Koil Energy Solutions, Inc.
For the period ended Jun 30, 2025. Filed Aug 14, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 14, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-20.
0001683168-25-003859
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001683168-25-006073
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 39 previous paragraphs and 56 current paragraphs.
22 unchanged; 11 reworded; 20 added; 5 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 4 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Global energy demand continues to grow, requiring increased oil and natural gas production alongside growth in renewable energy sources. Years of underinvestment in offshore exploration and development are now fueling a resurgence in subsea activity. Deepwater fields naturally decline at an average rate of 7% per year, underscoring the urgency for new development just to maintain current output. From our perspective, we are seeing global operators allocate more capital toward deepwater and ultra-deepwater developments, particularly in Brazil, the US. and West Africa.
Current report
There are three primary ways to maintain and grow subsea production:
Current report
Koil Energy supports all three sub-segments, with a particular strength in subsea tie-back projects.
Current report
We believe that the fastest growing sub-segment is subsea tie-back projects, which are becoming the preferred development strategy for offshore operators. This approach has been employed for decades and involves tapping adjacent reservoirs, maximizing underutilized topside capacity, and leveraging existing subsea infrastructure. In some mature basins, brownfield tie-ins have operated for over 20 years, while in other regions, operators are just beginning to adopt this strategy to boost hydrocarbon production and enhance financial returns.
Current report
One of the key advantages of a subsea tie-back development is shorter payback periods than traditional greenfield projects. Leveraging existing assets, these projects frequently have the potential to achieve first oil within two years of final investment decision. However, success hinges on meticulous planning and swift execution. Integrating new equipment into an aging infrastructure presents both technical challenges and opportunities, making adaptability and foresight essential. Proven, practical design, backed by a deep team experienced in subsea installation and commissioning, plays a critical role in ensuring reliability and staying on schedule.
Current report
Order intake from subsea tie-back and maintenance has increased significantly since the beginning of the year. While second-quarter earnings were impacted by lower labor utilization early in the quarter, this was driven by the intentional buildout of our team. These hires align with our long-term growth strategy. We remain disciplined in balancing profitability with investment and are confident that our expanded capabilities position us well to execute on our growing backlog.
Current report
The decline in gross profit was driven by reduced direct employee utilization and the lower gross profit percentage resulted from an increase in direct overhead costs including employee benefits and rent expense for the Brazilian office when compared to the three months ended June 30, 2024.
Current report
Other (income) expense, net
Current report
The increase other (income), net was driven by a $250 gain upon the successful resolution of the WW Champion lawsuit. In addition, the Company received a $34 dividend from its insurance company.
Current report
The $1,004 decrease in Adjusted EBITDA was primarily driven by lower labor utilization on projects and increased SG&A expenses during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.
Current report
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Current report
Revenues
Current report
The 10% decrease in revenues was primarily driven by a reduction in fixed price contract sales and backlog for the manufacture of flying leads and hydraulic distribution manifolds, partially offset by an increase in sales and delivery of service contract work when compared to revenues for the six months ended June 30, 2024.
Current report
Cost of Sales
Current report
Selling, general and administrative expenses
Current report
The increase in SG&A was primarily due to higher administrative payroll due to increased hiring of key business support functions, greater spending on industry conferences, legal fees related to the settlement of a lawsuit and general corporate needs, and expenses for outside consultants to strengthen and restructure administrative functions.
Current report
Other (income) expense, net
Current report
The increase other (income), net was driven by a $250 gain upon the successful resolution of the WW Champion lawsuit. In addition, the Company received a $34 dividend from its insurance company and a $42 Employee Retention Tax Credit from the federal government.
