Forum Energy Technologies (FET) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $205.2 million, up 10.7%–11% year-over-year, driven by the Variperm acquisition and international growth, despite lower U.S. drilling and completions activity and a 5% global rig count decline.

• Net loss was $6.7–$7 million ($0.54 per share); adjusted net loss was $1 million ($0.07 per share).

• Adjusted EBITDA rose 48% year-over-year to $26 million, with margins steady at 12.6%–13%.

• Free cash flow for Q2 was $21 million; full-year 2024 free cash flow guidance raised to $50–$70 million.

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

Financial highlights

• Q2 2024 gross profit was $63.1 million, up from $51.3 million in Q2 2023; gross margin improved to 30.7%–30.8%.

• Operating income for Q2 2024 was $7.9 million, up from $6.4 million in Q2 2023; segment operating margin rose to 4.6%.

• Adjusted EBITDA for Q2 2024 was $25.8 million (12.6% margin), up from $17.4 million (9.4% margin) in Q2 2023.

• Free cash flow of $21 million in Q2, with an 81% EBITDA-to-free cash flow conversion rate.

• Ended Q2 with $31.8–$32 million cash and $103.1–$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 revenue expected at $200–$220 million; EBITDA at $24–$28 million.

• Free cash flow guidance raised by $10 million to $50–$70 million for 2024.

• U.S. rig count expected to decline 15% for the year, steeper than the initial 5% forecast.

• Plan to return cash to shareholders via repurchases or dividends around mid-2025, post-debt retirement.