- Revenue of $272 million in
1Q19
- Diluted EPS of $(0.07) and adjusted
EPS of $(0.04) in 1Q19
- Net loss of $8 million and adjusted
EBITDA of $22 million in 1Q19
- Cash flow from operations of $18
million and free cash flow of $14 million in 1Q19
Forum Energy Technologies, Inc. (NYSE: FET) today announced
first quarter 2019 revenue of $272 million, a decrease of $1
million from the fourth quarter 2018. Net loss for the quarter was
$8 million, or $0.07 per diluted share, compared to net loss of
$384 million, or $3.52 per diluted share, for the fourth quarter
2018. Excluding $3 million, or $0.03 per share of special items,
adjusted net loss was $0.04 per diluted share in the first quarter
2019 compared to adjusted net income of $0.08 per diluted share in
the fourth quarter 2018. Adjusted EBITDA for the first quarter was
$22 million, a 4% sequential improvement from $21 million in the
fourth quarter 2018.
Special items in the first quarter 2019 included pre-tax charges
of $5 million for restructuring and $2 million of foreign exchange
losses, partially offset by a $5 million gain due to a reduction in
contingent consideration. See Tables 1-3 for a reconciliation of
GAAP to non-GAAP financial information.
In the first quarter 2019, we changed our reporting segments in
order to align with business activity drivers and the manner in
which we review and evaluate operating performance. Forum now
operates in the following three reporting segments: Drilling &
Downhole, Completions and Production. This move better aligns with
the key phases of the well cycle and provides improved operating
efficiencies. Historically, we operated in three business segments:
Drilling & Subsea, Completions, and Production &
Infrastructure. We have moved the Downhole product line from
Completions to Drilling & Subsea to form the new Drilling &
Downhole segment. Completions retains the Stimulation &
Intervention and Coiled Tubing product lines. Finally, we renamed
Production & Infrastructure as the Production segment. These
changes are reflected on a retrospective basis in accordance with
generally accepted accounting principles. See the supplemental
schedules for the historical quarterly results of the three new
reporting segments for 2018.
Segment Results
Drilling & Downhole segment revenue was $86 million, a
decrease of $3 million, or 3%, from the fourth quarter 2018,
primarily due to a lower rig count in North America, partially
offset by continued market penetration of our artificial lift
products. New inbound orders in the first quarter were $82 million,
an 8% decrease from the fourth 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 $95 million, an increase of $1
million, or 1% sequentially, primarily due to the delivery of an
international offshore coiled line pipe project, partially offset
by lower sales of hydraulic fracturing equipment for new fleets.
New inbound orders in the first quarter were $80 million, a
decrease of $26 million, or 24% from the fourth quarter 2018, due
to lower orders for stimulation and intervention products. We are
beginning to see a shift in customer spending in US land from
capital equipment to short cycle consumable products to support the
wear and tear on the active fleets. These orders are typically
booked and shipped in the same quarter. The Completions segment
designs and manufactures products for the completion, stimulation
and intervention markets.
Production segment revenue was $92 million, a 1% increase from
the fourth quarter 2018, on higher sales of upstream and midstream
valves in North America. New inbound orders in the first quarter
were $80 million, a 6% increase sequentially, due to improved
orders for valves, partially offset by delayed orders of production
equipment. The Production segment manufactures land well site
production equipment, desalination refinery equipment, and a wide
range of valves for energy, industrial and mining customers.
Review and Outlook
Cris Gaut, Forum’s Chairman and Chief Executive Officer,
remarked, “I am pleased to see the excellent efforts of our
employees paying off with strong first quarter results and a good
start to the year. Revenue in the first quarter was $272 million
and our adjusted EBITDA was $22 million, an increase of 4% over the
fourth quarter. Adjusted EBITDA and margin percentage improved in
all three segments due to efficiency gains and good cost
control.
“New orders in the first quarter were $242 million, resulting in
a book to bill ratio of 89%. Although customer order activity began
the year at a slow pace, it accelerated in the month of March and
we have received several sizeable orders early in the second
quarter. With continued high levels of drilling and completion
activity in the US onshore market, but greater constraints on
customer spending for new capital equipment, we are seeing a shift
in demand from capital equipment to our consumable and replacement
products that allow our customers to keep their active equipment
working efficiently.
