Full Year 2022 Highlights and 2023 Guidance
- Revenue: $700 million, a 29% year-over-year
increase
- Orders: $781 million and book-to-bill ratio of 112%
- Net Income: $4 million and diluted EPS of $0.62
- Adjusted EBITDA: $59 million, a 194% increase from
2021
- Second half 2022 Free Cash Flow: $62 million
- 2023 Adjusted EBITDA guidance: $80 - $100 million
Forum Energy Technologies, Inc. (NYSE: FET) today announced
fourth quarter 2022 revenue of $191 million, a $9 million increase
from the third quarter 2022. Orders received were $215 million,
with a book-to-bill ratio of 113%. The fourth quarter net loss was
$13 million, or $2.22 per diluted share, compared to net income of
$17 million, or $1.82 per diluted share, for the third quarter
2022. Excluding $10 million, or $1.77 per share, for special items,
adjusted net loss was $0.45 per diluted share, compared to an
adjusted net loss of $0.25 per diluted share in the third
quarter.
Special items in the quarter, on a pre-tax basis, included $14
million of foreign exchange losses, $3 million of restructuring,
transaction and other costs and $7 million of gain on our
previously announced sale-leaseback transaction. See Tables 1-6 for
a reconciliation of GAAP to non-GAAP financial information.
Neal Lux, President and Chief Executive Officer, remarked,
“Activity increased across all seven product lines and 5%
sequential fourth quarter revenue growth exceeded the increase in
rig count. In addition, FET secured strong bookings of $215 million
and backlog is at its highest level since the fourth quarter of
2018. Incremental profitability was negatively impacted by elevated
project costs in the Subsea Technologies and Coiled Tubing product
lines, and additional freight expense. Despite these challenges,
adjusted EBITDA of $17 million was within our formal guidance
range. Strong fourth quarter free cash flow of $45 million
benefited from the November 2022 sale-leaseback transaction and
continued working capital efficiency.
“On a full year basis, adjusted EBITDA of $59 million was at the
upper end of the guidance we provided in February 2022. Our
impressive 194% adjusted EBITDA growth rate was among the best of
FET's peer group. In addition, our asset-lite business generated
$34 million of cash flow from operations in the second half of the
year. Finally, in December 2022, FET satisfied the mandatory
conversion requirements under our 9.00% Convertible Senior Secured
Notes. As a result, in January, our long-term debt was reduced by
47.8%, and our year-end leverage ratio decreased from 3.5x to 1.4x,
proforma for the conversion. These strong results reflect our
team’s elite performance, hard work, and dedication to the strategy
we adopted at the beginning of the year.
“Looking ahead, on-going global supply and demand imbalances for
commodities are creating long-term opportunities for energy
investment that will benefit FET. Given the industry’s focus on
profitability and shareholder returns, we anticipate modest U.S.
rig count growth during 2023. However, equipment utilization and
service intensity are expected to remain at extremely high levels.
In addition, offshore and international market activity growth,
particularly in the Middle East and Latin America, should
accelerate in 2023 and serve as the engine that sustains a
multi-year investment cycle. With these assumptions, our EBITDA
guidance range for 2023 is $80 to $100 million.”
Segment Results (unless
otherwise noted, comparisons are fourth quarter 2022 versus third
quarter 2022)
Drilling & Downhole segment revenue was $81 million, a 7%
increase driven by higher demand for our drilling capital
equipment. Orders were $87 million, a 19% increase, which included
significant orders in our Drilling Technologies product line for
new drilling rigs and upgrade projects. Segment adjusted EBITDA was
$11 million, a $2 million decrease primarily related to increased
project costs on a Subsea project and increased freight costs.
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, a 3% increase,
primarily due to higher demand for pressure control equipment,
power ends, and radiators to support increased hydraulic fracturing
activity. Orders were $81 million, a 3% increase. Segment adjusted
EBITDA was $9 million, down $1 million, as higher revenues were
offset by line pipe project costs in Coiled Tubing, sales mix, and
higher freight costs. The Completions segment designs and
manufactures products for the coiled tubing, wireline and
stimulation markets.
