- Revenue of $104 million
- Net loss of $22 million and diluted EPS of negative
$0.19
- Adjusted EBITDA of negative $10 million
- Operating cash flow of $4 million and free cash flow of $6
million
- Extended long-term debt maturity to 2025 and $129 million of
liquidity
Forum Energy Technologies, Inc. (NYSE: FET) today announced
third quarter 2020 revenue of $104 million, a decrease of $10
million from the second quarter 2020. Orders received in the
quarter increased by $7 million to $92 million. Net loss for the
quarter was $22 million, or $0.19 per diluted share, compared to a
net loss of $5 million, or $0.05 per diluted share, for the second
quarter 2020. Excluding $12 million, or $0.11 per share of special
items, adjusted net loss was $0.30 per diluted share in the third
quarter 2020, compared to an adjusted net loss of $0.29 per diluted
share in the second quarter 2020. Adjusted EBITDA was negative $10
million in the third quarter 2020, an improvement of approximately
$2 million from the second quarter 2020.
Special items in the third quarter 2020, on a pre-tax basis,
included a $29 million gain on extinguishment of debt resulting
from the debt exchange completed in August. This par for par
exchange extended Forum's debt maturity date from 2021 to 2025. The
$29 million gain reflects the accounting difference between the net
carrying value of the 2021 Notes exchanged and the estimated fair
value of the 2025 Notes. The gain was partially offset by
impairments and restructuring charges of $11 million and $3 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, “U.S.
rig count and U.S. frac fleet count both declined sharply in the
third quarter as compared with the second. However, it appears
these measures of activity bottomed in the third quarter and have
continued to increase into the fourth quarter. As a result, we
believe the third quarter represents an inflection point in U.S.
drilling and completion activity, as well as for Forum.
“Forum bookings increased 8% sequentially, driven by orders for
our short-cycle completion products and our surface separation
production equipment products. Orders for these products rose as
our exploration and production and service company customers began
to increase spending commitments. Our revenues, however, decreased
due to the lower than anticipated activity levels in the quarter.
Given the increases in U.S. land activity that have occurred
already in the fourth quarter, we expect sequential improvement in
both orders and revenue in line with activity.
“Our on-going efforts to size our operations for the current
level of market activity continued to improve our earnings and our
EBITDA increased sequentially despite lower revenues in the
quarter. Accelerating cost reduction efforts allowed us to increase
EBITDA despite lower revenue in the third quarter. We have
significantly reduced fixed costs and are continuing initiatives to
further decrease direct and structural costs to generate positive
EBITDA, even at historically low levels of activity.”
“I am pleased with the way our employees have responded to these
extremely challenging market conditions and look forward to seeing
the strong results Forum will deliver as market conditions continue
to improve.”
Segment Results
Drilling & Downhole segment revenue was $43 million and
orders were $39 million, a decrease of 8% and 9%, respectively,
from the second quarter 2020. Lower demand for drilling products in
North America, resulting from the continued steep decline in
drilling activity levels in the third quarter of 2020, was the
primary driver of these decreases. Segment adjusted EBITDA was $(4)
million, down $1 million from the second quarter, resulting
primarily from the decline in revenues partially offset by cost
reduction actions implemented 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 $20 million, a sequential
increase of $2 million, or 11%, as well completions activity began
to grow in the third quarter. Orders in the third quarter were $18
million, an increase of $4 million, or 30%, from the second quarter
2020. Segment adjusted EBITDA was $(4) million, up $2 million from
the second quarter due to a more favorable revenue mix and
continued cost management. The Completions segment designs and
manufactures products for the coiled tubing, stimulation and
intervention markets.
