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ChampionX Corp (CHX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient performance: revenue $912.0M, diluted EPS $0.43, adjusted diluted EPS $0.50, and record consolidated adjusted EBITDA margin of 23.3% .
  • Sequential trends were positive: revenue +1% and adjusted EBITDA +7.5% vs Q3; Production Chemical strength offset typical seasonal declines in Production & Automation .
  • Cash generation was strong with cash from operations $207.3M (23% of revenue) and free cash flow $170.1M (80% of adjusted EBITDA) .
  • Corporate catalysts: pending SLB all-stock acquisition continues; company will not host quarterly calls and discontinued guidance; agreement to divest US Synthetic alongside deal closing, and regular dividend declared at $0.095 per share (paid Apr 25, 2025) .
  • Near-term stock narrative likely hinges on deal timeline (Norway Phase II review), margin durability, and continued FCF conversion; digital product momentum (Q4 digital revenue $62.3M, +7.5% QoQ) is an incremental positive .

What Went Well and What Went Wrong

What Went Well

  • Record margin execution: consolidated adjusted EBITDA margin reached 23.3% (vs 21.8% in Q3), and income-before-tax margin 13.0% .
  • Production Chemical Technologies strength: revenue $569.7M (+2% QoQ), adjusted segment EBITDA margin expanded to 23.4% on volumes and mix .
  • Digital momentum: digital product revenue rose to $62.3M (+7.5% QoQ), with margin uplift in Production & Automation from productivity and mix; “our highest level as ChampionX” margins underscore profitability focus (CEO) .

What Went Wrong

  • Year-over-year revenue declined 3.3% (Q4 2024 $912.0M vs Q4 2023 $943.6M), with SG&A elevated ($184.7M vs $147.4M in Q4 2023) .
  • Reservoir Chemical Technologies remains small and volatile: revenue $21.9M; while sequential margins improved, YoY margins fell (Q4 2023 adjusted segment EBITDA margin 25.7% vs 17.1% in Q4 2024) .
  • Seasonal softness in Production & Automation Technologies: revenue down 2% QoQ into year-end holidays despite improved margins; broader context includes prior-quarter Mexico weakness (Q2, Q3) impacting trends through 2024 .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$943.6 $906.5 $912.0
Diluted EPS (GAAP) ($)$0.39 $0.37 $0.43
Adjusted Diluted EPS ($)$0.44 $0.44 $0.50
Adjusted EBITDA ($USD Millions)$198.1 $197.5 $212.3
Adjusted EBITDA Margin (%)21.0% 21.8% 23.3%
Income Before Income Taxes Margin (%)12.1% 11.2% 13.0%

Segment revenue and margins:

SegmentQ4 2023 Revenue ($MM)Q3 2024 Revenue ($MM)Q4 2024 Revenue ($MM)Q4 2023 Adj EBITDA MarginQ3 2024 Adj EBITDA MarginQ4 2024 Adj EBITDA Margin
Production Chemical Technologies$634.1 $559.5 $569.7 21.9% 21.6% 23.4%
Production & Automation Technologies$241.3 $275.7 $269.6 21.9% 25.2% 26.2%
Drilling Technologies$46.8 $51.8 $51.9 22.1% 24.8% 23.7%
Reservoir Chemical Technologies$21.4 $20.5 $21.9 25.7% 16.0% 17.1%

Key KPIs:

KPIQ4 2023Q3 2024Q4 2024
Cash from Operating Activities ($MM)$168.953 $141.298 $207.250
Free Cash Flow ($MM)$139.811 $108.050 $170.133
CFO/Revenue Ratio (%)18% 16% 23%
FCF/Revenue Ratio (%)15% 12% 19%
FCF / Adjusted EBITDA (%)71% 55% 80%
Digital Product Revenue ($MM)N/A$57.9 $62.3

Guidance Changes

ChampionX discontinued quarterly guidance due to the pending SLB acquisition and did not host a conference call .

