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Forum Energy Technologies Inc (FET)
Q4 2013 Earnings Call
February 07, 2014 10:00 am ET
Mark Traylor - Vice President, Investor Relations & Planning
Chris Gaut - Chairman of the Board and Chief Executive Officer
Jim Harris - Senior Vice President and Chief Financial Officer
Prady Iyyanki - Chief Operating Officer
Wendell Brooks - President of Production and Infrastructure Segment
Blake Hutchinson - Howard Weil
Jonathan Sisto - Credit Suisse
Robin Shoemaker - Citi
Brad Handler - Jefferies
Rob Mackenzie - FBR Capital
George O'Leary - Tudor, Pickering
Tom Dillon - William Blair
Previous Statements by FET
» Forum Energy Technologies' CEO Discusses Q3 2013 Results - Earnings Call Transcript
» Forum Energy Technologies Inc (FET) CEO Discusses Q2 2013 Results - Earnings Call Transcript
» Forum Energy Technologies' CEO Discusses Q1 2013 Results - Earnings Call Transcript
I would now like to turn the conference over to your host for today, Mr. Mark Traylor, Vice President of Investor Relations and Planning. Please proceed.
Thank you, Denise. Good morning and welcome to Forum Energy Technologies Quarterly Earnings Conference Call for the fourth quarter 2013. With us today to present formal remarks is Chris Gaut, Forum's Chairman and Chief Executive Officer as well as Jim Harris, Senior Vice President and Chief Financial Officer. Also, with us today is, Prady Iyyanki, Chief Operating Officer and Wendell Brooks, President of Production and Infrastructure division.
We issued our earnings release last night and it is available on our website. The statements made during this conference call including the answers to your questions, provide information that we believe to be forward looking statements within the meaning of the Private Securities Litigation Reform Act.
Forward looking statements involve risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied in such statements. Those risks include among other things matters that we have described in our earnings release and in our filings with the Securities and Exchange Commission.
We do not undertake any ongoing obligation other than that imposed by law to publicly update or revise any forward looking statements to reflect future events, information or circumstances that arise after this call. In addition, this conference call contains time-sensitive information that reflects management's best judgment only as of the date of the live call.
Management's statements may include non-GAAP financial measures. For reconciliation of these measures refer to our earnings news release available on our website. This call is being recorded. A replay of the call will be available on our website for 30 days following the call.
I am now pleased to turn the call over to Chris Gaut, our CEO.
Thanks, Mark. Good morning. I will start with highlights from the fourth quarter and the full year, and offer some thoughts on the outlook for our business. Then I will turn it over to Jim, who will provide more detail on our financial performance.
In the fourth quarter 2013, we had record revenue of $394 million. The fourth quarter results include $0.03 per share of severance and restructuring charges and several non operating items. Excluding these items, adjust net income was $0.39 per share and adjusted EBITDA was $76 million.
EBITDA margins in the fourth quarter were 19.2%, just under our third quarter and targeted margins of 20%. Margin improvement remains our primary objective. Total orders during the fourth quarter were a record $387 million, a 9% increase over orders in the third quarter.
Bookings increased sequentially for subsea equipment downhole and completion products and Production Equipment. The fourth quarter book-to-bill ratio was 98% of the company as a whole, 100% for the Drilling and Subsea segment and 95% for the Production and Infrastructure segment.
Our Drilling and Subsea achieved a 5% increase in sequential revenue on record quarterly sales of drilling and downhole products. However, margins were down sequentially from the third quarter, due to cost overruns on one drilling project and delays in subsea deliveries.
Orders continued at a strong pace for capital drilling equipment part and especially for international and offshore customers. During the fourth quarter, the drilling product line had record revenue, also officially opened a 150,000 square-foot manufacturing facility in Broussard, Louisiana, and we rolled out a new organization structure to better align product offerings with our customers.
Our subsea product line orders in the fourth quarter were up over 50%, sequentially, primarily on the previously announced contract with DOF Subsea to supply seven Perry 200 horsepower work-class remotely operated vehicle systems, including five of our Dynacon Launch and Recovery Systems. A very recent development is the order from another customer for an additional eight work-class ROVs to be delivered later this year and into 2015. Together, these two large orders are validation of our leading market position in the work-class ROV market and confirmation of the strength of the sector.
The Downhole Technologies product line realized record quarterly revenue and had a sequential improvement in orders as we received large orders from major service companies for international sales of our cementing and cashing accessories and are seeing a recovery in orders for the North American market. Strong demand continues for our Cannon protectors in our ProDrill composite frac plugs.
Moving to our Production and Infrastructure segment, we had a sequential decline in revenue as demand for our valve declined from the record levels in the first half of 2013, and both production and flow equipment were impacted by the severe winter weather in the fourth quarter. However, this segment maintained good cost control and actually improved margins on the lower revenue.