Forum Energy Technologies Announces First Quarter 2024 Results, Benefits from Variperm Acquisition

Forum Energy Technologies, Inc.

Condensed consolidated statements of income (loss)

(Unaudited)

Three months ended

March 31,

December 31,

(in millions, except per share information)

2024

2023

2023

Revenue

$

202.4

$

189.0

$

185.2

Cost of sales

138.6

136.9

135.5

Gross profit

63.8

52.1

49.7

Operating expenses

Selling, general and administrative expenses

54.7

45.5

45.0

Transaction expenses

5.9

-

2.9

Gain on disposal of assets and other

-

(0.3

)

-

Total operating expenses

60.6

45.2

47.9

Operating income

3.2

6.9

1.8

Other expense

Interest expense

8.8

4.5

4.6

Foreign exchange losses and other, net

1.2

3.1

9.1

Total other expense

10.0

7.6

13.7

Loss before income taxes

(6.8

)

(0.7

)

(11.9

)

Income tax expense

3.5

2.8

4.9

Net income (loss) ⁽¹⁾

$

(10.3

)

$

(3.5

)

$

(16.8

)

Weighted average shares outstanding

Basic

12.2

10.2

10.2

Diluted

12.2

10.2

10.2

Loss per share

Basic

$

(0.85

)

$

(0.34

)

$

(1.64

)

Diluted

$

(0.85

)

$

(0.34

)

$

(1.64

)

⁽¹⁾ Refer to Table 1 for schedule of adjusting items.

Forum Energy Technologies, Inc.

Condensed consolidated balance sheets

(Unaudited)

March 31,

December 31,

(in millions of dollars)

2024

2023

Assets

Current assets

Cash and cash equivalents

$

48.5

$

46.2

Accounts receivable-trade, net

162.0

146.7

Inventories, net

303.0

299.6

Other current assets

33.3

37.1

Total current assets

546.8

529.6

Property and equipment, net of accumulated depreciation

87.7

61.4

Operating lease assets

54.8

55.4

Goodwill and other intangible assets, net

324.6

168.0

Other long-term assets

7.5

6.7

Total assets

$

1,021.4

$

821.1

Liabilities and equity

Current liabilities

Current portion of long-term debt

$

5.2

$

1.2

Other current liabilities

187.9

203.1

Total current liabilities

193.1

204.3

Long-term debt, net of current portion

282.3

129.6

Other long-term liabilities

99.8

74.5

Total liabilities

575.2

408.4

Total equity

446.2

412.7

Total liabilities and equity

$

1,021.4

$

821.1

Forum Energy Technologies, Inc.

Condensed consolidated cash flow information

(Unaudited)

Three Months Ended March 31,

(in millions of dollars)

2024

2023

Cash flows from operating activities

Net loss

$

(10.3

)

$

(3.5

)

Depreciation and amortization

13.8

8.7

Inventory write down

0.5

0.9

Other noncash items and changes in working capital

1.0

(29.2

)

Net cash provided by (used in) operating activities

5.0

(23.1

)

Cash flows from investing activities

Capital expenditures for property and equipment

(2.9

)

(1.1

)

Proceeds from sale of property and equipment

0.2

0.3

Payments related to business acquisition

(150.1

)

-

Net cash used in investing activities

(152.8

)

(0.8

)

Cash flows from financing activities

Borrowings of debt

304.8

119.4

Repayments of debt

(148.8

)

(94.7

)

Repurchases of stock

(1.2

)

(5.4

)

Deferred financing costs

(3.0

)

-

Net cash provided by financing activities

151.8

19.3

Effect of exchange rate changes on cash

(1.7

)

0.3

Net increase (decrease) in cash, cash equivalents and restricted cash

$

2.3

$

(4.3

)

Forum Energy Technologies, Inc.

Supplemental schedule - Segment information

(Unaudited)

As Reported

As Adjusted ⁽³⁾

Three months ended

Three months ended

(in millions of dollars)

March 31,
2024

March 31,
2023

December 31,
2023

March 31,
2024

March 31,
2023

December 31,
2023

Revenue

Drilling and Completions

$

119.1

$

126.8

$

126.6

$

119.1

$

126.8

$

126.6

Artificial Lift and Downhole

83.3

62.2

58.6

83.3

62.2

58.6

Eliminations

-

-

-

-

-

-

Total revenue

$

202.4

$

189.0

$

185.2

$

202.4

$

189.0

$

185.2

Operating income (loss)

Drilling and Completions

$

4.6

$

5.0

$

4.0

$

5.8

$

5.9

$

4.7

Operating Margin %

3.9

%

3.9

%

3.2

%

4.9

%

4.7

%

3.7

%

Artificial Lift and Downhole

11.8

8.6

7.4

11.7

8.6

7.4

Operating Margin %

14.2

%

13.8

%

12.6

%

14.0

%

13.8

%

12.6

%

Corporate

(7.3

)