Production segment revenue was $36 million, a 5% increase,
primarily due to higher shipments of production equipment. Orders
were $47 million and comparable to the third quarter. Segment
adjusted EBITDA was $2 million, up $1 million, due to favorable
sales mix and increased volume in the Production Equipment product
line. 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.
Forum Energy Technologies, Inc. ("FET") is a global company,
serving the crude oil, natural gas, 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.
Non-GAAP Financial Measures
The Company presents its financial results in accordance with
GAAP. However, management believes that non-GAAP measures are
useful tools for evaluating the Company's overall financial
performance. Not all companies define these measures in the same
way. In addition, these non-GAAP financial measures are not a
substitute for those prepared in accordance with GAAP and should,
therefore, be considered only as a supplement. Please see the
attached schedules for reconciliations between GAAP and the
non-GAAP financial measures used in this press release.
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 net income (loss)
(Unaudited)
Three months ended
December 31,
September 30,
(in millions of dollars, except per share
information)
2022
2021
2022
Revenues
$
190.7
$
148.1
$
181.8
Cost of sales
140.7
118.0
130.4
Gross profit
50.0
30.1
51.4
Operating expenses
Selling, general and administrative
expenses
48.0
42.9
43.7
Gain on sale-leaseback transactions
(7.0
)
—
—
Loss (gain) on disposal of assets and
other
(0.3
)
0.3
—
Total operating expenses
40.7
43.2
43.7
Operating income (loss)
9.3
(13.1
)
7.7
Other expense (income)
Interest expense
7.9
7.9
8.1
Foreign exchange losses (gains) and other,
net
12.5
1.7
(18.2
)
Total other (income) expense, net
20.4
9.6
(10.1
)
Income (loss) before income
taxes
(11.1
)
(22.7
)
17.8
Income tax expense (benefit)
1.7
(3.1
)
1.3
Net income (loss) (1)
$
(12.8
)
$
(19.6
)
$
16.5
Weighted average shares
outstanding
Basic
5.8
5.7
5.8
Diluted
5.8
5.7
10.6
Earnings (loss) per share
Basic
$
(2.22
)
$
(3.46
)
$
2.85
Diluted
$
(2.22
)
$
(3.46
)
$
1.82
(1) Refer to Table 1 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Condensed consolidated
statements of net income (loss)
(Unaudited)
Year ended
December 31,
(in millions of dollars, except per share
information)
2022
2021
Revenues
$
699.9
$
541.1
Cost of sales
511.4
417.8
Gross profit
188.5
123.3
Operating expenses
Selling, general and administrative
expenses
179.5
168.9
Gain on sale-leaseback transactions
(7.0
)
—
Gain on disposal of assets and other
(1.3
)
(1.1
)
Total operating expenses
171.2
167.8
Operating income (loss)
17.3
(44.5
)
Other expense (income)
Interest expense
31.5
32.0
Loss on extinguishment of debt
—
5.3
Foreign exchange losses (gains) and other,
net
(24.5
)
0.2
Total other expense
7.0
37.5
Income (loss) before income
taxes
10.3
(82.0
)
Income tax expense
6.6
0.7
Net income (loss) (1)
$
3.7
$
(82.7
)
Weighted average shares
outstanding
Basic
5.7
5.6
Diluted
6.0
5.6
Earnings (loss) per share
Basic
$
0.65
$
(14.65
)
Diluted
$
0.62
$
(14.65
)
(1) Refer to Table 2 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Condensed consolidated balance
sheets
(Unaudited)
(in millions of dollars)
December 31,
2022
December 31,
2021
Assets
Current assets
Cash and cash equivalents
$
51.0
$
46.9
Accounts receivable—trade, net
154.2
123.9
Inventories, net
269.8
241.7
Other current assets
37.9
34.2
Total current assets
512.9
446.7
Property and equipment, net of accumulated
depreciation
63.0
94.0
Operating lease assets
53.8
25.4
Intangibles, net
191.5
217.4
Other long-term assets
10.1
7.8
Total assets
$
831.3
$
791.3
Liabilities and equity
Current liabilities
Current portion of long-term debt
$
0.8
$
0.9
Other current liabilities
209.7
174.8
Total current liabilities
210.5
175.7
Long-term debt, net of current portion
239.1
232.4
Other long-term liabilities
74.6
54.1
Total liabilities
524.2
462.2
Total equity
307.1
329.1
Total liabilities and equity
$
831.3
$
791.3
Forum Energy Technologies,
Inc.
