Forum Energy Technologies, Inc. · NYSE:FET
Forum Energy Technologies — Cowen Energy Conference 2015
28 slides from Forum Energy Technologies's conference presentation, Dec 2, 2015
Slide 1: Forum Energy Technologies Cowen Energy Conference
Forum Energy Technologies Cowen Energy Conference
Slide 2: Forward Looking Statements
Confidential 2 Forward Looking Statements The statements made during this presentation, including the answers to your questions, include information that the Company believes to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statemen
Slide 3: 2015 Objectives
Confidential 3 2015 Objectives • Generating free cash flow • Focused acquisition strategy • Developing new products • Protecting margins • Improving operational performance
Slide 4: Free Cash Flow History
Confidential 4 Free Cash Flow History Cumulative Free Cash Flow - $616 million and Net Income - $592 million Note: Free Cash Flow is a non-GAAP measure. See reconciliation of Free Cash Flow to Net Income at the end of this presentation. $- $100 $200 $300 $400 $500 $600 $700 2009 2010 2011 2012 2013
Slide 5: Free Cash Flow to Net Income Ratio 2009 – 2014
Confidential 5 Free Cash Flow to Net Income Ratio 2009 – 2014 Cumulative Free Cash Flow* to Cumulative Net Income Ratio 0 0.2 0.4 0.6 0.8 1 1.2 FET Average Large Equipment (NOV, FMC, CAM) Average Large Service (SLB, HAL, BHI) *FCF equals cash generated after working capital changes and after capital
Slide 6: Free Cash Flow 2015 Focus
Confidential 6 Free Cash Flow 2015 Focus • Working capital reduction • Lower capital expenditures • Focused M&A ($ millions) YTD 9/30/15 2014 2013 Free cash flow, before acquisitions Net income $ 44 $ 174 $ 129 Depreciation and amortization 49 65 61 Other, primarily working capital 24 31 21 Net cash
Slide 7: Deployment of Cash
Confidential 7 Deployment of Cash • Seventeen acquisitions since the 2010 combination • New product development • $150 million share repurchase program − Repurchased 4.4 million shares in Q4 2014 for $100 million − $50 million remaining under existing program
Slide 8: Capitalization and Credit Statistics
Confidential 8 Capitalization and Credit Statistics Strong balance sheet ($ millions) 9/30/15 12/31/14 Capitalization 6.25% Senior unsecured notes due October 2021 $ 402 $ 403 Senior secured revolving credit facility ($600mm) - 25 Other debt 1 1 Total debt $ 403 $ 429 Total equity 1,431 1,396 Total
Slide 9: Flow Equipment Refurbishment & Recertification
Confidential 9 Flow Equipment Refurbishment & Recertification Power Ends & Pumps J-Mac Tool - 2015 Manifolds & Treating Iron Wood Flowline - 2011 Fluid Ends, Valves, Fittings Phoinix Global - 2011 • The full suite of pumps, replacement power and fluid ends, manifolds, valves and treating iron • Crit
Slide 10: Well Intervention
Confidential 10 • Building a well intervention product offering for the service companies • Critical consumable products – coiled tubing and wireline • Capital items with significant aftermarket opportunity – pressure control Coiled Tubing Global Tubing JV - 2013 Wireline Cable Quality Wireline - 20
Slide 11: New Products
Confidential 11 EDGE™ II Desalter XLX –C ROV Coiled Tubing Products New Products • Coiled Tubing Pipeline –Offshore pipelines – Developing product for large, onshore market • Umbilical Tubes – Specialized offshore applications –Carbon steel coated center tube for injection lines and gaslift tubing •
Slide 12: Improving Operational Performance and Cost Reductions
Confidential 12 Improving Operational Performance and Cost Reductions • Manufacturing excellence – Develop and leverage centers of excellence – On time delivery – Shorten manufacturing lead times • Supply chain efficiencies – Supply base rationalization – Sourcing technology – e-sourcing – Upgrade o
Slide 13: Protecting Margins
Confidential 13 Protecting Margins • Scalable organization − Direct labor & overhead costs − SG&A costs • Minimal sustaining CAPEX requirements • Scalable capital spending with growth prospects • Procurement savings opportunities • Quality management initiatives Material 72% Labor Related 14% Variab
Slide 14: 3rd Quarter 2015 Results (Unaudited)
Confidential 14 3rd Quarter 2015 Results (Unaudited) Quarterly Revenue ($millions) and Adjusted EBITDA Margin % Note: EBITDA is a non-GAAP financial measure. See reconciliation of EBITDA to Net Income at the end of this presentation. $469 $439 $348 $284 $245 20.2% 19.1% 17.7% 14.5% 12.8% 0% 5% 10% 1
Slide 15: Current Market – Q4 Update
Confidential 15 Current Market – Q4 Update • E&P’s have exhausted budgets • Rig count declining • “Fracation” through year-end • Deferring maintenance • Customer priorities: - Preserve liquidity - Reduce expenses - Lower spending on OPEX items 700 750 800 850 900 8/21/2015 11/25/2015 US Land Rig Cou
Slide 16: Summary
Confidential 16 Summary Large cap capabilities, small cap opportunities • Strong financial position • Free cash flow generation for enhanced shareholder value – Focused and disciplined M&A – New product development • Balanced and diverse portfolio mix • Protecting margins in downturn – Cost reductio
Slide 17: Questions?
