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)
August5, 2024
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
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 August 5, 2024, Koil Energy Solutions, Inc. issued a press release announcing its financial results for the three and six months ended June 30, 2024. 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<br> Solutions, Inc. dated August 5, 2024 |
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| 104 | Cover Page Interactive Data File (formatted in Inline XBRL in Exhibit<br>101). |
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SIGNATURE
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: August 5, 2024
| KOIL ENERGY SOLUTIONS, INC. | |
|---|---|
| By: | /s/ Erik Wiik |
| Erik Wiik | |
| President and Chief Executive Officer |
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Exhibit 99.1
Koil Energy Solutions,Inc. Announces Second Quarter 2024 Results
Second Quarter Highlights
| · | Revenues of $5.8 million increased 65% year-over-year |
|---|---|
| · | Gross profit of $2.0 million increased 96% year-over-year |
| · | Net income of $1.0 million increased $1.4 million<br>year-over-year |
| · | Adjusted EBITDA of $1.2 million increased $1.4<br>million year-over-year |
Houston, TX – August 5, 2024 – Koil Energy Solutions, Inc. (OTCQB: KLNG) (“KOIL”, or the “Company”), a specialist in deepwater production and distribution equipment and services, today reported results for the three and six months ended June 30, 2024.
KOIL at a Glance:
| Share Price†: | $1.01 | Cash*: | $1.5M |
|---|---|---|---|
| 52-Week Range†: | $0.42 - $1.12 | Book Value*: | $7.2M |
| Shares Out.†: | 12.2M | Price / Book Value: | 1.7x |
| Market Cap†: | $12.3M | TTM Revenue: | $19.7M |
| *As of 06/30/24;<br><br> <br>†As of 08/02/24 |
“We achieved yet another quarter of strong performance underpinned by a proactive growth strategy and exemplary execution,” said Erik Wiik, President and CEO of KOIL. “Compared to the second quarter of last year, revenue grew 65%, gross profit almost doubled and adjusted EBITDA improved from a loss to a healthy margin of 20%. Sequentially, while holding steady the revenue from Q1, we further increased the EBITDA margin from 13% to 20%.”
“We are very pleased with our results and the progress we have made during the last two quarters. While the recent results are impressive, we are confident that there is further upside as we continue our growth journey.”
“I want to thank our employees for their passion and dedication to supporting our clients in delivering these impressive results.”
Operating Results
KOIL’s revenues for the three months ended June 30, 2024 (“Q2 2024”) increased 65 percent to $5.8 million compared to $3.5 million for the three months ended June 30, 2023 (“Q2 2023”), primarily due to an increase in fixed price contracts for the manufacture of flying leads and hydraulic distribution manifolds.
Gross profit for Q2 2024 was $2.2 million, or 39 percent of revenues, compared to Q2 2023 gross profit of $1.1 million, or 33 percent of revenues. The comparative increase in Q2 2024 gross profit was primarily driven by increased revenues.
Selling, general and administrative expenses (“SG&A”) were $1.3 million, or 22 percent of revenues, in Q2 2024 compared to $1.6 million, or 45 percent of revenues, in Q2 2023. SG&A in Q2 2024 reflected lower research and development expense, increased labor allocations to support our increased project activity, and lower rental expense related to the Company’s short-term lease for office furniture.
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Due to the factors discussed above, KOIL reported Q2 2024 net income of $1.0 million, or $0.08 per diluted share, compared to a Q2 2023 net loss of $0.4 million, or a $0.04 loss per diluted share. Per share results for Q2 2024 and Q2 2023 are based on 12.28 million and 11.89 million weighted average shares outstanding, respectively.
KOIL reported adjusted EBITDA of $1.2 million in Q2 2024 compared to adjusted EBITDA of negative $0.3 million in Q2 2023. The comparative increase in adjusted EBITDA for Q2 2024 was primarily driven by growth in revenues and gross profit stemming from an increase in product-oriented, fixed-price projects in Q2 2024 as compared to Q2 2023.
