- Revenue: $189 million, a 22% year-over-year
increase
- Net loss: $4 million and diluted EPS of negative
$0.34
- Adjusted EBITDA: $18 million, a 99% year-over-year
increase
Forum Energy Technologies, Inc. (NYSE: FET) today announced
first quarter 2023 revenue of $189 million, a 22% year-over-year
increase and a $2 million sequential decrease. Orders received were
$179 million, with a book-to-bill ratio of 95%. The first quarter
2023 net loss was $4 million, or $0.34 per diluted share, compared
to net loss of $13 million, or $2.22 per diluted share, for the
fourth quarter 2022.
Excluding $4 million, or $0.43 per diluted share, for special
items, adjusted net income was $0.09 per diluted share in the first
quarter 2023, compared to an adjusted net loss of $0.45 per diluted
share in the fourth quarter 2022. Special items in the first
quarter 2023, on a pre-tax basis, primarily included $3 million of
foreign exchange losses. See Tables 1-3 for a reconciliation of
GAAP to non-GAAP financial information.
Neal Lux, President and Chief Executive Officer, remarked, “Once
again, FET’s employees executed our plan and delivered results
within the forecasted guidance range. Since the first quarter 2022,
we improved our adjusted EBITDA margins by 370 basis points with
strong performance from all three segments. While revenue was down
slightly due to softer than expected U.S. rig count, this decline
was mitigated by robust international activity. The Middle East
region stood out with sales increasing 36% sequentially, as service
companies and operators invest in long-term energy supply. Based on
the global rig count's trajectory and the success of our organic
growth initiatives, we continue to forecast 2023 adjusted EBITDA to
be within our previous guidance of $80 to $100 million.
“Recent commodity price volatility has led to uncertainty for
operators and service companies in the U.S. For the second
consecutive quarter, we anticipate international and offshore
activity to offset softness in the U.S. drilling and completions
markets. Second quarter 2023 adjusted EBITDA is forecasted to be in
the range of $16 to $20 million.
“Our strong balance sheet provides stability and flexibility as
we execute our strategic initiatives in the midst of uncertain
market conditions. As discussed on last quarter’s earnings call, we
converted 48% of our long-term debt to equity in early January. The
benefit of the conversion is reflected in our first quarter
financial statements. With ample liquidity and a strong balance
sheet, FET is well positioned to fund operations and take advantage
of market growth opportunities.”
Segment Results (unless
otherwise noted, comparisons are first quarter 2023 versus fourth
quarter 2022)
Drilling & Downhole segment revenue was $77 million, a 5%
decrease primarily related to the completion and delivery of
several ROV projects in the fourth quarter 2022 and lower demand
for drilling-related capital equipment, partially offset by
increased demand in artificial lift. Orders were $81 million, a 7%
decrease due to a decline in Drilling Technologies bookings,
partially offset by higher Downhole and Subsea Technologies product
lines bookings. Segment adjusted EBITDA was comparable at $11
million. Drilling & Downhole operations focus primarily on
capital equipment and consumable products for global well
construction, artificial lift and subsea markets.
Completions segment revenue was $74 million, comparable to the
prior quarter. Orders were $66 million, a 19% decrease following
larger pressure control equipment and radiator bookings received in
the fourth quarter. Segment adjusted EBITDA was $10 million, a 5%
increase resulting from higher radiator sales. The Completions
segment designs and manufactures products for the coiled tubing,
wireline and stimulation markets.
Production segment revenue was $39 million, a 9% increase
related to higher demand for our valve products. Orders were $32
million, a 31% decrease, primarily related to the large desalter
project awarded in the fourth quarter 2022, partially offset by
increased valve products orders in the Middle East. Segment
Adjusted EBITDA was $2 million, a 35% increase due to favorable
sales mix and increased volume. The Production segment manufactures
land well site production equipment, desalination process
equipment, and a wide range of valves for upstream, midstream and
process industry customers.
FET (Forum Energy Technologies) is a global company, serving the
oil, natural gas, industrial and renewable energy industries. With
headquarters located in Houston, Texas, FET provides value added
solutions aimed at improving the safety, efficiency, and
environmental impact of our customer’s operations. For more
information, please visit www.f-e-t.com.