“Forum’s strategy to manage the business for success despite the
market’s volatility and to generate free cash flow on a consistent
and continuous basis is progressing well. In the first quarter, our
free cash flow was $14 million, in line with our expectations. As
evidenced by our inventory reductions in the last two quarters, our
plans to turn excess inventory to cash are progressing well. We
ended the quarter with approximately $224 million of total
liquidity and we expect to use our free cash flow to reduce
debt.”
Recent Events
In the second quarter, Forum received a significant order from a
major operator in the Permian basin for production equipment to be
delivered throughout the year.
Also in the second quarter, Forum received a large subsea
capital equipment order for a defense contractor.
Forum received orders for three Perry XLX-C work-class remotely
operated vehicle systems for oil and gas operations, two in the
fourth quarter of 2018 and one in the first quarter of 2019.
Conference Call
Information
Forum's conference call is scheduled for Friday, April 26, 2019
at 9:00 AM CDT. During the call, the Company intends to discuss
first 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 8747933.
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
8747933.
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 March 31,
December 31, (in millions, except per share information)
2019 2018 2018 Revenue $ 271.8 $
250.2 $ 272.9 Cost of sales 201.7 182.9 231.0
Gross profit 70.1 67.3 41.9
Operating
expenses Selling, general and administrative expenses 69.0 72.1
71.6 Transaction expenses 0.6 1.3 1.3 Goodwill and intangible asset
impairment — — 349.0 Contingent consideration benefit (4.6 ) — —
Loss (gain) on disposal of assets and other — (0.4 ) 1.1
Total operating expenses 65.0 73.0 423.0 Earnings (loss)
from equity investment (0.8 ) (1.0 ) 0.1
Operating income
(loss) 4.3 (6.7 ) (381.0 )
Other expense (income)
Interest expense 8.2 8.1 8.7 Foreign exchange losses (gains) and
other, net 2.3 3.5 (2.6 ) Gain on contribution of subsea rentals
business — (33.5 ) — Total other (income) expense,
net 10.5 (21.9 ) 6.1
Income (loss) before income
taxes (6.2 ) 15.2 (387.1 ) Income tax expense (benefit) 1.7
(12.9 ) (3.4 )
Net loss (1) $ (7.9 ) $ 28.1
$ (383.7 )
Weighted average shares outstanding
Basic 109.6 108.4 109.1 Diluted 109.6 110.9 109.1
Earnings (loss) per share Basic $ (0.07 ) $ 0.26 $ (3.52 )
Diluted $ (0.07 ) $ 0.25 $ (3.52 ) (1) Refer to Table 1 for
schedule of adjusting items.
Forum Energy
Technologies, Inc. Condensed consolidated balance sheets
(Unaudited) (in millions of dollars)
March 31, 2019 December 31, 2018
Assets Current assets Cash and cash equivalents $ 29.7 $
47.2 Accounts receivable—trade, net 203.6 206.1 Inventories, net
471.6 479.0 Other current assets 37.9 33.7 Total current
assets 742.8 766.0 Property and equipment, net of accumulated
depreciation 173.2 177.4 Operating lease assets 55.4 — Goodwill and
other intangibles, net 821.0 828.7 Investment in unconsolidated
subsidiary 45.1 45.0 Other long-term assets 12.7 12.6
Total assets $ 1,850.2 $ 1,829.7
Liabilities and
equity Current liabilities Current portion of long-term debt $
0.1 $ 1.2 Other current liabilities 233.6 235.7 Total
current liabilities 233.7 236.9 Long-term debt, net of current
portion 487.9 517.5 Other long-term liabilities 97.5 45.1
Total liabilities 819.1 799.5 Total equity 1,031.1
1,030.2
Total liabilities and equity $ 1,850.2
$ 1,829.7
Forum Energy Technologies, Inc.
