Forum Energy Technologies, Inc. (NYSE:FET) today announced third quarter 2016 revenue of $138 million, a decrease of $5 million, or 3%, from the second quarter 2016. Net loss for the quarter was $18 million, or $0.20 per diluted share, compared to a net loss of $29 million, or $0.31 per diluted share, for the second quarter 2016. Excluding $0.01 per share of special items, the adjusted net loss was $0.19 per diluted share in the third quarter of 2016.
Special items in the third quarter 2016 included pre-tax charges of $4 million for restructuring related to facility closures, partially offset by $3 million of foreign exchange gains. See Tables 1-5 for a reconciliation of GAAP to non-GAAP financial information.
For the first time since 2015, Forum experienced a sequential increase in orders. New inbound orders in the third quarter were $145 million, a 13% increase from the second quarter 2016, resulting in a book to bill ratio of 104%.
Segment Results
Drilling & Subsea operations focus primarily on manufactured equipment and consumable products for the global drilling and subsea contractors. The segment revenue was $51 million, an 11% decrease from the second quarter 2016, due to lower demand for drilling and subsea capital equipment, partially offset by a significant increase in sales of drilling consumable products in North America.
The Completions segment revenue was $34 million, a 37% increase sequentially, as customer spending improved on downhole completion products and pressure pumping consumable equipment. This increased spending was driven by higher drilling activity in the Permian and improved utilization of hydraulic fracturing equipment that accelerated throughout the quarter. This Completions segment designs and manufactures products for the well construction, completion, stimulation and intervention markets primarily in North America.
Production & Infrastructure segment revenue was $54 million, a 13% decline from the second quarter 2016. This decrease resulted primarily from the completion of an unusually large international refinery project in the prior quarter and softer demand for valves from the midstream gas transmission industry. Forum’s U.S. land surface production equipment sales increased 18% in the third quarter. The Production & Infrastructure segment manufactures well site production and process equipment, desalination refinery equipment, and a wide range of valves for the upstream, midstream and downstream oil and gas customers.
Review and Outlook
Cris Gaut, Forum’s Chairman and Chief Executive Officer, remarked, “We are beginning to see the impact of improved North America land activity on our business. Forum’s U.S. revenue increased 17% sequentially, in line with the improvement in the land rig count. Orders in the third quarter, excluding the Subsea product line, were up 29% sequentially, representing a book to bill ratio of 113%.
“Our cost structure and operational efficiencies allowed Forum to improve operating performance, even with lower revenue during the third quarter.
“With Forum’s focus on early cycle, consumable products and activity-based equipment, we are well positioned for the recovery.”
Recent Events
Forum received an award from a large independent operator for 100 hydrocarbon separation units to support their well completion activity in the Permian and Eagle Ford basins.