Forum Energy Technologies, Inc. (NYSE:FET) today announced second
quarter 2016 revenue of $143 million, a decrease of $17 million, or 10%,
from the first quarter 2016. Net loss for the quarter was $29 million,
or $0.31 per diluted share, compared to a net loss of $23 million, or
$0.25 per diluted share, for the first quarter 2016. Excluding $0.12 per
share of special items, the adjusted net loss was $0.19 per diluted
share in the second quarter of 2016.
Forum generated cash flow from operating activities of $18 million and
free cash flow after net capital expenditures but before acquisitions of
$16 million during the second quarter of 2016.
Special items in the second quarter 2016 included pre-tax charges of $26
million for inventory and other working capital reserves and $3 million
for restructuring charges, partially offset by $10 million of foreign
exchange gains. See Tables 1-5 for a reconciliation of GAAP to non-GAAP
financial information.
Segment Results
Drilling & Subsea segment revenue was $57 million, a 13% decrease from
the first quarter 2016, due to the 23% decline in the United States
drilling rig count and lower demand for subsea robotics and equipment.
The Completions segment revenue was $25 million, a 29% decline
sequentially, as customers continued to defer all non-essential spending
on completions equipment.
Production & Infrastructure segment revenue was $62 million, a 2%
increase from the first quarter 2016, as the improvement in valve sales,
particularly to the midstream gas transmission industry, was partially
offset by lower surface production equipment deliveries in the quarter.
New orders received by Forum in the second quarter were $128 million,
resulting in a book to bill ratio of 90%.
Review and Outlook
Cris Gaut, Forum’s Chairman and Chief Executive Officer, remarked,
"Although the second quarter saw a new low in industry activity in this
down cycle, our operating results were better than the industry trend.
Our second quarter revenue declined only 10% sequentially, and we
generated significant free cash flow. Our initiatives to right-size our
organization and improve operational efficiency enabled us to hold our
operating income decremental margins to 13% from the prior quarter. I am
confident these cost structure and operational enhancements will allow
Forum to achieve high incremental margins when activity improves.
"Our financial strength is a differentiator, allowing us to invest in
operational excellence initiatives, new product development and
acquisition opportunities.
“Forum is well positioned for the recovery in drilling and completions
activity. We have a significant majority of our revenue coming from
North America, which is expected to be the first market to recover, and
from early cycle, consumable products and activity-based equipment
sales."
Recent Events
Forum received an order from New Orient Marine, to supply three remotely
operated vehicles (ROVs) for its multi-purpose ice-class vessel. The
order includes two Perry™ XLX 200 HP work class ROV systems and one
Sub-Atlantic™ Comanche observation class ROV.
Forum has aligned with Offshore Technology Development, a subsidiary of
Keppel Offshore & Marine, to offer the oil and gas industry the latest
in hydraulic catwalk technology for offshore rigs, a catwalk with
best-in-class cycle times for moving pipe and completion tubulars from
the pipe storage area up to the drill floor.
Conference Call Information
Forum's conference call is scheduled for July 29, 2016 at 9:00 AM CDT.
During the call, the Company intends to discuss second quarter 2016
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 43228502. 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 43228502.
