Koil Energy's Profit Plummets Amid Revenue Decline, Soaring Costs

TL;DR

**KLNG is bleeding cash and profits; get out before the well runs dry.**

AI Summary

Koil Energy Solutions, Inc. reported a significant decline in net income for the three and six months ended June 30, 2025, falling to $61 thousand and $32 thousand, respectively, from $984 thousand and $1,560 thousand in the prior year periods. This represents a 93.8% decrease for the quarter and a 97.9% decrease for the six-month period. Revenues also decreased, with the quarter seeing a drop from $5,779 thousand to $5,183 thousand (10.3% decrease) and the six-month period from $11,570 thousand to $10,433 thousand (9.9% decrease). The company's operating income shifted from a profit of $981 thousand in Q2 2024 to a loss of $235 thousand in Q2 2025, and from a profit of $1,551 thousand to a loss of $312 thousand for the six months. Selling, general, and administrative expenses increased substantially by 54.9% to $1,964 thousand for the quarter and 35.7% to $3,693 thousand for the six months. Cash on hand decreased from $3,422 thousand at December 31, 2024, to $2,193 thousand at June 30, 2025, and working capital declined from $5,682 thousand to $5,082 thousand over the same period. The company continues to rely on cash on hand, cash flows from operations, and potential opportunistic sales of property, plant, and equipment for liquidity.

Why It Matters

Koil Energy's sharp decline in net income and revenue, coupled with rising SG&A expenses, signals significant operational challenges that could impact investor confidence and future growth prospects. The company's reduced cash position and working capital, despite a factoring agreement with Amegy, highlight potential liquidity concerns, especially given the volatility in oil prices. This performance could make it harder for Koil Energy to compete effectively in the energy solutions market, potentially affecting its ability to invest in new technologies or retain skilled labor, which are critical for its long-term viability and competitive standing.

Risk Assessment

Risk Level: high — Koil Energy's net income plummeted by 93.8% for the quarter and 97.9% for the six months ended June 30, 2025, compared to the prior year. The company also shifted from an operating income of $981 thousand in Q2 2024 to an operating loss of $235 thousand in Q2 2025, indicating a severe deterioration in core business profitability. Cash on hand decreased by $1,229 thousand in the six months ended June 30, 2025, further exacerbating liquidity concerns.

Analyst Insight

Investors should consider divesting from Koil Energy Solutions, Inc. given the drastic decline in profitability, revenue, and cash on hand. The significant increase in SG&A expenses without corresponding revenue growth suggests operational inefficiencies that could persist. Monitor future filings for any signs of a turnaround in operating income and cash flow generation before considering re-entry.

Financial Highlights

debt To Equity

1.23

revenue

$10.43M

operating Margin

-3.0%

total Assets

$19.62M

total Debt

$10.83M

net Income

$32K

eps

$0.00

gross Margin

31.5%

cash Position

$2.19M

revenue Growth

-9.9%

Key Numbers

• $61K — Net Income (Q2 2025) (93.8% decrease from $984K in Q2 2024)
• $32K — Net Income (YTD Q2 2025) (97.9% decrease from $1,560K in YTD Q2 2024)
• $5.18M — Revenues (Q2 2025) (10.3% decrease from $5.78M in Q2 2024)
• $10.43M — Revenues (YTD Q2 2025) (9.9% decrease from $11.57M in YTD Q2 2024)
• ($235K) — Operating Loss (Q2 2025) (Shift from $981K operating income in Q2 2024)
• ($312K) — Operating Loss (YTD Q2 2025) (Shift from $1,551K operating income in YTD Q2 2024)
• $1.96M — SG&A Expenses (Q2 2025) (54.9% increase from $1.27M in Q2 2024)
• $3.69M — SG&A Expenses (YTD Q2 2025) (35.7% increase from $2.73M in YTD Q2 2024)
• $2.19M — Cash on Hand (June 30, 2025) (Decreased from $3.42M at Dec 31, 2024)
• $5.08M — Working Capital (June 30, 2025) (Decreased from $5.68M at Dec 31, 2024)

