Forum Energy Technologies(FET)2024-11-01 18:35Revenue Performance - For the nine months ended September 30, 2024, approximately 80% of the company's revenue was derived from consumable products and activity-based equipment[70]. - Total revenue for the three months ended September 30, 2024, was $207.8 million, an increase of $28.6 million, or 15.9%, compared to the same period in 2023[83]. - Revenue from the Drilling and Completions segment was $123.6 million, up $4.7 million, or 3.9%, driven by a $6.2 million increase in the Subsea product line[83]. - Revenue from the Artificial Lift and Downhole segment was $84.2 million, an increase of $23.9 million, or 39.5%, primarily due to a $27.1 million increase from the acquired Variperm business[83]. - Total revenue for the nine months ended September 30, 2024, was $615.4 million, an increase of $61.7 million, or 11.2%, compared to the same period in 2023[92]. - The Drilling and Completions segment generated revenue of $359.7 million, a decrease of $16.3 million, or 4.3%, while the Artificial Lift and Downhole segment saw revenue of $255.7 million, an increase of $78.1 million, or 43.9%[92]. - Revenue for the three months ended September 30, 2024, was $126.7 million, a decrease of 4.0% from $133.2 million in the same period of 2023[107]. Orders and Activity Levels - Total inbound orders for the Drilling and Completions segment were $129.5 million for Q3 2024, compared to $139.9 million in Q3 2023[80]. - The Artificial Lift and Downhole segment reported total orders of $76.3 million in Q3 2024, up from $58.9 million in Q3 2023[80]. - The average number of active drilling rigs in the U.S. was 586 in Q3 2024, down from 649 in Q3 2023[79]. - The global active rig count decreased by 3.1% in Q3 2024 compared to Q3 2023, with a notable decline of 9.7% in the U.S. rig count[76]. - The company anticipates that activity levels in the U.S. will remain depressed in Q4 2024 and into 2025, while international growth is expected to decline[76]. Financial Performance - Segment operating income for the three months ended September 30, 2024, was $9.4 million, a $3.9 million increase compared to $5.5 million in 2023[84]. - The operating margin percentage improved to 4.5% for the three months ended September 30, 2024, compared to 3.1% in the same period of 2023[84]. - Interest expense increased to $7.7 million, up $3.1 million compared to the same period in 2023, due to increased borrowings related to the Variperm acquisition[87]. - The company recorded a net loss of $14.8 million for the three months ended September 30, 2024, compared to a net income of $8.0 million in 2023, representing a decrease of $22.8 million[83]. - The tax expense for the three months ended September 30, 2024, was $4.6 million, compared to $1.5 million in 2023, reflecting a significant increase[88]. - Operating income for the nine months ended September 30, 2024, was a loss of $15.2 million, compared to an operating income of $14.9 million for the same period in 2023[107]. - Net loss for the nine months ended September 30, 2024, was $31.8 million, compared to a net loss of $2.1 million for the same period in 2023[107]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $53.7 million for the nine months ended September 30, 2024, compared to a net cash used of $3.1 million for the same period in 2023, reflecting an improvement of $56.8 million[102]. - Net cash used in investing activities was $155.9 million for the nine months ended September 30, 2024, primarily due to the Variperm Acquisition of $150.4 million[103]. - Net cash provided by financing activities was $89.4 million for the nine months ended September 30, 2024, compared to cash used of $6.9 million for the same period in 2023, indicating a change of $96.3 million[104]. - Total capital expenditures for 2024 are expected to be approximately $10.0 million, primarily for replacing end-of-life machinery and equipment[98]. Acquisition and Segment Structure - Following the Variperm Acquisition, the company now operates in two reportable segments: Drilling and Completions, and Artificial Lift and Downhole[72]. - The company completed the Variperm acquisition in January 2024 for approximately $150.0 million in cash and 2.0 million shares of common stock[100]. Balance Sheet and Liabilities - Current assets as of September 30, 2024, were $345.1 million, down from $388.8 million as of December 31, 2023[107]. - Current liabilities increased to $201.4 million as of September 30, 2024, compared to $144.5 million as of December 31, 2023[107]. - Non-current liabilities rose to $207.5 million as of September 30, 2024, compared to $178.8 million as of December 31, 2023[107]. Market Outlook - The company expects long-term energy demand to continue rising, with hydrocarbons playing a vital role alongside renewable energy sources[71]. - The decline in U.S. drilling activity and lower revenues in the Production Equipment product line partially offset the overall revenue increase[83].