Condensed consolidated cash flow information
(Unaudited) Three Months Ended March 31, (in
millions of dollars)
2019 2018 Cash
flows from operating activities Net income (loss) $ (7.9
) $ 28.1 Depreciation and amortization 16.4 18.6 Other noncash
items and changes in working capital 9.4 (66.0 )
Net cash
provided by (used in) operating activities 17.9 (19.3 )
Cash flows from investing activities Capital expenditures
for property and equipment (3.7 ) (5.1 ) Proceeds from sale of
business, property and equipment 0.1 5.1
Net cash
used in investing activities (3.6 ) —
Cash flows from
financing activities Repayment of debt, net of borrowings (31.1
) (50.7 ) Repurchases of stock (0.9 ) (2.0 )
Net cash used in
financing activities (32.0 ) (52.7 ) Effect of
exchange rate changes on cash 0.2 (0.9 )
Net decrease in
cash, cash equivalents and restricted cash $ (17.5 ) $ (72.9 )
Forum Energy Technologies, Inc.
Supplemental schedule - Segment information
(Unaudited) As Reported As
Adjusted (4) Three months ended Three months
ended (in millions of dollars)
March 31,
2019 March 31, 2018 December
31, 2018 March 31, 2019 March
31, 2018 December 31, 2018
Revenue Drilling & Downhole $ 85.9 $ 76.9 $ 88.6 $ 85.9
$ 76.9 $ 88.6 Completions 94.7 88.1 94.0 94.7 88.1 94.0 Production
92.0 86.4 91.1 92.0 86.4 91.1 Eliminations (0.8 ) (1.2 ) (0.8 )
(0.8 ) (1.2 ) (0.8 )
Total revenue $ 271.8 $ 250.2
$ 272.9 $ 271.8 $ 250.2 $ 272.9
Operating income (loss) Drilling & Downhole (1) $
(2.5 ) $ (10.3 ) $ (10.9 ) $ 0.3 $ (8.4 ) $ (2.2 ) Operating income
margin % (2.9 )% (13.4 )% (12.3 )% 0.3 % (10.9 )% (2.5 )%
Completions 6.9 9.0 (2.8 ) 7.6 12.1 7.0 Operating income margin %
7.3 % 10.2 % (3.0 )% 8.0 % 13.7 % 7.4 % Production 4.3 4.2 (7.1 )
4.6 4.2 3.3 Operating income margin % 4.7 % 4.9 % (7.8 )% 5.0 % 4.9
% 3.6 % Corporate (8.4 ) (8.7 ) (8.8 ) (7.3 ) (8.3 ) (5.7 )
Total segment operating income (loss) 0.3 (5.8 ) (29.6 ) 5.2
(0.4 ) 2.4 Other items not in segment operating income (2) 4.0
(0.9 ) (351.4 ) 0.1 0.6 (0.3 )
Total
operating income (loss) $ 4.3 $ (6.7 ) $ (381.0 ) $ 5.3
$ 0.2 $ 2.1 Operating income margin % 1.6 %
(2.7 )% (139.6 )% 1.9 % 0.1 % 0.8 %
EBITDA (3)
Drilling & Downhole $ 1.9 $ 28.1 $ (350.0 ) $ 6.0 $ (0.1 ) $
5.4 EBITDA Margin % 2.2 % 36.5 % (395.0 )% 7.0 % (0.1 )% 6.1 %
Completions 15.5 17.2 5.4 16.4 20.3 15.7 EBITDA Margin % 16.4 %
19.5 % 5.7 % 17.3 % 23.0 % 16.7 % Production 6.4 7.0 (6.1 ) 6.6 7.2
5.4 EBITDA Margin % 7.0 % 8.1 % (6.7 )% 7.2 % 8.3 % 5.9 % Corporate
(5.4 ) (10.4 ) (9.1 ) (7.3 ) (8.3 ) (5.6 )
Total EBITDA $
18.4 $ 41.9 $ (359.8 ) $ 21.7 $ 19.1 $
20.9 EBITDA Margin % 6.8 % 16.7 % (131.8 )% 8.0 % 7.6 % 7.7
% (1) Includes earnings (loss) from equity investment. (2)
Includes transaction expenses, gain/(loss) on disposal of assets,