Key Players & Entities

• Koil Energy Solutions, Inc. (company) — registrant
• Zions Bancorporation, N.A. (company) — factoring agreement partner
• Amegy Bank Business Credit (company) — factoring agreement partner
• SEC (regulator) — Securities and Exchange Commission
• $61 thousand (dollar_amount) — Net income for Q2 2025
• $984 thousand (dollar_amount) — Net income for Q2 2024
• $32 thousand (dollar_amount) — Net income for six months ended June 30, 2025
• $1,560 thousand (dollar_amount) — Net income for six months ended June 30, 2024
• $5,183 thousand (dollar_amount) — Revenues for Q2 2025
• $5,779 thousand (dollar_amount) — Revenues for Q2 2024

FAQ

Risk Factors

• Deteriorating Profitability and Cash Position [high — financial]: Net income plummeted by 93.8% to $61 thousand in Q2 2025 and 97.9% to $32 thousand year-to-date, while operating income shifted to a loss of $235 thousand and $312 thousand respectively. Cash on hand decreased by $1.23 million to $2.19 million, and working capital declined by $0.6 million to $5.08 million, indicating a strained liquidity situation.
• Significant Increase in SG&A Expenses [high — operational]: Selling, general, and administrative expenses surged by 54.9% to $1.96 million for the quarter and 35.7% to $3.69 million year-to-date. This substantial increase, outpacing revenue declines, is a major contributor to the operating losses and reduced profitability.
• Declining Revenues [medium — financial]: Revenues decreased by 10.3% to $5.18 million in Q2 2025 and 9.9% to $10.43 million year-to-date. This top-line contraction exacerbates the impact of rising costs and expenses, leading to the sharp decline in net income.
• Reliance on Asset Sales for Liquidity [medium — financial]: The company's liquidity strategy relies on cash on hand, cash flows from operations, and 'potential opportunistic sales of property, plant, and equipment.' This suggests a lack of robust, sustainable cash generation and a dependence on non-core asset disposals.
• Increased Lease Liabilities [medium — operational]: Operating lease liabilities, both current and long-term, have increased significantly from December 31, 2024, to June 30, 2025. Current operating lease liabilities rose from $537 thousand to $861 thousand, and long-term liabilities increased from $5.60 million to $6.13 million, adding to fixed financial obligations.

Industry Context

The energy services sector is highly cyclical and capital-intensive, often experiencing volatility tied to commodity prices and global economic conditions. Companies like Koil Energy Solutions typically face intense competition, pressure on margins, and the need for continuous technological investment. Recent trends include a focus on efficiency, sustainability, and adapting to evolving energy demands.

Regulatory Implications

While this filing does not detail specific regulatory changes, companies in the energy sector are subject to stringent environmental, safety, and operational regulations. Non-compliance can lead to significant fines, operational disruptions, and reputational damage, impacting financial performance.

What Investors Should Do

1. Monitor SG&A Expense Control
2. Analyze Revenue Generation Strategies
3. Assess Liquidity and Cash Flow Sustainability
4. Evaluate Operating Margin Improvement Potential

Glossary

Operating Income (Loss)

Profitability from a company's core business operations before accounting for interest, taxes, and other non-operating income or expenses. (A significant shift from operating income to a loss of $235K in Q2 2025 and $312K year-to-date highlights severe operational challenges.)

Selling, General and Administrative (SG&A) Expenses

Costs incurred by a company for selling its products and for general corporate overhead, excluding direct costs of production. (The 54.9% increase in Q2 2025 SG&A to $1.96M is a primary driver of the company's operating losses.)

Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term financial health and operational efficiency. (The decline in working capital from $5.68M to $5.08M suggests tightening liquidity and potential challenges in meeting short-term obligations.)

Accumulated Deficit

The cumulative net losses of a company since its inception that have not been offset by profits. (The accumulated deficit of $62.45M indicates a history of unprofitability, which is further exacerbated by recent performance.)

