ChampionX Earnings: Short-Lived Headwinds Offset Otherwise Favorable End-Market Dynamics

ChampionX performed well in the second quarter despite headwinds from numerous external sources, including production shutdowns relating to Canadian wildfires and logistics-related shipment delays in Latin America, as well as decelerating activity across North America. ChampionX’s profitability improved despite a modest sequential revenue decline of 2%, with the firmwide adjusted EBITDA margin expanding nearly 160 basis points quarter over quarter. Few challenges from second quarter will likely carry over into the second half of the year, but we expect overall modest performance improvements in the future, as constrained North American activity offsets growth in international markets. Our $33 per share fair value estimate and no-moat rating are therefore unchanged.