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 - Orders
information (Unaudited) Three months
ended (in millions of dollars)
March 31,
2019 March 31, 2018 December
31, 2018 Orders Drilling & Downhole $ 82.0 $
77.1 $ 89.0 Completions 80.3 87.1 106.2 Production 79.9 96.8
75.6
Total orders $ 242.2 $ 261.0
$ 270.8
Revenue Drilling & Downhole
$ 85.9 $ 76.9 $ 88.6 Completions 94.7 88.1 94.0 Production 92.0
86.4 91.1 Eliminations (0.8 ) (1.2 ) (0.8 )
Total revenue $
271.8 $ 250.2 $ 272.9
Book to bill
ratio (1) Drilling & Downhole 0.95 1.00 1.00
Completions 0.85 0.99 1.13 Production 0.87 1.12 0.83
Total book to bill ratio 0.89 1.04 0.99
(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, 2019
March 31, 2018 December 31, 2018 (in
millions, 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 $
4.3 $ 18.4 $ (7.9 )
$ (6.7 ) $ 41.9 $
28.1 $ (381.0 ) $ (359.8
) $ (383.7 ) % of revenue 1.6
%
6.8 % (2.7 )% 16.7 % (139.6 )% (131.8 )% Restructuring charges and
other 4.7 4.7 4.7 2.9 2.9 3.3 6.2 6.2 6.2 Transaction expenses 0.6
0.6 0.6 1.3 1.3 1.3 1.3 1.3 1.3 Inventory and other working capital
adjustments (0.1 ) (0.1 ) (0.1 ) 2.5 2.5 2.5 26.1 26.1 26.1
Goodwill and intangible asset impairment — — — — — — 349.0 349.0
349.0 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) 0.4 0.4 0.4 0.2 0.2 0.2 0.5 0.5 0.5 Loss (gain) on
foreign exchange, net (3) — 2.3 2.3 — 3.8 3.8 — (2.4 ) (2.4 )
Income tax expense (benefit) of adjustments — — (0.1 ) — — 3.2 — —
(38.6 ) Impact of U.S. tax reform — — — — — (16.2 ) — — — Valuation
allowance on deferred tax assets — — — —
— — — — 50.0
As
adjusted(1) $ 5.3 $
21.7 $ (4.7 ) $
0.2 $ 19.1 $ (7.3
) $ 2.1 $ 20.9
$ 8.4 % of revenue 1.9 % 8.0 % 0.1 % 7.6 % 0.8
% 7.7 % Diluted shares outstanding as reported 109.6 110.9
109.1 Diluted shares outstanding as adjusted 109.6 108.4 109.7
Diluted EPS - as reported $ (0.07 ) $ 0.25 $ (3.52 ) Diluted
EPS - as adjusted $ (0.04 ) $ (0.07 ) $ 0.08 (1) The Company
believes that the presentation of EBITDA, adjusted EBITDA, adjusted
operating income and adjusted Diluted EPS is useful to investors
because (i) 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 and (ii) each of adjusted EBITDA, adjusted operating
income and adjusted Diluted EPS is 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. 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.
(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 Three months ended
(in millions of dollars)
March 31, 2019
March 31, 2018 December 31, 2018
EBITDA reconciliation (1) Net income (loss) $ (7.9 )
$ 28.1 $ (383.7 ) Interest expense 8.2 8.1 8.7 Depreciation and
amortization 16.4 18.6 18.6 Income tax expense (benefit) 1.7
(12.9 ) (3.4 )
EBITDA $ 18.4 $
41.9 $ (359.8 ) (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.
