Forum Energy Technologies, Inc. (NYSE: FET) today announced second quarter 2023 revenue of $185 million, an 8% year-over-year increase. Orders were $186 million, with a book-to-bill ratio of 100%. The second quarter 2023 net loss was $7 million, or $0.64 per diluted share, compared to a net loss of $3 million, or $0.34 per diluted share, for the first quarter 2023.
Excluding $8 million, or $0.74 per diluted share, for special items, the quarter's adjusted net income was $0.10 per diluted share compared to the first quarter 2023 adjusted net income of $0.09 per diluted share. Pre-tax foreign exchange losses of $7 million comprise the majority of special items in the second quarter 2023. See Tables 1-5 for a reconciliation of GAAP to non-GAAP financial information.
Neal Lux, President and Chief Executive Officer, remarked, “FET’s steady financial results, during a time of market volatility, demonstrate the benefit of our exposure to the international and offshore markets. Our impressive 10% sequential international revenue growth offset weaker than expected U.S. activity. As a result, revenue and adjusted EBITDA were in line with our guidance.
“Our second quarter book-to-bill ratio was 100%, with backlog building in 10 of the last 12 quarters. Last quarter, we indicated subsea bookings would ramp up as we progress through the year. This quarter, we saw meaningful bookings for our Subsea Technologies product line. In addition, the Production Equipment product line posted strong orders, with several large international ForuMix™ technology and U.S. production-based project awards.
“We remain optimistic about the long-term global energy cycle. International and offshore markets are forecasted to continue their growth trajectory and we expect FET bookings and revenue to follow a similar path. We also anticipate a rebound in U.S. activity following a soft second quarter. However, the timing of this recovery remains uncertain. Therefore, projected 2023 global activity is now lower than our previous expectations. We forecast third quarter 2023 revenue and adjusted EBITDA to be sequentially flat with ranges of $180 to $200 million and $16 to $20 million, respectively. For the full year, we now expect adjusted EBITDA to be around $80 million and free cash flow of $20 million. This implies year-over-year EBITDA growth of 36% and second half 2023 free cash flow of approximately $50 million.”
Segment Results (unless otherwise noted, comparisons are second quarter 2023 versus first quarter 2023)
Drilling & Downhole segment revenue was $81 million, a 5% increase, primarily related to increased international activity that partially offset lower U.S. activity. Orders were $82 million, a 1% increase, due to higher Subsea Technologies bookings for new and refurbished remotely operated vehicles. Segment adjusted EBITDA was comparable to the first quarter 2023 at $11 million. Drilling & Downhole segment operations focus primarily on capital equipment and consumable products for global well construction, artificial lift, and subsea markets.
Completions segment revenue was $72 million, a 2% decrease, primarily related to lower power end and radiator sales. Orders were $63 million, a 5% decrease, primarily related to lower stimulation equipment demand. Segment adjusted EBITDA was $10 million, a 4% decrease, resulting from lower revenue. The Completions segment designs and manufactures products for the coiled tubing, wireline, and stimulation markets.
Production segment revenue was $33 million, a 15% decrease, related to lower deliveries of our production equipment and valve products. Orders were $42 million, a 30% increase, primarily related to major awards for dehydration units, gas processing units, and fuel gas skids, as well as several international ForuMix™ technology awards. Segment Adjusted EBITDA was $2 million, a slight decrease primarily related to lower valve sales. 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.
