- Revenue of $155 million, a 5% sequential increase
- Orders of $165 million and book-to-bill ratio of
1.06
- Net loss of $9 million and diluted EPS of negative
$1.62
- Adjusted EBITDA of $9 million, a sequential increase of $5
million, or 112%
Forum Energy Technologies, Inc. (NYSE: FET) today announced
first quarter 2022 revenue of $155 million, an increase of $7
million from the fourth quarter 2021. Net loss for the quarter was
$9 million, or $1.62 per diluted share, compared to a net loss of
$20 million, or $3.46 per diluted share, for the fourth quarter
2021. Excluding special items, adjusted net loss was $2.00 per
diluted share in the first quarter 2022 compared to an adjusted net
loss of $2.23 per diluted share in the fourth quarter 2021.
Adjusted EBITDA was $9 million in the first quarter 2022, an
improvement of approximately $5 million from the fourth quarter
2021.
Special items in the first quarter 2022, on a pre-tax basis,
included $6 million of foreign exchange gains partially offset by
$4 million of restructuring, transaction and other costs. See
Tables 1-5 for a reconciliation of GAAP to non-GAAP financial
information.
Neal Lux, President and Chief Executive Officer, remarked,
“Stronger industry fundamentals combined with outstanding execution
by our team drove FET's first quarter performance. We are
overcoming the supply chain issues experienced in the second half
of 2021 by investing in key raw materials and components to meet
growing demand. Price increases began to flow through the income
statement and we expect the trend to accelerate in future quarters.
With these efforts, EBITDA more than doubled on a sequential basis
to $9 million and was up 344% year-over-year.
“Demand for our products and advanced technology solutions
remains robust. We have achieved six consecutive quarters of
bookings in excess of revenue and our backlog is over $200 million
for the first time since 2019. Looking ahead, we anticipate our
backlog and continued order growth will further improve revenue and
EBITDA. We forecast second quarter revenue to be between $160 and
$170 million, and adjusted EBITDA of $11 to $14 million. On a full
year basis, we continue to expect adjusted EBITDA of $50 to $60
million.
“On a year-over-basis, revenue and adjusted EBITDA grew by 36%
and 344%, respectively. We are confident that this strong momentum
will continue in the second quarter and beyond. Our consumable
businesses will benefit from increased drilling and completions
activity. Furthermore, our customers‘ underinvestment in capital
equipment since 2014 has reduced the capacity of the oilfield
service industry. As a result, significant increases in activity
will require additional capital spending by our domestic and
international customers. This will translate to higher revenues for
FET and rapid profit growth due to our strong operating leverage
and net price increases.”
Segment Results
Drilling & Downhole segment revenue was $71 million, an
increase of 7% from the fourth quarter 2021, led by fulfillment of
subsea capital equipment orders for international customers, and
higher demand for drilling capital equipment in connection with
increasing activity levels. Orders were $71 million, a 17%
sequential increase which included significant order growth in both
our drilling and downhole product lines. Segment adjusted EBITDA
was $9 million, a $3 million sequential increase resulting from the
higher revenue levels and favorable sales mix. The Drilling &
Downhole segment designs and manufactures capital equipment and
consumable products for global well construction, artificial lift
and subsea markets.
Completions segment revenue was $53 million, a 3% sequential
increase driven by increased sales of our wireline products for the
well intervention market. Orders were $54 million, a sequential
increase of $1 million, or 2%, due to orders for new product
offerings in our stimulation and intervention product line. Segment
adjusted EBITDA was $5 million, in line with the fourth quarter.
The Completions segment designs and manufactures products for the
coiled tubing, wireline and stimulation markets.