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company Guidance (Revenue, margins, OpEx, OI&E, tax rate)Q4 2024 onwardProvided historicallyDiscontinued due to SLB transaction Withdrawn
DividendQ1 2025Regular quarterly policy (per merger terms) $0.095 per share; Record: Apr 4, 2025; Pay: Apr 25, 2025 Maintained (declared)

Earnings Call Themes & Trends

Note: No Q4 2024 call or transcript; themes derived from company releases.

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Digital/Software momentumXSPOC and Pump Checker expansion; ALLY production optimization rollout; Q2 digital rev $54.1M; Q3 digital rev $57.9M Digital revenue $62.3M (+7.5% QoQ); continued margin uplift in P&A Improving sequentially
Regional trends (Permian, Mexico)Mexico revenue pressure; North America PCT growth; Permian optimization wins North America up 3% YoY for full year; Permian highlighted by CEO Mixed: Mexico stabilizing; Permian strong
Emissions techSOOFIE unit installations +7% QoQ and +21% YoY (Q2); lease/subscription mix rising Continued deployments; post-period EPA OOOOb approval for AOGI (Mar 4, 2025) Structural adoption tailwind
Macro outlookPortfolio resiliency amid variable environment Expect global oil production growth; positive performance vs market activity (CEO) Constructive
Regulatory/legal (M&A)Transaction anticipated Q4’24/Q1’25 HSR waiting periods expired; Norway Phase II review; expected close by end Q1 or early Q2 2025 Extended timeline; path progressing
Product performancePCT margins expanding; P&A demand in NA (ESP, RMSpumptools integration) PCT +2% QoQ; P&A seasonal decline but margin expansion; Drilling flat vs rig count PCT strong; P&A mixed seasonally

Management Commentary

  • “We delivered robust adjusted EBITDA margin expansion and generated strong free cash flow… our highest level as ChampionX, which speaks to the continued productivity and profitability focus of our team.” — President & CEO Somasundaram .
  • “Cash flow from operating activities was $207 million… includes a $48 million tax payment deferred… we generated robust free cash flow of $170 million, converting 80% of our adjusted EBITDA for the period.” — President & CEO Somasundaram .
  • “As we look ahead to 2025, we expect global oil production to grow… we expect another year of positive performance relative to general oil and gas market activity.” — President & CEO Somasundaram .

Q&A Highlights

  • No Q4 2024 conference call or webcast due to the pending SLB acquisition; therefore no Q&A or guidance clarifications this quarter .

Estimates Context

  • S&P Global Wall Street consensus estimates for Q4 2024 EPS, revenue, and EBITDA were unavailable due to a Capital IQ mapping issue for CHX; as a result, beats/misses vs consensus cannot be assessed this quarter. When available, we default to S&P Global consensus for comparisons.

Key Takeaways for Investors

  • Margin quality improving: record 23.3% adjusted EBITDA margin and 13.0% pre-tax margin underscore pricing, mix, and productivity execution; watch sustainability into 2025 .
  • FCF flywheel remains intact: $170.1M FCF in Q4 (80% of adjusted EBITDA) supports deleveraging, dividends, and strategic flexibility even without formal guidance .
  • Segment divergence manageable: PCT strength and P&A margin expansion offset seasonality; Drilling stable with rig count; Reservoir small but showing sequential improvement .
  • Digital acceleration: $62.3M digital revenue in Q4, continued adoption of optimization software and emissions monitoring solutions; EPA approval of AOGI post-period adds regulatory validation to the emissions suite .
  • Transaction path: HSR clearance achieved; Norway Phase II extends timeline; planned USS divestiture aligned with SLB closing—deal status will be the primary stock catalyst near term .
  • Dividends maintained: $0.095 per share declared for Q1 2025; payout supported by strong cash generation .
  • Without guidance or an earnings call, narrative will hinge on execution data points (margins, FCF conversion, digital/emissions momentum) and M&A milestones; monitor regulatory updates and closing window .