- Revenue of $246 million
- Diluted EPS of $(0.12) and adjusted EPS of $(0.08)
- Net loss of $14 million and adjusted EBITDA of $18
million
- Cash flow from operations of $23 million and free cash flow
after capital expenditures of $18 million
Forum Energy Technologies, Inc. (NYSE: FET) today announced
second quarter 2019 revenue of $246 million, a decrease of $26
million from the first quarter 2019. Net loss for the quarter was
$14 million, or $0.12 per diluted share, compared to net loss of $8
million, or $0.07 per diluted share, for the first quarter 2019.
Excluding $5 million, or $0.04 per share of special items, adjusted
net loss was $0.08 per diluted share in the second quarter 2019
compared to adjusted net loss of $0.04 per diluted share in the
first quarter 2019. See Tables 1-5 for a reconciliation of GAAP to
non-GAAP financial information.
Cris Gaut, Chairman and Chief Executive Officer, remarked, “Our
primary focus at Forum is on generating free cash flow to reduce
net debt. Free cash flow was $18 million in the second quarter, a
sequential improvement, and the third successive quarter of free
cash flow. Since we changed our strategy to focus on free cash flow
in the fourth quarter 2018, we have generated $55 million,
resulting in an annualized yield of over 25% based on today’s
equity market value. As our inventory reduction efforts accelerate,
we expect our free cash flow generating ability to increase
further. We ended the quarter with approximately $242 million of
total liquidity and we expect to use our free cash flow to further
reduce debt.
“Our operating results in the second quarter were in line with
the updated guidance we provided last month. Revenue declined $26
million from last quarter as a result of decreased spending by our
customers as they sought to lower costs, preserve cash, and
exercise capital discipline. We generated $18 million of EBITDA in
the second quarter on reduced revenue of $246 million.
“Looking ahead to the third quarter, we expect sequential
improvements in our Drilling and Downhole segment and our Valves
product line, partially offset by a slowdown in our Completions
segment. We continue to reduce costs as we manage the business for
the existing market environment, as evidenced by our $6 million
sequential decline in SG&A. We expect third quarter EBITDA to
be relatively flat to slightly higher, despite a further slowing in
U.S. land drilling and completions activity. We expect another
strong increase in our free cash flow.
“We are already experiencing increasing levels of inquiries from
international and offshore customers. As we look further into the
future, we expect these inquiries to translate into orders across
our broad product portfolio. In addition, in the U.S. where our
sales are primarily short cycle consumable items, we believe the
current destocking and cannibalization by our customers is
unsustainable.”
Segment Results
Drilling & Downhole segment revenue was $82 million, a
decrease of $4 million, or 4%, from the first quarter 2019,
primarily due to a lower rig count in North America, partially
offset by improvement in our Subsea product line. Orders in the
second quarter were $78 million, a 5% decrease from the first
quarter. Drilling & Downhole operations focus primarily on
manufactured equipment and consumable products for global drilling,
well construction, artificial lift and subsea construction and
services markets.
Completions segment revenue was $82 million, a decrease of $13
million, or 14% sequentially, due to lower sales of pressure
pumping products and the previously announced non-recurring
international offshore coiled line pipe project delivered in the
first quarter. Orders in the second quarter were $71 million, a
decrease of $10 million, or 12% from the first quarter 2019, due to
lower orders of stimulation products, as the pressure pumping
service companies are cannibalizing their idle fleets and
destocking their consumables. The Completions segment designs and
manufactures products for the completion, stimulation and
intervention markets.
Production segment revenue was $83 million, a decrease of $9
million, or 9% from the first quarter 2019, due to lower sales of
upstream and midstream valves, and surface production equipment.
Orders in the second quarter were $76 million, a 5% decrease
sequentially, primarily due to lower orders for valves, as
distributors deferred orders and destocked their existing inventory
levels. The Production segment manufactures land well site
production equipment, desalination refinery equipment, and a wide
range of valves for the upstream, midstream and process industry
customers.
Conference Call
Information
Forum's conference call is scheduled for Friday, July 26, 2019
at 9:00 AM CDT. During the call, the Company intends to discuss
second quarter 2019 results. To participate in the earnings
conference call, please call 855-757-8876 within North America, or
631-485-4851 outside of North America. The access code is 2867018.