Production segment revenue was $41 million, a decrease of $8
million, or 16% from the second quarter 2020, due to lower sales of
both valves and surface production equipment. Orders in the third
quarter were $35 million, a 21% increase sequentially, due to
significant orders for well-site production equipment for
deliveries throughout 2021 and one large international order for
desalination process equipment. Segment adjusted EBITDA was $3
million, an increase of $1 million sequentially, as revenue
declines were more than offset by 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 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 income (loss)
(Unaudited)
Three months ended
September 30,
June 30,
(in millions, except per share
information)
2020
2019
2020
Revenue
$
103.6
$
239.3
$
113.3
Cost of sales
90.5
176.7
100.4
Gross profit
13.1
62.6
12.9
Operating expenses
Selling, general and administrative
expenses
46.0
63.5
48.3
Transaction expenses
0.7
0.3
0.2
Impairments of goodwill, intangible
assets, property and equipment
3.0
532.3
0.1
Loss (gain) on disposal of assets and
other
0.5
(0.1
)
(0.7
)
Total operating expenses
50.2
596.0
47.9
Operating loss
(37.1
)
(533.4
)
(35.0
)
Other expense (income)
Interest expense
8.5
7.8
6.4
Gain on extinguishment of debt
(28.7
)
—
(36.3
)
Deferred loan costs written off
0.3
—
0.1
Gain realized on previously held equity
investment
—
(1.6
)
—
Foreign exchange losses (gains) and other,
net
3.3
(3.2
)
0.7
Total other (income) expense, net
(16.6
)
3.0
(29.1
)
Loss before income taxes
(20.5
)
(536.4
)
(5.9
)
Income tax expense (benefit)
1.1
(3.4
)
(0.4
)
Net loss (1)
$
(21.6
)
$
(533.0
)
$
(5.5
)
Weighted average shares
outstanding
Basic
111.6
110.3
111.6
Diluted
111.6
110.3
111.6
Loss per share
Basic
$
(0.19
)
$
(4.83
)
$
(0.05
)
Diluted
$
(0.19
)
$
(4.83
)
$
(0.05
)
(1) Refer to Table 1 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Condensed consolidated
statements of income (loss)
(Unaudited)
Nine months ended
September 30,
(in millions, except per share
information)
2020
2019
Revenue
$
399.5
$
756.8
Cost of sales
351.4
560.9
Gross profit
48.1
195.9
Operating expenses
Selling, general and administrative
expenses
154.5
195.3
Transaction expenses
0.9
1.0
Impairments of goodwill, intangible
assets, property and equipment
20.4
532.3
Contingent consideration benefit
—
(4.6
)
Gain on disposal of assets and other
(0.2
)
(0.1
)
Total operating expenses
175.6
723.9
Loss from equity investment
—
(0.3
)
Operating loss
(127.5
)
(528.3
)
Other expense (income)
Interest expense
21.6
24.2
Foreign exchange gains and other, net
(1.0
)
(3.0
)
Gain on extinguishment of debt
(72.5
)
—
Deferred loan costs written off
2.3
—
Gain realized on previously held equity
investment
—
(1.6
)
Total other (income) expense, net
(49.6
)
19.6
Loss before income taxes
(77.9
)
(547.9
)
Income tax expense (benefit)
(13.7
)
6.7
Net income (loss) (1)
$
(64.2
)
$
(554.6
)
Weighted average shares
outstanding
Basic
111.5
110.0
Diluted
111.5
110.0
Loss per share
Basic
$
(0.58
)
$
(5.04
)
Diluted
$
(0.58
)
$
(5.04
)
(1) Refer to Table 2 for schedule of
adjusting items.
Forum Energy Technologies,
Inc.
Condensed consolidated balance
sheets
(Unaudited)
(in millions of dollars)
September 30, 2020
December 31, 2019
Assets
Current assets
Cash and cash equivalents
$
20.0
$
57.9
Accounts receivable—trade, net
79.8
154.2
Inventories, net
364.7
414.6
Other current assets
41.0
39.2
Total current assets
505.5
665.9
Property and equipment, net of accumulated
depreciation
120.3
154.8
Operating lease assets
33.9
48.7
Intangible assets, net
247.3
272.3
Other long-term assets
17.0
18.3
Total assets
$
924.0
$
1,160.0
Liabilities and equity
Current liabilities
Current portion of long-term debt
$
1.3
$
0.7
Other current liabilities
135.9
196.2
Total current liabilities
137.2
196.9
Long-term debt, net of current portion
290.0
398.9
Other long-term liabilities
69.5
78.2
Total liabilities
496.7
674.0
Total equity
427.3
486.0
Total liabilities and equity
$
924.0
$
1,160.0
Forum Energy Technologies,
Inc.
