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Forum Energy Technologies Announces Fourth Quarter And Full Year 2012 Earnings

Stocks in this article: FET

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
(Unaudited)
 
Three months ended
December 31,   September 30,
(in millions, except per share information)   2012   2011 2012
Revenue $ 330.1 $ 336.7 $ 347.8
Total operating expenses 292.2   286.2   284.9
Operating income 37.9 50.5 62.9
Interest expense 3.4 5.8 3.6
Loss (gain) on foreign exchange 0.5   (0.9 ) 0.8
Profit before income taxes 34.0 45.6 58.5
Provision for income tax expense 10.1   13.9   17.6
Net income 23.9 31.7 40.9
Less: Net income attributable to noncontrolling interest    
Net income attributable to common stockholders $ 23.9   $ 31.7   $ 40.9
 
Weighted average shares outstanding (1)
Basic 86.1 67.8 85.0
Diluted 93.4 74.0 92.3
 
Earnings per share
Basic $ 0.28 $ 0.47 $ 0.48
Diluted $ 0.26 $ 0.43 $ 0.44
 
(1) Third and fourth quarter 2012 diluted earnings per share include the impact of the 16.6 million shares issued in connection with the IPO and concurrent private placement on April 12, 2012.
 
Forum Energy Technologies, Inc.
Condensed consolidated statements of income
(Unaudited)
  Year ended
December 31,
(in millions, except per share information)   2012   2011
Revenue $ 1,414.9 $ 1,128.1
Total operating expenses 1,174.0   967.5
Operating income 240.9 160.6
Interest expense 16.4 19.5
Loss on foreign exchange 1.7   0.4
Profit before income taxes 222.8 140.7
Provision for income tax expense 71.3   47.1
Net income 151.5 93.6
Less: Net income attributable to noncontrolling interest 0.1   0.3
Net income attributable to common stockholders $ 151.4   $ 93.3
 
Weighted average shares outstanding (1)
Basic 80.1 63.3
Diluted 86.9 67.5
 
Earnings per share
Basic $ 1.89 $ 1.48
Diluted $ 1.74 $ 1.38
 
(1) Diluted earnings per share for the year ended December 31, 2012 include the weighted impact of the 16.6 million shares issued in connection with the IPO and concurrent private placement on April 12, 2012.
 
Forum Energy Technologies, Inc.
Condensed consolidated balance sheets
   
(in millions of dollars)   December 31, 2012   December 31, 2011
Assets (unaudited)
Current assets
Cash and cash equivalents $ 41.1 $ 20.6
Other current assets 733.8   598.0
Total current assets 774.9 618.6
Property and equipment, net of accumulated depreciation 153.0 124.8
Goodwill

696.3

600.8
Other long-term assets

268.8

  263.1
Total assets $ 1,893.0   $ 1,607.3
Liabilities and Equity
Current liabilities
Current portion of long-term debt and capital lease obligations $ 20.5 $ 5.2
Accounts payable—trade 99.0 97.6
Accrued liabilities 93.7 92.3
Other current liabilities 67.7   59.6
Total current liabilities 280.9 254.7
Long-term debt, net of current portion 400.2 660.4
Other long-term liabilities 49.7   37.1
Total liabilities 730.8   952.2
Equity
Total stockholders’ equity 1,161.5 654.5
Noncontrolling interest in subsidiary 0.7   0.6
Total equity 1,162.2   655.1
Total liabilities and equity $ 1,893.0   $ 1,607.3
 
Forum Energy Technologies, Inc.
Condensed consolidated cash flow information
(Unaudited)
  Year ended December 31,
(in millions of dollars)   2012   2011
Cash flows from operating activities  
Net income $ 151.5 $ 93.6
Change in contingent consideration (4.6 ) 12.1
Impairment of intangible assets 1.2
Depreciation and amortization 51.8 40.8
Other, primarily working capital (54.9 ) (107.2 )
Net cash provided by operating activities, excluding contingent consideration payments (1) $ 145.0   $ 39.3  
Cash flows from investing activities
Capital expenditures for property and equipment $ (49.7 ) $ (41.2 )
Proceeds from sale of property and equipment and other 5.1 1.0
Acquisition of businesses, net of cash acquired (139.9 ) (509.9 )
Net cash provided by (used in) investing activities $ (184.5 ) $ (550.1 )
Cash flows from financing activities
Borrowings of long-term debt, including borrowings due to acquisitions $ 203.3 $ 520.3
Repayment of long-term debt (454.0 ) (62.0 )
Proceeds of Initial Public Offering, net of offering costs 256.4
Proceeds from concurrent private placement 50.0
Payment of contingent consideration (18.2 )
Excess tax benefits from stock based compensation 7.3 1.0
Proceeds from stock issuance 14.4 57.0
Other (0.5 ) (6.2 )
Net cash provided by (used in) financing activities, including contingent consideration payments $ 58.7   $ 510.1  
Effect of exchange rate changes on cash 1.3 0.9
Net increase (decrease) in cash and cash equivalents $ 20.5   $ 0.2  
 
(1) For the year ended December 31, 2012, the amount excluded from cash provided by operating activities for the contingent consideration payment is $7.1 million and this amount is included in the “Payment of contingent consideration” caption.
 
