Fortrea (FTRE) - 2025 Q1 - Quarterly Results

Financial Highlights Fortrea reported Q1 2025 revenue of $651.3 million, a GAAP net loss of $562.9 million due to goodwill impairment, and increased adjusted EBITDA Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues ($ millions) | $651.3 | $662.1 | | GAAP Net Loss ($ millions) | $(562.9) | $(79.8) | | Diluted Loss Per Share (GAAP) ($) | $(6.25) | $(0.89) | | Adjusted EBITDA ($ millions) | $30.3 | $27.1 | | Adjusted Diluted EPS ($) | $0.02 | $(0.05) | | Book-to-Bill Ratio | 1.02x | N/A | - The first quarter GAAP net loss included a significant non-cash goodwill impairment charge of $488.8 million[6] - The company's backlog stood at $7,721 million as of March 31, 2025[6] - The trailing 12-month book-to-bill ratio was 1.14x[9] Full Year 2025 Guidance Fortrea reiterates its full-year 2025 guidance, targeting revenues between $2,450 million and $2,550 million and adjusted EBITDA Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenues ($ millions) | $2,450 - $2,550 | | Adjusted EBITDA ($ millions) | $170 - $200 | - The guidance assumes that foreign currency exchange rates as of December 31, 2024, will remain in effect for the forecast period[7] Management Changes Thomas Pike steps down as Chairman and CEO, with Peter M. Neupert appointed Interim CEO and Board Chair, as a search for a permanent CEO progresses - Thomas Pike is stepping down as Chairman and CEO, with Peter M. Neupert appointed as Interim CEO and Board Chair[8] - A succession planning process is underway, and an executive search for a new CEO is at an advanced stage[8] - Mr. Pike will continue to serve as a resource to the leadership team through a consulting agreement during the transition[8] Financial Statements The consolidated financial statements for Q1 2025 reflect a significant net loss driven by goodwill impairment, reduced assets, and increased cash usage Condensed Consolidated Statements of Operations Q1 2025 revenues decreased to $651.3 million, with a $488.8 million goodwill impairment leading to a $562.9 million net loss from continuing operations Q1 2025 vs Q1 2024 Statement of Operations | Line Item | Q1 2025 ($ millions) | Q1 2024 ($ millions) | | :--- | :--- | :--- | | Revenues | $651.3 | $662.1 | | Total costs and expenses | $1,171.4 | $699.5 | | Goodwill and other asset impairments | $488.8 | $— | | Operating loss | $(520.1) | $(37.4) | | Loss from continuing operations | $(562.9) | $(79.8) | | Basic and diluted loss per share ($) | $(6.25) | $(1.13) | Condensed Consolidated Balance Sheets Total assets decreased to $3,121.1 million as of March 31, 2025, primarily due to reduced goodwill, resulting in a significant drop in total equity Balance Sheet Comparison | Line Item | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | | :--- | :--- | :--- | | Total current assets | $970.3 | $948.2 | | Goodwill, net | $1,242.5 | $1,710.4 | | Total assets | $3,121.1 | $3,579.2 | | Total current liabilities | $999.1 | $949.5 | | Total liabilities | $2,262.3 | $2,216.8 | | Total equity | $858.8 | $1,362.4 | Condensed Consolidated Statements of Cash Flows Net cash used for operating activities significantly increased to $124.2 million in Q1 2025, leading to a $16.9 million decrease in cash and cash equivalents Q1 2025 vs Q1 2024 Cash Flows | Cash Flow Activity | Q1 2025 ($ millions) | Q1 2024 ($ millions) | | :--- | :--- | :--- | | Net cash used for operating activities | $(124.2) | $(25.6) | | Net cash provided by (used for) investing activities | $16.1 | $(9.2) | | Net cash provided by financing activities | $88.4 | $21.3 | | Net change in cash and cash equivalents | $(16.9) | $(15.8) | | Cash and cash equivalents at end of period | $101.6 | $92.8 | Reconciliation of Non-GAAP Measures The company provides reconciliations for non-GAAP measures, including Adjusted EBITDA of $30.3 million and a negative free cash flow of $127.1 million for Q1 2025 - The company uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Income in its operational and financial decision-making to provide a more meaningful indicator of underlying operating performance[14] Net Income to Adjusted EBITDA Reconciliation Adjusted EBITDA from continuing operations increased to $30.3 million in Q1 2025, reconciled from a GAAP net loss by adding back significant non-cash charges Adjusted EBITDA Reconciliation | Line Item | Q1 2025 ($ millions) | Q1 2024 ($ millions) | | :--- | :--- | :--- | | Net loss from continuing operations | $(562.9) | $(79.8) | | Goodwill and other asset impairments | $488.8 | $— | | Interest expense, net | $22.3 | $34.3 | | Depreciation and amortization | $19.5 | $21.9 | | Stock based compensation | $14.6 | $13.5 | | One-time spin-related costs | $10.0 | $17.0 | | Adjusted EBITDA from continuing operations | $30.3 | $27.1 | Net Income to Adjusted Net Income Reconciliation Adjusted net income from continuing operations improved to $1.9 million in Q1 2025, resulting in an adjusted diluted EPS of $0.02 after key non-GAAP adjustments Adjusted Net Income Reconciliation | Line Item | Q1 2025 ($ millions) | Q1 2024 ($ millions) | | :--- | :--- | :--- | | Net loss from continuing operations | $(562.9) | $(79.8) | | Goodwill and other asset impairments | $488.8 | $— | | Stock based compensation | $14.6 | $13.5 | | Amortization | $14.5 | $15.3 | | Adjusted net income (loss) from continuing operations | $1.9 | $(4.9) | | Adjusted diluted EPS from continuing operations ($) | $0.02 | $(0.05) | Free Cash Flow Reconciliation Free cash flow for Q1 2025 was a negative $127.1 million, primarily due to $124.2 million in net cash used for operating activities Q1 2025 Free Cash Flow | Line Item | Q1 2025 ($ millions) | | :--- | :--- | | Net cash used for operating activities | $(124.2) | | Capital expenditures | $(2.9) | | Free cash flow | $(127.1) |