Production segment revenue was $32 million, an increase of $1
million, or 2% from the fourth quarter 2021 driven by higher valve
sales into the downstream market. Orders in the first quarter were
$40 million, a 12% sequential decrease, due to full-year orders
received for well-site production equipment in the fourth quarter
2021 for fulfillment throughout 2022. Segment adjusted EBITDA was
negative $1 million, an improvement of $1 million from the fourth
quarter 2021. The Production segment designs and 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. FET
provides value added solutions that increase the safety and
efficiency of energy exploration and production. We are an
environmentally and socially responsible company headquartered in
Houston, TX with manufacturing, distribution, and service
facilities strategically located throughout the world. 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 severity and duration of the COVID-19
pandemic and related repercussions resulting from the negative
impact on demand for oil and natural gas, 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, 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)
2022
2021
2021
Revenue
$
155.2
$
114.5
$
148.1
Cost of sales
116.6
88.3
118.0
Gross profit
38.6
26.2
30.1
Operating expenses
Selling, general and administrative
expenses
44.3
41.5
42.9
Loss (gain) on disposal of assets and
other
—
(0.9
)
0.3
Total operating expenses
44.3
40.6
43.2
Operating loss
(5.7
)
(14.4
)
(13.1
)
Other expense (income)
Interest expense
7.6
9.2
7.9
Loss on extinguishment of debt
—
0.9
—
Foreign exchange losses (gains) and other,
net
(6.0
)
3.4
1.7
Total other expense
1.6
13.5
9.6
Loss before income taxes
(7.3
)
(27.9
)
(22.7
)
Income tax expense (benefit)
1.9
1.8
(3.1
)
Net loss (1)
$
(9.2
)
$
(29.7
)
$
(19.6
)
Weighted average shares
outstanding
Basic
5.7
5.6
5.7
Diluted
5.7
5.6
5.7
Loss per share
Basic
$
(1.62
)
$
(5.28
)
$
(3.46
)
Diluted
$
(1.62
)
$
(5.28
)
$
(3.46
)
(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)
2022
2021
Assets
Current assets
Cash and cash equivalents
$
20.6
$
46.9
Accounts receivable—trade, net
132.2
123.9
Inventories, net
263.8
241.7
Other current assets
39.7
34.2
Total current assets
456.3
446.7
Property and equipment, net of accumulated
depreciation
91.2
94.0
Operating lease assets
24.7
25.4
Intangible assets, net
210.9
217.4
Other long-term assets
7.8
7.8
Total assets
$
790.9
$
791.3
Liabilities and equity
Current liabilities
Current portion of long-term debt
$
0.8
$
0.9
Other current liabilities
191.3
174.8
Total current liabilities
192.1
175.7
Long-term debt, net of current portion
233.7
232.4
Other long-term liabilities
50.4
54.1
Total liabilities
476.2
462.2
Total equity
314.7
329.1
Total liabilities and
equity
$
790.9
$
791.3
Forum Energy Technologies,
Inc.
Condensed consolidated cash
flow information
(Unaudited)
Three Months Ended March
31,