Forward Looking Statements and Other Legal Disclosure
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements,
other than statements of historical facts, included in this press
release that address activities, events or developments that the
company expects, believes or anticipates will or may occur in the
future are forward-looking statements. Without limiting the
generality of the foregoing, forward-looking statements contained
in this press release specifically include the expectations of
plans, strategies, objectives and anticipated financial and
operating results of the company, including any statement about the
company's future financial position, liquidity and capital
resources, operations, performance, acquisitions, returns, capital
expenditure budgets, new product development activities, costs and
other guidance included in this press release.
These statements are based on certain assumptions made by the
company based on management's experience and perception of
historical trends, current conditions, anticipated future
developments and other factors believed to be appropriate. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the company,
which may cause actual results to differ materially from those
implied or expressed by the forward-looking statements. Among other
things, these include the volatility of oil and natural gas prices,
oilfield development activity levels, the availability of raw
materials and specialized equipment, the company's ability to
deliver backlog in a timely fashion, the availability of skilled
and qualified labor, competition in the oil and natural gas
industry, governmental regulation and taxation of the oil and
natural gas industry, the company's ability to implement new
technologies and services, the availability and terms of capital,
and uncertainties regarding environmental regulations or litigation
and other legal or regulatory developments affecting the company's
business, impacts associated with COVID-19, and other important
factors that could cause actual results to differ materially from
those projected as described in the company's filings with the U.S.
Securities and Exchange Commission.
Any forward-looking statement speaks only as of the date on
which such statement is made, and the company undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Forum Energy Technologies,
Inc.
Condensed consolidated
statements of loss
(Unaudited)
Three months ended
March 31,
December 31,
(in millions, except per share
information)
2023
2022
2022
Revenue
$
189.0
$
155.2
$
190.7
Cost of sales
136.9
116.6
140.7
Gross profit
52.1
38.6
50.0
Operating expenses
Selling, general and administrative
expenses
45.5
44.3
48.0
Gain on sale-leaseback transactions
—
—
(7.0
)
Gain on disposal of assets and other
(0.3
)
—
(0.3
)
Total operating expenses
45.2
44.3
40.7
Operating income (loss)
6.9
(5.7
)
9.3
Other expense (income)
Interest expense
4.5
7.6
7.9
Foreign exchange losses (gains) and other,
net
3.1
(6.0
)
12.5
Total other expense
7.6
1.6
20.4
Loss before income taxes
(0.7
)
(7.3
)
(11.1
)
Income tax expense
2.8
1.9
1.7
Net loss (1)
$
(3.5
)
$
(9.2
)
$
(12.8
)
Weighted average shares
outstanding
Basic
10.2
5.7
5.8
Diluted
10.2
5.7
5.8
Loss per share
Basic
$
(0.34
)
$
(1.62
)
$
(2.22
)
Diluted
$
(0.34
)
$
(1.62
)
$
(2.22
)
(1) Refer to Table 1 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Condensed consolidated balance
sheets
(Unaudited)
March 31,
December 31,
(in millions of dollars)
2023
2022
Assets
Current assets
Cash and cash equivalents
$
46.8
$
51.0
Accounts receivable—trade, net
164.0
154.2
Inventories, net
287.6
269.8
Other current assets
38.4
37.9
Total current assets
536.8
512.9
Property and equipment, net of accumulated
depreciation
62.6
63.0
Operating lease assets
57.0
57.3
Intangible assets, net
185.6
191.5
Other long-term assets
8.0
10.1
Total assets
$
850.0
$
834.8
Liabilities and equity
Current liabilities
Current portion of long-term debt
$
1.0
$
0.8
Other current liabilities
202.6
209.5
Total current liabilities
203.6
210.3
Long-term debt, net of current portion
152.0
239.1
Other long-term liabilities
77.5
78.3
Total liabilities
433.1
527.7
Total equity
416.9
307.1
Total liabilities and equity
$
850.0
$
834.8
Forum Energy Technologies,
Inc.
