- Revenue of $113 million
- Net loss of $(5) million and diluted EPS of $(0.05)
- Adjusted EBITDA of $(11.6) million
- Cash flow from operations of $(3.6) million and free cash
flow after capital expenditures of $(3.5) million
Forum Energy Technologies, Inc. (NYSE: FET) today announced
second quarter 2020 revenue of $113 million, a decrease of $69
million from the first quarter 2020. Net loss for the quarter was
$5 million, or $0.05 per diluted share, compared to a net loss of
$37 million, or $0.33 per diluted share, for the first quarter
2020. Excluding $27 million, or $0.24 per share of special items,
adjusted net loss was $0.29 per diluted share in the second quarter
2020, compared to an adjusted net loss of $0.20 per diluted share
in the first quarter 2020. Adjusted EBITDA was $(11.6) million in
the second quarter 2020, a decrease of approximately $16.1 million
from the first quarter 2020.
Special items in the second quarter 2020, on a pre-tax basis,
included a $36 million gain on extinguishment of debt, repurchased
by the company at a substantial discount, partially offset by $4
million of restructuring and other charges, $4 million of inventory
and other impairments and $1 million of foreign exchange losses.
See Tables 1-3 for a reconciliation of GAAP to non-GAAP financial
information.
Cris Gaut, Chairman and Chief Executive Officer, remarked, “The
dislocation caused by the COVID-19 pandemic and the resulting
collapse in energy demand has been dramatic. With little ongoing
work for drilling and completions services, customer spending has
been exceptionally weak, impacting demand for many of Forum’s
products.
“In response to these challenges, our management team moved
swiftly to restructure the company to weather the storm. Early in
the second quarter, we completed significant structural cost
reductions, which represent a step change in the rate of continuous
cost actions undertaken since the downturn began in 2014. Our
results reflect the impact of removing approximately $100 million
of cost on an annualized basis in the second quarter 2020 compared
to the immediately preceding quarter. On a year-over-year basis,
the cost reductions on an annualized basis are close to $150
million. This swift and significant action allowed Forum to
significantly offset lower sales volume and pricing limiting our
decremental margins to 23% compared to the first quarter. We now
have a much leaner cost structure to weather the downturn and
benefit from any incremental activity increases.
“Earlier this week, Forum successfully closed the exchange offer
for our outstanding notes. This transaction extends our maturity to
2025 and maintains our current cash interest cost. In addition, the
new notes preserve equity value for our current shareholders and
provide a deleveraging opportunity through a partial, mandatory
conversion to equity at a significant premium to the current stock
price. Forum now has ample runway to take advantage of the
opportunities a market recovery will present.”
Segment Results
Drilling & Downhole segment revenue was $47 million, a
decrease of $29 million, or 38%, from the first quarter 2020, due
to lower sales of drilling and downhole products in North America,
resulting from the significant slowdown in drilling and completions
activity. Orders in the second quarter were $42 million, a 40%
decrease from the first quarter, primarily due to lower orders for
downhole and drilling consumable short cycle products. Segment
adjusted EBITDA was $(3) million, down $10 million from the first
quarter, resulting primarily from the significant decline in
revenues partially offset by cost reduction actions taken in the
second quarter. Drilling & Downhole operations focus primarily
on capital equipment and consumable products for global drilling,
well construction, artificial lift and subsea markets.
Completions segment revenue was $18 million, a sequential
decrease of $33 million, or 65%, due to the severe slowdown in well
completions activity and cannibalization of equipment by our
service company customers. Orders in the second quarter were $14
million, a decrease of $36 million, or 72%, from the first quarter
2020. Segment adjusted EBITDA was $(6) million, down $10 million
from the first quarter, as a result of the loss of operating
leverage on lower sales volumes partially offset by significant
cost reductions implemented in the second quarter. The Completions
segment designs and manufactures products for the coiled tubing,
stimulation and intervention markets.