(7.0

)

(6.7

)

(6.9

)

(6.8

)

(6.7

)

Total segment operating income

9.1

6.6

4.7

10.6

7.7

5.4

Other items not in segment operating income ⁽¹⁾

(5.9

)

0.3

(2.9

)

0.1

0.3

-

Total operating income

$

3.2

$

6.9

$

1.8

$

10.7

$

8.0

$

5.4

Operating Margin %

1.6

%

3.7

%

1.0

%

5.3

%

4.2

%

2.9

%

EBITDA ⁽²⁾

Drilling and Completions

$

13.1

$

9.5

$

3.8

$

13.7

$

13.5

$

12.1

EBITDA Margin %

11.0

%

7.5

%

3.0

%

11.5

%

10.6

%

9.6

%

Artificial Lift and Downhole

17.7

10.1

8.5

18.0

10.1

8.7

EBITDA Margin %

21.2

%

16.2

%

14.5

%

21.6

%

16.2

%

14.8

%

Corporate

(15.0

)

(7.1

)

(10.9

)

(5.6

)

(5.9

)

(5.4

)

Total EBITDA

$

15.8

$

12.5

$

1.4

$

26.1

$

17.7

$

15.4

EBITDA Margin %

7.8

%

6.6

%

0.8

%

12.9

%

9.4

%

8.3

%

⁽¹⁾ Includes gain/(loss) on disposal of assets and other.

⁽²⁾ The Company believes that the presentation of EBITDA is useful to the Company's investors because EBITDA is an appropriate measure for evaluating the Company's operating performance and liquidity that reflects the resources available for strategic opportunities including, among others, investing in the business, strengthening the balance sheet, repurchasing the Company's securities and making strategic acquisitions. In addition, EBITDA is a widely used benchmark in the investment community. See the attached separate schedule for the reconciliation of GAAP to non-GAAP financial information.

⁽³⁾ Refer to Table 1 for schedule of adjusting items.

Forum Energy Technologies, Inc.

Supplemental schedule - Orders information

(Unaudited)

Three months ended

(in millions of dollars)

March 31, 2024

March 31, 2023

December 31, 2023

Orders

Drilling and Completions

$

116.6

$

121.3

$

113.8

Artificial Lift and Downhole

87.8

57.6

46.5

Total orders

$

204.4

$

178.9

$

160.3

Revenue

Drilling and Completions

$

119.1

$

126.8

$

126.6

Artificial Lift and Downhole

83.3

62.2

58.6

Total revenue

$

202.4

$

189.0

$

185.2

Book to bill ratio ⁽¹⁾

Drilling and Completions

0.98

0.96

0.90

Artificial Lift and Downhole

1.05

0.93

0.79

Total book to bill ratio

1.01

0.95

0.87

⁽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 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, 2024

March 31, 2023

December 31, 2023

(in millions, except per share information)

Operating income

EBITDA⁽¹⁾

Net income (loss)

Operating income

EBITDA⁽¹⁾

Net income (loss)

Operating income

EBITDA⁽¹⁾

Net income (loss)

As reported

$

3.2

$

15.8

$

(10.3

)

$

6.9

$

12.5

$

(3.5

)

$

1.8

$

1.4

$

(16.8

)

% of revenue

1.6

%

7.8

%

3.7

%

6.6

%

1.0

%

0.8

%

Restructuring, transaction and other costs

1.6

1.6

1.6

1.1

1.1

1.1

0.7

0.7

0.7

Transaction expenses

5.9

5.9

5.9

-

-

-

2.9

2.9

2.9

Loss (gain) on foreign exchange, net ⁽²⁾

-

1.3

1.3

-

3.3

3.3

-

9.2

9.2

Stock-based compensation expense

-

1.5

-

-

0.8

-

-

1.2

-

As adjusted ⁽¹⁾

$

10.7

$

26.1

$

(1.5

)

$

8.0

$

17.7

$

0.9

$

5.4

$

15.4

$

(4.0

)

% of revenue

5.3

%

12.9

%

4.2

%

9.4

%

2.9

%

8.3

%

Diluted shares outstanding as reported

12.2

10.2

10.2

Diluted shares outstanding as adjusted

12.2

10.2

10.2

Diluted EPS - as reported

$

(0.85

)

$

(0.34

)

$

(1.64

)

Diluted EPS - as adjusted

$

(0.12

)

$

0.09

$

(0.39

)

⁽¹⁾ The Company believes that the presentation of EBITDA, adjusted EBITDA, adjusted operating loss, adjusted net loss and adjusted diluted EPS are useful to the Company's investors because (i) each of these financial metrics are useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the Company's normal operating results and (ii) EBITDA is an appropriate measure of evaluating the company's operating performance and liquidity that reflects the resources available for strategic opportunities including, among others, investing in the business, strengthening the balance sheet, repurchasing the Company's securities and making strategic acquisitions. In addition, these benchmarks are widely used in the investment community. See the attached separate schedule for the reconciliation of GAAP to non-GAAP financial information.