Current report
Adjusted EBITDA
Current report
The $1,401 decrease in Adjusted EBITDA was driven by lower labor utilization on projects, a project mix containing lower gross margin contracts, increased employee benefit costs, administrative hiring to support future growth, and investment in building our Brazil operations during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Removed paragraphs (5)
Previous report
The current consensus among our customers is that the demand for energy is increasing. Our clients are indicating that the world’s energy demand will require supply growth within oil and natural gas as well as for renewables. Oil and natural gas supply from existing wells naturally declines over time, making sustained investments more important over the coming years. The years of underinvestment in offshore production appear to have triggered a general shift and returning focus on increasing production. As a result, several key subsea basins, particularly the Gulf of America, the North Sea, and off the coasts of Brazil, are being prepared to contribute significantly to this production output. Our strengthened positioning in these markets is therefore essential to achieve a sustained level of growth. A leading indicator for our main products is the number of subsea trees purchased by operators. Our product lines include vital support systems for subsea trees. During the first quarter of this year, we have seen a significant increase in bidding activity. We therefore anticipate experiencing the benefits of this positive momentum throughout this year and into next year.
Previous report
We also expect expenditure in the brownfield segment to increase due to aging infrastructure. We are currently bidding several subsea-tie-back projects and decommissioning services, globally. The order intake has increased significantly since the beginning of the year. During the first quarter of 2025, we were awarded a significant contract to supply Multi-Quick Connector (MQC) Plates for a project in the Gulf of America. This award encompasses equipment designed to control the high-pressure systems of a subsea field operated by a U.S. independent energy company. The scope of work for this project includes engineering, procurement, fabrication, assembly, and testing. The project has started successfully and will be carried out at our state-of-the-art manufacturing facility in Houston, Texas. Final delivery is scheduled for the fourth quarter of this year. Although we typically secure numerous smaller contracts on a weekly basis, it is the major and significant awards that drive our growth. During the first quarter of 2025, we also completed the installation of a fiberoptic telecommunication cable in the Caribbean. This is an example of where our oil & gas expertise is applicable when other industries need more powerful underwater tools with unique subsea expertise.
Previous report
The $395 decrease in Adjusted EBITDA was primarily driven by a decrease in gross profit associated with the decrease in revenue from fixed price contracts during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Restructuring costs during the three months ended March 31, 2025, consisted of expenses to strengthen and restructure administrative functions. Specifically, expenses included executive search fees for a Chief Financial Officer and a Director of Human Resources, as well as consulting costs related to organizational design and human capital strategy.
Previous report
Allowance for Credit Losses
Previous report
The estimation of anticipated credit losses that may be incurred as we work through the invoice collection process with our customers requires us to make judgments and estimates regarding our customers’ ability to pay amounts due. We monitor our customers’ payment history and current credit worthiness, if needed, to determine that collectability is reasonably assured. We provide an allowance for credit losses based by reviewing each accounts receivable balance with respect to a debtor’s ability to make payments. We also evaluate historical loss rates as well as consider forward-looking factors specific to the debtors, the overall economic environment, and management expectations to determine expected losses. When certain accounts are determined to require an allowance, they are expensed by a provision for bad debts in that period. At March 31, 2025 and 2024, we estimated the allowance for credit losses requirement to be $0, and there were no charges to bad debt expense for the three months ended March 31, 2025 and 2024. We believe that our allowance for credit losses is adequate to cover the anticipated credit losses under current conditions; however, uncertainties regarding changes in the financial condition of our customers, either adverse or positive, could impact the amount and timing of any additional credit losses that may be required.
Reworded paragraphs (11)
Previous wording
Koil Energy is an energy services company that provides equipment and support services to the world’s energy and offshore industries. The Company provides innovative solutions to complex customer challenges presented between the production facility and the energy source. Koil Energy's 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 experienced professionals can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world. The Company’s solutions are engineered and manufactured primarily for major integrated, large independent, and foreign national energy companies in offshore areas throughout the world. These products are often developed in direct response to customer requests for solutions to critical needs in the field. The Company primarily serves the offshore oil and gas market; however, the Company’s product offerings and service capabilities are based on core competencies that are indifferent to energy source and can be applied to additional markets, including offshore wind, offshore wave energy, hydrogen, and liquefied natural gas.
Current wording
Koil Energy is an energy services company that provides equipment and support services to the world’s energy and offshore industries. The Company provides innovative solutions to complex customer challenges presented between the production facility and the energy source. Koil Energy's 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 experienced professionals can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world. The Company’s solutions are engineered and manufactured primarily for major integrated, large independent, and foreign national energy companies in offshore areas throughout the world. These products are often developed in direct response to customer requests for solutions to critical needs in the field. The Company primarily serves the offshore oil and gas market; however, the Company’s product offerings and service capabilities are based on core competencies that are indifferent to energy source and can be applied to additional markets, including offshore wind, telecommunications, hydrogen, and liquefied natural gas.