Condensed consolidated cash
flow information
(Unaudited)
Nine Months Ended September
30,
(in millions of dollars)
2020
2019
Cash flows from operating
activities
Net loss
$
(64.2
)
$
(554.6
)
Impairments of goodwill, intangible
assets, property and equipment
20.4
532.3
Depreciation and amortization
39.1
48.5
Impairments of operating lease assets
14.1
2.2
Gain on extinguishment of debt
(72.5
)
—
Other noncash items and changes in working
capital
64.8
47.3
Net cash provided by operating
activities
1.7
75.7
Cash flows from investing
activities
Capital expenditures for property and
equipment
(2.2
)
(12.6
)
Proceeds from sale of business, property
and equipment
4.2
39.8
Net cash provided by investing
activities
2.0
27.2
Cash flows from financing
activities
Borrowings of debt
85.0
97.0
Repayments of debt
(113.4
)
(217.3
)
Bond exchange early participation
payment
(3.5
)
—
Repurchases of stock
(0.2
)
(1.1
)
Deferred financing costs
(9.4
)
—
Net cash used in financing
activities
(41.5
)
(121.4
)
Effect of exchange rate changes on
cash
(0.1
)
0.2
Net decrease in cash, cash equivalents
and restricted cash
$
(37.9
)
$
(18.3
)
Forum Energy Technologies,
Inc.
Supplemental schedule -
Segment information
(Unaudited)
As Reported
As Adjusted (4)
Three months ended
Three months ended
(in millions of dollars)
September 30, 2020
September 30, 2019
June 30, 2020
September 30, 2020
September 30, 2019
June 30, 2020
Revenue
Drilling & Downhole
$
43.2
$
88.3
$
47.2
$
43.2
$
88.3
$
47.2
Completions
19.6
70.6
17.6
19.6
70.6
17.6
Production
40.8
81.0
48.6
40.8
81.0
48.6
Eliminations
—
(0.6
)
(0.1
)
—
(0.6
)
(0.1
)
Total revenue
$
103.6
$
239.3
$
113.3
$
103.6
$
239.3
$
113.3
Operating income (loss)
Drilling & Downhole (1)
$
(13.2
)
$
4.3
$
(9.4
)
$
(8.4
)
$
6.4
$
(7.8
)
Operating income margin %
(30.6
)%
4.9
%
(19.9
)%
(19.4
)%
7.2
%
(16.5
)%
Completions
(11.9
)
(0.1
)
(17.8
)
(11.4
)
2.5
(13.2
)
Operating income margin %
(60.7
)%
(0.1
)%
(101.1
)%
(58.2
)%
3.5
%
(75.0
)%
Production
(0.1
)
2.3
(1.1
)
0.6
3.5
(0.7
)
Operating income margin %
(0.2
)%
2.8
%
(2.3
)%
1.5
%
4.3
%
(1.4
)%
Corporate
(7.7
)
(7.4
)
(7.2
)
(5.0
)
(6.5
)
(5.7
)
Total segment operating income
(loss)
(32.9
)
(0.9
)
(35.5
)
(24.2
)
5.9
(27.4
)
Other items not in segment operating
income (2)
(4.2
)
(532.5
)
0.5
0.1
0.1
0.7
Total operating income (loss)
$
(37.1
)
$
(533.4
)
$
(35.0
)
$
(24.1
)
$
6.0
$
(26.7
)
Operating income margin %
(35.8
)%
(222.9
)%
(30.9
)%
(23.3
)%
2.5
%
(23.6
)%
EBITDA (3)
Drilling & Downhole
$
(13.0
)
$
(181.5
)
$
(5.3
)
$
(3.8
)
$
12.3
$
(3.2
)
EBITDA Margin %
(30.1
)%
(205.5
)%
(11.2
)%
(8.8
)%
13.9
%
(6.8
)%
Completions
(5.9
)
(303.5
)
(11.9
)
(4.4
)
11.6
(6.2
)
EBITDA Margin %
(30.1
)%
(429.9
)%
(67.6
)%
(22.4
)%
16.4
%
(35.2
)%
Production
(1.1
)
(19.5
)
1.3
2.7
5.9
2.1
EBITDA Margin %
(2.7
)%
(24.1
)%
2.7
%
6.6
%
7.3
%
4.3
%
Corporate
20.4
(8.3
)
28.9
(4.2
)
(4.3
)
(4.3
)
Total EBITDA
$
0.4
$
(512.8
)
$
13.0
$
(9.7
)
$
25.5
$
(11.6
)
EBITDA Margin %
0.4
%
(214.3
)%
11.5
%
(9.4
)%
10.7
%
(10.2
)%
(1) Includes earnings (loss) from equity
investment for the three months ended September 30, 2019.