⁽²⁾ Foreign exchange, net primarily relates to cash and receivables denominated in U.S. dollars by some of our non-U.S. subsidiaries that report in a local currency, and therefore the loss (gain) 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,
2024

March 31,
2023

December 31,
2023

EBITDA reconciliation ⁽¹⁾

Net loss

$

(10.3

)

$

(3.5

)

$

(16.8

)

Interest expense

8.8

4.5

4.6

Depreciation and amortization

13.8

8.7

8.7

Income tax expense

3.5

2.8

4.9

EBITDA

$

15.8

$

12.5

$

1.4

⁽¹⁾ The Company believes adjusted EBITDA is useful to investors because it is an appropriate measure of evaluating operating performance and liquidity. It 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, adjusted EBITDA is a widely used benchmark in the investment community.

Forum Energy Technologies, Inc.

Reconciliation of GAAP to non-GAAP financial information

(Unaudited)

Table 3 - Adjusting items

Three months ended

(in millions of dollars)

March 31,
2024

March 31,
2023

December 31,
2023

Free cash flow, before acquisitions, reconciliation ⁽¹⁾

Net cash provided by (used in) operating activities

$

5.0

$

(23.1

)

$

11.3

Capital expenditures for property and equipment

(2.9

)

(1.1

)

(2.4

)

Proceeds from sale of property and equipment

0.2

0.3

-

Free cash flow, before acquisitions

$

2.3

$

(23.9

)

$

8.9

⁽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, 2024

March 31, 2023

December 31, 2023

Revenue

$

%

$

%

$

%

Drilling

$

36.5

17.9

%

$

40.4

21.4

%

$

41.6

22.5

%

Subsea

21.8

10.8

%

12.8

6.8

%

27.6

14.9

%

Stimulation and Intervention

38.6

19.1

%

47.3

25.0

%

32.1

17.3

%

Coiled Tubing

22.2

11.0

%

26.3

13.9

%

25.3

13.7

%

Drilling and Completions

119.1

58.8

%

126.8

67.1

%

126.6

68.4

%

Downhole

52.2

25.8

%

23.2

12.3

%

21.7

11.7

%

Production Equipment

18.5

9.1

%

19.9

10.5

%

22.7

12.3

%

Valve Solutions

12.6

6.3

%

19.1

10.1

%

14.2

7.6

%

Artificial Lift and Downhole

83.3

41.2

%

62.2

32.9

%

58.6

31.6

%

Eliminations

-

-

%

-

-

%

-

-

%

Total revenue

$

202.4

100.0

%

$

189.0

100.0

%

$

185.2

100.0

%

Forum Energy Technologies, Inc.

Supplemental schedule - 2023 segment information provided for segment change

(Unaudited)

As Reported

As Adjusted ⁽³⁾

Three months ended

Three months ended

(in millions of dollars)

December 31, 2023

September 30,
2023

June 30,
2023

March 31, 2023

December 31, 2023

September 30,
2023

June 30,
2023

March 31, 2023

Revenue

Drilling and Completions

$

126.6

$

118.9

$

130.3

$

126.8

$

126.6

$

118.9

$

130.3

$

126.8

Artificial Lift and Downhole

58.6

60.4

55.1

62.2

58.6

60.4

55.1

62.2

Eliminations

-

-

-

-

-

-

-

-

Total revenue

$

185.2

$

179.3

$

185.4

$

189.0

$

185.2

$

179.3

$

185.4

$

189.0

Operating income (loss)

Drilling and Completions

$

4.0

$

3.8

$

6.6

$

5.0

$

4.7

$

3.7

$

6.6

$

5.9

Operating Margin %

3.2

%

3.2

%

5.1

%

3.9

%

3.7

%

3.1

%

5.1

%

4.7

%

Artificial Lift and Downhole

7.4

8.5

7.0

8.6

7.4

8.8

7.2

8.6

Operating Margin %

12.6

%

14.1

%

12.7

%

13.8

%

12.6

%

14.6

%

13.1

%

13.8

%

Corporate

(6.7

)

(6.8

)

(6.7

)

(7.0

)

(6.7

)

(6.3

)

(6.6

)

(6.8

)

Total segment operating income

4.7

5.5

6.9

6.6

5.4

6.2

7.2

7.7

Other items not in segment operating income ⁽¹⁾

(2.9

)

0.2

(0.5

)