Condensed consolidated cash
flow information
(Unaudited)
Three Months Ended March
31,
(in millions of dollars)
2023
2022
Cash flows from operating
activities
Net loss
$
(3.5
)
$
(9.2
)
Depreciation and amortization
8.7
9.6
Inventory write down
0.9
0.2
Other noncash items and changes in working
capital
(29.2
)
(25.5
)
Net cash used in operating
activities
(23.1
)
(24.9
)
Cash flows from investing
activities
Capital expenditures for property and
equipment
(1.1
)
(0.8
)
Proceeds from sale of property and
equipment
0.3
0.1
Net cash used in investing
activities
(0.8
)
(0.7
)
Cash flows from financing
activities
Borrowings of debt
119.4
95.9
Repayments of debt
(94.7
)
(96.1
)
Repurchases of stock
(5.4
)
(0.4
)
Net cash provided by (used in)
financing activities
19.3
(0.6
)
Effect of exchange rate changes on
cash
0.3
(0.1
)
Net decrease in cash, cash equivalents
and restricted cash
$
(4.3
)
$
(26.3
)
Forum Energy Technologies,
Inc.
Supplemental schedule -
Segment information
(Unaudited)
As Reported
As Adjusted (3)
Three months ended
Three months ended
(in millions of dollars)
March 31, 2023
March 31, 2022
December 31, 2022
March 31, 2023
March 31, 2022
December 31, 2022
Revenue
Drilling & Downhole
$
76.8
$
71.3
$
81.1
$
76.8
$
71.3
$
81.1
Completions
73.7
52.5
74.1
73.7
52.5
74.1
Production
39.0
31.5
35.9
39.0
31.5
35.9
Eliminations
(0.5
)
(0.1
)
(0.4
)
(0.5
)
(0.1
)
(0.4
)
Total revenue
$
189.0
$
155.2
$
190.7
$
189.0
$
155.2
$
190.7
Operating income (loss)
Drilling & Downhole
$
8.4
$
6.0
$
8.2
$
8.5
$
5.6
$
8.1
Operating Margin %
10.9
%
8.4
%
10.1
%
11.1
%
7.9
%
10.0
%
Completions
3.6
(0.7
)
2.8
4.4
(0.7
)
3.8
Operating Margin %
4.9
%
(1.3
) %
3.8
%
6.0
%
(1.3
) %
5.1
%
Production
1.6
(1.8
)
0.8
1.6
(1.5
)
0.9
Operating Margin %
4.1
%
(5.7
) %
2.2
%
4.1
%
(4.8
) %
2.5
%
Corporate
(7.0
)
(9.2
)
(9.8
)
(6.8
)
(5.5
)
(7.1
)
Total segment operating income
(loss)
6.6
(5.7
)
2.0
7.7
(2.1
)
5.7
Other items not in segment operating
income (loss) (1)
0.3
—
7.3
0.3
0.1
0.3
Total operating income (loss)
$
6.9
$
(5.7
)
$
9.3
$
8.0
$
(2.0
)
$
6.0
Operating Margin %
3.7
%
(3.7
) %
4.9
%
4.2
%
(1.3
) %
3.1
%
EBITDA (2)
Drilling & Downhole
$
8.5
$
15.5
$
5.8
$
11.4
$
9.1
$
11.2
EBITDA Margin %
11.1
%
21.7
%
7.2
%
14.8
%
12.8
%
13.8
%
Completions
8.8
4.7
8.1
9.9
4.9
9.4
EBITDA Margin %
11.9
%
9.0
%
10.9
%
13.4
%
9.3
%
12.7
%
Production
2.3
(1.0
)
1.5
2.3
(0.6
)
1.7
EBITDA Margin %
5.9
%
(3.2
) %
4.2
%
5.9
%
(1.9
) %
4.7
%
Corporate
(7.1
)
(9.3
)
(9.8
)
(5.9
)
(4.5
)
(5.8
)
Total EBITDA
$
12.5
$
9.9
$
5.6
$
17.7
$
8.9
$
16.5
EBITDA Margin %
6.6
%
6.4
%
2.9
%
9.4
%
5.7
%
8.7
%
(1) Includes gain/(loss) on disposal of
assets and other.
