Executive Summary

Q2 2024 delivered strong execution: revenue $5.779M (+65% YoY), gross margin 39% (up 600 bps YoY), net income $0.984M ($0.08 diluted EPS), and adjusted EBITDA $1.167M with margin near 20% .
Sequentially stable revenue vs Q1 ($5.791M) with notable margin inflection: adjusted EBITDA margin rose from ~13% to ~20% on higher gross margin and reduced SG&A .
Management highlighted a multimillion-dollar subsea safety control system award and a product-led mix shift; services lagged and will be targeted for growth via investment and hiring .
Balance sheet strengthened: working capital $4.4M, equity $7.231M; post-quarter cash improved to “a little over $2.5M” and the company is free cash flow positive YTD; no long-term debt .
No formal numeric guidance or consensus estimates available; narrative catalysts are margin expansion, contract awards, and cash conversion, which can drive estimate revisions and stock sentiment .

What Went Well and What Went Wrong

What Went Well

Margin inflection: gross margin expanded to 39% (from 33% YoY) and adjusted EBITDA reached $1.167M (~20% margin), driven by product-oriented fixed-price projects and lower SG&A .
Commercial traction: awarded a multimillion-dollar subsea safety control system contract spanning engineering through testing; “testament to our team’s achievements in developing integrated product solutions” .
Discipline and liquidity: “a little over $2.5M in cash” post-quarter and free cash flow positive YTD; management emphasized “no long-term debt” .

What Went Wrong

Services growth lagged: management noted product revenue tripled YoY but overall service revenue did not grow; they will launch a program to expand services .
Cash dipped intra-quarter due to working capital build; Q2 cash ended at $1.459M, though converted to cash post-quarter per management .
No formal guidance: Q2 materials did not include numeric revenue/EPS/margin guidance, limiting near-term visibility for the market .

Financial Results

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$3.508	$5.791	$5.779
Gross Profit ($USD Millions)	$1.100	$2.000	$2.200
Gross Margin %	33.0%	35.0%	39.0%
SG&A ($USD Millions)	$1.569	$1.460	$1.268
Operating Income ($USD Millions)	($0.421)	$0.570	$0.981
Adjusted EBITDA ($USD Millions)	($0.258)	$0.734	$1.167
Adjusted EBITDA Margin %	(7.4%) (calc)	12.7% (calc)	20.2% (calc)
Net Income ($USD Millions)	($0.433)	$0.576	$0.984
Diluted EPS ($USD)	($0.04)	$0.05	$0.08
Net Income Margin %	(12.3%) (calc)	9.9% (calc)	17.0% (calc)

Notes: Adjusted EBITDA margin calculated as Adjusted EBITDA divided by Revenue using reported figures . Management commentary referenced “13% to 20%” sequential margin increase .

KPIs and Balance Sheet

Metric	Q4 2023 (Dec 31)	Q1 2024 (Mar 31)	Q2 2024 (Jun 30)
Working Capital ($USD Millions)	$2.600	$3.300	$4.400
Cash ($USD Millions)	$2.030	$1.978	$1.459
Net Receivables ($USD Millions)	$4.200	$3.900	$5.500
Shareholders’ Equity ($USD Millions)	$5.618	$6.213	$7.231
Total Assets ($USD Millions)	$17.062	$18.084	$19.010
Post-quarter Cash (as of call)	—	—	“> $2.5M”

Revenue Mix (qualitative): Mix skewed to product-oriented, fixed-price projects (flying leads, hydraulic/electrical manifolds); services stable to flat per management .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q2 onward	None disclosed	None disclosed	Maintained (no formal guidance)
Margins (Gross/EBITDA)	FY/Q2 onward	None disclosed	None disclosed; management emphasized margin progression but no numeric targets	Maintained (no formal guidance)
OpEx	FY/Q2 onward	None disclosed	None disclosed; SG&A reduced Q/Q	Maintained (no formal guidance)
Tax Rate	FY/Q2 onward	None disclosed	None disclosed	Maintained (no formal guidance)
Segment/Dividends	FY/Q2 onward	Not applicable (no segments/dividend)	Not applicable	N/A

