Forum energy technologies announces fourth quarter and full year 2018
results
Houston--(business wire)--forum energy technologies, inc. (nyse: fet) today announced fourth quarter 2018 revenue of $273 million, an increase of $6 million, or 2%, from the third quarter 2018. net loss for the quarter was $384 million, or $3.52 per diluted share, compared to net loss of $3 million, or $0.03 per diluted share, for the third quarter 2018. excluding $392 million, or $3.60 per share of impairments and special items, adjusted net income was $0.08 per diluted share in the fourth quarter of 2018. special items in the fourth quarter 2018 included pre-tax charges of $349 million for goodwill and intangible asset impairments, $26 million for inventory reserves, $8 million for restructuring and other charges, and $2 million of foreign exchange gains. in addition, our tax expense included a $50 million valuation allowance on our deferred tax assets. see tables 1-5 for a reconciliation of gaap to non-gaap financial information. new orders in the fourth quarter were $271 million, resulting in a book to bill ratio of 99%. forum’s total revenue for the full year 2018 was $1,064 million, an increase of $246 million, or 30%, from 2017. net loss was $374 million, or $3.44 per diluted share. excluding $3.46 per share of special items, adjusted net income was $0.02 per diluted share for the full year 2018 compared to adjusted net loss of $0.38 in 2017. new inbound orders in the year were $1,116 million, a 28% increase from 2017, resulting in a book to bill ratio of 105%. segment results completions segment revenue was $120 million, an increase of $2 million, or 2% sequentially, primarily due to the acquisition of global heat transfer (“ght”) in the fourth quarter, offset by lower completions activity in north america associated with the precipitous decline in oil prices during the fourth quarter. new inbound orders in the fourth quarter were $133 million, an increase of $18 million, or 16%, from the third quarter. the completions segment designs and manufactures products for the well construction, completion, stimulation and intervention markets. production & infrastructure segment revenue was $91 million, a 4% decrease from the third quarter 2018, on lower sales of valves in north america. new inbound orders in the fourth quarter were $76 million, a 24% decrease sequentially, due to the large well site production equipment orders received in the third quarter for 2019 delivery, and the deferral of new orders by some of our customers due to budget exhaustion. the production & infrastructure segment manufactures land well site production equipment, desalination refinery equipment, and a wide range of valves for energy, industrial and mining customers. drilling & subsea segment revenue was $62 million, an increase of $8 million, or 14%, from the third quarter 2018, primarily due to sales of drilling equipment for the middle east and orders received for two new remotely operated vehicles. new inbound orders in the fourth quarter were $62 million, a 3% increase from the third quarter. drilling & subsea operations focus primarily on manufactured equipment and consumable products for global drilling and subsea contractors. review and outlook cris gaut, forum’s chairman and chief executive officer, remarked, "the market clearly softened in the fourth quarter, yet another change in market direction and sentiment, demonstrating the unpredictability of trends in our industry. "as a result, forum’s strategy will be to manage the business for success despite the market’s volatility and to not be dependent on a broad based, robust recovery. our emphasis will be on generating free cash flow on a consistent and continuous basis. in the fourth quarter, our free cash flow was $23 million, a sequential improvement of $27 million. we ended the quarter with approximately $215 million of total liquidity. "we are streamlining the business for efficiency in the current market. forum has a number of strong products and brands with market share opportunity. i believe we have a strong financial position and low financial risk given our ability to generate free cash flow and our cost efficient model going forward." recent events forum received an order in the fourth quarter of 2018 for two perry xlx-c work-class remotely operated vehicle systems for oil and gas operations. forum received a large international order for twenty-five coiled tubing pressure control equipment packages in the fourth quarter. during the fourth quarter, forum acquired ght for $53 million in cash consideration and an earn-out arrangement under which additional cash consideration will be paid if certain conditions are met in 2019 and 2020. ght engineers and manufactures premium industrial heat exchanger and cooling systems used primarily on hydraulic fracturing equipment as well as applications in other industries. conference call information forum's conference call is scheduled for friday, february 8, 2019 at 9:00 am cdt. during the call, the company intends to discuss fourth quarter and full year 2018 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 3597240. 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 3597240. forum energy technologies is a global oilfield products company, serving the drilling, subsea, completions, production and infrastructure sectors of the oil and natural gas industry. the company’s products include a mix of frequently replaced consumable products and highly engineered capital products that are used in the drilling, well completion, 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. december 31, 2018 operating income (loss) net income (loss) operating income (loss) net income (loss) operating income (loss) net income (loss) (1) the company believes that the presentation of ebitda, adjusted ebitda, adjusted operating income and adjusted diluted eps is useful to 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) the difference between the fair value of our interest in ashtead and the book value of the underlying net assets resulted in a non-operating gain due to this basis difference 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. operating income (loss) net income (loss) operating income (loss) net income (loss) (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) the difference between the fair value of our interest in ashtead and the book value of the underlying net assets resulted in a non-operating gain due to this basis difference 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.
