Shares of Koil Energy Solutions, Inc. KLNG have gained 16.5% since the company reported its earnings for the quarter ended June 30, 2026, outperforming the S&P 500 index’s 0.6% decline over the same period. Over the past month, Koil Energy shares have advanced 25.8% compared with a 2.2% increase for the S&P 500.
Koil Energy reported second-quarter 2026 earnings per share of 5 cents, which rose from 1 cent in the prior-year quarter.
Revenues of $9.2 million denoted a 78% surge from $5.2 million a year earlier.
Net income increased to $0.7 million from $0.06 million in the prior-year quarter.
Gross profit increased to $3 million from $1.7 million, although gross margin narrowed to 32% from 33%. Adjusted EBITDA climbed to $1.1 million, or 12% of revenues, from $0.1 million a year ago.
Other Key Business Metrics
Service revenues increased 115% year over year, supported by investments in rental equipment and project execution, while revenues from fixed-price projects, representing product manufacturing, increased 49%. Fixed-price revenues, however, declined 21% sequentially because of lower percentage-of-completion revenue recognized from materials procurement. Management said significant milestones on major system projects were completed on time or ahead of schedule.
New customers acquired during the preceding 12 months accounted for 32% of second-quarter revenues. Management also indicated on the earnings call that the revenue mix had shifted to roughly an even balance between services and products, with services slightly higher and rental equipment accounting for a sizable portion of service revenues.
Factors Influencing the Headline Numbers
Higher volumes and project activity supported the improvement in adjusted EBITDA. Meanwhile, selling, general and administrative expenses increased to $2.3 million from $2 million a year earlier. Management attributed the increase mainly to higher staffing, with full-time equivalent employees and contractors rising to 90 from 74, including additions in sales, administration and finance. Gross margin slipped one percentage point, with management noting that larger, longer-term projects can carry somewhat lower margins, partly offset by growth in higher-margin rental equipment contracts.
At June 30, Koil had $0.9 million in cash compared with $1.5 million at Dec. 31, 2025.
Total assets increased to $23.9 million from $19.8 million at 2025-end.
Total liabilities rose to $13.8 million from $10.9 million. Meanwhile, stockholders’ equity increased to $10.2 million from $9 million.
Cash used in operating activities totaled $0.7 million for the first six months of 2026, compared with $0.4 million a year earlier.
Management Commentary and Outlook
CEO Erik Wiik said Koil is seeing results from initiatives developed over nearly two years, including international expansion and a greater emphasis on services and rental equipment. In Brazil, management expects services to grow faster than manufacturing over the next couple of quarters, although the company intends to pursue both categories. Management also views subsea tie-backs as an attractive opportunity because they can allow operators to add production to existing fields more quickly than greenfield developments.
Management said most work associated with its major subsea umbilical handling, spooling and storage project is expected to occur during the second half of 2026, followed by long-term storage of the customer's umbilical system.
Other Developments
During the quarter, Koil secured financing and acquired a 3,500-metric-ton modular offshore carousel for the major umbilical project while redeploying an underutilized carousel from its existing fleet. The company also established a new asset-based lending facility with maximum borrowing capacity of $5 million, with $2.4 million outstanding at quarter-end. Subsequent to June 30, Koil announced its first subsea umbilical maintenance campaign in Brazil and a strategic alliance with Pipeline Network aimed at expanding its presence and capabilities in the Eastern Hemisphere. These initiatives align with the renewed “KOIL 2030” strategy centered on systems solutions, Brazilian expansion and rental equipment.
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Koil Energy Solutions, Inc. (KLNG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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