Condensed consolidated cash
flow information
(Unaudited)
Year ended
December 31,
(in millions of dollars)
2022
2021
Cash flows from operating
activities
Net income (loss)
$
3.7
$
(82.7
)
Depreciation and amortization
37.1
42.2
Inventory write downs
2.7
8.1
Gain on sale-leaseback transactions
(7.0
)
—
Loss on extinguishment of debt
—
5.3
Other noncash items and changes in working
capital
(53.6
)
11.3
Net cash used in operating
activities
(17.1
)
(15.8
)
Cash flows from investing
activities
Capital expenditures for property and
equipment
(7.5
)
(2.4
)
Proceeds from sale of business
—
(1.3
)
Acquisition of businesses, net of cash
acquired
(0.5
)
(3.4
)
Proceeds from settlement of note
receivable
—
10.8
Proceeds from sale-leaseback
transactions
32.1
—
Proceeds from the sale of property and
equipment
3.0
7.0
Net cash provided by investing
activities
27.1
10.7
Cash flows from financing
activities
Borrowings of debt
556.6
—
Repayments of debt
(557.8
)
(14.6
)
Cash paid to repurchase 2025 Notes
—
(58.6
)
Repurchases of stock
(3.8
)
(1.4
)
Deferred financing costs
—
(1.6
)
Net cash used in investing
activities
(5.0
)
(76.2
)
Effect of exchange rate changes on
cash
(0.8
)
(0.5
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
$
4.2
$
(81.8
)
Forum Energy Technologies,
Inc.
Supplemental schedule -
Segment information
(Unaudited)
As Reported
As Adjusted (3)
Three months ended
Three months ended
(in millions of dollars)
December 31,
2022
December 31,
2021
September 30,
2022
December 31,
2022
December 31,
2021
September 30,
2022
Revenues
Drilling & Downhole
$
81.1
$
66.5
$
75.7
$
81.1
$
66.5
$
75.7
Completions
74.1
51.0
72.2
74.1
51.0
72.2
Production
35.9
30.9
34.2
35.9
30.9
34.2
Eliminations
(0.4
)
(0.3
)
(0.3
)
(0.4
)
(0.3
)
(0.3
)
Total revenues
$
190.7
$
148.1
$
181.8
$
190.7
$
148.1
$
181.8
Operating income (loss)
Drilling & Downhole
$
8.2
$
2.5
$
9.5
$
8.1
$
2.7
$
9.8
Operating margin %
10.1
%
3.8
%
12.5
%
10.0
%
4.1
%
12.9
%
Completions
2.8
(4.5
)
5.9
3.8
(0.7
)
4.8
Operating margin %
3.8
%
(8.8
)%
8.2
%
5.1
%
(1.4
)%
6.6
%
Production
0.8
(3.1
)
0.7
0.9
(3.0
)
0.6
Operating margin %
2.2
%
(10.0
)%
2.0
%
2.5
%
(9.7
)%
1.8
%
Corporate
(9.8
)
(7.7
)
(8.4
)
(7.1
)
(6.9
)
(7.3
)
Total segment operating income
(loss)
2.0
(12.8
)
7.7
5.7
(7.9
)
7.9
Other items not in segment operating
income (loss) (1)
7.3
(0.3
)
—
0.3
(0.1
)
—
Total operating income (loss)
$
9.3
$
(13.1
)
$
7.7
$
6.0
$
(8.0
)
$
7.9
Operating margin %
4.9
%
(8.8
)%
4.2
%
3.1
%
(5.4
)%
4.3
%
EBITDA (2)
Drilling & Downhole
$
5.8
$
4.1
$
27.8
$
11.2
$
6.2
$
12.8
EBITDA margin %
7.2
%
6.2
%
36.7
%
13.8
%
9.3
%
16.9
%
Completions
8.1
1.0
12.1
9.4
4.9
10.3
EBITDA margin %
10.9
%
2.0
%
16.8
%
12.7
%
9.6
%
14.3
%
Production
1.5
(2.0
)
1.5
1.7
(1.7
)
1.2
