Forum Energy Technologies (FET) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue increased 10.7% year-over-year to $205.2 million, driven by the Variperm acquisition and international growth, despite lower U.S. drilling and completions activity.

• Net loss was $6.7 million ($0.54 per share) in Q2 2024, similar to the prior year; adjusted net loss was $1 million.

• Free cash flow conversion exceeded expectations, leading to a raised 2024 guidance of $50–$70 million.

• Over half of 2025 notes to be redeemed by Q3-end, with plans to retire the remainder and the Variperm Seller Term Loan by mid-2025, improving balance sheet flexibility.

• Segment realignment in Q1 2024 resulted in two reportable segments: Drilling and Completions, and Artificial Lift and Downhole.

Financial highlights

• Q2 2024 gross profit was $63.1 million, up from $51.3 million in Q2 2023, with gross margin improving to 30.8%.

• Adjusted EBITDA for Q2 2024 was $25.8 million (12.6% margin), up 48% year-over-year.

• Free cash flow for Q2 2024 was $21 million, with 81% EBITDA-to-free cash flow conversion.

• Net working capital reduced by $11 million year-to-date, supporting cash flow outperformance.

• Ended Q2 with $32 million cash and $135 million total liquidity.

Outlook and guidance

• 2024 adjusted EBITDA guidance set at $100–$110 million, with the top end reduced by $10 million due to U.S. market softness.

• Q3 2024 revenue expected at $200–$220 million; EBITDA at $24–$28 million.

• Free cash flow guidance for 2024 raised to $50–$70 million.

• U.S. rig count expected to decline 15% for the year, while international and Canadian markets remain stable.

• 2024 capital expenditures projected at approximately $10 million, focused on machinery and equipment replacement.