Year-Over-Year Comparison

Compared to the prior year periods, Koil Energy Solutions has experienced a severe downturn. Revenue has declined by approximately 10% year-to-date, while net income has collapsed by nearly 98%. Operating income has swung from a substantial profit to a significant loss. Most concerning is the dramatic 54.9% increase in SG&A expenses for the quarter, which has heavily contributed to the deteriorating profitability and cash position, with cash on hand decreasing by over $1.2 million.

Key Financial Figures

• $0.001 — outstanding of Common Stock, par value $0.001 per share. IMPORTANT INFORMATION REGAR

Filing Documents

• koil_i10q-063025.htm (10-Q) — 565KB
• koil_ex3101.htm (EX-31.1) — 7KB
• koil_ex3102.htm (EX-31.2) — 7KB
• koil_ex3201.htm (EX-32.1) — 3KB
• koil_ex3202.htm (EX-32.2) — 3KB
• 0001683168-25-006073.txt ( ) — 3293KB
• klng-20250630.xsd (EX-101.SCH) — 29KB
• klng-20250630_cal.xml (EX-101.CAL) — 43KB
• klng-20250630_def.xml (EX-101.DEF) — 56KB
• klng-20250630_lab.xml (EX-101.LAB) — 250KB
• klng-20250630_pre.xml (EX-101.PRE) — 195KB
• koil_i10q-063025_htm.xml (XML) — 410KB

Forward-Looking Statements

Forward-Looking Statements The statements contained or incorporated by reference in this Report that are not historical facts are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements include any statement that may project, indicate or imply future results, events, performance or achievements. The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as "believes," "expect," "may," "will," "should," "intend," "plan," "could," "estimate," or "anticipate," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Given the risks and uncertainties relating to forward-looking statements, investors should not place undue reliance on such statements. Forward-looking statements included in this Report speak only as of the date of this Report and are not guarantees of future performance. Although we believe that the expectations reflected in the forward-looking statements are reasonable, such expectations may prove to be incorrect. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary Economic uncertainty and financial market conditions may impact our customer base, suppliers and backlog; The volatility of oil and natural gas prices; Our use of

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) 1 Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Consolidated Statements of Stockholders' Equity 3 Condensed Consolidated Statements of Cash Flows 4 Notes to Unaudited Condensed Consolidated Financial Statements 5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 23 Item 4.

Controls and Procedures

Controls and Procedures 23

OTHER INFORMATION

PART II. OTHER INFORMATION Item 5. Other Information 24 Item 6. Exhibits 24

Signatures

Signatures 25 Index to Exhibits 26 iii

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS KOIL ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, 2025 December 31, 2024 (In thousands, except share and per share amounts) ASSETS Current assets: Cash $ 2,193 $ 3,422 Accounts receivable, net 5,551 2,767 Employee retention tax credit receivable – 323 Inventory 468 404 Contract assets 1,162 3,080 Prepaid expenses and other current assets 334 210 Total current assets 9,708 10,206 Property, plant and equipment, net 3,355 2,791 Intangibles, net 193 64 Right-of-use operating lease assets 6,176 5,383 Right-of-use finance lease assets 75 29 Other assets 109 267 Total assets $ 19,616 $ 18,740 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 2,999 $ 3,319 Contract liabilities 715 542 Deferred revenue 28 114 Current operating lease liabilities 861 537 Current finance lease liabilities 23 12 Total current liabilities 4,626 4,524 Long term notes payable 27 – Operating lease liability, long-term 6,125 5,600 Finance lease liability, long-term 53 12 Total liabilities 10,831 10,136 Commitments and contingencies (Note 8) – Stockholders' equity: Common stock, 24,500,000 shares authorized at $ 0.001 par value, 16,106,010 issued at June 30, 2025 and December 31, 2024 16 16 Additional paid-in capital 74,355 74,206 Treasury stock, 4,017,808 shares at June 30, 2025 and December 31, 2024, at cost ( 3,135 ) ( 3,135 ) Accumulated deficit ( 62,451 ) ( 62,483 ) Total stockholders' equity 8,785 8,604 Total liabilities and stockholders' equity $ 19,616 $ 18,740 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 1 KOIL ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (In thousands

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