Production segment revenue was $49 million, a decrease of $7
million, or 13% from the first quarter 2020, due to lower sales for
our Valve Solutions product line. Orders in the second quarter were
$29 million, a 43% decrease sequentially, due to lower orders for
surface production equipment as operators slowed their completions
activity and fewer bookings from our valve distribution customers
due to their ongoing inventory destocking. Segment adjusted EBITDA
was $2.1 million, an increase of $2 million sequentially, as a
result of cost reductions from restructuring actions implemented in
the second quarter. 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 is a global oilfield products company,
serving the drilling, downhole, subsea, completions and production
sectors of the oil and natural gas industry. The Company’s products
include highly engineered capital equipment as well as products
that are consumed in the drilling, well construction, 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 severity and duration of the COVID-19
pandemic and related repercussions resulting from the negative
impact on demand for oil and 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 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 income (loss)
(Unaudited)
Three months ended
June 30,
March 31,
(in millions, except per share
information)
2020
2019
2020
Revenue
$
113.3
$
245.6
$
182.6
Cost of sales
100.4
182.4
160.5
Gross profit
12.9
63.2
22.1
Operating expenses
Selling, general and administrative
expenses
48.3
62.9
60.2
Transaction expenses
0.2
0.1
—
Impairments of intangibles, property and
equipment
0.1
—
17.3
Loss (gain) on disposal of assets and
other
(0.7
)
0.1
—
Total operating expenses
47.9
63.1
77.5
Earnings from equity investment
—
0.6
—
Operating income (loss)
(35.0
)
0.7
(55.4
)
Other expense (income)
Interest expense
6.4
8.2
6.7
Gain on extinguishment of debt
(36.3
)
—
(7.5
)
Deferred loan costs written off
0.1
—
1.8
Foreign exchange losses (gains) and other,
net
0.7
(2.2
)
(4.9
)
Total other (income) expense, net
(29.1
)
6.0
(3.9
)
Loss before income taxes
(5.9
)
(5.3
)
(51.5
)
Income tax expense (benefit)
(0.4
)
8.4
(14.4
)
Net loss (1)
$
(5.5
)
$
(13.7
)
$
(37.1
)
Weighted average shares
outstanding
Basic
111.6
110.0
111.2
Diluted
111.6
110.0
111.2
Loss per share
Basic
$
(0.05
)
$
(0.12
)
$
(0.33
)
Diluted
$
(0.05
)
$
(0.12
)
$
(0.33
)
(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,
(in millions, except per share
information)
2020
2019
Revenue
$
295.9
$
517.5
Cost of sales
260.9
384.2
Gross profit
35.0
133.3
Operating expenses
Selling, general and administrative
expenses
108.5
131.8
Transaction expenses
0.2
0.7
Impairments of goodwill, intangibles,
property and equipment
17.4
—
Contingent consideration benefit
—
(4.6
)
Loss (gain) on disposal of assets and
other
(0.7
)
0.1
Total operating expenses
125.4
128.0
Loss from equity investment
—
(0.3
)
Operating income (loss)
(90.4
)
5.0
Other expense (income)
Interest expense
13.1
16.4
Foreign exchange losses (gains) and other,
net
(4.4
)
0.1
Gain on extinguishment of debt
(43.7
)
—
Deferred loan costs written off
2.0
—
Total other (income) expense, net
(33.0
)
16.5
Loss before income taxes
(57.4
)
(11.5
)
Income tax expense (benefit)
(14.8
)
10.1
Net income (loss) (1)
$
(42.6
)
$
(21.6
)
Weighted average shares
outstanding
Basic
111.4
109.8
Diluted
111.4
109.8
Loss per share
Basic
$
(0.38
)
$
(0.20
)
Diluted
$
(0.38
)
$
(0.20
)
(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, 2020
December 31, 2019
Assets
Current assets
Cash and cash equivalents
$
109.7
$
57.9
Accounts receivable—trade, net
89.3
154.2
Inventories, net
377.6
414.6
Other current assets
53.2
39.2
Total current assets
629.8
665.9
Property and equipment, net of accumulated
depreciation
131.5
154.8
Operating lease assets
35.5
48.7
Intangible assets, net
253.0
272.3
Other long-term assets
17.1
18.3
Total assets
$
1,066.9
$
1,160.0
Liabilities and equity
Current liabilities
Current portion of long-term debt
$
1.3
$
0.7
Other current liabilities
146.9
196.2
Total current liabilities
148.2
196.9
Long-term debt, net of current portion
412.4
398.9
Other long-term liabilities
65.3
78.2
Total liabilities
625.9
674.0
Total equity
441.0
486.0
Total liabilities and equity
$
1,066.9
$
1,160.0
Forum Energy Technologies,
Inc.