Table 3 - Adjusting
items Three months ended (in millions of dollars)
March 31, 2019 March 31,
2018 Free cash flow, before acquisitions,
reconciliation (1) Net cash provided by (used in)
operating activities $ 17.9 $ (19.3 ) Capital expenditures for
property and equipment (3.7 ) (5.1 ) Proceeds from sale of property
and equipment 0.1 5.1 Free cash flow, before
acquisitions
$ 14.3 $ (19.3
) (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, 2019 March 31, 2018
December 31, 2018 Revenue: $ % $ % $ %
Drilling Technologies $ 41.9 15.4 % $ 42.8 17.1 % $ 45.8 16.8 %
Downhole Technologies 30.4 11.2 % 24.5 9.8 % 26.4 9.7 % Subsea
Technologies 13.6 5.0 % 9.6 3.8 % 16.4 6.0 %
Drilling & Downhole 85.9 31.6 % 76.9 30.7 % 88.6 32.5 %
Stimulation and Intervention 51.4 18.9 % 51.1 20.4 % 62.3 22.8 %
Coiled Tubing 43.3 15.9 % 37.0 14.8 % 31.7
11.6 % Completions 94.7 34.8 % 88.1 35.2 % 94.0 34.4 %
Production Equipment 36.6 13.5 % 31.5 12.6 % 37.0 13.6 % Valve
Solutions 55.4 20.4 % 54.9 21.9 % 54.1 19.8 %
Production 92.0 33.9 % 86.4 34.5 % 91.1 33.4 % Eliminations (0.8 )
(0.3 )% (1.2 ) (0.4 )% (0.8 ) (0.3 )%
Total Revenue $ 271.8
100.0 % $ 250.2 100.0 % $ 272.9 100.0 %
Forum Energy Technologies, Inc. Supplemental
schedule - 2018 segment information provided for segment change
(Unaudited) As Reported As
Adjusted (4) Three months ended Three months
ended (in millions of dollars)
December 31,
2018 September 30, 2018 June
30, 2018 March 31, 2018
December 31, 2018 September 30,
2018 June 30, 2018 March
31, 2018 Revenue
Drilling & Downhole $ 88.6 $ 82.0 $ 86.5 76.9 $
88.6 $ 82.0 $ 86.5 $ 76.9 Completions 94.0 91.0 100.0 88.1 $ 94.0 $
91.0 $ 100.0 $ 88.1 Production 91.1 95.3 88.6 86.4 $ 91.1 $ 95.3 $
88.6 $ 86.4 Eliminations (0.8 ) (1.3 ) (1.1 )
(1.2 ) $ (0.8 ) $ (1.3 ) $ (1.1 )
$ (1.2 )
Total revenue $ 272.9 $ 267.0
$ 274.0 $ 250.2 $
272.9 $ 267.0 $ 274.0 $
250.2
Operating income Drilling & Downhole
(1) $ (10.9 ) $ (4.7 ) $ (7.5 ) $ (10.3 ) $ (2.2 ) $ (0.1 ) $ (3.1
) $ (8.4 ) Operating income margin % (12.3 )% (5.7 )% (8.7 )% (13.4
)% (2.5 )% (0.1 )% (3.6 )% (10.9 )% Completions (2.8 ) 11.6 14.2
9.0 7.0 11.9 14.8 12.1 Operating income margin % (3.0 )% 12.7 %
14.2 % 10.2 % 7.4 % 13.1 % 14.8 % 13.7 % Production (7.1 ) 5.3 3.7
4.2 3.3 5.4 3.9 4.2 Operating income margin % (7.8 )% 5.6 % 4.2 %
4.9 % 3.6 % 5.7 % 4.4 % 4.9 % Corporate (8.8 ) (8.8 )
(8.9 ) (8.7 ) (5.7 ) (6.9 ) (8.7
) (8.3 )
Total Segment operating income (loss) (29.6
) 3.4 1.5 (5.8 ) 2.4 10.3 6.9 (0.4 ) Other items not in segment
operating income(2) (351.4 ) (1.0 ) (13.2 )
(0.9 ) (0.3 ) — 1.7
0.6
Total operating income (loss) $ (381.0 )
$ 2.4 $ (11.7 ) $ (6.7 )
$ 2.1 $ 10.3 $ 8.6 $ 0.2
Operating income margin % (139.6 )% 0.9 % (4.3 )% (2.7 )%
0.8 % 3.9 % 3.1 % 0.1 %
EBITDA (3) Drilling
& Downhole $ (350.0 ) $ 4.2 $ (7.5 ) $ 28.1 $ 5.4 $ 7.8 $ 6.3 $
(0.1 ) EBITDA Margin % (395.0 )% 5.1 % (8.7 )% 36.5 % 6.1 % 9.5 %
7.3 % (0.1 )% Completions 5.4 20.1 22.7 17.2 15.7 20.5 23.2 20.3
EBITDA Margin % 5.7 % 22.1 % 22.7 % 19.5 % 16.7 % 22.5 % 23.2 %
23.0 % Production (6.1 ) 7.2 5.9 7.0 5.4 7.6 6.4 7.2 EBITDA Margin
% (6.7 )% 7.6 % 6.7 % 8.1 % 5.9 % 8.0 % 7.2 % 8.3 % Corporate (9.1
) (9.2 ) (8.3 ) (10.4 ) (5.6 )
(6.8 ) (8.6 ) (8.3 )
Total EBITDA $
(359.8 ) $ 22.3 $ 12.8 $ 41.9
$ 20.9 $ 29.1 $
27.3 $ 19.1 EBITDA Margin % (131.8 )% 8.4 %
4.7 % 16.7 % 7.7 % 10.9 % 10.0 % 7.6 % (1) Includes earnings
(loss) from equity investment. (2) Includes transaction expenses,
gain/(loss) on disposal of assets, 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 "Supplemental Schedule - Adjusting items" for schedule of
adjusting items.