EBITDA margin %
4.2
%
(6.5
)%
4.4
%
4.7
%
(5.5
)%
3.5
%
Corporate
(9.8
)
(7.7
)
(6.4
)
(5.8
)
(5.2
)
(6.5
)
Total EBITDA
$
5.6
$
(4.6
)
$
35.0
$
16.5
$
4.2
$
17.8
EBITDA margin %
2.9
%
(3.1
)%
19.3
%
8.7
%
2.8
%
9.8
%
(1) Includes gain on sale-leaseback
transaction and gain 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 -
Segment information
(Unaudited)
As Reported
As Adjusted (3)
Year ended
Year ended
(in millions of dollars)
December 31,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Revenues
Drilling & Downhole
$
304.6
$
239.9
$
304.6
$
239.9
Completions
265.0
185.0
265.0
185.0
Production
131.5
116.7
131.5
116.7
Eliminations
(1.2
)
(0.5
)
(1.2
)
(0.5
)
Total revenues
$
699.9
$
541.1
$
699.9
$
541.1
Operating income (loss)
Drilling & Downhole
$
32.2
$
4.7
$
32.5
$
9.9
Operating margin %
10.6
%
2.0
%
10.7
%
4.1
%
Completions
11.6
(4.5
)
11.0
(2.1
)
Operating margin %
4.4
%
(2.4
)%
4.2
%
(1.1
)%
Production
(0.4
)
(14.4
)
(0.3
)
(12.2
)
Operating margin %
(0.3
)%
(12.3
)%
(0.2
)%
(10.5
)%
Corporate
(34.3
)
(31.3
)
(26.5
)
(25.6
)
Total segment operating income
(loss)
9.1
(45.5
)
16.7
(30.0
)
Other items not in segment operating
income (loss) (1)
8.2
1.0
0.6
—
Total operating income (loss)
$
17.3
$
(44.5
)
$
17.3
$
(30.0
)
Operating margin %
2.5
%
(8.2
)%
2.5
%
(5.5
)%
EBITDA (2)
Drilling & Downhole
$
72.8
$
18.4
$
45.2
$
25.3
EBITDA margin %
23.9
%
7.7
%
14.8
%
10.5
%
Completions
34.2
19.5
33.3
21.0
EBITDA margin %
12.9
%
10.5
%
12.6
%
11.4
%
Production
3.4
(9.3
)
2.9
(7.0
)
EBITDA margin %
2.6
%
(8.0
)%
2.2
%
(6.0
)%
Corporate
(31.5
)
(36.4
)
(22.7
)
(19.3
)
Total EBITDA
$
78.9
$
(7.8
)
$
58.7
$
20.0
EBITDA margin %
11.3
%
(1.4
)%
8.4
%
3.7
%
(1) Includes gain on sale-leaseback
transaction and gain 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 2 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Supplemental schedule - Orders
information
(Unaudited)
Three months ended
(in millions of dollars)
December 31,
2022
December 31,
2021
September 30,
2022
Orders
Drilling & Downhole
$
87.2
$
60.8
$
73.3
Completions
81.4
52.8
78.7
Production
46.5
46.1
45.7
Total orders
$
215.1
$
159.7
$
197.7
Revenues
Drilling & Downhole
$
81.1
$
66.5
$
75.7
Completions
74.1
51.0
72.2
Production
35.9
30.9
34.2
Eliminations
(0.4
)
(0.3
)
(0.3
)
Total revenues
$
190.7
$
148.1
$
181.8
Book to bill ratio (1)
Drilling & Downhole
1.08
0.91
0.97
Completions
1.10
1.04
1.09
Production
1.30
1.49
1.34
Total book to bill ratio
1.13
1.08
1.09
(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
December 31, 2022
December 31, 2021
September 30, 2022
(in millions of dollars, except per share
information)
Operating (income)
loss
EBITDA (1)
Net income (loss)
Operating (income)
loss
EBITDA (1)
Net income (loss)
Operating (income)