Forum Energy Technologies, Inc.
Supplemental schedule - Segment information
(Unaudited)
  Three months ended
December 31, 2012   December 31, 2011   September 30, 2012
(in millions of dollars)   Actual Actual Actual
Revenue
Drilling & Subsea $ 187.0 $ 193.5 $ 203.8
Production & Infrastructure 143.4 143.2 144.1
Eliminations (0.3 )   (0.1 )
Total revenue $ 330.1   $ 336.7   $ 347.8  
 
Operating income
Drilling & Subsea $ 27.4 $ 34.4 $ 41.4
Operating income margin % 14.7 % 17.8 % 20.3 %
Production & Infrastructure 17.2 27.3 25.5
Operating income margin % 12.0 % 19.1 % 17.7 %
Corporate (5.6 ) (5.0 ) (6.2 )
Total Segment operating income 39.0 56.7 60.7
Other items not included in segment operating income (1) (1.1 ) (6.2 ) 2.2  
Total operating income $ 37.9   $ 50.5   $ 62.9  
Operating income margin % 11.5 % 15.0 % 18.1 %
 
EBITDA (2)
Drilling & Subsea $ 36.7 $ 45.2 $ 51.8
Percentage of D&S revenue % 19.6 % 23.4 % 25.4 %
Production & Infrastructure 20.7 30.2 28.8
Percentage of P&I revenue % 14.4 % 21.1 % 20.0 %
Corporate (5.4 ) (4.9 ) (6.0 )
Other items (3) (0.9 ) (6.2 ) 0.5  
Total EBITDA $ 51.1   $ 64.3   $ 75.1  
Percentage of total revenue % 15.5 % 19.1 % 21.6 %
 
(1) Includes contingent consideration, transaction expenses and gain/(loss) on sale of assets.
(2) The company believes 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.
(3) Includes contingent consideration and transaction expenses.
 
Forum Energy Technologies, Inc.
Supplemental schedule - Segment information
(Unaudited)
  Year ended
December 31, 2012   December 31, 2011
(in millions of dollars)   Actual Actual
Revenue
Drilling & Subsea $ 826.5 $ 659.4
Production & Infrastructure 589.2 468.7
Eliminations (0.8 )  
Total revenue $ 1,414.9   $ 1,128.1  
 
Operating income
Drilling & Subsea $ 161.2 $ 117.9
Operating income margin % 19.5 % 17.9 %
Production & Infrastructure 97.3 78.0
Operating income margin % 16.5 % 16.6 %
Corporate (20.6 ) (20.2 )
Total segment operating income 237.9 175.7
Other items not included in segment operating income (1) 3.0   (15.1 )
Total operating income $ 240.9   $ 160.6  
Operating income margin % 17.0 % 14.2 %
 
EBITDA (2)
Drilling & Subsea $ 198.7 $ 148.6
Percentage of D&S revenue % 24.0 % 22.5 %
Production & Infrastructure 110.4 88.0
Percentage of P&I revenue % 18.7 % 18.8 %
Corporate (19.9 ) (20.2 )
Other items (3) 1.7   (15.6 )
Total EBITDA $ 290.9   $ 200.8  
Percentage of total revenue % 20.6 % 17.8 %
 
(1) Includes contingent consideration, intangible asset impairment, transaction expenses and gain/(loss) on sale of assets.
(2) The company believes 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.
(3) Includes contingent consideration, intangible asset impairment and transaction expenses.
 
Forum Energy Technologies, Inc.
Reconciliation of GAAP to non-GAAP financial information
(Unaudited)
  Three months ended
    December 31, 2012   December 31, 2011   September 30, 2012
(in millions of dollars) Actual Actual Actual
EBITDA reconciliation (1)
Net income attributable to common stockholders $ 23.9 $ 31.7 $ 40.9
Interest expense 3.4 5.8 3.6
Depreciation and amortization 13.7 12.9 13.0
Income tax expense 10.1   13.9   17.6
EBITDA $ 51.1   $ 64.3   $ 75.1
 
(1) The company believes 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.
Forum Energy Technologies, Inc.
Reconciliation of GAAP to non-GAAP financial information
(Unaudited)
  Year ended
    December 31, 2012   December 31, 2011
(in millions of dollars)   Actual Actual
EBITDA reconciliation (1)
Net income attributable to common stockholders $ 151.4 $ 93.3
Interest expense 16.4 19.5
Depreciation and amortization 51.8 40.9
Income tax expense 71.3   47.1
EBITDA $ 290.9   $ 200.8
 
(1) The company believes 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.




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