Previous wording
The energy services industry relies heavily on the capital and operating expenditure programs of energy companies. Operators’ decisions to scale back or accelerate their exploration, drilling, and production activities are significantly influenced by the overall state of the energy sector. Notably, the oil and gas industry has historically experienced fluctuations in commodity prices, driven by various global market forces.
Current wording
The energy services industry relies heavily on the capital and operating expenditure programs of upstream energy companies. Operators’ decisions to scale back or accelerate exploration, drilling, and production activities are heavily influenced by the broader energy sector dynamics, including fluctuations in commodity prices driven by various global market forces.
Previous wording
The 9% decrease in revenues was primarily driven by an overall decrease in fixed price contracts partially offset by an increase in service contract activity when compared to revenues for the three months ended March 31, 2024.
Current wording
The 10% decrease in revenues was primarily driven by a decrease in fixed price contract sales and backlog for the manufacture of flying leads and hydraulic distribution manifolds, partially offset by an increase in the sales and delivery of service contract work when compared to revenues for the three months ended June 30, 2024.
Previous wording
The Company records depreciation expense related to revenue-generating property, plant and equipment as cost of sales, which totaled $117 and $116 for the three months ended March 31, 2025 and 2024, respectively.
Current wording
The Company records depreciation expense related to revenue-generating property, plant and equipment as cost of sales, which totaled $127 and $122 for the three months ended June 30, 2025 and 2024, respectively.
Previous wording
The increase in selling, general, and administrative expenses (“SG&A”) was primarily due to higher administrative payroll expense, advertising expense, professional fees, and expenses to strengthen and restructure administrative functions.
Current wording
The increase in selling, general, and administrative expenses (“SG&A”) was primarily due to higher administrative payroll due to increased hiring of key business support functions, the timing of accounting fees associated with the annual audit, legal fees related to the settlement of a lawsuit and general corporate needs, and expenses for outside consultants to strengthen and restructure administrative functions.
Previous wording
The Company records depreciation expense related to administrative property, plant and equipment and intellectual property as SG&A, which totaled $29 and $28 for the three months ended March 31, 2025 and 2024, respectively.
Current wording
The Company records depreciation and amortization expense related to administrative property, plant and equipment and intellectual property as SG&A, which totaled $29 and $27 for the three months ended June 30, 2025 and 2024, respectively.
Previous wording
Management evaluates Company performance based on a measure that is not in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which consists of earnings (net income or loss) available to common stockholders before net interest income, income taxes, depreciation and amortization, non-cash share-based compensation expense, non-cash impairments, non-cash gains or losses on the sale of property, plant and equipment (“PP&E”), other non-cash items and one-time charges (“Adjusted EBITDA”). This measure may not be comparable to similarly titled measures employed by other companies. The measure should not be considered in isolation or as a substitute for operating income or loss, net income or loss, cash flows provided by operating, investing, or financing activities, or other cash flow data prepared in accordance with US GAAP. The amounts included in the Adjusted EBITDA calculation, however, are derived from amounts included in the accompanying condensed consolidated statements of operations.
Current wording
Management evaluates Company performance based on a measure that is not in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which consists of earnings (net income or loss) available to common stockholders before net interest income, income taxes, depreciation and amortization, non-cash share-based compensation expense, non-cash impairments, non-cash gains or losses on the sale of property, plant and equipment (“PP&E”), other non-cash items and one-time charges (“Adjusted EBITDA”). This measure may not be comparable to similarly titled measures employed by other companies. The measure should not be considered in isolation or as a substitute for operating income or loss, net income or loss, cash flows provided by operating, investing, or financing activities, or other cash flow data prepared in accordance with US GAAP. The amounts included in the Adjusted EBITDA calculation, however, are derived from amounts included in the accompanying unaudited condensed consolidated statements of operations.