Condensed consolidated cash
flow information
(Unaudited)
Six Months Ended June
30,
(in millions of dollars)
2020
2019
Cash flows from operating
activities
Net loss
$
(42.6
)
$
(21.6
)
Impairments of intangible assets, property
and equipment
17.4
—
Depreciation and amortization
26.7
32.7
Impairments of operating lease assets
9.3
2.0
Inventory write down
16.4
1.6
Gain on extinguishment of debt
(43.7
)
—
Other noncash items and changes in working
capital
14.4
26.1
Net cash provided by (used in)
operating activities
(2.1
)
40.8
Cash flows from investing
activities
Capital expenditures for property and
equipment
(1.5
)
(9.2
)
Proceeds from sale of business, property
and equipment
1.3
0.4
Net cash used in investing
activities
(0.2
)
(8.8
)
Cash flows from financing
activities
Borrowings of debt
85.0
82.0
Repayments of debt
(28.2
)
(123.1
)
Repurchases of stock
(0.1
)
(1.0
)
Deferred financing costs
(2.3
)
—
Net cash provided by (used in)
financing activities
54.4
(42.1
)
Effect of exchange rate changes on
cash
(0.3
)
0.2
Net increase (decrease) in cash, cash
equivalents and restricted cash
$
51.8
$
(9.9
)
Forum Energy Technologies,
Inc.
Supplemental schedule -
Segment information
(Unaudited)
As Reported
As Adjusted (4)
Three months ended
Three months ended
(in millions of dollars)
June 30, 2020
June 30, 2019
March 31, 2020
June 30, 2020
June 30, 2019
March 31, 2020
Revenue
Drilling & Downhole
$
47.2
$
82.4
$
76.6
$
47.2
$
82.4
$
76.6
Completions
17.6
81.5
50.8
17.6
81.5
50.8
Production
48.6
83.3
55.6
48.6
83.3
55.6
Eliminations
(0.1
)
(1.6
)
(0.4
)
(0.1
)
(1.6
)
(0.4
)
Total revenue
$
113.3
$
245.6
$
182.6
$
113.3
$
245.6
$
182.6
Operating income (loss)
Drilling & Downhole (1)
$
(9.4
)
$
1.3
$
(4.1
)
$
(7.8
)
$
2.0
$
1.0
Operating income margin %
(19.9
)%
1.6
%
(5.4
)%
(16.5
)%
2.4
%
1.3
%
Completions
(17.8
)
2.8
(17.3
)
(13.2
)
2.9
(4.2
)
Operating income margin %
(101.1
)%
3.4
%
(34.1
)%
(75.0
)%
3.6
%
(8.3
)%
Production
(1.1
)
3.6
(8.2
)
(0.7
)
3.6
(2.2
)
Operating income margin %
(2.3
)%
4.3
%
(14.7
)%
(1.4
)%
4.3
%
(4.0
)%
Corporate
(7.2
)
(6.8
)
(8.5
)
(5.7
)
(6.7
)
(7.5
)
Total segment operating income
(loss)
(35.5
)
0.9
(38.1
)
(27.4
)
1.8
(12.9
)
Other items not in segment operating
income (2)
0.5
(0.2
)
(17.3
)
0.7
0.1
—
Total operating income (loss)
$
(35.0
)
$
0.7
$
(55.4
)
$
(26.7
)
$
1.9
$
(12.9
)
Operating income margin %