The call will also be broadcast through the Investor Relations link
on Forum’s website at www.f-e-t.com. Participants are encouraged to
log in to the webcast or dial in to the conference call
approximately ten minutes prior to the start time. A replay of the
call will be available for two weeks after the call and may be
accessed by dialing 855-859-2056 within North America, or
404-537-3406 outside of North America. The access code is
2867018.
Forum Energy Technologies is a global oilfield products company,
serving the drilling, subsea, completions, production and
infrastructure sectors of the oil and natural gas industry. The
Company’s products include a mix of frequently replaced consumable
products and highly engineered capital products that are used in
the drilling, well completion, production and transportation of oil
and natural gas. Forum is headquartered in Houston, TX with
manufacturing and distribution facilities strategically located
around the globe. 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 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, and
other important factors that could cause actual results to differ
materially from those projected as described in the company's
filings with the 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 income (loss)
(Unaudited)
Three months ended
June 30,
March 31,
(in millions, except per share
information)
2019
2018
2019
Revenue
$
245.6
$
274.0
$
271.8
Cost of sales
182.4
201.3
201.7
Gross profit
63.2
72.7
70.1
Operating expenses
Selling, general and administrative
expenses
62.9
71.5
69.0
Transaction expenses
0.1
0.1
0.6
Intangible asset impairments
—
14.5
—
Contingent consideration benefit
—
—
(4.6
)
Loss (gain) on disposal of assets and
other
0.1
(1.3
)
—
Total operating expenses
63.1
84.8
65.0
Earnings (loss) from equity investment
0.6
0.4
(0.8
)
Operating income (loss)
0.7
(11.7
)
4.3
Other expense (income)
Interest expense
8.2
7.9
8.2
Foreign exchange losses (gains) and other,
net
(2.2
)
(5.9
)
2.3
Total other expense
6.0
2.0
10.5
Loss before income taxes
(5.3
)
(13.7
)
(6.2
)
Income tax expense (benefit)
8.4
1.6
1.7
Net loss (1)
$
(13.7
)
$
(15.3
)
$
(7.9
)
Weighted average shares
outstanding
Basic
110.0
108.7
109.6
Diluted
110.0
108.7
109.6
Loss per share
Basic
$
(0.12
)
$
(0.14
)
$
(0.07
)
Diluted
$
(0.12
)
$
(0.14
)
$
(0.07
)
(1) Refer to Table 1 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Condensed consolidated
statements of income (loss)
(Unaudited)
Six Months Ended
June 30, 2019
(in millions, except per share
information)
2019
2018
Revenue
$
517.5
$
524.2
Cost of sales
384.2
384.2
Gross profit
133.3
140.0
Operating expenses
Selling, general and administrative
expenses
131.8
143.6
Transaction expenses
0.7
1.4
Goodwill and intangible asset
impairments
—
14.5
Contingent consideration benefit
(4.6
)
—
Loss (gain) on disposal of assets and
other
0.1
(1.7
)
Total operating expenses
128.0
157.8
Loss from equity investment
(0.3
)
(0.6
)
Operating income (loss)
5.0
(18.4
)
Other expense (income)
Interest expense
16.4
15.9
Foreign exchange losses (gains) and other,
net
0.1
(2.3
)
Gain on contribution of subsea rentals
business
—
(33.5
)
Total other (income) expense, net
16.5
(19.9
)
Income (loss) before income
taxes
(11.5
)
1.5
Income tax expense (benefit)
10.1
(11.2
)
Net income (loss) (1)
$
(21.6
)
$
12.7
Weighted average shares
outstanding
Basic
109.8
108.6
Diluted
109.8
110.8
Earnings (loss) per share
Basic
$
(0.20
)
$
0.12
Diluted
$
(0.20
)
$
0.11
(1) Refer to Table 2 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Condensed consolidated balance
sheets
(Unaudited)
(in millions of dollars)
June 30, 2019
December 31, 2018
Assets
Current assets
Cash and cash equivalents
$
37.4
$
47.2
Accounts receivable—trade, net
180.6
206.1
Inventories, net
469.1
479.0
Other current assets
40.8
33.7
Total current assets
727.9
766.0
Property and equipment, net of accumulated
depreciation
171.5
177.4
Operating lease assets
54.0
—
Goodwill and other intangibles, net
813.4
828.7
Investment in unconsolidated
subsidiary
44.5
45.0
Other long-term assets
10.4
12.6
Total assets
$
1,821.7
$
1,829.7
Liabilities and equity
Current liabilities
Current portion of long-term debt
$
1.2
$
1.2
Other current liabilities
223.1
235.7
Total current liabilities
224.3
236.9
Long-term debt, net of current portion
478.0
517.5
Other long-term liabilities
99.2
45.1
Total liabilities
801.5
799.5
Total equity
1,020.2
1,030.2
Total liabilities and equity
$
1,821.7
$
1,829.7
Forum Energy Technologies,
Inc.