0.3

-

0.2

0.3

0.3

Total operating income

$

1.8

$

5.7

$

6.4

$

6.9

$

5.4

$

6.4

$

7.5

$

8.0

Operating Margin %

1.0

%

3.2

%

3.5

%

3.7

%

2.9

%

3.6

%

4.0

%

4.2

%

EBITDA ⁽²⁾

Drilling and Completions

$

3.8

$

18.4

$

8.4

$

9.5

$

12.1

$

11.6

$

13.7

$

13.5

EBITDA Margin %

3.0

%

15.5

%

6.4

%

7.5

%

9.6

%

9.8

%

10.5

%

10.6

%

Artificial Lift and Downhole

8.5

10.2

7.4

10.1

8.7

10.1

8.6

10.1

EBITDA Margin %

14.5

%

16.9

%

13.4

%

16.2

%

14.8

%

16.7

%

15.6

%

16.2

%

Corporate

(10.9

)

(5.7

)

(7.3

)

(7.1

)

(5.4

)

(5.1

)

(4.9

)

(5.9

)

Total EBITDA

$

1.4

$

22.9

$

8.5

$

12.5

$

15.4

$

16.6

$

17.4

$

17.7

EBITDA Margin %

0.8

%

12.8

%

4.6

%

6.6

%

8.3

%

9.3

%

9.4

%

9.4

%

⁽¹⁾ Includes gain/(loss) on disposal of assets and other.

⁽²⁾ The Company believes that the presentation of EBITDA is useful to the Company's investors because EBITDA is an appropriate measure for 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 [Supplemental schedule - 2023 adjusting items provided for segment change.]

Forum Energy Technologies, Inc.

Reconciliation of GAAP to non-GAAP financial information

(Unaudited)

Supplemental schedule - 2023 adjusting items provided for segment change

Three months ended

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

(in millions, except per share information)

Operating
income

EBITDA
⁽¹⁾

Net
income
(loss)

Operating
income

EBITDA
⁽¹⁾

Net
income
(loss)

Operating
income

EBITDA
⁽¹⁾

Net
income
(loss)

Operating
income

EBITDA
⁽¹⁾

Net
income
(loss)

As reported

$

1.8

$

1.4

$

(16.8

)

$

5.7

$

22.9

$

8.0

$

6.4

$

8.5

$

(6.6

)

$

6.9

$

12.5

$

(3.5

)

% of revenue

1.0

%

0.8

%

3.2

%

12.8

%

3.5

%

4.6

%

3.7

%

6.6

%

Restructuring, transaction and other costs

0.7

0.7

0.7

0.8

0.8

0.8

1.5

1.5

1.5

1.1

1.1

1.1

Transaction expenses

2.9

2.9

2.9

-

-

-

-

-

-

-

-

-

Inventory and other working capital adjustments

-

-

-

(0.1

)

(0.1

)

(0.1

)

(0.4

)

(0.4

)

(0.4

)

-

-

-

Loss (gain) on foreign exchange, net ⁽²⁾

-

9.2

9.2

-

(8.2

)

(8.2

)

-

6.5

6.5

-

3.3

3.3

Stock-based compensation expense

-

1.2

-

-

1.2

-

-

1.3

-

-

0.8

-

As adjusted ⁽¹⁾

$

5.4

$

15.4

$

(4.0

)

$

6.4

$

16.6

$

0.5

$

7.5

$

17.4

$

1.0

$

8.0

$

17.7

$

0.9

% of revenue

2.9

%

8.3

%

3.6

%

9.3

%

4.0

%

9.4

%

4.2

%

9.4

%

Diluted shares outstanding as reported

10.2

10.4

10.2

10.2

Diluted shares outstanding as adjusted

10.2

10.4

10.2

10.2

Diluted EPS - as reported

$

(1.64

)

$

0.77

$

(0.64

)

$

(0.34

)

Diluted EPS - as adjusted

$

(0.39

)

$

0.05

$

0.10

$

0.09

⁽¹⁾ The Company believes that the presentation of EBITDA, adjusted EBITDA, adjusted operating loss, adjusted net loss and adjusted diluted EPS are useful to the Company's investors because (i) each of these financial metrics are useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the Company's normal operating results and (ii) EBITDA is an appropriate measure of evaluating the company's operating performance and liquidity that reflects the resources available for strategic opportunities including, among others, investing in the business, strengthening the balance sheet, repurchasing the Company's securities and making strategic acquisitions. In addition, these benchmarks are widely used in the investment community. See the attached separate schedule for the reconciliation of GAAP to non-GAAP financial information.

⁽²⁾ Foreign exchange, net primarily relates to cash and receivables denominated in U.S. dollars by some of our non-U.S. subsidiaries that report in a local currency, and therefore the loss (gain) has no economic impact in dollar terms.