(30.9
)%
0.3
%
(30.3
)%
(23.6
)%
0.8
%
(7.1
)%
EBITDA (3)
Drilling & Downhole
$
(5.3
)
$
8.1
$
(1.0
)
$
(3.2
)
$
8.1
$
6.5
EBITDA Margin %
(11.2
)%
9.8
%
(1.3
)%
(6.8
)%
9.8
%
8.5
%
Completions
(11.9
)
11.3
(19.9
)
(6.2
)
12.7
3.7
EBITDA Margin %
(67.6
)%
13.9
%
(39.2
)%
(35.2
)%
15.6
%
7.3
%
Production
1.3
5.2
(6.5
)
2.1
6.1
0.3
EBITDA Margin %
2.7
%
6.2
%
(11.7
)%
4.3
%
7.3
%
0.5
%
Corporate
28.9
(5.4
)
(3.2
)
(4.3
)
(4.2
)
(6.0
)
Total EBITDA
$
13.0
$
19.2
$
(30.6
)
$
(11.6
)
$
22.7
$
4.5
EBITDA Margin %
11.5
%
7.8
%
(16.8
)%
(10.2
)%
9.2
%
2.5
%
(1) Includes earnings (loss) from equity
investment for the three months ended June 30, 2019.
(2) Includes transaction expenses,
gain/(loss) on disposal of assets, and impairments of intangibles,
property and equipment.
(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, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Revenue
Drilling & Downhole
$
123.8
$
168.3
$
123.8
$
168.3
Completions
68.4
176.2
68.4
176.2
Production
104.2
175.3
104.2
175.3
Eliminations
(0.5
)
(2.3
)
(0.5
)
(2.3
)
Total revenue
$
295.9
$
517.5
$
295.9
$
517.5
Operating income (loss)
Drilling & Downhole (1)
$
(13.5
)
$
(1.2
)
$
(6.7
)
$
2.3
Operating income margin %
(10.9
)%
(0.7
)%
(5.4
)%
1.4
%
Completions
(35.1
)
9.7
(17.4
)
10.5
Operating income margin %
(51.3
)%
5.5
%
(25.4
)%
6.0
%
Production
(9.2
)
7.9
(2.9
)
8.2
Operating income margin %
(8.8
)%
4.5
%
(2.8
)%
4.7
%
Corporate
(15.7
)
(15.2
)
(13.3
)
(14.1
)
Total segment operating income
(loss)
(73.5
)
1.2
(40.3
)
6.9
Other items not in segment operating
income (loss) (2)
(16.9
)
3.8
0.7
0.2
Total operating income (loss)
$
(90.4
)
$
5.0
$
(39.6
)
$
7.1
Operating income margin %
(30.6
)%
1.0
%
(13.4
)%
1.4
%
EBITDA (3)
Drilling & Downhole
$
(6.2
)
$
10.1
$
3.3
$
14.4
EBITDA Margin %
(5.0
)%
6.0
%
(3.6
)%
8.6
%
Completions
(31.8
)
26.9
(2.5
)
30.1
EBITDA Margin %
(46.5
)%
15.3
%
(3.7
)%
17.1
%
Production
(5.3
)
11.6
2.4
13.1
EBITDA Margin %
(5.1
)%
6.6
%
2.3
%
7.5
%
Corporate
25.7
(11.0
)
(10.3
)
(9.3
)
Total EBITDA
$
(17.6
)
$
37.6
$
(7.1
)
$
48.3
EBITDA Margin %
(5.9
)%
7.3
%
(2.4
)%
9.3
%
(1) Includes earnings (loss) from equity
investment for the six months ended June 30, 2019.
(2) Includes transaction expenses, gain
(loss) on disposal of assets, contingent consideration benefit, and
impairments of intangibles, property and equipment.
