HOUSTON - Forum Energy Technologies, Inc. (NYSE: FET), a global energy industry solutions provider, has announced plans to redeem $60 million of its 9.000% Convertible Senior Secured Notes, with the redemption set to occur on August 16, 2024. This move is part of the company's strategy to manage its long-term debt obligations using its positive cash flow and available liquidity.
The company also provided a preliminary range for its second-quarter cash flows from operating activities, estimating them to be between $23 million and $25 million. Additionally, Forum Energy Technologies disclosed that it repurchased approximately $13 million of the 2025 Notes at a discount to par during the same quarter.
Neal Lux, President and CEO of Forum Energy Technologies, commented on the company's efforts to reduce its long-term debt, stating that after the scheduled redemption in August, over half of the outstanding principal amount of the 2025 Notes will have been retired. He added that the company aims to repay the remaining 2025 Notes and the Variperm Seller Term Loan in 2025.
This announcement does not represent an official notice of redemption for the 2025 Notes; such notice will be distributed to the note holders separately. The company has indicated that the second quarter 2024 financial results will be reported at a later date and that the current cash flow estimates are preliminary, unaudited, and based on information available to management as of now.
Forum Energy Technologies specializes in providing solutions that aim to enhance the safety and efficiency of energy exploration and production. Headquartered in Houston, Texas, the company operates manufacturing, distribution, and service facilities worldwide.
The information in this article is based on a press release statement from Forum Energy Technologies, Inc.
In other recent news, Forum Energy Technologies (FET) demonstrated a strong Q1 2024 performance, largely attributed to the successful acquisition of Variperm. The company reported a 9% revenue increase and a significant 69% rise in EBITDA, with margins improving notably by 460 basis points. Despite some challenges, FET maintained its 2024 guidance, projecting EBITDA between $100 million and $120 million and free cash flow from $40 million to $60 million.
The integration of Variperm is progressing smoothly, expected to extend FET's market reach in Canada. The company also experienced an 89% surge in orders to $88 million, driven by Variperm's contributions. FET's Downhole segment reported a 42% revenue increase and a 107% EBITDA expansion.
In addition, FET plans to retire its long-term debt by year-end and aims for a net leverage of around 1 times trailing EBITDA. The company also indicated potential cash return to shareholders through share repurchases or dividends. Lastly, FET is optimistic about future acquisitions that meet their criteria for industrial logic and financial accretion.
InvestingPro Insights
As Forum Energy Technologies (NYSE: FET) takes strategic steps to manage its long-term debt, current metrics provided by InvestingPro show a mixed financial landscape for the company. With a market capitalization of $211.52 million, the company's valuation reflects its position in the market. Despite a negative P/E ratio of -7.16, which often indicates investor skepticism about future earnings potential, the company's revenue paints a more positive picture. Over the last twelve months as of Q1 2024, Forum Energy Technologies reported revenue growth of 2.54%, with a more robust quarterly revenue growth of 7.11% in Q1 2024.
The company's gross profit for the same period stood at $215.81 million, translating to a gross profit margin of 28.69%, suggesting that it has been effective in managing its cost of sales. Furthermore, the EBITDA growth of 21.43% signals improving profitability and operational efficiency. In light of these metrics, InvestingPro's fair value estimate for FET stands at $22.26, which is higher than the previous close price of $17.57, hinting at potential undervaluation.
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