Forum Energy Technologies is a global oilfield products company,
serving the subsea, drilling, completion, production and infrastructure
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 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
|
|
|
June 30,
|
|
March 31,
|
(in millions, except per share information)
|
|
2016
|
|
2015
|
|
2016
|
Revenue
|
|
$
|
142.8
|
|
|
$
|
284.4
|
|
|
$
|
159.4
|
|
Total operating expenses
|
|
195.9
|
|
|
265.8
|
|
|
185.0
|
|
Earnings from equity investment
|
|
0.2
|
|
|
3.8
|
|
|
0.6
|
|
Operating income (loss)
|
|
(52.9
|
)
|
|
22.4
|
|
|
(25.0
|
)
|
Other expense (income)
|
|
|
|
|
|
|
Interest expense
|
|
6.8
|
|
|
7.6
|
|
|
7.1
|
|
Deferred loan costs written off
|
|
—
|
|
|
—
|
|
|
2.6
|
|
Loss (gain) on foreign exchange and other, net
|
|
(10.0
|
)
|
|
4.0
|
|
|
(1.4
|
)
|
Profit (loss) before income taxes
|
|
(49.7
|
)
|
|
10.8
|
|
|
(33.3
|
)
|
Provision (benefit) for income tax expense
|
|
(21.1
|
)
|
|
1.9
|
|
|
(10.4
|
)
|
Net income (loss)
|
|
(28.6
|
)
|
|
8.9
|
|
|
(22.9
|
)
|
Less: Net income (loss) attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income (loss) attributable to common stockholders (1)
|
|
$
|
(28.6
|
)
|
|
$
|
8.9
|
|
|
$
|
(22.9
|
)
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
Basic
|
|
90.7
|
|
|
89.8
|
|
|
90.5
|
|
Diluted
|
|
90.7
|
|
|
91.9
|
|
|
90.5
|
|
|
|
|
|
|
|
|
Earnings (losses) per share
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.31
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.25
|
)
|
Diluted
|
|
$
|
(0.31
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.25
|
)
|
|
|
|
|
|
|
|
(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)
|
|
2016
|
|
2015
|
Revenue
|
|
$
|
302.2
|
|
|
$
|
632.5
|
|
Total operating expenses
|
|
380.9
|
|
|
578.3
|
|
Earnings from equity investment
|
|
0.8
|
|
|
8.4
|
|
Operating income (loss)
|
|
(77.9
|
)
|
|
62.6
|
|
Other expense (income)
|
|
|
|
|
Interest expense
|
|
13.9
|
|
|
15.2
|
|
Deferred loan costs written off
|
|
2.6
|
|
|
—
|
|
Loss (gain) on foreign exchange and other, net
|
|
(11.4
|
)
|
|
(2.7
|
)
|
Profit (loss) before income taxes
|
|
(83.0
|
)
|
|
50.1
|
|
Provision (benefit) for income tax expense
|
|
(31.5
|
)
|
|
12.5
|
|
Net income (loss)
|
|
(51.5
|
)
|
|
37.6
|
|
Less: Net income (loss) attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
Net income (loss) attributable to common stockholders (1)
|
|
$
|
(51.5
|
)
|
|
$
|
37.6
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
Basic
|
|
90.6
|
|
|
89.6
|
|
Diluted
|
|
90.6
|
|
|
91.6
|
|
|
|
|
|
|
Earnings (losses) per share
|
|
|
|
|
Basic
|
|
$
|
(0.57
|
)
|
|
$
|
0.42
|
|
Diluted
|
|
$
|
(0.57
|
)
|
|
$
|
0.41
|
|
|
|
|
|
|
(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, 2016
|
|
December 31, 2015
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
137.2
|
|
|
$
|
109.2
|
Accounts receivable—trade, net
|
|
94.4
|
|
|
138.6
|
Inventories, net
|
|
375.0
|
|
|
424.1
|
Other current assets
|
|
33.9
|
|
|
45.9
|
Total current assets
|
|
640.5
|
|
|
717.8
|
Property and equipment, net of accumulated depreciation
|
|
173.6
|
|
|
186.7
|
Goodwill and other intangibles, net
|
|
895.4
|
|
|
915.7
|
Investment in unconsolidated subsidiary
|
|
58.1
|
|
|
57.7
|
Other long-term assets
|
|
5.6
|
|
|
8.1
|
Total assets
|
|
$
|
1,773.2
|
|
|
$
|
1,886.0
|
Liabilities and Equity
|
|
|
|
|
Current liabilities
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
—
|
|
|
$
|
0.3
|
Other current liabilities
|
|
131.7
|
|
|
151.2
|
Total current liabilities
|
|
131.7
|
|
|
151.5
|
Long-term debt, net of current portion
|
|
396.3
|
|
|
396.0
|
Other long-term liabilities
|
|
49.6
|
|
|
81.1
|
Total liabilities
|
|
577.6
|
|
|
628.6
|
Total stockholders’ equity
|
|
1,195.1
|
|
|
1,257.0
|
Noncontrolling interest in subsidiary
|
|
0.5
|
|
|
0.4
|
Total equity
|
|
1,195.6
|
|
|
1,257.4
|
Total liabilities and equity
|
|
$
|
1,773.2
|
|
|
$
|
1,886.0
|
|
Forum Energy Technologies, Inc.
