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Forum Energy Technologies (FET)
Q1 2014 Earnings Conference Call
April 25, 2014, 10:00 AM ET
Mark Traylor - Vice President, Investor Relations and Planning
Christopher Gaut - Chairman and Chief Executive Officer
James Harris - Senior Vice President and Chief Financial Officer
Prady Iyyanki - Executive Vice President and Chief Operating Officer
Wendell Brooks - President, Production and Infrastructure Segment
Jonathan Sisto - Credit Suisse
David Anderson - JPMorgan
Jeff Tillery - Tudor, Pickering, Holt
Blake Hutchinson - Howard Weil
Ole Slorer - Morgan Stanley
Robin Shoemaker - Citi
Brad Handler - Jefferies
Doug Becker - Bank of America Merrill Lynch
Robert MacKenzie - Iberia Capital Partners
Martin Malloy - Johnson
Mike Urban - Deutsche Bank
Tom Curran - FBR Capital markets
Dan Leben - Robert W. Baird
Previous Statements by FET
» Forum Energy Technologies' CEO Discusses Q4 2013 Results - Earnings Call Transcript
» Forum Energy Technologies' CEO Discusses Q3 2013 Results - Earnings Call Transcript
» Forum Energy Technologies Inc (FET) CEO Discusses Q2 2013 Results - Earnings Call Transcript
Thank you, Jackie. Good morning and welcome to Forum Energy Technologies' quarterly earnings conference call for the first quarter 2014. 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 is Prady Iyyanki, Chief Operating Officer; and Wendell Brooks, President of our 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, include 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 the date of the live call.
Management's statements may include non-GAAP financial measures. For a reconciliation of these measures, please 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.
Thanks, Mark. Good morning. I will start with some highlights from the first quarter and offer a few thoughts on the outlook for our business, and then turn it over to Jim Harris, who will provide more detail on our financial performance.
We are pleased with our first quarter results and our progress on improved efficiencies, integration of our operations and operational performance. In addition, we had record revenue and record bookings. Adjusted net income was $0.40 per diluted share and adjusted EBITDA was $78 million, excluding $0.02 per share for losses on the sale of a small business and foreign exchange.
EBITDA margins in the first quarter were 19.4%. We continue to realize operational efficiencies and margin improvement, but these were offset by some significant cost increases impacting 2014 results. Margin improvement remains a primary objective for us. Total inbound orders during the first quarter were a very strong $486 million, that's 26% increase over the orders in the fourth quarter.
Bookings of new orders increased substantially for both of our segments. The first quarter book-to-bill ratio was 120% for the company as a whole, 123% for Drilling and Subsea and 114% for Production and Infrastructure.
During the first quarter, the drilling product line experienced near-record revenue, record operating income and record orders. We are now seeing an increase in domestic orders for consumable and capital drilling equipment as well as a continuation of the strengths in new international orders.
On the international side, we received an award for pipe handling packages for seven new build land rigs in Latin America. That order includes Forum's Wrangler hydraulic catwalks and the Blohm & Voss FloorHand FH-100 iron roughnecks, a testament to the integration of our sales team. We are also seeing an increase in orders of Forum drilling equipment for new jack-up rigs that continue to be built.
As we previously announced, Mr. James Bement has joined Forum as our Senior Vice President, Drilling Technologies. We welcome James to this role, where he will be responsible for leading and driving performance of Forum's Global Drilling Business.
James brings over 30 years of experience in our industry to Forum. Our drilling business line is poised for domestic and international growth, especially since our acquisition last year of Blohm & Voss. James' global experience makes him well-qualified to lead this product line.
At our subsea product line, orders in the first quarter were up 35% sequentially, primarily on the previously announced contract with Subsea 7 to supply eight work-class remotely operated vehicle systems and the more recent contract with Canyon Offshore to supply three Perry XLX Evo 200 horsepower work-class ROVs, as well as two Dynacon Launch and Recovery Systems.
The market outlook is strong for orders of our subsea equipment to install and maintain the large amount of subsea trees and related equipment that has been ordered in recent years.