(2) The Company believes that the
presentation of EBITDA is useful to the Company's investors because
EBITDA is an appropriate measure of evaluating the Company's
operating performance and liquidity that reflects the resources
available for strategic opportunities including, among others,
investing in the business, strengthening the balance sheet,
repurchasing the Company's securities and making strategic
acquisitions. In addition, EBITDA is a widely used benchmark in the
investment community. See the attached separate schedule for the
reconciliation of GAAP to non-GAAP financial information.
(3) Refer to Table 1 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Supplemental schedule - Orders
information
(Unaudited)
Three months ended
(in millions of dollars)
March 31, 2023
March 31, 2022
December 31, 2022
Orders
Drilling & Downhole
$
81.0
$
70.9
$
87.2
Completions
66.0
53.7
81.4
Production
31.9
40.4
46.5
Total orders
$
178.9
$
165.0
$
215.1
Revenue
Drilling & Downhole
$
76.8
$
71.3
$
81.1
Completions
73.7
52.5
74.1
Production
39.0
31.5
35.9
Eliminations
(0.5
)
(0.1
)
(0.4
)
Total revenue
$
189.0
$
155.2
$
190.7
Book to bill ratio (1)
Drilling & Downhole
1.05
0.99
1.08
Completions
0.90
1.02
1.10
Production
0.82
1.28
1.30
Total book to bill ratio
0.95
1.06
1.13
(1) The book-to-bill ratio is calculated
by dividing the dollar value of orders received in a given period
by the revenue earned in that same period. The Company believes
that this ratio is useful to investors because it provides an
indication of whether the demand for our products, in the markets
in which the Company operates, is strengthening or declining. A
ratio of greater than one is indicative of improving market demand,
while a ratio of less than one would suggest weakening demand. In
addition, the Company believes the book-to-bill ratio provides more
meaningful insight into future revenues for our business than other
measures, such as order backlog, because the majority of the
Company's products are activity based consumable items or shorter
cycle capital equipment, neither of which are typically ordered by
customers far in advance.
Forum Energy Technologies,
Inc.
Reconciliation of GAAP to
non-GAAP financial information
(Unaudited)
Table 1 - Adjusting
items
Three months ended
March 31, 2023
March 31, 2022
December 31, 2022
(in millions, except per share
information)
Operating income
EBITDA (1)
Net income (loss)
Operating loss
EBITDA (1)
Net loss
Operating loss
EBITDA (1)
Net loss
As reported
$
6.9
$
12.5
$
(3.5
)
$
(5.7
)
$
9.9
$
(9.2
)
$
9.3
$
5.6
$
(12.8
)
% of revenue
3.7
%
6.6
%
(3.7
)%
6.4
%
4.9
%
2.9
%
Restructuring, transaction and other
costs
1.1
1.1
1.1
3.7
3.7
3.7
2.7
2.7
2.7
Inventory and other working capital
adjustments
—
—
—
—
—
—
0.2
0.2
0.2
Loss (gain) on foreign exchange, net
(2)
—
3.3
3.3
—
(5.8
)
(5.8
)
—
13.5
13.5
Stock-based compensation expense
—
0.8
—
—
1.1
—
0.8
1.5
0.8
Gain on sale-leaseback transactions
—
—
—
—
—
—
(7.0
)
(7.0
)
(7.0
)
As adjusted (1)
$
8.0
$
17.7
$
0.9
$
(2.0
)
$
8.9
$
(11.3
)
$
6.0
$
16.5
$
(2.6
)
% of revenue
4.2
%
9.4
%
(1.3
)%
5.7
%
3.1
%
8.7
%
Diluted shares outstanding as reported
10.2
5.7
5.8
Diluted shares outstanding as adjusted
10.2
5.7
5.8
Diluted EPS - as reported
$
(0.34
)
$
(1.62
)
$
(2.22
)
Diluted EPS - as adjusted
$
0.09
$
(1.98
)
$
(0.45
)
(1) The Company believes that the
presentation of EBITDA, adjusted EBITDA, adjusted operating loss,
adjusted net loss and adjusted diluted EPS are useful to the
company's investors because (i) each of these financial metrics are
useful to investors to assess and understand operating performance,
especially when comparing those results with previous and
subsequent periods or forecasting performance for future periods,
primarily because management views the excluded items to be outside
of the Company's normal operating results and (ii) EBITDA is an
appropriate measure of evaluating the company's operating
performance and liquidity that reflects the resources available for
strategic opportunities including, among others, investing in the
business, strengthening the balance sheet, repurchasing the
Company's securities and making strategic acquisitions. In
addition, these benchmarks are widely used in the investment
community. See the attached separate schedule for the
reconciliation of GAAP to non-GAAP financial information.