Company did not issue numeric guidance in the Q2 2024 press release or on the call; disclosures focused on operational drivers and strategic initiatives .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2023)	Previous Mentions (Q1 2024)	Current Period (Q2 2024)	Trend
Product technology/performance	Emphasis on fixed-price product growth; margins pressured by past pricing	First delivery of new 20,000 psi MQC plate; repeat orders; growing key accounts	Margin uplift (39% gross, ~20% EBITDA); standardized solutions lowering cost/lead time; MQC plate recognized in market	Improving product momentum and profitability
Services execution	Service projects contributed to 2023 growth but overall margins thin	Responsive service support as core offering	Service revenue did not grow YoY; launching program to expand services via capex and technician hiring	Focused push to revive services growth
International expansion	Macro offshore cycle supportive; contracts in Gulf of Mexico	Increasing presence in faster-growing international markets	Work performed in Africa and South America by following key accounts abroad	Broadening international footprint
Supply chain/material costs	Higher materials costs weighed on 2023 margins	Materials costs impacted Q1 gross margin percentage	Margin improved on product mix and planning; no new cost headwinds cited	Easing impact via mix/standardization
Macro/offshore cycle	Strong long-cycle subsea demand expected to persist	Strong execution; accelerating results from growth initiatives	Operators targeting resilient deepwater basins; demand increasing globally	Supportive macro backdrop
Liquidity/capital structure	Working capital $2.6M; no AR factoring outstanding EOY	Working capital $3.3M; small factoring balance	Working capital $4.4M; post-quarter cash >$2.5M; FCF positive YTD; no long-term debt	Strengthening liquidity, debt-free posture

Management Commentary

“Compared to the second quarter last year, revenue grew 65%. Gross profit almost doubled and adjusted EBITDA improved from a loss to a healthy margin of 20%. Sequentially… we increased the EBITDA margin from 13% to 20% mainly due to a higher gross margin and reduced SG&A.”
“During the second quarter, we were awarded a major contract for a subsea safety control system… engineering, procurement, manufacturing, installation and testing of Koil's well-proven technology.”
“While we have tripled the product revenue year-over-year we have not grown our overall service revenue… launching a program to… pursue service opportunities… accompanied by targeted capital investment and the hiring of additional service technicians.”
“As of this morning, we have a little over $2.5 million in cash and are currently free cash flow positive for the year.”
“We offer mission-critical deepwater solutions… We have no long-term debt.”

Q&A Highlights

The transcript contains prepared remarks and an invitation to Q&A; a Q&A section was not included in the published transcript materials .

Estimates Context

Wall Street consensus (S&P Global) for Q2 2024 revenue and EPS could not be retrieved; therefore, beat/miss vs estimates cannot be assessed at this time (S&P Global data unavailable due to access limits).
Given reported results (EPS $0.08, adjusted EBITDA $1.167M, ~20% EBITDA margin), estimate revisions may need to reflect sustained product-led margin improvement and services growth initiatives once tracked by coverage .

Key Takeaways for Investors

Margin inflection and profitability: gross margin 39% and adjusted EBITDA near 20% with net income $0.984M and EPS $0.08—evidence of pricing/mix and operational planning gains; supports multiple expansion potential in micro-cap context .
Contract momentum: multimillion-dollar subsea safety control systems award validates integrated product approach and should bolster backlog visibility .
Services as the next lever: targeted investment and technician hiring to reinvigorate services can diversify revenue and stabilize margins through cycles .
Liquidity strengthened despite working capital build: quarter-end cash $1.459M, post-quarter cash “> $2.5M”, FCF positive YTD; debt-free capital structure reduces risk and supports growth investment .
Operational cadence: standardized product solutions are reducing unit costs and lead times; international work alongside key accounts (Africa, South America) expands addressable market .
Risk watch: services execution and materials costs remain areas to monitor; lack of formal guidance can add volatility until coverage/estimates are established .
Trading lens: narrative catalysts include continued margin progression, additional contract awards, and cash conversion updates; absence of guidance places emphasis on quarterly prints and disclosed contract activity for sentiment shifts .

Koil Energy Solutions, Inc. (KLNG)·Q2 2024 Earnings Summary