|
Condensed consolidated cash flow information
|
(Unaudited)
|
|
|
Six months ended June 30,
|
(in millions of dollars)
|
|
2016
|
|
2015
|
Cash flows from operating activities
|
|
|
|
|
Net income (loss)
|
|
$
|
(51.5
|
)
|
|
$
|
37.6
|
|
Depreciation and amortization
|
|
31.6
|
|
|
32.7
|
|
Other, primarily changes in working capital
|
|
64.8
|
|
|
(15.2
|
)
|
Net cash provided by operating activities
|
|
$
|
44.9
|
|
|
$
|
55.1
|
|
Cash flows from investing activities
|
|
|
|
|
Capital expenditures for property and equipment
|
|
$
|
(10.0
|
)
|
|
$
|
(18.9
|
)
|
Proceeds from sale of business, property and equipment and other
|
|
3.7
|
|
|
1.4
|
|
Acquisition of businesses, net of cash acquired
|
|
(2.7
|
)
|
|
(60.8
|
)
|
Net cash used in investing activities
|
|
$
|
(9.0
|
)
|
|
$
|
(78.3
|
)
|
Cash flows from financing activities
|
|
|
|
|
Borrowings of long-term debt, including borrowings due to
acquisitions
|
|
$
|
—
|
|
|
$
|
79.9
|
|
Repayment of long-term debt
|
|
(0.2
|
)
|
|
(70.6
|
)
|
Other
|
|
(0.5
|
)
|
|
(3.8
|
)
|
Net cash provided by (used in) financing activities
|
|
$
|
(0.7
|
)
|
|
$
|
5.5
|
|
Effect of exchange rate changes on cash
|
|
(7.2
|
)
|
|
(1.1
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
28.0
|
|
|
$
|
(18.8
|
)
|
|
Forum Energy Technologies, Inc.
|
Supplemental schedule - Segment information
|
(Unaudited)
|
|
|
|
|
|
|
|
As Reported
|
|
As Adjusted (6)
|
|
|
Three months ended
|
|
Three months ended
|
(in millions of dollars)
|
|
June 30, 2016
|
|
June 30, 2015
|
|
March 31, 2016
|
|
June 30, 2016
|
|
June 30, 2015
|
|
March 31, 2016
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling & Subsea
|
|
$
|
56.8
|
|
|
$
|
129.8
|
|
|
$
|
65.3
|
|
|
$
|
56.8
|
|
|
$
|
129.8
|
|
|
$
|
65.3
|
|
Completions
|
|
24.5
|
|
|
72.3
|
|
|
34.3
|
|
|
24.5
|
|
|
72.3
|
|
|
34.3
|
|
Production & Infrastructure
|
|
61.8
|
|
|
82.5
|
|
|
60.5
|
|
|
61.8
|
|
|
82.5
|
|
|
60.5
|
|
Eliminations
|
|
(0.3
|
)
|
|
(0.2
|
)
|
|
(0.7
|
)
|
|
(0.3
|
)
|
|
(0.2
|
)
|
|
(0.7
|
)
|
Total revenue
|
|
$
|
142.8
|
|
|
$
|
284.4
|
|
|
$
|
159.4
|
|
|
$
|
142.8
|
|
|
$
|
284.4
|
|
|
$
|
159.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling & Subsea
|
|
$
|
(20.5
|
)
|
|
$
|
10.3
|
|
|
$
|
(9.8
|
)
|
|
$
|
(11.9
|
)
|
|
$
|
12.5
|
|
|
$
|
(9.3
|
)
|
Operating income margin %
|
|
(36.1
|
)%
|
|
7.9
|
%
|
|
(15.0
|
)%
|
|
(21.0
|
)%
|
|
9.6
|
%
|
|
(14.2
|
)%
|
Completions (1)
|
|
(28.0
|
)
|
|
10.9
|
|
|
(6.5
|
)
|
|
(8.4
|
)
|
|
11.4
|
|
|
(5.7
|
)
|
Operating income margin %