(in millions of dollars)
2022
2021
Cash flows from operating
activities
Net loss
$
(9.2
)
$
(29.7
)
Depreciation and amortization
9.6
11.2
Loss on extinguishment of debt
—
0.9
Other noncash items and changes in working
capital
(25.3
)
16.3
Net cash used in operating
activities
(24.9
)
(1.3
)
Cash flows from investing
activities
Capital expenditures for property and
equipment
(0.8
)
(0.4
)
Proceeds from sale of business, property
and equipment
0.1
1.5
Net cash provided by (used in)
investing activities
(0.7
)
1.1
Cash flows from financing
activities
Borrowings of debt
95.9
—
Repayments of debt
(96.1
)
(27.3
)
Repurchases of stock
(0.4
)
(0.2
)
Net cash used in financing
activities
(0.6
)
(27.5
)
Effect of exchange rate changes on
cash
(0.1
)
(0.1
)
Net decrease in cash, cash equivalents
and restricted cash
$
(26.3
)
$
(27.8
)
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, 2022
March 31, 2021
December 31, 2021
March 31, 2022
March 31, 2021
December 31, 2021
Revenue
Drilling & Downhole
$
71.3
$
48.7
$
66.5
$
71.3
$
48.7
$
66.5
Completions
52.5
37.8
51.0
52.5
37.8
51.0
Production
31.5
28.0
30.9
31.5
28.0
30.9
Eliminations
(0.1
)
—
(0.3
)
(0.1
)
—
(0.3
)
Total revenue
$
155.2
$
114.5
$
148.1
$
155.2
$
114.5
$
148.1
Operating income (loss)
Drilling & Downhole
$
6.0
$
(4.5
)
$
2.5
$
5.6
$
(1.3
)
$
2.7
Operating Margin %
8.4
%
(9.2
)%
3.8
%
7.9
%
(2.7
)%
4.1
%
Completions
(0.7
)
0.1
(4.5
)
(0.7
)
(1.3
)
(0.7
)
Operating Margin %
(1.3
)%
0.3
%
(8.8
)%
(1.3
)%
(3.4
)%
(1.4
)%
Production
(1.8
)
(3.8
)
(3.1
)
(1.5
)
(2.9
)
(3.0
)
Operating Margin %
(5.7
)%
(13.6
)%
(10.0
)%
(4.8
)%
(10.4
)%
(9.7
)%
Corporate
(9.2
)
(7.1
)
(7.7
)
(5.5
)
(5.9
)
(6.9
)
Total segment operating loss
(5.7
)
(15.3
)
(12.8
)
(2.1
)
(11.4
)
(7.9
)
Other items not in segment operating loss
(1)
—
0.9
(0.3
)
0.1
0.2
(0.1
)
Total operating loss
$
(5.7
)
$
(14.4
)
$
(13.1
)
$
(2.0
)
$
(11.2
)
$
(8.0
)
Operating Margin %
(3.7
)%
(12.6
)%
(8.8
)%
(1.3
)%
(9.8
)%
(5.4
)%
EBITDA (2)
Drilling & Downhole
$
15.5
$
(3.7
)
$
4.1
$
9.1
$
3.0
$
6.2
EBITDA Margin %
21.7
%
(7.6
)%
6.2
%
12.8
%
6.2
%
9.3
%
Completions
4.7
6.6
1.0
4.9
4.6
4.9
EBITDA Margin %
9.0
%
17.5
%
2.0
%
9.3
%
12.2
%
9.6
%
Production
(1.0
)
(2.3
)
(2.0
)
(0.6
)
(1.3
)
(1.7
)
EBITDA Margin %
(3.2
)%
(8.2
)%
(6.5
)%
(1.9
)%
(4.6
)%
(5.5
)%
Corporate
(9.3
)
(8.1
)
(7.7
)
(4.5
)
(4.3
)
(5.2
)
Total EBITDA
$
9.9
$
(7.5
)
$
(4.6
)
$
8.9
$
2.0
$
4.2
EBITDA Margin %
6.4
%
(6.6
)%
(3.1
)%
5.7
%
1.7
%
2.8
%
(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, 2022
March 31, 2021
December 31, 2021
Orders
Drilling & Downhole
$
70.9
$
57.9
$
60.8
Completions
53.7
47.2
52.8
Production
40.4
32.9
46.1
Total orders
$
165.0
$
138.0
$
159.7
Revenue
Drilling & Downhole
$
71.3
$
48.7
$
66.5
Completions
52.5
37.8
51.0
Production
31.5
28.0
30.9
Eliminations
(0.1
)
—
(0.3
)
Total revenue
$
155.2
$
114.5
$
148.1
Book to bill ratio (1)
Drilling & Downhole
0.99
1.19
