Robbins Arroyo LLP: KLX, Inc. (KLXI) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed in the U.S. District Court for the Southern District of Florida. The complaint alleges that officers and directors of KLX, Inc. (NASDAQGS: KLXI) violated the Securities Exchange Act of 1934 between March 9, 2015 and November 11, 2015, by making materially false and misleading statements about KLX’s business prospects. KLX, together with its subsidiaries, distributes aerospace fasteners and consumables, and provides logistics services for the commercial, business jet, and military markets worldwide. It also provides oilfield services and associated rental equipment across North America as KLX’s Energy Services Group (“ESG”).
KLX Accused of Misrepresenting the Value of its Assets
According to the complaint, KLX misrepresented the value of the company’s assets, including the value of the identifiable tangible assets and goodwill associated with ESG, along with its policies and methodology related to the calculation of risk, goodwill, and asset impairment. Specifically, on March 6, 2015, KLX filed a Form 10-K with the U.S. Securities and Exchange Commission, stating that the net value of its goodwill was $1,069.8 million as of December 31, 2013, and $1,328.7 million as of December 31, 2014. In its 10-Q filed on May 28, 2015, the company represented the value of its goodwill to be $1,286.5 million as of January 31, 2015, and $1,284.8 million as of April 31, 2015.
Then, on August 25, 2015, KLX held a conference call to discuss their second quarter 2015 results, acknowledging that ESG’s financial performance was negatively impacted by a 60% decrease in the price of oil, as well as pricing pressures throughout the energy services sector. Despite KLX’s acknowledgement of the deterioration in the oil market and its effects on the company’s business, it continuously represented the value of the goodwill associated with the ESG assets as worth more than $300 million.
On November 12, 2015, KLX announced that as a result of its interim asset impairment test, it expected to recognize a non-cash, after-tax asset impairment charge of approximately $435 million related to ESG, citing the downturn in the oil and gas industry. On this news, KLX’s stock plunged by nearly 18%, from $39.00 per share on November 11, 2015, to close at $32.11 on November 12, 2015.
KLX Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.