Forum Energy Technologies(US:FET)2022-05-06 19:24Financial Data and Key Metrics Changes - Revenues for Q1 2022 were $155 million, falling within the guided range, while EBITDA was $9 million, exceeding guidance by $2 million [20] - Sequentially, revenue and EBITDA grew by $7 million and $5 million respectively, representing a 68% incremental EBITDA margin [20][21] - The company experienced a 3% increase in bookings, marking the sixth consecutive quarter of backlog growth [19] Business Line Data and Key Metrics Changes - The Drilling & Downhole segment generated $71 million in revenue, accounting for approximately 46% of total revenues, with a 7% sequential increase and a 46% year-over-year increase [22] - The Completions segment revenue was $53 million, with growth constrained by supply chain delays, while segment EBITDA remained flat at $5 million [26] - The Production segment saw a slight improvement with revenue and EBITDA each increasing by $1 million, driven by the valve product line [27] Market Data and Key Metrics Changes - Orders in the Drilling & Downhole segment grew by 17%, outpacing the 8% growth in global rig count, indicating strong demand particularly in international markets [23] - The company noted a decrease in orders for the Production segment, down $6 million, but highlighted a 21% increase in valve product line orders [28] Company Strategy and Development Direction - The company is positioned to benefit from a prolonged energy investment cycle, with strong fundamentals in the oil and gas sector and a focus on innovative products for energy production [7][15] - There is a strategic emphasis on low carbon energy growth, particularly in offshore wind, leveraging core competencies in subsea technology [14][15] - The company aims to mitigate inflationary pressures and expects to see net price increases flow through the income statement, enhancing margins [16][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering a new energy investment cycle, with expectations for outsized earnings growth and improved balance sheet health [18] - The company anticipates second quarter revenue to increase to between $160 million and $170 million, with adjusted EBITDA between $11 million and $14 million [31] - Concerns remain regarding supply chain challenges, particularly due to recent lockdowns in China, but management is taking steps to mitigate these risks [34][44] Other Important Information - The company ended the quarter with total cash of $21 million and liquidity of $162 million, with cash balances decreasing primarily due to net working capital growth [32] - Special items in the first quarter included $6 million in foreign exchange gains and $4 million in restructuring costs [30] Q&A Session Summary Question: What were the upsides for the quarter compared to expectations? - Management noted broad improvements across product lines, particularly in drilling and downhole products [39] Question: Will drilling continue to lead growth in Q2? - Management indicated that while drilling will continue to grow, the Completions segment also showed strong momentum [40] Question: Is the production business expected to turn positive EBITDA? - Management expressed optimism for improved performance in the production segment due to international shipments and restructuring efforts [42] Question: How are supply chain issues factored into guidance? - Management confirmed that supply chain challenges have been incorporated into their Q2 and full-year EBITDA guidance [43] Question: Is there an appetite for consolidation in the industry? - Management acknowledged a growing interest in consolidation, particularly for small deals, and emphasized their position as a potential consolidator [52][57]