Forum Energy Technologies(FET) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Performance and Outlook Q2 2025 Financial Highlights Forum Energy Technologies reported Q2 2025 revenue of $200 million and GAAP net income of $8 million, achieving record backlog and raising free cash flow guidance Q2 2025 Key Financial Metrics (in millions) | Metric | Q2 2025 Value | | :--- | :--- | | Revenue | $200 million | | Net Income (GAAP) | $8 million | | Diluted EPS (GAAP) | $0.61 | | Net Loss (Adjusted) | $1 million | | Diluted EPS (Adjusted) | ($0.10) | | Adjusted EBITDA | $21 million | | Orders | $263 million | | Book-to-Bill Ratio | 132% | | Free Cash Flow | $23 million | - Full-year 2025 free cash flow guidance was increased to a range of $60 - $80 million, supported by strong performance and a positive outlook[2][5] - The company achieved its highest backlog in over ten years, driven by strong bookings, particularly in offshore defense[4][5] Management Commentary and Capital Allocation Management highlighted strong sequential performance and positive free cash flow, prioritizing debt reduction and share repurchases to reduce net leverage - The company's capital returns framework prioritizes using free cash flow to reduce net debt and repurchase shares[2] - FET has repurchased 5% of its outstanding shares in 2025 and is on track to repurchase another 10% based on updated guidance[3] - The company aims to reduce its net leverage to 1.3 times by the end of 2025[3] Financial Guidance FET raised its full-year 2025 free cash flow guidance to between $60 and $80 million while maintaining its adjusted EBITDA forecast of approximately $85 million Financial Guidance Summary | Guidance Metric | Forecasted Range/Value | | :--- | :--- | | Full Year 2025 Free Cash Flow | $60 - $80 million | | Full Year 2025 Adjusted EBITDA | Approx. $85 million | | Q3 2025 Adjusted EBITDA | $19 - $23 million | Segment Performance Drilling and Completions Drilling and Completions revenue rose 1% to $117 million with orders up 35%, but adjusted EBITDA declined 8% due to an unfavorable product mix Drilling and Completions Segment Performance (in millions) | Metric (vs Q1 2025) | Q2 2025 Value | Sequential Change | | :--- | :--- | :--- | | Revenue | $117 million | +1% | | Adjusted EBITDA | $11 million | -8% | | Orders | $178 million | +35% | - Revenue growth was driven by coiled line pipe sales for the U.S and a large Middle East project, partially offset by lower demand for completions-related equipment[6] - The decrease in adjusted EBITDA was attributed to an unfavorable product mix from lower sales of higher-margin products[6] Artificial Lift and Downhole Artificial Lift and Downhole revenue grew 6% to $83 million and adjusted EBITDA surged 24% to $17 million, driven by demand, favorable mix, and cost savings Artificial Lift and Downhole Segment Performance (in millions) | Metric (vs Q1 2025) | Q2 2025 Value | Sequential Change | | :--- | :--- | :--- | | Revenue | $83 million | +6% | | Adjusted EBITDA | $17 million | +24% | | Orders | $85 million | +24% | - Revenue growth was primarily due to higher demand for processing equipment technologies, downhole casing equipment, sand control products, and cable protection products[7] - The significant increase in adjusted EBITDA was a result of higher revenue, favorable product mix, and benefits from cost-saving initiatives[7] Financial Statements Condensed Consolidated Statements of Income (Loss) For Q2 2025, FET reported revenue of $199.8 million and net income of $7.7 million, a significant turnaround from a net loss in Q2 2024 Quarterly Income Statement Highlights (in millions) | Account | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Revenue | $199.8 | $193.3 | $205.2 | | Gross Profit | $59.4 | $58.4 | $63.1 | | Operating Income | $14.7 | $8.8 | $7.9 | | Net Income (Loss) | $7.7 | $1.1 | $(6.7) | Six-Month Income Statement Highlights (in millions) | Account | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | $393.0 | $407.6 | | Gross Profit | $117.7 | $126.8 | | Operating Income | $23.5 | $11.1 | | Net Income (Loss) | $8.8 | $(17.0) | Condensed Consolidated Balance Sheets As of June 30, 2025, FET's total assets were $810.1 million, with long-term debt reduced to $157.7 million and total equity increasing to $334.2 million Balance Sheet Highlights (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $39.0 | $44.7 | | Total current assets | $487.7 | $495.6 | | Total assets | $810.1 | $816.0 | | Long-term debt | $157.7 | $186.5 | | Total liabilities | $475.9 | $496.2 | | Total equity | $334.2 | $319.8 | Condensed Consolidated Cash Flow Information H1 2025 operating cash flow was $25.1 million, with a $37.3 million net outflow from financing activities driven by debt repayments and stock repurchases Six-Month Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25.1 | $28.1 | | Net cash provided by (used in) investing activities | $5.0 | $(154.5) | | Net cash provided by (used in) financing activities | $(37.3) | $114.9 | | Net decrease in cash | $(5.7) | $(14.3) | Supplemental Financial Information Detailed Segment and Orders Information In Q2 2025, total orders reached $263.1 million, resulting in a strong company-wide book-to-bill ratio of 1.32, indicating robust demand growth Q2 2025 Orders and Book-to-Bill Ratio (in millions) | Segment | Orders (millions) | Revenue (millions) | Book-to-Bill Ratio | | :--- | :--- | :--- | :--- | | Drilling and Completions | $177.8 | $117.2 | 1.52 | | Artificial Lift and Downhole | $85.3 | $82.5 | 1.03 | | Total | $263.1 | $199.8 | 1.32 | - The company states that a book-to-bill ratio greater than one is indicative of improving market demand and provides insight into future revenues[27] Reconciliation of GAAP to Non-GAAP Measures The company provides non-GAAP reconciliations, adjusting Q2 2025 net income of $7.7 million to an adjusted net loss of $1.2 million after specific exclusions Q2 2025 GAAP to Non-GAAP Reconciliation (in millions) | Metric | As Reported (GAAP) | Adjustments | As Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $14.7 | $(5.1) | $9.6 | | EBITDA | $27.7 | $(7.2) | $20.5 | | Net Income (Loss) | $7.7 | $(8.9) | $(1.2) | - Key adjustments in Q2 2025 included a $6.9 million gain on sale-leaseback transactions, a $3.8 million foreign exchange gain, and $1.7 million in restructuring costs[29] Q2 2025 Free Cash Flow Reconciliation (in millions) | Line Item | Amount | | :--- | :--- | | Net cash provided by operating activities | $15.8 | | Capital expenditures | $(1.0) | | Proceeds from sale-leaseback transactions | $8.0 | | Free cash flow, before acquisitions | $22.9 | Product Line Revenue Breakdown In Q2 2025, Drilling and Completions accounted for 58.7% of total revenue, while Artificial Lift and Downhole made up the remaining 41.3% Q2 2025 Revenue by Product Line (in millions) | Segment / Product Line | Revenue | % of Total | | :--- | :--- | :--- | | Drilling and Completions | $117.2 | 58.7% | | - Stimulation and Intervention | $32.9 | 16.5% | | - Drilling | $32.8 | 16.4% | | - Coiled Tubing | $29.1 | 14.6% | | - Subsea | $22.4 | 11.2% | | Artificial Lift and Downhole | $82.5 | 41.3% | | - Downhole | $51.3 | 25.7% | | - Production Equipment | $20.7 | 10.4% | | - Valve Solutions | $10.5 | 5.2% | | Total Revenue | $199.8 | 100.0% |