FET (Forum Energy Technologies) is a global company, serving the oil, natural gas, industrial and renewable energy industries. With headquarters located in Houston, Texas, FET provides value added solutions aimed at improving the safety, efficiency, and environmental impact of our customer’s operations. 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 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, impacts associated with COVID-19, 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) | 2023 | 2022 | 2023 | ||||||||
Revenue | $ | 185.4 | $ | 172.2 | $ | 189.0 | |||||
Cost of sales | 134.1 | 123.6 | 136.9 | ||||||||
Gross profit | 51.3 | 48.6 | 52.1 | ||||||||
Operating expenses | |||||||||||
Selling, general and administrative expenses | 44.4 | 43.5 | 45.5 | ||||||||
Loss (gain) on disposal of assets and other | 0.5 | (0.9 | ) | (0.3 | ) | ||||||
Total operating expenses | 44.9 | 42.6 | 45.2 | ||||||||
Operating income | 6.4 | 6.0 | 6.9 | ||||||||
Other expense (income) | |||||||||||
Interest expense | 4.7 | 7.8 | 4.5 | ||||||||
Foreign exchange losses (gains) and other, net | 6.4 | (12.8 | ) | 3.1 | |||||||
Total other (income) expense, net | 11.1 | (5.0 | ) | 7.6 | |||||||
Income (loss) before income taxes | (4.7 | ) | 11.0 | (0.7 | ) | ||||||
Income tax expense | 1.9 | 1.7 | 2.8 | ||||||||
Net income (loss) (1) | $ | (6.6 | ) | $ | 9.3 | $ | (3.5 | ) | |||
Weighted average shares outstanding | |||||||||||
Basic | 10.2 | 5.7 | 10.2 | ||||||||
Diluted | 10.2 | 10.5 | 10.2 | ||||||||
Earnings (loss) per share | |||||||||||
Basic | $ | (0.64 | ) | $ | 1.61 | $ | (0.34 | ) | |||
Diluted | $ | (0.64 | ) | $ | 1.15 | $ | (0.34 | ) | |||
(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) | 2023 | 2022 | |||||
Revenue | $ | 374.4 | $ | 327.4 | |||
Cost of sales | 271.0 | 240.2 | |||||
Gross profit | 103.4 | 87.2 | |||||
Operating expenses | |||||||
Selling, general and administrative expenses | 89.9 | 87.8 | |||||
Loss (gain) on disposal of assets and other | 0.2 | (0.9 | ) | ||||
Total operating expenses | 90.1 | 86.9 | |||||
Operating income | 13.3 | 0.3 | |||||
Other expense (income) | |||||||
Interest expense | 9.2 | 15.5 | |||||
Foreign exchange losses (gains) and other, net | 9.5 | (18.8 | ) | ||||
Total other (income) expense, net | 18.7 | (3.3 | ) | ||||
Income (loss) before income taxes | (5.4 | ) | 3.6 | ||||
Income tax expense | 4.7 | 3.5 | |||||
Net income (loss) (1) | $ | (10.1 | ) | $ | 0.1 | ||
Weighted average shares outstanding | |||||||
Basic | 10.2 | 5.7 | |||||
Diluted | 10.2 | 5.9 | |||||
Earnings (loss) per share | |||||||
Basic | $ | (0.99 | ) | $ | 0.01 | ||
Diluted | $ | (0.99 | ) | $ | 0.01 | ||
(1) Refer to Table 2 for schedule of adjusting items. | |||||||
Forum Energy Technologies, Inc. | |||||
Condensed consolidated balance sheets | |||||
(Unaudited) | |||||
June 30, | December 31, | ||||
(in millions of dollars) | 2023 | 2022 | |||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 24.8 | $ | 51.0 | |
Accounts receivable—trade, net | 169.0 | 154.2 | |||
Inventories, net | 302.5 | 269.8 | |||
Other current assets | 41.2 | 37.9 | |||
Total current assets | 537.5 | 512.9 | |||
Property and equipment, net of accumulated depreciation | 62.4 | 63.0 | |||
Operating lease assets | 56.0 | 57.3 | |||
Intangible assets, net | 179.8 | 191.5 | |||
Other long-term assets | 8.0 | 10.1 | |||
Total assets | $ | 843.7 | $ | 834.8 | |
Liabilities and equity | |||||
Current liabilities | |||||
Current portion of long-term debt | $ | 1.1 | $ | 0.8 | |
Other current liabilities | 209.1 | 209.5 | |||
Total current liabilities | 210.2 | 210.3 | |||
Long-term debt, net of current portion | 137.8 | 239.1 | |||
Other long-term liabilities | 76.4 | 78.3 | |||
Total liabilities | 424.4 | 527.7 | |||
Total equity | 419.3 | 307.1 | |||
Total liabilities and equity | $ | 843.7 | $ | 834.8 | |
Forum Energy Technologies, Inc. | |||||||
Condensed consolidated cash flow information | |||||||
(Unaudited) | |||||||
Six Months Ended June 30, | |||||||
(in millions of dollars) | 2023 | 2022 | |||||
Cash flows from operating activities | |||||||
Net income (loss) | $ | (10.1 | ) | $ | 0.1 | ||