(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, 2020
June 30, 2019
March 31, 2020
Orders
Drilling & Downhole
$
42.3
$
78.3
$
70.0
Completions
14.2
70.7
49.9
Production
29.1
75.6
50.7
Total orders
$
85.6
$
224.6
$
170.6
Revenue
Drilling & Downhole
$
47.2
$
82.4
$
76.6
Completions
17.6
81.5
50.8
Production
48.6
83.3
55.6
Eliminations
(0.1
)
(1.6
)
(0.4
)
Total revenue
$
113.3
$
245.6
$
182.6
Book to bill ratio (1)
Drilling & Downhole
0.90
0.95
0.91
Completions
0.81
0.87
0.98
Production
0.60
0.91
0.91
Total book to bill ratio
0.76
0.91
0.93
(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, 2020
June 30, 2019
March 31, 2020
(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
$
(35.0)
$
13.0
$
(5.5)
$
0.7
$
19.2
$
(13.7)
$
(55.4)
$
(30.6)
$
(37.1)
% of revenue
(30.9)
%
11.5
%
0.3
%
7.8
%
(30.3)
%
(16.8)
%
Restructuring charges and other
4.1
4.1
4.1
1.0
1.0
1.0
5.4
5.4
5.4
Transaction expenses
0.2
0.2
0.2
0.1
0.1
0.1
—
—
—
Inventory and other working capital
adjustments
4.1
4.1
4.1
—
—
—
10.3
10.3
10.3
Impairments of intangibles, property and
equipment
0.1
0.1
0.1
—
—
—
17.3
17.3
17.3
Stock-based compensation expense
—
2.6
—
—
4.4
—
—
3.2
—
Impairments of operating lease assets
(0.2)
(0.2)
(0.2)
(0.5)
(0.5)
(0.5)
9.5
9.5
9.5
Amortization of basis difference for
equity method investment (2)
—
—
—
0.5
0.5
0.5
—
—
—
Gain on extinguishment of debt
—
(36.2)
(36.2)
—
—
—
—
(7.5)
(7.5)
Deferred loan costs written off
—
0.2
0.2
—
—
—
—
1.8
1.8
Loss (gain) on foreign exchange, net
(3)
—
0.5
0.5
—
(2.1)
(2.1)
—
(4.9)
(4.9)
Impact of U.S. CARES Act
—
—
—
—
—
—
—
—
(16.6)
Valuation allowance on deferred tax
assets
—
—
—
—
—
5.9
—
—
—
As adjusted (1)
$
(26.7)
$
(11.6)
$
(32.7)
$
1.8
$
22.6
$
(8.8)
$
(12.9)
$
4.5
$
(21.8)
% of revenue
(23.6)
%
(10.2)
%
0.7
%
9.2
%
(7.1)
%
2.5
%
Diluted shares outstanding as reported
111.6
110.0
111.2
Diluted shares outstanding as adjusted
111.6
110.0
111.2
Diluted EPS - as reported
$
(0.05)
$
(0.12)
$
(0.33)
Diluted EPS - as adjusted
$
(0.29)
$
(0.08)
$
(0.20)
(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, 2020
June 30, 2019
(in millions, except per share
information)
Operating income
(loss)
EBITDA (1)
Net income
(loss)
Operating
income (loss)
EBITDA (1)
Net income
(loss)
As reported
$
(90.4)
$
(17.6)
$
(42.6)
$
5.0
$
37.6
$
(21.6)
% of revenue
(30.6)
%
(5.9)
%
1.0
%
7.3
%
Restructuring charges and other
9.5
9.5
9.5
3.1
3.1
3.1
Transaction expenses
0.2
0.2
0.2
0.7
0.7
0.7
Inventory and other working capital
adjustments
14.4
14.4
14.4
(0.1)
(0.1)
(0.1)
Impairments of intangibles, property and
equipment
17.4
17.4
17.4
—
—
—
Impairments of operating lease assets
9.3
9.3
9.3
2.0
2.0
2.0
Stock-based compensation expense
—
5.8
—
—
8.3
—
Contingent consideration benefit
—
—
—
(4.6)
(4.6)
(4.6)
Gain on extinguishment of debt
—
(43.7)