(2) Foreign exchange, net primarily
relates to cash and receivables denominated in U.S. dollars by some
of our non-U.S. subsidiaries that report in a local currency, and
therefore the loss (gain) has no economic impact in dollar
terms.
Forum Energy Technologies,
Inc.
Reconciliation of GAAP to
non-GAAP financial information
(Unaudited)
Table 2 - Adjusting
Items
Three months ended
(in millions of dollars)
March 31, 2023
March 31, 2022
December 31, 2022
EBITDA reconciliation (1)
Net loss
$
(3.5
)
$
(9.2
)
$
(12.8
)
Interest expense
4.5
7.6
7.9
Depreciation and amortization
8.7
9.6
8.8
Income tax expense
2.8
1.9
1.7
EBITDA
$
12.5
$
9.9
$
5.6
(1) The Company believes that the
presentation of EBITDA is useful to investors because EBITDA is an
appropriate measure of evaluating the Company's operating
performance and liquidity that reflects the resources available for
strategic opportunities including, among others, investing in the
business, strengthening the balance sheet, repurchasing the
Company's securities and making strategic acquisitions. In
addition, EBITDA is a widely used benchmark in the investment
community.
Forum Energy Technologies,
Inc.
Reconciliation of GAAP to
non-GAAP financial information
(Unaudited)
Table 3 - Adjusting
items
Three months ended
(in millions of dollars)
March 31, 2023
March 31, 2022
Free cash flow, before acquisitions,
reconciliation (1)
Net cash used in operating activities
$
(23.1
)
$
(24.9
)
Capital expenditures for property and
equipment
(1.1
)
(0.8
)
Proceeds from sale of property and
equipment
0.3
0.1
Free cash flow, before acquisitions
$
(23.9
)
$
(25.6
)
(1) The Company believes free cash flow,
before acquisitions is an important measure because it encompasses
both profitability and capital management in evaluating
results.
Forum Energy Technologies,
Inc.
Supplemental schedule -
Product line revenue
(Unaudited)
Three months ended
(in millions of dollars)
March 31, 2023
March 31, 2022
December 31, 2022
Revenue
$
%
$
%
$
%
Drilling Technologies
$
40.8
21.5
%
$
29.2
18.8
%
$
42.5
22.2
%
Downhole Technologies
23.2
12.3
%
19.6
12.6
%
22.1
11.6
%
Subsea Technologies
12.8
6.8
%
22.5
14.5
%
16.5
8.7
%
Drilling & Downhole
76.8
40.6
%
71.3
45.9
%
81.1
42.5
%
Stimulation and Intervention
47.4
25.1
%
30.1
19.4
%
45.2
23.7
%
Coiled Tubing
26.3
13.9
%
22.4
14.4
%
28.9
15.2
%
Completions
73.7
39.0
%
52.5
33.8
%
74.1
38.9
%
Production Equipment
19.9
10.5
%
15.2
9.8
%
19.9
10.4
%
Valve Solutions
19.1
10.1
%
16.3
10.5
%
16.0
8.4
%
Production
39.0
20.6
%
31.5
20.3
%
35.9
18.8
%
Eliminations
(0.5
)
(0.2
)%
(0.1
)
—
%
(0.4
)
(0.2
)%
Total revenue
$
189.0
100.0
%
$
155.2
100.0
%
$
190.7
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005768/en/
Rob Kukla Director of Investor Relations 281.994.3763
rob.kukla@f-e-t.com
Forum Energy Technologies (NYSE:FET)
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Forum Energy Technologies (NYSE:FET)
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