0.91
Completions
1.02
1.25
1.04
Production
1.28
1.18
1.49
Total book to bill ratio
1.06
1.21
1.08
(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, 2022
March 31, 2021
December 31, 2021
(in millions, except per share
information)
Operating loss
EBITDA (1)
Net loss
Operating loss
EBITDA (1)
Net loss
Operating loss
EBITDA (1)
Net loss
As reported
$
(5.7
)
$
9.9
$
(9.2
)
$
(14.4
)
$
(7.5
)
$
(29.7
)
$
(13.1
)
$
(4.6
)
$
(19.6
)
% of revenue
(3.7
)%
6.4
%
(12.6
)%
(6.6
)%
(8.8
)%
(3.1
)%
Restructuring, transaction and other
costs
3.7
3.7
3.7
2.6
2.6
2.6
1.8
1.8
1.8
Inventory and other working capital
adjustments
—
—
—
0.6
0.6
0.6
3.3
3.3
3.3
Loss on extinguishment of debt
—
—
—
—
0.9
0.9
—
—
—
Loss (gain) on foreign exchange, net
(2)
—
(5.8
)
(5.8
)
—
3.5
3.5
—
1.8
1.8
Stock-based compensation expense
—
1.1
—
—
1.9
—
—
1.9
—
As adjusted (1)
$
(2.0
)
$
8.9
$
(11.3
)
$
(11.2
)
$
2.0
$
(22.1
)
$
(8.0
)
$
4.2
$
(12.7
)
% of revenue
(1.3
)%
5.7
%
(9.8
)%
1.7
%
(5.4
)%
2.8
%
Diluted shares outstanding as reported
5.7
5.6
5.7
Diluted shares outstanding as adjusted
5.7
5.6
5.7
Diluted EPS - as reported
$
(1.62
)
$
(5.28
)
$
(3.46
)
Diluted EPS - as adjusted
$
(2.00
)
$
(3.95
)
$
(2.23
)
(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 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, 2022
March 31, 2021
December 31, 2021
EBITDA reconciliation (1)
Net loss
$
(9.2
)
$
(29.7
)
$
(19.6
)
Interest expense
7.6
9.2
7.9
Depreciation and amortization
9.6
11.2
10.2
Income tax expense
1.9
1.8
(3.1
)
EBITDA
$
9.9
$
(7.5
)
$
(4.6
)
(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, 2022
March 31, 2021
Free cash flow, before acquisitions,
reconciliation (1)
Net cash used in operating activities
$
(24.9
)
$
(1.3
)
Capital expenditures for property and
equipment
(0.8
)
(0.4
)
Proceeds from sale of property and
equipment
0.1
1.5
Free cash flow, before acquisitions
$
(25.6
)
$
(0.2
)
(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, 2022
March 31, 2021
December 31, 2021
Revenue:
$
%
$
%
$
%
Drilling Technologies
$
29.2
18.8
%
$
18.6
16.2
%
$
27.3
18.5
%
Downhole Technologies
19.6
12.6
%
15.1
13.2
%
19.9
13.4
%
Subsea Technologies
22.5
14.5
%
15.0
13.1
%
19.3
13.0
%
Drilling & Downhole
71.3
45.9
%
48.7
42.5
%
66.5
44.9
%
Stimulation and Intervention
30.1
19.4
%
18.7
16.3
%
28.1
18.9
%
Coiled Tubing
22.4
14.4
%
19.1
16.7
%
22.9
15.5
%
Completions
52.5
33.8
%
37.8
33.0
%
51.0
34.4
%
Production Equipment
15.2
9.8
%
14.4
12.6
%
14.9
10.1
%
Valve Solutions (1)
16.3
10.5
%
13.6
11.9
%
16.0
10.8
%
Production (1)
31.5
20.3
%
28.0
24.5
%
30.9
20.9
%
Eliminations
(0.1
)
—
%
—
—
%
(0.3
)
(0.2
)%
Total Revenue
$
155.2
100.0
%
$
114.5
100.0
%
$
148.1
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220505005912/en/
Lyle Williams Executive Vice President and Chief Financial
Officer 713.351.7920 lyle.williams@f-e-t.com
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