(43.7)
—
—
—
Deferred loan costs written off
—
2.0
2.0
—
—
—
Amortization of basis difference for
equity method investment (2)
—
—
—
0.9
0.9
0.9
Loss (gain) on foreign exchange, net
(3)
—
(4.4)
(4.4)
—
0.4
0.4
Income tax expense (benefit) of
adjustments
—
—
—
—
—
(0.1)
Impact of U.S. CARES Act
—
—
(16.6)
—
—
—
Valuation allowance on deferred tax
assets
—
—
—
—
—
5.9
As adjusted (1)
$
(39.6)
$
(7.1)
$
(54.5)
$
7.0
$
48.3
$
(13.4)
% of revenue
(13.4)
%
(2.4)
%
1.4
%
9.3
%
Diluted shares outstanding as reported
111.4
109.8
Diluted shares outstanding as adjusted
111.4
109.8
Diluted EPS - as reported
$
(0.38)
$
(0.20)
Diluted EPS - as adjusted
$
(0.49)
$
(0.12)
(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 3 - Adjusting
Items
Three months ended
(in millions of dollars)
June 30, 2020
June 30, 2019
March 31, 2020
EBITDA reconciliation (1)
Net loss
$
(5.5
)
$
(13.7
)
$
(37.1
)
Interest expense
6.4
8.2
6.7
Depreciation and amortization
12.5
16.3
14.2
Income tax expense (benefit)
(0.4
)
8.4
(14.4
)
EBITDA
$
13.0
$
19.2
$
(30.6
)
(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 4 - Adjusting
Items
Six months ended
(in millions of dollars)
June 30, 2020
June 30, 2019
EBITDA reconciliation (1)
Net loss
$
(42.6
)
$
(21.6
)
Interest expense
13.1
16.4
Depreciation and amortization
26.7
32.7
Income tax expense (benefit)
(14.8
)
10.1
EBITDA
$
(17.6
)
$
37.6
(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.
Table 5 - Adjusting
items
Six months ended
(in millions of dollars)
June 30, 2020
June 30, 2019
Free cash flow, before acquisitions,
reconciliation (1)
Net cash provided by (used in) operating
activities
$
(2.1
)
$
40.8
Capital expenditures for property and
equipment
(1.5
)
(9.2
)
Proceeds from sale of property and
equipment
0.7
0.4
Free cash flow, before acquisitions
$
(2.9
)
$
32.0
(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, 2020
June 30, 2019
March 31, 2020
Revenue:
$
%
$
%
$
%
Drilling Technologies
$
20.0
17.7
%
$
37.3
15.3
%
$
36.5
19.9
%
Downhole Technologies
12.7
11.2
%
28.8
11.7
%
25.0
13.7
%
Subsea Technologies
14.5
12.8
%
16.3
6.6
%
15.1
8.3
%
Drilling & Downhole
47.2
41.7
%
82.4
33.6
%
76.6
41.9
%
Stimulation and Intervention
8.5
7.5
%
46.9
19.1
%
24.5
13.4
%
Coiled Tubing
9.1
8.0
%
34.6
14.1
%
26.3
14.4
%
Completions
17.6
15.5
%
81.5
33.2
%
50.8
27.8
%
Production Equipment
19.4
17.1
%
33.0
13.4
%
18.7
10.2
%
Valve Solutions
29.2
25.8
%
50.3
20.6
%
36.9
20.2
%
Production
48.6
42.9
%
83.3
34.0
%
55.6
30.4
%
Eliminations
(0.1
)
(0.1
)
%
(1.6
)
(0.8
)
%
(0.4
)
(0.1
)%
Total Revenue
$
113.3
100.0
%
$
245.6
100.0
%
$
182.6
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806006104/en/
Lyle Williams Executive Vice President and Chief Financial
Officer 713.351.7920 lyle.williams@f-e-t.com
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