loss
EBITDA (1)
Net income (loss)
As reported
$
9.3
$
5.6
$
(12.8
)
$
(13.1
)
$
(4.6
)
$
(19.6
)
$
7.7
$
35.0
$
16.5
% of revenue
4.9
%
2.9
%
(8.8
)%
(3.1
)%
4.2
%
19.3
%
Restructuring, transaction and other
costs
2.7
2.7
2.7
1.8
1.8
1.8
1.0
1.0
1.0
Inventory and other working capital
adjustments
0.2
0.2
0.2
3.3
3.3
3.3
(0.8
)
(0.8
)
(0.8
)
Stock-based compensation expense
0.8
1.5
0.8
—
1.9
—
—
0.8
—
Loss (gain) on foreign exchange, net
(2)
—
13.5
13.5
—
1.8
1.8
—
(18.2
)
(18.2
)
Gain on sale-leaseback transactions
(7.0
)
(7.0
)
(7.0
)
—
—
—
—
—
—
As adjusted(1)
$
6.0
$
16.5
$
(2.6
)
$
(8.0
)
$
4.2
$
(12.7
)
$
7.9
$
17.8
$
(1.5
)
% of revenue
3.1
%
8.7
%
(5.4
)%
2.8
%
4.3
%
9.8
%
Diluted shares outstanding as reported
5.8
5.7
10.6
Diluted shares outstanding as adjusted
5.8
5.7
6.0
Diluted EPS - as reported
$
(2.22
)
$
(3.46
)
$
1.82
Diluted EPS - as adjusted
$
(0.45
)
$
(2.23
)
$
(0.25
)
(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) 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
Year ended
December 31, 2022
December 31, 2021
(in millions of dollars, except per share
information)
Operating (income)
loss
EBITDA (1)
Net income (loss)
Operating (income)
loss
EBITDA (1)
Net income (loss)
As reported
$
17.3
$
78.9
$
3.7
$
(44.5
)
$
(7.8
)
$
(82.7
)
% of revenue
2.5
%
11.3
%
(8.2
)%
(1.4
)%
Restructuring, transaction and other
costs
8.9
8.9
8.9
9.5
9.5
9.5
Inventory and other working capital
adjustments
(2.7
)
(2.7
)
(2.7
)
5.0
5.0
5.0
Stock-based compensation expense
0.8
4.0
0.8
—
7.6
—
Loss on extinguishment of debt
—
—
—
—
5.3
5.3
Loss (gain) on foreign exchange, net
(2)
—
(23.4
)
(23.4
)
—
0.4
0.4
Gain on sale-leaseback transactions
(7.0
)
(7.0
)
(7.0
)
—
—
—
As adjusted (1)
$
17.3
$
58.7
$
(19.7
)
$
(30.0
)
$
20.0
$
(62.5
)
% of revenue
2.5
%
8.4
%
(5.5
)%
3.7
%
Diluted shares outstanding as reported
6.0
5.6
Diluted shares outstanding as adjusted
6.0
5.6
Diluted EPS - as reported
$
0.62
$
(14.65
)
Diluted EPS - as adjusted
$
(3.28
)
$
(11.16
)
(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) 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)
December 31,
2022
December 31,
2021
September 30,
2022
EBITDA reconciliation (1)
Net income (loss)
$
(12.8
)
$
(19.6
)
$
16.5
Interest expense
7.9
7.9
8.1
Depreciation and amortization
8.8
10.2
9.1
Income tax benefit
1.7
(3.1
)
1.3
EBITDA
$
5.6
$
(4.6
)
$
35.0
(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 4 - Adjusting
Items
Year ended
(in millions of dollars)
December 31,
2022
December 31,
2021
EBITDA reconciliation (1)
Net income (loss)
$
3.7
$
(82.7
)
Interest expense
31.5
32.0
Depreciation and amortization
37.1
42.2
Income tax benefit
6.6
0.7
EBITDA
$
78.9
$
(7.8
)
(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.