|
|
(114.3
|
)%
|
|
15.1
|
%
|
|
(19.0
|
)%
|
|
(34.3
|
)%
|
|
15.8
|
%
|
|
(16.6
|
)%
|
Production & Infrastructure
|
|
2.6
|
|
|
9.4
|
|
|
(1.4
|
)
|
|
3.6
|
|
|
8.4
|
|
|
0.8
|
|
Operating income margin %
|
|
4.2
|
%
|
|
11.4
|
%
|
|
(2.3
|
)%
|
|
5.8
|
%
|
|
10.2
|
%
|
|
1.3
|
%
|
Corporate
|
|
(6.9
|
)
|
|
(8.1
|
)
|
|
(7.2
|
)
|
|
(6.7
|
)
|
|
(7.8
|
)
|
|
(6.9
|
)
|
Total Segment operating income (loss)
|
|
(52.8
|
)
|
|
22.5
|
|
|
(24.9
|
)
|
|
(23.4
|
)
|
|
24.5
|
|
|
(21.1
|
)
|
Other items not in segment operating income (loss) (2)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
Total operating income (loss)
|
|
$
|
(52.9
|
)
|
|
$
|
22.4
|
|
|
$
|
(25.0
|
)
|
|
$
|
(23.2
|
)
|
|
$
|
24.5
|
|
|
$
|
(21.0
|
)
|
Operating income margin %
|
|
(37.0
|
)%
|
|
7.9
|
%
|
|
(15.7
|
)%
|
|
(16.2
|
)%
|
|
8.6
|
%
|
|
(13.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (3) (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling & Subsea
|
|
$
|
(1.0
|
)
|
|
$
|
14.5
|
|
|
$
|
(0.4
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
21.0
|
|
|
$
|
(1.4
|
)
|
EBITDA Margin %
|
|
(1.8
|
)%
|
|
11.2
|
%
|
|
(0.6
|
)%
|
|
(6.7
|
)%
|
|
16.2
|
%
|
|
(2.1
|
)%
|
Completions
|
|
(21.9
|
)
|
|
17.1
|
|
|
(0.3
|
)
|
|
(2.3
|
)
|
|
17.7
|
|
|
0.5
|
|
EBITDA Margin %
|
|
(89.4
|
)%
|
|
23.7
|
%
|
|
(0.9
|
)%
|
|
(9.4
|
)%
|
|
24.5
|
%
|
|
1.5
|
%
|
Production & Infrastructure
|
|
2.3
|
|
|
11.2
|
|
|
0.3
|
|
|
5.2
|
|
|
10.2
|
|
|
2.5
|
|
EBITDA Margin %
|
|
3.7
|
%
|
|
13.6
|
%
|
|
0.5
|
%
|
|
8.4
|
%
|
|
12.4
|
%
|
|
4.1
|
%
|
Corporate
|
|
(6.6
|
)
|
|
(8.0
|
)
|
|
(9.7
|
)
|
|
(6.5
|
)
|
|
(7.8
|
)
|
|
(6.7
|
)
|
Other items (5)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Total EBITDA
|
|
$
|
(27.2
|
)
|
|
$
|
34.8
|
|
|
$
|
(10.3
|
)
|
|
$
|
(7.4
|
)
|
|
$
|
41.1
|
|
|
$
|
(5.1
|
)
|
EBITDA Margin %
|
|
(19.0
|
)%
|
|
12.2
|
%
|
|
(6.5
|
)%
|
|
(5.2
|
)%
|
|
14.5
|
%
|
|
(3.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes earnings from equity investment.
|
(2)
|
|
Includes transaction expenses and gain/(loss) on sale of assets.
|
(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)
|
|
Depreciation and amortization expense has been reclassified among
corporate and the operating segments. Prior period EBITDA financial
information has been revised to conform with current period
presentation with no impact to operating income.
|
(5)
|
|
Includes transaction expenses.
|
(6)
|
|
Refer to Table 1 for schedule of adjusting items.
|
|
Forum Energy Technologies, Inc.