Condensed consolidated cash
flow information
(Unaudited)
Six Months Ended June
30,
(in millions of dollars)
2019
2018
Cash flows from operating
activities
Net income (loss)
$
(21.6
)
$
12.7
Intangible asset impairments
—
14.5
Depreciation and amortization
32.7
37.3
Other noncash items and changes in working
capital
29.7
(90.2
)
Net cash provided by (used in)
operating activities
40.8
(25.7
)
Cash flows from investing
activities
Capital expenditures for property and
equipment
(9.2
)
(14.1
)
Proceeds from sale of business, property
and equipment
0.4
8.8
Net cash used in investing
activities
(8.8
)
(5.3
)
Cash flows from financing
activities
Repayment of debt, net of borrowings
(41.1
)
(41.7
)
Repurchases of stock
(1.0
)
(2.2
)
Net cash used in financing
activities
(42.1
)
(43.9
)
Effect of exchange rate changes on
cash
0.2
(1.2
)
Net decrease in cash, cash equivalents
and restricted cash
$
(9.9
)
$
(76.1
)
Forum Energy Technologies,
Inc.
Supplemental schedule -
Segment information
(Unaudited)
As Reported
As Adjusted (4)
Three months ended
Three months ended
(in millions of dollars)
June 30, 2019
June 30, 2018
March 31, 2019
June 30, 2019
June 30, 2018
March 31, 2019
Revenue
Drilling & Downhole
$
82.4
$
86.5
$
85.9
$
82.4
$
86.5
$
85.9
Completions
81.5
100.0
94.7
81.5
100.0
94.7
Production
83.3
88.6
92.0
83.3
88.6
92.0
Eliminations
(1.6
)
(1.1
)
(0.8
)
(1.6
)
(1.1
)
(0.8
)
Total revenue
$
245.6
$
274.0
$
271.8
$
245.6
$
274.0
$
271.8
Operating income (loss)
Drilling & Downhole (1)
$
1.3
$
(7.5
)
$
(2.5
)
$
2.0
$
(3.1
)
$
0.3
Operating income margin %
1.6
%
(8.7
)%
(2.9
)%
2.4
%
(3.6
)%
0.3
%
Completions
2.8
14.2
6.9
2.9
14.8
7.6
Operating income margin %
3.4
%
14.2
%
7.3
%
3.6
%
14.8
%
8.0
%
Production
3.6
3.7
4.3
3.6
3.9
4.6
Operating income margin %
4.3
%
4.2
%
4.7
%
4.3
%
4.4
%
5.0
%
Corporate
(6.8
)
(8.9
)
(8.4
)
(6.7
)
(8.7
)
(7.3
)
Total segment operating income
(loss)
0.9
1.5
0.3
1.8
6.9
5.2
Other items not in segment operating
income (2)
(0.2
)
(13.2
)
4.0
0.1
1.7
0.1
Total operating income (loss)
$
0.7
$
(11.7
)
$
4.3
$
1.9
$
8.6
$
5.3
Operating income margin %
0.3
%
(4.3
)%
1.6
%
0.8
%
3.1
%
1.9
%
EBITDA (3)
Drilling & Downhole
$
8.1
$
(7.5
)
$
1.9
$
7.5
$
6.3
$
6.0
EBITDA Margin %
9.8
%
(8.7
)%
2.2
%
9.1
%
7.3
%
7.0
%
Completions
11.3
22.7
15.5
11.7
23.2
16.4
EBITDA Margin %
13.9
%
22.7
%
16.4
%
14.4
%
23.2
%
17.3
%
Production
5.2
5.9
6.4
5.7
6.4
6.6
EBITDA Margin %
6.2
%
6.7
%
7.0
%
6.8
%
7.2
%
7.2
%
Corporate
(5.4
)
(8.3
)
(5.4
)
(6.6
)
(8.6
)
(7.3
)
Total EBITDA
$
19.2
$
12.8
$
18.4
$
18.3
$
27.3
$
21.7
EBITDA Margin %
7.8
%
4.7
%
6.8
%
7.5
%
10.0
%
8.0
%
(1) Includes earnings (loss) from equity
investment.
