDA (loss) | $ | 90 | $ | (57 | ) |
Cash flow data:
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| (In thousands) | ||||||
| Cash provided by (used in): | ||||||
| Operating activities | $ | (674 | ) | $ | (477 | ) |
| Investing activities | (78 | ) | (347 | ) | ||
| Financing activities | (82 | ) | (150 | ) | ||
| Change in cash | $ | (834 | ) | $ | (974 | ) |
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