Previous wording
The following is a reconciliation of net income (loss) to Adjusted EBITDA for the three months ended March 31, 2025 and 2024:
Current wording
The following is a reconciliation of net income to Adjusted EBITDA for the six months ended June 30, 2025 and 2024:
Previous wording
The decrease in gross profit was primarily driven by decreased revenues. The decrease in gross profit as a percentage of sales was mainly due to incurring higher labor and materials costs associated with the decrease in fixed price contracts.
Current wording
The decline in gross profit was primarily driven by lower revenues from reduced direct employee utilization, and the decrease in gross profit as a percentage of sales resulted from an increase in direct overhead costs including employee benefits and Brazil office rent expenses when compared to the six months ended June 30, 2024.
Previous wording
The Company believes it will have adequate liquidity to meet its future operating requirements. We are generally dependent on our cash flows from operations to fund our working capital requirements, and the uncertainties noted above create risks that we may not achieve our planned earnings or cash flow from operations. On May 24, 2023, the Company entered into a Purchase and Sale Agreement/Security Agreement with Zions Bancorporation, N.A., d/b/a Amegy Bank Business Credit (“Amegy”), which provides for Koil Energy from time to time to sell its accounts receivable and other rights to payment to Amegy, subject to Amegy’s right to approve or reject future accounts receivable and other rights proposed for sale, in its sole discretion. At March 31, 2025 and December 31, 2024, the Company had no factored invoice outstanding with Amegy.
Current wording
The Company believes it will have adequate liquidity to meet its future operating requirements. We are generally dependent on our cash flows from operations to fund our working capital requirements, and the uncertainties noted above create risks that we may not achieve our planned earnings or cash flow from operations. In 2023, the Company entered into a Purchase and Sale Agreement/Security Agreement with Zions Bancorporation, N.A., d/b/a Amegy Bank Business Credit (“Amegy”), which provides for Koil Energy from time to time to sell its accounts receivable and other rights to payment to Amegy, subject to Amegy’s right to approve or reject future accounts receivable and other rights proposed for sale, in its sole discretion. On June 30, 2025 and December 31, 2024, the Company had no factored invoices outstanding with Amegy.
Previous wording
The principal liquidity needs of the Company are to fund ongoing operations, working capital, and capital expenditures. During the three months ended March 31, 2025, the Company reported a $1,229 decrease in cash. The Company used $766 of net cash in operating activities, primarily driven by net changes in operating assets and liabilities of $995. This was partially offset by other adjustments of $258 to reconcile net income to net cash used in operating activities, which includes items such as non-cash lease expense, share-based compensation, and depreciation and amortization. The Company used $463 of net cash for investing activities, primarily to fund capital expenditures.
Current wording
The principal liquidity needs of the Company are to fund ongoing operations, working capital, and capital expenditures. During the six months ended June 30, 2025, the Company reported a $1,229 decrease in cash. The Company used $406 of net cash in operating activities, primarily driven by net changes in operating assets and liabilities of $943. This was partially offset by net income and other adjustments of $537 to reconcile net income to net cash used in operating activities, which mainly includes items such as non-cash lease expense, share-based compensation, and depreciation and amortization. The Company used $820 of net cash for investing activities, primarily to fund capital expenditures. The Company also used $3 of net cash from financing activities.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The Company records depreciation expense related to revenue-generating property, plant and equipment as cost of sales, which totaled $245 and $238 for the six months ended June 30, 2025 and 2024, respectively.
Current report — wording carried from elsewhere
The Company records depreciation expense related to administrative property, plant and equipment and intellectual property as SG&A, which totaled $58 and $55 for the six months ended June 30, 2025 and 2024, respectively.
Current report — wording carried from elsewhere
The following is a reconciliation of net income to Adjusted EBITDA for the six months ended June 30, 2025 and 2024:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
During the three months ended March 31, 2024, the Company reported a $52 decrease in cash. The Company used $307 of net cash in operating activities, primarily driven by net changes in operating assets and liabilities of $1,067. This was partially offset by net income of $576 and other adjustments of $184 to reconcile net income to net cash used in operating activities, which includes items such as non-cash lease expense, share-based compensation, and depreciation and amortization. The Company used $10 of net cash for investing activities, primarily to fund capital expenditures. The Company also generated $265 of net cash from financing activities, primarily driven by proceeds received from short-term borrowings.