(2) Includes transaction expenses,
gain/(loss) on disposal of assets, contingent consideration
benefit, and goodwill and intangible assets impairments.
(3) 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.
(4) Refer to Table 1 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Supplemental schedule -
Segment information
(Unaudited)
As Reported
As Adjusted (4)
Six months ended
Six months ended
(in millions of dollars)
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Revenue
Drilling & Subsea
$
168.3
$
163.3
$
168.3
$
163.3
Completions
176.2
188.1
176.2
188.1
Production & Infrastructure
175.3
175.0
175.3
175.0
Eliminations
(2.3
)
(2.2
)
(2.3
)
(2.2
)
Total revenue
$
517.5
$
524.2
$
517.5
$
524.2
Operating income (loss)
Drilling & Subsea (1)
$
(1.2
)
$
(17.8
)
$
2.3
$
(11.6
)
Operating income margin %
(0.7
)%
(10.9
)%
1.4
%
(7.1
)%
Completions (1)
9.7
23.2
10.5
26.9
Operating income margin %
5.5
%
12.3
%
6.0
%
14.3
%
Production & Infrastructure
7.9
7.9
8.2
8.1
Operating income margin %
4.5
%
4.5
%
4.7
%
4.6
%
Corporate
(15.2
)
(17.5
)
(14.1
)
(17.0
)
Total segment operating income
(loss)
1.2
(4.2
)
6.9
6.4
Other items not in segment operating
income (loss) (2)
3.8
(14.2
)
0.2
2.4
Total operating income (loss)
$
5.0
$
(18.4
)
$
7.1
$
8.8
Operating income margin %
1.0
%
(3.5
)%
1.4
%
1.7
%
EBITDA (3)
Drilling & Subsea
$
10.1
$
20.7
$
13.5
$
6.2
EBITDA Margin %
6.0
%
12.7
%
8.0
%
3.8
%
Completions
26.9
39.9
28.1
43.4
EBITDA Margin %
15.3
%
21.2
%
15.9
%
23.1
%
Production & Infrastructure
11.6
12.8
12.2
13.6
EBITDA Margin %
6.6
%
7.3
%
7.0
%
7.8
%
Corporate
(11.0
)
(18.7
)
(13.7
)
(16.8
)
Total EBITDA
$
37.6
$
54.7
$
40.1
$
46.4
EBITDA Margin %
7.3
%
10.4
%
7.7
%
8.9
%
(1) Includes earnings (loss) from equity
investment.
(2) Includes transaction expenses, gain
(loss) on disposal of assets, contingent consideration benefit, and
goodwill and intangible asset impairments
(3) 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.