(2) Includes transaction expenses,
gain/(loss) on disposal of assets, and impairments of goodwill,
intangible assets, 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)
Nine months ended
Nine months ended
(in millions of dollars)
September 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
Revenue
Drilling & Downhole
$
167.0
$
256.6
$
167.0
$
256.6
Completions
88.0
246.8
88.0
246.8
Production
145.0
256.3
145.0
256.3
Eliminations
(0.5
)
(2.9
)
(0.5
)
(2.9
)
Total revenue
$
399.5
$
756.8
$
399.5
$
756.8
Operating income (loss)
Drilling & Downhole (1)
$
(26.8
)
$
3.2
$
(15.1
)
$
8.8
Operating income margin %
(16.0
)%
1.2
%
(9.0
)%
3.4
%
Completions
(47.0
)
9.6
(28.7
)
13.0
Operating income margin %
(53.4
)%
3.9
%
(32.6
)%
5.3
%
Production
(9.3
)
10.2
(2.3
)
11.8
Operating income margin %
(6.4
)%
4.0
%
(1.6
)%
4.6
%
Corporate
(23.3
)
(22.7
)
(18.4
)
(20.7
)
Total segment operating income
(loss)
(106.4
)
0.3
(64.5
)
12.9
Other items not in segment operating
income (loss) (2)
(21.1
)
(528.6
)
0.8
0.3
Total operating income (loss)
$
(127.5
)
$
(528.3
)
$
(63.7
)
$
13.2
Operating income margin %
(31.9
)%
(69.8
)%
(15.9
)%
1.7
%
EBITDA (3)
Drilling & Downhole
$
(19.3
)
$
(171.5
)
$
(0.5
)
$
26.7
EBITDA Margin %
(11.6
)%
(66.8
)%
(3.6
)%
10.4
%
Completions
(37.7
)
(276.6
)
(6.9
)
41.7
EBITDA Margin %
(42.8
)%
(112.1
)%
(7.8
)%
16.9
%
Production
(6.3
)
(7.8
)
5.1
18.9
EBITDA Margin %
(4.3
)%
(3.0
)%
3.5
%
7.4
%
Corporate
46.1
(19.3
)
(14.5
)
(13.5
)
Total EBITDA
$
(17.2
)
$
(475.2
)
$
(16.8
)
$
73.8
EBITDA Margin %
(4.3
)%
(62.8
)%
(4.2
)%
9.8
%
(1) Includes earnings (loss) from equity
investment for the nine months ended September 30, 2019.