|
Supplemental schedule - Segment information
|
(Unaudited)
|
|
|
|
|
|
|
|
As Reported
|
|
As Adjusted (6)
|
|
|
Six months ended
|
|
Six months ended
|
(in millions of dollars)
|
|
June 30, 2016
|
|
June 30, 2015
|
|
June 30, 2016
|
|
June 30, 2015
|
Revenue
|
|
|
|
|
|
|
|
|
Drilling & Subsea
|
|
$
|
122.1
|
|
|
$
|
293.4
|
|
|
$
|
122.1
|
|
|
$
|
293.4
|
|
Completions
|
|
58.8
|
|
|
166.8
|
|
|
58.8
|
|
|
$
|
166.8
|
|
Production & Infrastructure
|
|
122.3
|
|
|
173.0
|
|
|
122.3
|
|
|
$
|
173.0
|
|
Eliminations
|
|
(1.0
|
)
|
|
(0.7
|
)
|
|
(1.0
|
)
|
|
$
|
(0.7
|
)
|
Total revenue
|
|
$
|
302.2
|
|
|
$
|
632.5
|
|
|
$
|
302.2
|
|
|
$
|
632.5
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
Drilling & Subsea
|
|
$
|
(30.3
|
)
|
|
$
|
30.1
|
|
|
$
|
(21.2
|
)
|
|
$
|
36.0
|
|
Operating income margin %
|
|
(24.8
|
)%
|
|
10.3
|
%
|
|
(17.4
|
)%
|
|
12.3
|
%
|
Completions (1)
|
|
(34.5
|
)
|
|
31.5
|
|
|
(14.1
|
)
|
|
33.2
|
|
Operating income margin %
|
|
(58.7
|
)%
|
|
18.9
|
%
|
|
(24.0
|
)%
|
|
19.9
|
%
|
Production & Infrastructure
|
|
1.2
|
|
|
17.4
|
|
|
4.4
|
|
|
16.4
|
|
Operating income margin %
|
|
1.0
|
%
|
|
10.1
|
%
|
|
3.6
|
%
|
|
9.5
|
%
|
Corporate
|
|
(14.1
|
)
|
|
(16.4
|
)
|
|
(13.6
|
)
|
|
(16.1
|
)
|
Total Segment operating income (loss)
|
|
(77.7
|
)
|
|
62.6
|
|
|
(44.5
|
)
|
|
69.5
|
|
Other items not in segment operating income (loss) (2)
|
|
(0.2
|
)
|
|
—
|
|
|
0.3
|
|
|
0.3
|
|
Total operating income (loss)
|
|
$
|
(77.9
|
)
|
|
$
|
62.6
|
|
|
$
|
(44.2
|
)
|
|
$
|
69.8
|
|
Operating income margin %
|
|
(25.8
|
)%
|
|
9.9
|
%
|
|
(14.6
|
)%
|
|
11.0
|
%
|
|
|
|
|
|
|
|
|
|
EBITDA (3) (4)
|
|
|
|
|
|
|
|
|
Drilling & Subsea
|
|
$
|
(1.4
|
)
|
|
$
|
50.4
|
|
|
$
|
(5.2
|
)
|
|
$
|
53.2
|
|
EBITDA Margin %
|
|
(1.1
|
)%
|
|
17.2
|
%
|
|
(4.3
|
)%
|
|
18.1
|
%
|
Completions
|
|
(22.2
|
)
|
|
43.7
|
|
|
(1.8
|
)
|
|
45.2
|
|
EBITDA Margin %
|
|
(37.8
|
)%
|
|
26.2
|
%
|
|
(3.1
|
)%
|
|
27.1
|
%
|
Production & Infrastructure
|
|
2.6
|
|
|
20.2
|
|
|
7.7
|
|
|
20.2
|
|
EBITDA Margin %
|
|
2.1
|
%
|
|
11.7
|
%
|
|
6.3
|
%
|
|
11.7
|
%
|
Corporate
|
|
(16.3
|
)
|
|
(16.1
|
)
|
|
(13.2
|
)
|
|
(15.8
|
)
|
Other items (5)
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
Total EBITDA
|
|
$
|
(37.5
|
)
|
|
$
|
98.0
|
|
|
$
|
(12.5
|
)
|
|
$
|
102.8
|
|
EBITDA Margin %
|
|
(12.4
|
)%
|
|
15.5
|
%
|
|
(4.1
|
)%
|
|
16.3
|
%
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes earnings from equity investment.