Forum Energy Technologies,
Inc. Reconciliation of GAAP to non-GAAP financial
information (Unaudited) Supplemental Schedule
- 2018 Adjusting items provided for segment change Three
months ended December 31, 2018 September 30,
2018 June 30, 2018 March 31, 2018
(in millions, 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) Operating income
(loss) EBITDA (1) Net income
(loss) As reported $ (381.0 ) $ (359.8 ) $ (383.7 ) $
2.4 $ 22.3 $ (3.1 ) $ (11.7 ) $ 12.8 $ (15.3 ) $ (6.7 ) $
41.9 $ 28.1 % of revenue (139.6 )% (131.8 )% 0.9 % 8.4 % (4.3 )%
4.7 % (2.7 )% 16.7 % Restructuring charges and other 6.2 6.2 6.2
7.3 7.3 7.3 1.4 1.4 1.4 2.9 2.9 3.3 Transaction expenses 1.3 1.3
1.3 0.8 0.8 0.8 0.1 0.1 0.1 1.3 1.3 1.3 Inventory and other working
capital reserve 26.1 26.1 26.1 (0.7 ) (0.7 ) (0.7 ) 3.6 3.6 3.6 2.5
2.5 2.5 Goodwill and intangible asset impairment 349.0 349.0 349.0
— — — 14.5 14.5 14.5 — — — Gain on contribution of subsea rentals
business — — — — — — — — — — (33.5 ) (33.5 ) Amortization of basis
difference for equity method investment (2) 0.5 0.5 0.5 0.5 0.5 0.5
0.7 0.7 0.7 0.2 0.2 0.2 Loss (gain) on foreign exchange, net (3) —
(2.4 ) (2.4 ) — (1.1 ) (1.1 ) — (5.8 ) (5.8 ) — 3.8 3.8 Income tax
expense (benefit) of adjustments — — (38.6 ) — — (1.2 ) — — (1.1 )
— — 3.2 Impact of U.S. tax reform — — — — — 0.3 — — 0.3 — — (16.2 )
Valuation allowance on deferred tax assets — — 50.0
— — — — — —
— — —
As adjusted (1)
$ 2.1 $ 20.9 $
8.4 $ 10.3 $ 29.1
$ 2.8 $ 8.6
$ 27.3 $ (1.6 )
$ 0.2 $ 19.1 $
(7.3 ) % of revenue 0.8 % 7.7 % 3.9 % 10.9 % 3.1 %
10.0 % 0.1 % 7.6 % Diluted shares outstanding as reported
109.1 108.9 108.7 110.9 Diluted shares outstanding as adjusted
109.7 110.8 108.7 108.4 Diluted EPS -as reported $ (3.52 ) $
(0.03 ) $ (0.14 ) $ 0.25 Diluted EPS - as adjusted $ 0.08 $ 0.03 $
(0.01 ) $ (0.07 )
(1) The Company believes that the
presentation of EBITDA, adjusted EBITDA, adjusted operating income
and adjusted Diluted EPS is useful to investors because (i) 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 and (ii)
each of adjusted EBITDA, adjusted operating income and adjusted
Diluted EPS is 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. 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.
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190425006011/en/
Mark Traylor - Vice President, Investor
Relations281.368.1108mark.traylor@f-e-t.com
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