(2) Includes transaction expenses, gain
(loss) on disposal of assets, contingent consideration benefit, and
impairments of goodwill, intangible assets, 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)
September 30, 2020
September 30, 2019
June 30, 2020
Orders
Drilling & Downhole
$
38.7
$
80.0
$
42.3
Completions
18.4
64.5
14.2
Production
35.2
55.2
29.1
Total orders
$
92.3
$
199.7
$
85.6
Revenue
Drilling & Downhole
$
43.2
$
88.3
$
47.2
Completions
19.6
70.6
17.6
Production
40.8
81.0
48.6
Eliminations
—
(0.6
)
(0.1
)
Total revenue
$
103.6
$
239.3
$
113.3
Book to bill ratio (1)
Drilling & Downhole
0.90
0.91
0.90
Completions
0.94
0.91
0.81
Production
0.86
0.68
0.60
Total book to bill ratio
0.89
0.83
0.76
(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
September 30, 2020
September 30, 2019
June 30, 2020
(in millions, except per share
information)
Operating loss
EBITDA (1)
Net loss
Operating income
(loss)
EBITDA (1)
Net income (loss)
Operating loss
EBITDA (1)
Net loss
As reported
$
(37.1
)
$
0.4
$
(21.6
)
$
(533.4
)
$
(512.8
)
$
(533.0
)
$
(35.0
)
$
13.0
$
(5.5
)
% of revenue
(35.8
)%
0.4
%
(222.9
)%
(214.3
)%
(30.9
)%
11.5
%
Restructuring charges and other
3.3
3.3
3.3
2.7
2.7
2.7
4.1
4.1
4.1
Transaction expenses
0.7
0.7
0.7
0.3
0.3
0.3
0.2
0.2
0.2
Inventory and other working capital
adjustments
1.2
1.2
1.2
2.6
2.6
2.6
4.1
4.1
4.1
Impairments of goodwill, intangible
assets, property and equipment
3.0
3.0
3.0
532.3
532.3
532.3
0.1
0.1
0.1
Stock-based compensation expense
—
1.9
—
—
3.6
—
—
2.6
—
Impairments of operating lease assets
4.8
4.8
4.8
0.2
0.2
0.2
(0.2
)
(0.2
)
(0.2
)
Amortization of basis difference for
equity method investment (2)
—
—
—
0.3
0.3
0.3
—
—
—
Gain Realized on Previously Held Equity
Investment
—
—
—
—
(1.6
)
(1.6
)
—
—
—
Disposal related equity-based compensation
recorded by equity investment subsidiary
—
—
—
1.0
1.0
1.0
—
—
—
Gain on extinguishment of debt
—
(28.7
)
(28.7
)
—
—
—
—
(36.2
)
(36.2
)
Deferred loan costs written off
—
0.3
0.3
—
—
—
—
0.2
0.2
Loss (gain) on foreign exchange, net
(3)
—
3.4
3.4
—
(3.1
)
(3.1
)
—
0.5
0.5
Income tax expense of adjustments
—
—
—
—
—
0.3
—
—
—
As adjusted (1)
$
(24.1
)
$
(9.7
)
$
(33.6
)
$
6.0
$
25.5
$
2.0
$
(26.7
)
$
(11.6
)
$
(32.7
)
% of revenue
(23.3
)%
(9.4
)%
2.5
%
10.7
%
(23.6
)%
(10.2
)%
Diluted shares outstanding as reported
111.6
110.3
111.6
Diluted shares outstanding as adjusted
111.6
110.5
111.6
Diluted EPS - as reported
$
(0.19
)
$
(4.83
)
$
(0.05
)
Diluted EPS - as adjusted
$
(0.30
)
$
0.02
$
(0.29
)
(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
Nine months ended
September 30, 2020
September 30, 2019
(in millions, except per share
information)
Operating loss
EBITDA (1)
Net loss
Operating income
(loss)
EBITDA (1)
Net loss
As reported
$
(127.5
)
$
(17.2
)
$
(64.2
)
$
(528.3
)
$
(475.2
)
$
(554.6
)
% of revenue
(31.9
)%
(4.3
)%
(69.8
)%
(62.8
)%
Restructuring charges and other
12.8
12.8
12.8
5.9
5.9
5.9
Transaction expenses
0.9
0.9
0.9
1.0
1.0
1.0
Inventory and other working capital
adjustments
15.6
15.6
15.6
2.5
2.5
2.5
Impairments of goodwill, intangible
assets, property and equipment
20.4
20.4
20.4
532.3
532.3
532.3
Impairments of operating lease assets
14.1
14.1
14.1
2.2
2.2
2.2
Stock-based compensation expense