Financial Position
At June 30, 2024, working capital totaled $4.4 million, which includes cash of $1.5 million and net receivables of $5.5 million. This is compared to $2.6 million of working capital at December 31, 2023, which includes cash of $2.0 million and receivables of $4.2 million. Shareholders’ equity totaled $7.2 million, or approximately $0.59 per common share, at June 30, 2024, compared to $5.6 million, or approximately $0.47 per common share, at the beginning of the year. The Company maintains access to a factoring arrangement with Amegy Bank Business Credit and at June 30, 2024, had four factored invoices outstanding with Amegy recorded as short-term borrowings in the aggregate amount of $182 thousand on its condensed consolidated balance sheet.
Conference Call Details
| Call Dial-in: | 1-833-630-1956 for domestic callers |
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| 1-412-317-1837 for international callers | |
| Webcast/Replay URL: | https://edge.media-server.com/mmc/p/w3774mtx |
The earnings release and a replay of the conference call will be available on the Company’s website, www.koilenergy.com, under the “Investors” section. An investor presentation will also be posted on our webpage following this press release.
About KOIL (www.koilenergy.com)
KOIL is a leading energy services company offering subsea 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’s experienced team 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 SOLUTIONS, INC.
SUMMARY FINANCIAL DATA
(UNAUDITED)
Comparative Condensed Consolidated Income Statement
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Revenues | $ | 5,779 | $ | 3,508 | $ | 11,570 | $ | 7,232 | ||||
| Cost of sales | 3,530 | 2,360 | 7,290 | 4,442 | ||||||||
| Selling, general and administrative | 1,268 | 1,569 | 2,729 | 3,306 | ||||||||
| Operating income (loss) | 981 | (421 | ) | 1,551 | (516 | ) | ||||||
| Total other (income) expense | (5 | ) | 8 | (14 | ) | 9 | ||||||
| Income (loss) before income tax expense | 986 | (429 | ) | 1,565 | (525 | ) | ||||||
| Income tax expense | 2 | 4 | 5 | 5 | ||||||||
| Net income (loss) | $ | 984 | $ | (433 | ) | $ | 1,560 | $ | (530 | ) | ||
| Net income (loss) per share, basic | $ | 0.08 | $ | (0.04 | ) | $ | 0.13 | $ | (0.04 | ) | ||
| Weighted-average shares outstanding, basic | 12,188 | 11,888 | 12,147 | 11,888 |
Comparative Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||
|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | ||
| Assets: | ||||
| Cash | $ | 1,459 | $ | 2,030 |
| Other current assets | 8,823 | 5,819 | ||
| PP&E, net | 2,763 | 2,968 | ||
| Other non-current assets | 5,965 | 6,245 | ||
| Total assets | $ | 19,010 | $ | 17,062 |
| Liabilities: | ||||
| Current liabilities | 5,882 | 5,284 | ||
| Other long-term liabilities | 5,897 | 6,160 | ||
| Total liabilities | 11,779 | 11,444 | ||
| Stockholders' equity | 7,231 | 5,618 | ||
| Total liabilities and stockholders' equity | $ | 19,010 | $ | 17,062 |
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KOIL ENERGY SOLUTIONS, INC.
SUMMARY FINANCIAL DATA, CONTINUED
(UNAUDITED)
Adjusted EBITDA
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Net income (loss) | $ | 984 | $ | (433 | ) | $ | 1,560 | $ | (530 | ) | ||
| (Deduct) Add: Interest (income) expense, net | (5 | ) | 2 | (13 | ) | 4 | ||||||
| Add: Income tax expense | 2 | 4 | 5 | 5 | ||||||||
| Add: Depreciation and amortization | 149 | 154 | 293 | 306 | ||||||||
| Add: Share-based compensation | 34 | 16 | 53 | 40 | ||||||||
| Add (Deduct): Loss (gain) on sale of asset | 3 | (1 | ) | 3 | (2 | ) | ||||||
| Add: Relocation costs | – | – | – | 9 | ||||||||
| Adjusted EBITDA | $ | 1,167 | $ | (258 | ) | $ | 1,901 | $ | (168 | ) |
Cash Flow Data
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Cash provided by (used in): | ||||||||||||
| Operating activities | $ | (449 | ) | $ | 912 | $ | (756 | ) | $ | 238 | ||
| Investing activities | (52 | ) | (2 | ) | (62 | ) | (80 | ) | ||||
| Financing activities | (18 | ) | (82 | ) | 247 | (164 | ) | |||||
| Change in cash | $ | (519 | ) | $ | 828 | $ | (571 | ) | $ | (6 | ) |
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