|
(2)
|
|
Includes transaction expenses, loss on sale of business and
gain/(loss) on sale of assets.
|
(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)
|
|
Depreciation and amortization expense has been reclassified among
corporate and the operating segments. Prior period EBITDA financial
information has been revised to conform with current period
presentation with no impact to operating income.
|
(5)
|
|
Includes transaction expenses and loss on sale of business.
|
(6)
|
|
Refer to Table 2 for schedule of adjusting items.
|
|
Forum Energy Technologies, Inc.
|
Reconciliation of GAAP to non-GAAP financial information
|
(Unaudited)
|
|
|
|
Table 1 - Adjusting items
|
|
|
Three months ended
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
March 31, 2016
|
(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
|
|
$
|
(52.9
|
)
|
|
$
|
(27.2
|
)
|
|
$
|
(28.6
|
)
|
|
$
|
22.4
|
|
|
$
|
34.8
|
|
|
$
|
8.9
|
|
|
$
|
(25.0
|
)
|
|
$
|
(10.3
|
)
|
|
$
|
(22.9
|
)
|
% of revenue
|
|
(37.0
|
)%
|
|
(19.0
|
)%
|
|
|
|
7.9
|
%
|
|
12.2
|
%
|
|
|
|
(15.7
|
)%
|
|
(6.5
|
)%
|
|
|
Restructuring charges
|
|
3.2
|
|
|
3.2
|
|
|
3.2
|
|
|
2.1
|
|
|
2.1
|
|
|
2.1
|
|
|
3.8
|
|
|
3.8
|
|
|
3.8
|
|
Transaction expenses
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
Inventory and other working capital reserve
|
|
26.4
|
|
|
26.4
|
|
|
26.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Goodwill and intangible asset impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Deferred loan costs written off
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
2.6
|
|
Loss (gain) on foreign exchange, net (2)
|
|
—
|
|
|
(9.9
|
)
|
|
(9.9
|
)
|
|
—
|
|
|
4.2
|
|
|
4.2
|
|
|
—
|
|
|
(1.4
|
)
|
|
(1.4
|
)
|
Income tax expense (benefit) of adjustments
|
|
—
|
|
|
—
|
|
|
(8.2
|
)
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
|
|
—
|
|
|
(2.1
|
)
|
As adjusted (1)
|
|
$
|
(23.2
|
)
|
|
$
|
(7.4
|
)
|
|
$
|
(17.0
|
)
|
|
$
|
24.5
|
|
|
$
|
41.1
|
|
|
$
|
14.2
|
|
|
$
|
(21.0
|
)
|
|
$
|
(5.1
|
)
|
|
$
|
(19.8
|
)
|
% of revenue
|
|
(16.2
|
)%
|
|
(5.2
|
)%
|
|
|
|
8.6
|
%
|
|
14.5
|
%
|
|
|
|
(13.2
|
)%
|
|
(3.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS -as reported
|
|
|
|
|
|
$
|
(0.31
|
)
|
|
|
|
|
|
$
|
0.10
|
|
|
|
|
|
|
$
|
(0.25
|
)
|
Diluted EPS - as adjusted
|
|
|
|
|
|
$
|
(0.19
|
)
|
|
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
$
|
(0.22
|
)
|
|
Table 2 - Adjusting items
|
|
|
Six months ended
|
|
|
June 30, 2016
|
|
June 30, 2015
|
(in millions, except per share information)
|
|
Operating income (loss)
|
|
EBITDA (1)
|
|
Net income (loss)
|
|
Operating income (loss)
|
|
EBITDA (1)
|
|
Net income (loss)
|
As reported
|
|
$
|
(77.9
|
)
|
|
$
|
(37.5
|
)
|
|
$
|
(51.5
|
)
|
|
$
|
62.6
|
|
|
$
|
98.0
|
|
|
$
|
37.6
|
|
% of revenue
|
|
(25.8
|
)%
|
|
(12.4
|
)%
|
|
|
|
9.9
|
%
|
|
15.5
|
%
|
|
|
Restructuring charges
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
Transaction expenses
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