—
7.7
—
—
11.9
—
Contingent consideration benefit
—
—
—
(4.6
)
(4.6
)
(4.6
)
Gain on extinguishment of debt
—
(72.5
)
(72.5
)
—
—
—
Deferred loan costs written off
—
2.3
2.3
—
—
—
Amortization of basis difference for
equity method investment (2)
—
—
—
1.2
1.2
1.2
Gain Realized on Previously Held Equity
Investment
—
—
—
—
(1.6
)
(1.6
)
Disposal related equity-based compensation
recorded by equity investment subsidiary
—
—
—
1.0
1.0
1.0
Gain on foreign exchange, net (3)
—
(0.9
)
(0.9
)
—
(2.8
)
(2.8
)
Income tax expense of adjustments
—
—
—
—
—
0.2
Impact of U.S. CARES Act
—
—
(16.6
)
—
—
—
Valuation allowance on deferred tax
assets
—
—
—
—
—
5.9
As adjusted (1)
$
(63.7
)
$
(16.8
)
$
(88.1
)
$
13.2
$
73.8
$
(11.4
)
% of revenue
(15.9
)%
(4.2
)%
1.7
%
9.8
%
Diluted shares outstanding as reported
111.5
110.0
Diluted shares outstanding as adjusted
111.5
110.0
Diluted EPS - as reported
$
(0.58
)
$
(5.04
)
Diluted EPS - as adjusted
$
(0.79
)
$
(0.10
)
(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)
September 30, 2020
September 30, 2019
June 30, 2020
EBITDA reconciliation (1)
Net loss
$
(21.6
)
$
(533.0
)
$
(5.5
)
Interest expense
8.5
7.8
6.4
Depreciation and amortization
12.4
15.8
12.5
Income tax expense (benefit)
1.1
(3.4
)
(0.4
)
EBITDA
$
0.4
$
(512.8
)
$
13.0
(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
Nine months ended
(in millions of dollars)
September 30, 2020
September 30, 2019
EBITDA reconciliation (1)
Net loss
$
(64.2
)
$
(554.6
)
Interest expense
21.6
24.2
Depreciation and amortization
39.1
48.5
Income tax expense (benefit)
(13.7
)
6.7
EBITDA
$
(17.2
)
$
(475.2
)
(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
Nine months ended
(in millions of dollars)
September 30, 2020
September 30, 2019
Free cash flow, before acquisitions,
reconciliation (1)
Net cash provided by operating
activities
$
1.7
$
75.7
Capital expenditures for property and
equipment
(2.2
)
(12.6
)
Proceeds from sale of property and
equipment
3.6
0.5
Free cash flow, before acquisitions
$
3.1
$
63.6
(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.
Supplemental schedule -
Product line revenue
(Unaudited)
Three months ended
(in millions of dollars)
September 30, 2020
September 30, 2019
June 30, 2020
Revenue:
$
%
$
%
$
%
Drilling Technologies
$
17.5
16.9
%
$
43.2
18.1
%
$
20.0
17.7
%
Downhole Technologies
13.4
12.9
%
29.0
12.1
%
12.7
11.2
%
Subsea Technologies
12.3
11.9
%
16.1
6.7
%
14.5
12.8
%
Drilling & Downhole
43.2
41.7
%
88.3
36.9
%
47.2
41.7
%
Stimulation and Intervention
9.3
9.0
%
36.4
15.2
%
8.5
7.5
%
Coiled Tubing
10.3
9.9
%
34.2
14.3
%
9.1
8.0
%
Completions
19.6
18.9
%
70.6
29.5
%
17.6
15.5
%
Production Equipment
15.5
15.0
%
29.1
12.2
%
19.4
17.1
%
Valve Solutions
25.3
24.4
%
51.9
21.6
%
29.2
25.8
%
Production
40.8
39.4
%
81.0
33.8
%
48.6
42.9
%
Eliminations
—
—
%
(0.6
)
(0.2
)%
(0.1
)
(0.1
)%
Total Revenue
$
103.6
100.0
%
$
239.3
100.0
%
$
113.3
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105006249/en/
Company Contact Lyle Williams Executive Vice President
and Chief Financial Officer 713.351.7920
lyle.williams@f-e-t.com
Forum Energy Technologies (NYSE:FET)
Historical Stock Chart
From Mar 2024 to Apr 2024
Forum Energy Technologies (NYSE:FET)
Historical Stock Chart
From Apr 2023 to Apr 2024