USA: Forum Energy Reports Fourth Quarter and Full Year 2012 Earnings

Forum Energy Technologies, Inc. reported fourth quarter 2012 revenue of $330 million compared to $337 million for the fourth quarter 2011.

Net income for the fourth quarter 2012 was $24 million, down from fourth quarter 2011 net income of $32 million. Diluted earnings per share for the fourth quarter 2012 were $0.26, compared to fourth quarter 2011 diluted earnings of $0.43 per share. Included in the fourth quarter 2012 results was $0.02 per share of charges for transaction expenses, severance and foreign exchange losses. The fourth quarter 2011 diluted earnings per share did not include the impact of the 16.6 million shares issued in connection with Forum’s initial public offering in April 2012.

Forum’s total revenue for the full year 2012 was $1.415 billion, an increase of $287 million, or 25% from 2011. Net income was $151 million in 2012, an increase of $58 million, or 62%, from 2011 mainly due to higher market demand for our equipment and products, and the full year benefit in 2012 of the eight acquisitions completed during 2011. Diluted earnings per share for the year were $1.74.

Fourth Quarter Results by Segment

Drilling & Subsea

Drilling & Subsea revenue in the fourth quarter 2012 was $187 million, a decrease of $7 million, or 3%, from the fourth quarter 2011. The Drilling Technologies product line revenue decreased 6% compared to the fourth quarter 2011 on a decrease in the North America rig count. The Subsea Technologies product line revenue increased modestly in the fourth quarter 2012 over the fourth quarter 2011.

Production & Infrastructure

Production & Infrastructure revenue in the fourth quarter 2012 was $143 million, which was flat with revenue in the fourth quarter 2011. Strong demand and revenue growth for Valve Solutions and Production Equipment were offset by significantly lower demand for our Flow Equipment product line in the fourth quarter 2012 compared to the fourth quarter 2011.

Review and Outlook

Cris Gaut, Chairman and Chief Executive Officer of Forum, remarked, “Forum had a successful year during 2012. We delivered record annual revenue with each of our six product lines increasing revenue. We completed our IPO and concurrent private placement in April 2012, and closed four acquisitions in the fourth quarter 2012.

“We are not satisfied, however, with our performance during the fourth quarter 2012. A significant factor was the declining U.S. rig count during the period. The latter part of the fourth quarter was particularly challenging as customers significantly reduced spending on consumable products and delayed delivery of capital equipment orders. As a result, we had manufacturing inefficiencies and under absorbed costs, which depressed margins.

“In 2013, we anticipate sequential quarterly revenue and margin improvement in both of our segments, as most of our product lines are seeing improved demand. Our Drilling product line, however, is expected to face continued demand softness until the North America rig count improves. Forum expects diluted earnings per share for the full year 2013 of $1.80 to $1.90, and the first quarter 2013 of $0.31 to $0.35.

“We are pleased to welcome the employees of Dynacon, Inc. and Merrimac Manufacturing, Inc., our two most recent acquisitions, to Forum.”

Recent Acquisitions

– Dynacon, the leading provider of launch and recovery systems used for deployment of remotely operated vehicles and high quality, specialized cable and umbilical handling equipment for all segments of the marine industry.

– Merrimac, a manufacturer of premium consumable parts for drilling, well servicing and pressure pumping applications, including mud pump parts, power swivel parts and valves and seats for hydraulic fracturing pumps.

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Press Release, February 15, 2013