(4) Refer to Table 2 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Supplemental schedule - Orders
information
(Unaudited)
Three months ended
(in millions of dollars)
June 30, 2019
June 30, 2018
March 31, 2019
Orders
Drilling & Downhole
$
78.3
$
115.1
$
82.0
Completions
70.7
96.1
80.3
Production
75.6
98.8
79.9
Total orders
$
224.6
$
310.0
$
242.2
Revenue
Drilling & Downhole
$
82.4
$
86.5
$
85.9
Completions
81.5
100.0
94.7
Production
83.3
88.6
92.0
Eliminations
(1.6
)
(1.1
)
(0.8
)
Total revenue
$
245.6
$
274.0
$
271.8
Book to bill ratio (1)
Drilling & Downhole
0.95
1.33
0.95
Completions
0.87
0.96
0.85
Production
0.91
1.12
0.87
Total book to bill ratio
0.91
1.13
0.89
(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
June 30, 2019
June 30, 2018
March 31, 2019
(in millions, except per share
information)
Operating income
(loss)
EBITDA(1)
Net income (loss)
Operating income
(loss)
EBITDA
Net income (loss)
Operating income
(loss)
EBITDA(1)
Net income (loss)
As reported
$
0.7
$
19.2
$
(13.7
)
$
(11.7
)
$
12.8
$
(15.3
)
$
4.3
$
18.4
$
(7.9
)
% of revenue
0.3
%
7.8
%
(4.3
)%
4.7
%
1.6
%
6.8
%
Restructuring charges and other
0.6
0.6
0.6
1.4
1.4
1.4
4.7
4.7
4.7
Transaction expenses
0.1
0.1
0.1
0.1
0.1
0.1
0.6
0.6
0.6
Inventory and other working capital
adjustments
—
—
—
3.6
3.6
3.6
(0.1
)
(0.1
)
(0.1
)
Goodwill and intangible asset
impairment
—
—
—
14.5
14.5
14.5
—
—
—
Contingent consideration benefit
—
—
—
—
—
—
(4.6
)
(4.6
)
(4.6
)
Amortization of basis difference for
equity method investment (2)
0.5
0.5
0.5
0.7
0.7
0.7
0.4
0.4
0.4
Loss (gain) on foreign exchange, net
(3)
—
(2.1
)
(2.1
)
—
(5.8
)
(5.8
)
—
2.3
2.3
Income tax expense (benefit) of
adjustments
—
—
—
—
—
(1.1
)
—
—
(0.1
)
Impact of U.S. tax reform
—
—
—
—
—
0.3
—
—
—
Valuation allowance on deferred tax
assets
—
—
5.9
—
—
—
—
—
—
As adjusted(1)
$
1.9
$
18.3
$
(8.7
)
$
8.6
$
27.3
$
(1.6
)
$
5.3
$
21.7
$
(4.7
)
% of revenue
0.8
%
7.5
%
3.1
%
10.0
%
1.9
%
8.0
%
Diluted shares outstanding as reported
110.0
108.7
109.6
Diluted shares outstanding as adjusted
110.0
108.7
109.6
Diluted EPS - as reported
$
(0.12
)
$
(0.14
)
$
(0.07
)
Diluted EPS - as adjusted
$
(0.08
)
$
(0.01
)
$
(0.04
)
(1) The Company believes that the
presentation of EBITDA, adjusted EBITDA, adjusted operating income,
adjusted net income 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) The difference between the fair value
of our interest in Ashtead and the book value of the underlying net
assets resulted in a basis difference non-operating gain, which was
allocated to fixed assets, intangible assets and goodwill based on
their respective fair values as of the transaction date. This
amount represents the amortization of the basis difference gain
associated with intangible assets and property, plant and equipment
which is included in equity earnings (loss) over the estimated life
of the respective assets.
(3) 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 has no economic impact in dollar
terms.
Forum Energy Technologies,
Inc.
Reconciliation of GAAP to
non-GAAP financial information
(Unaudited)
Table 2 - Adjusting
items
Six months ended
June 30, 2019
June 30, 2018
(in millions, except per share
information)
Operating income
(loss)
EBITDA(1)
Net income (loss)
Operating income
(loss)
EBITDA(1)
Net income (loss)
As reported
$
5.0
$
37.6
$
(21.6
)
$
(18.4
)
$
54.7
$
12.7
% of revenue
1.0
%
7.3
%
(3.5
)%
10.4
%
Restructuring charges and other
5.2
5.2
5.2
4.3
4.3
4.6
Transaction expenses
0.7
0.7
0.7
1.4
1.4
1.4
Inventory and other working capital
adjustments
(0.1
)
(0.1
)
(0.1
)
6.1
6.1
6.1
Goodwill and intangible asset
impairment
—
—
—
14.5
14.5
14.5
Contingent consideration benefit
(4.6
)
(4.6
)
(4.6
)
—
—
—
Gain on contribution of subsea rentals
business
—
—
—
—
(33.5
)
(33.5
)
Amortization of basis difference for
equity method investment (2)
0.9
0.9
0.9
0.9
0.9
0.9
Loss (gain) on foreign exchange, net
(3)
—
0.4
0.4
—
(2.0
)
(2.0
)
Income tax expense (benefit) of
adjustments
—
—
(0.1
)
—
—
2.1
Impact of U.S. tax reform
—
—
—
—
—
(15.9
)
Valuation allowance on deferred tax
assets
—
—
5.9
—
—
—
As adjusted(1)
$
7.1
$
40.1
$
(13.3
)
$
8.8
$
46.4
$
(9.1
)
% of revenue
1.4
%
7.7
%
1.7
%
8.9
%
Diluted shares outstanding as reported
$
109.8
$
110.8
Diluted shares outstanding as adjusted
$
109.8
$
108.6
Diluted EPS - as reported
$
(0.20
)
$
0.11
Diluted EPS - as adjusted
$
(0.12
)
$
(0.08
)
(1) The Company believes that the
presentation of EBITDA, adjusted EBITDA, adjusted operating income,
adjusted net income 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) The difference between the fair value
of our interest in Ashtead and the book value of the underlying net
assets resulted in a non-operating gain due to this basis
difference which was allocated to fixed assets, intangible assets
and goodwill based on their respective fair values as of the
transaction date. This amount represents the amortization of the
basis difference gain associated with intangible assets and
property, plant and equipment which is included in equity earnings
(loss) over the estimated life of the respective assets.