Inventory and other working capital reserve
|
|
26.4
|
|
|
26.4
|
|
|
26.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Goodwill and intangible asset impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Deferred loan costs written off
|
|
—
|
|
|
2.6
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Gain on foreign exchange, net (2)
|
|
—
|
|
|
(11.3
|
)
|
|
(11.3
|
)
|
|
—
|
|
|
(2.4
|
)
|
|
(2.4
|
)
|
Income tax expense (benefit) of adjustments
|
|
—
|
|
|
—
|
|
|
(10.3
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
As adjusted (1)
|
|
$
|
(44.2
|
)
|
|
$
|
(12.5
|
)
|
|
$
|
(36.8
|
)
|
|
$
|
69.8
|
|
|
$
|
102.8
|
|
|
$
|
41.6
|
|
% of revenue
|
|
(14.6
|
)%
|
|
(4.1
|
)%
|
|
|
|
11.0
|
%
|
|
16.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS - as reported
|
|
|
|
|
|
$
|
(0.57
|
)
|
|
|
|
|
|
$
|
0.41
|
|
Diluted EPS - as adjusted
|
|
|
|
|
|
$
|
(0.41
|
)
|
|
|
|
|
|
$
|
0.45
|
|
|
|
(1)
|
|
The Company believes that the presentation of EBITDA, adjusted
EBITDA, adjusted operating income and adjusted Diluted EPS is useful
to the Company's 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)
|
|
Loss (gain) on foreign exchange, net primarily relates to the
translation of U.S. dollar denominated receivables for reporting
purposes only and 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, 2016
|
|
June 30, 2015
|
|
March 31, 2016
|
EBITDA reconciliation (1)
|
|
|
|
|
|
|
Net income (loss) attributable to common stockholders
|
|
$
|
(28.6
|
)
|
|
$
|
8.9
|
|
|
$
|
(22.9
|
)
|
Interest expense
|
|
6.8
|
|
|
7.6
|
|
|
7.1
|
|
Depreciation and amortization
|
|
15.7
|
|
|
16.4
|
|
|
15.9
|
|
Income tax expense (benefit)
|
|
(21.1
|
)
|
|
1.9
|
|
|
(10.4
|
)
|
EBITDA
|
|
$
|
(27.2
|
)
|
|
$
|
34.8
|
|
|
$
|
(10.3
|
)
|
|
|
|
|
|
Table 4 - Adjusting Items
|
|
|
Six months ended
|
(in millions of dollars)
|
|
June 30, 2016
|
|
June 30, 2015
|
EBITDA reconciliation (1)
|
|
|
|
|
Net income (loss) attributable to common stockholders
|
|
$
|
(51.5
|
)
|
|
$
|
37.6
|
Interest expense
|
|
13.9
|
|
|
15.2
|
Depreciation and amortization
|
|
31.6
|
|
|
32.7
|
Income tax expense (benefit)
|
|
(31.5
|
)
|
|
12.5
|
EBITDA
|
|
$
|
(37.5
|
)
|
|
$
|
98.0
|
|
|
|
|
|
(1)
|
|
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.
|
|
|
|
Table 5 - Adjusting items
|
|
|
Six months ended
|
(in millions of dollars)
|
|
June 30, 2016
|
|
June 30, 2015
|
Free cash flow, before acquisitions, reconciliation (2)
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
44.9
|
|
|
$
|
55.1
|
|
Capital expenditures for property and equipment
|
|
(10.0
|
)
|
|
(18.9
|
)
|
Proceeds from sale of property and equipment
|
|
3.7
|
|
|
1.4
|
|
Free cash flow, before acquisitions
|
|
$
|
38.6
|
|
|
$
|
37.6
|
|
|
|
|
|
|
|
(2)
|
|
The Company believes free cash flow, before acquisitions is an
important measure because it encompasses both profitability and
capital management in evaluating results.
|
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