Confidential 17 QUESTIONS?
Slide 18: Markets & Customers: Full Well Cycle Exposure
Confidential 18 Offshore Construction Midstream & Downstream Business Drivers Subsea Activity 20% Valves 15% Drilling Contractors Rig Count 30% Oilfield Service Companies E&P Operators Well Count and Well Construction 35% E&P Operators Subsea Construction & Development Drilling Well Construction & C
Slide 19: Focused Acquisition Strategy
Confidential 19 Focused Acquisition Strategy Global oilfield, manufactured products Leveraged to attractive secular growth trends Strong brand and market position Activity-based, consumable products High Growth International Expansion
Slide 20: Sources of Revenue
Confidential 20 Subsea 19% Drilling 35% Well Construction & Completion 11% Stimulation & Intervention 10% Production 13% Infrastructure 12% United States 60% Europe Africa 17% Asia Pacific 9% Canada 6% Latin America 4% Middle East 4% Consumable Products 50% Other 2% Capital Equipment 48% Onshore 73%
Slide 21: Drilling & Subsea Segment: Drilling Technologies
Confidential 21 Drilling & Subsea Segment Drilling Technologies XL Backsaver P-Quip™ mud pump liner retention system 1,000 ton hydraulic elevator 125 ton air spider Casing slip Drill pipe float valve Mousehole tool Blohm + Voss Oil Tools FLOORHAND™ Wrangler™ Catwalk AMC™ torque machines Offline Acti
Slide 22: Drilling & Subsea Segment: Subsea Technologies
Confidential 22 ROV Components Drilling & Subsea Segment Subsea Technologies PIG launchers Tether Management Systems Largest range of ROVs in industry Perry™ and Sub-Atlantic™ VMax™ Simulation Systems Trenchers Hot Stabs
Slide 23: Production & Infrastructure Segment: Flow Equipment
Confidential 23 Production & Infrastructure Segment Flow Equipment
Slide 24: Davis-Lynch Casing & Cementing Technology
Confidential 24 Davis-Lynch™ Casing & Cementing Technology Drilling & Subsea Segment Downhole Technologies 1) Spears & Associates – 2012 “Oilfield Market Report,” casing hardware market by revenue. Weatherford 39% Halliburton 17% Forum (Davis- Lynch) 11% Top-Co 8% Varel 3% Others 22% Downhole Comple
Slide 25: Production & Infrastructure Segment: Production Equipment
Confidential 25 Production & Infrastructure Segment Production Equipment Heater Treater Separators Well Manifold Tanks
Slide 26: Production & Infrastructure Segment: Valve Solutions
Confidential 26 Two piece trunnion valves for the shale markets Production & Infrastructure Segment Valve Solutions Specified ball valve of choice for the US Strategic Petroleum Reserve Preferred valve supplier to leading Canadian oil sands producers
Slide 27: Reconciliation of Non-GAAP Measures: EBITDA
Confidential 27 Actual ($ millions) Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 EBITDA Reconciliation Net Income attributable to common stockholders $ 52 $ 46 $ 29 $ 9 $ 7 Interest expense 8 7 8 8 7 Depreciation and amortization 17 16 16 16 17 Income tax expense 21 16 11 2 1 Transaction and restructurin
Slide 28: Reconciliation of Non-GAAP Measures: Free Cash Flow
Confidential 28 Reconciliation of Non-GAAP Measures (Unaudited) Note: The Company believes free cash flow, before acquisitions is an important measure because it encompasses both profitability and capital management in evaluating results. ($ millions) 2014 2013 2012 2011 2010 2009 Free cash flow, be
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