(3) 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 has no economic impact in dollar terms.
Forum Energy Technologies,
Inc.
Reconciliation of GAAP to
non-GAAP financial information
(Unaudited)
Table 3 - Adjusting
Items
Three months ended
(in millions of dollars)
June 30, 2019
June 30, 2018
March 31, 2019
EBITDA reconciliation (1)
Net loss
$
(13.7
)
$
(15.3
)
$
(7.9
)
Interest expense
8.2
7.9
8.2
Depreciation and amortization
16.3
18.6
16.4
Income tax expense (benefit)
8.4
1.6
1.7
EBITDA
$
19.2
$
12.8
$
18.4
(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.
Table 4 - Adjusting
Items
Six months ended
(in millions of dollars)
June 30, 2019
June 30, 2018
EBITDA reconciliation (1)
Net loss
$
(21.6
)
$
12.7
Interest expense
16.4
15.9
Depreciation and amortization
32.7
37.3
Income tax expense (benefit)
10.1
(11.2
)
EBITDA
$
37.6
$
54.7
(1) 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.
Table 5 - Adjusting
items
Six months ended
(in millions of dollars)
June 30, 2019
June 30, 2018
Free cash flow, before acquisitions,
reconciliation (1)
Net cash provided by (used in) operating
activities
$
40.8
$
(25.7
)
Capital expenditures for property and
equipment
(9.2
)
(14.1
)
Proceeds from sale of property and
equipment
0.4
8.8
Free cash flow, before acquisitions
$
32.0
$
(31.0
)
(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)
June 30, 2019
June 30, 2018
March 31, 2019
Revenue:
$
%
$
%
$
%
Drilling Technologies
$
37.3
15.3
%
$
46.4
17.0
%
$
41.9
15.4
%
Downhole Technologies
28.8
11.7
%
26.6
9.7
%
30.4
11.2
%
Subsea Technologies
16.3
6.6
%
13.5
4.9
%
13.6
5.0
%
Drilling & Downhole
82.4
33.6
%
86.5
31.6
%
85.9
31.6
%
Stimulation and Intervention
46.9
19.1
%
60.5
22.1
%
51.4
18.9
%
Coiled Tubing
34.6
14.1
%
39.5
14.4
%
43.3
15.9
%
Completions
81.5
33.2
%
100.0
36.5
%
94.7
34.8
%
Production Equipment
33.0
13.4
%
35.3
12.9
%
36.6
13.5
%
Valve Solutions
50.3
20.5
%
53.3
19.4
%
55.4
20.3
%
Production
83.3
33.9
%
88.6
32.3
%
92.0
33.8
%
Eliminations
(1.6
)
(0.7
)%
(1.1
)
(0.4
)%
(0.8
)
(0.2
)%
Total Revenue
$
245.6
100.0
%
$
274.0
100.0
%
$
271.8
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190725005933/en/
Mark Conlon - Director - Investor Relations & Planning
281.949.2523 Mark.Conlon@f-e-t.com
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