Forum Energy Technologies(US:FET)2025-03-03 21:01Financial Performance - Total revenue for 2024 was $816.4 million, an increase of $77.6 million, or 10.5%, compared to 2023[195] - The Drilling and Completions segment generated $470.8 million in revenue, a decrease of $31.9 million, or 6.3%, from 2023[195] - The Artificial Lift and Downhole segment reported revenue of $345.7 million, an increase of $109.4 million, or 46.3%, compared to 2023[196] - The company experienced a net loss of $135.3 million in 2024, compared to a net loss of $18.9 million in 2023[194] - Segment operating income for the year ended December 31, 2024 was $35.7 million, an increase from $23.8 million in 2023, with an operating margin percentage of 4.4% compared to 3.2% in 2023[197] - Operating income for the Artificial Lift and Downhole segment increased by 54.8% to $48.9 million in 2024[194] Market Conditions - The global drilling rig count decreased by 4.3% in 2024, primarily due to a 12.8% decline in the U.S. rig count[189] - Average West Texas Intermediate (WTI) crude oil price was $76.45 per barrel in 2024, down from $77.58 in 2023[190] - Average Henry Hub natural gas price was $2.19 per Mcf in 2024, compared to $2.53 in 2023[190] Orders and Capital Expenditures - Total inbound orders for 2024 were $780.3 million, an increase from $724.3 million in 2023[192] - The company expects total capital expenditures for 2025 to be approximately $10.0 million, mainly for replacing end-of-life machinery and equipment[210] Cash Flow and Investments - Net cash provided by operating activities was $92.2 million for 2024, significantly higher than $8.2 million in 2023, with improved inventory management contributing to this increase[214] - Net cash used in investing activities was $137.5 million in 2024, primarily for the Variperm acquisition of $150.4 million and capital expenditures of $8.1 million[215] - The company completed the Variperm acquisition for $150.0 million in cash and 2.0 million shares of common stock in January 2024[213] - The company repurchased approximately 105 thousand shares of common stock for $2.0 million following the board's approval of a $75.0 million share repurchase program[212] Tax and Valuation - For the year ended December 31, 2024, the company recognized a tax expense for valuation allowances totaling $25.1 million related to deferred tax assets[234] - The valuation allowance for U.S. deferred tax assets increased by $29.5 million, along with a $6.9 million increase for certain non-U.S. deferred tax assets in the U.K., Singapore, and China[234] - The company released $11.3 million of valuation allowance on deferred tax assets generated from operations in Germany and Saudi Arabia as they were determined no longer required[234] - The company follows the liability method of accounting for income taxes, recognizing deferred tax assets only if they are more likely than not to be realized[234] Impairment and Fair Value - An impairment loss of $119.1 million was recorded on intangible assets within the Coiled Tubing product line in 2024[232] - As of October 1, 2024, the estimated fair value of the reporting unit exceeded its carrying value by approximately 20%[230] - The company performed an annual impairment test for goodwill and concluded no impairment was necessary due to fair value estimates[230] - The company has significant inherent uncertainties and management judgment in estimating the fair value of the reporting unit[230] - Changes in the operating environment, including tax law changes, could impact the determination of tax liabilities for the company[236] Corporate Expenses - Corporate selling, general and administrative expenses increased by $3.7 million to $31.0 million in 2024, mainly due to higher variable compensation costs[199] - Interest expense for the year ended December 31, 2024 was $31.5 million, an increase of $13.2 million compared to 2023, attributed to increased borrowings related to the Variperm acquisition[202] Future Outlook - The company expects long-term energy demand to rise, with hydrocarbons continuing to play a vital role alongside renewable energy sources[183]