Free cash flow
(Unaudited)
Table 5 - Adjusting
items
Year ended
(in millions of dollars)
December 31,
2022
December 31,
2021
Free cash flow, before acquisitions,
reconciliation (1)
Net cash used in operating activities
$
(17.1
)
$
(15.8
)
Capital expenditures for property and
equipment
(7.5
)
(1.8
)
Proceeds from sale-leaseback
transactions
32.1
—
Proceeds from sale of property and
equipment
3.0
7.0
Free cash flow, before acquisitions
$
10.5
$
(10.6
)
(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.
Leverage Ratio (1)
(Unaudited)
Table 6 - Adjusting
items
(in millions of dollars)
December 31,
2022
Pro-forma post
conversion
2025 Notes (2)
$
257.0
$
134.2
Less: Cash and cash equivalents
51.0
51.0
Net debt
$
206.0
$
83.2
Adjusted EBITDA
$
58.7
$
58.7
Leverage Ratio
3.5
1.4
(1) The Company believes leverage ratio is
an important measure because it represents the Company's ability to
meet its financial obligations.
(2) Represents our outstanding 9.00%
convertible senior secured notes due August 2025. Subsequently in
January 2023, $122.8 million of principal amount was converted into
approximately 4.5 million shares of our common stock.
Forum Energy Technologies,
Inc.
Supplemental schedule -
Product line revenue
(Unaudited)
Three months ended
(in millions of dollars)
December 31,
2022
December 31,
2021
September 30,
2022
Revenues
$
%
$
%
$
%
Drilling Technologies
$
42.5
22.2
%
$
27.3
18.5
%
$
38.2
21.0
%
Downhole Technologies
22.1
11.6
%
19.9
13.4
%
21.9
12.0
%
Subsea Technologies
16.5
8.7
%
19.3
13.0
%
15.6
8.6
%
Drilling & Downhole
81.1
42.5
%
66.5
44.9
%
75.7
41.6
%
Stimulation and Intervention
45.2
23.7
%
28.1
18.9
%
43.6
24.0
%
Coiled Tubing
28.9
15.2
%
22.9
15.5
%
28.6
15.7
%
Completions
74.1
38.9
%
51.0
34.4
%
72.2
39.7
%
Production Equipment
19.9
10.4
%
14.9
10.1
%
18.5
10.2
%
Valve Solutions
16.0
8.4
%
16.0
10.8
%
15.7
8.6
%
Production
35.9
18.8
%
30.9
20.9
%
34.2
18.8
%
Eliminations
(0.4
)
(0.2
)%
(0.3
)
(0.2
)%
(0.3
)
(0.1
)%
Total revenues
$
190.7
100.0
%
$
148.1
100.0
%
$
181.8
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230220005294/en/
Rob Kukla Director of Investor Relations 281.994.3763
rob.kukla@f-e-t.com
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