SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON,~~Washington, D.C. 20549



þ☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
						~~For the Quarterly Period Ended September 30, 2017~~



~~Delaware~~	~~61-1488595~~

Delaware		61-1488595
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

~~920 Memorial City Way, Suite 1000~~

~~Houston, Texas 77024~~

10344 Sam Houston Park Drive

Suite 300

Houston

Texas

77064

(Address of Principal Executive Offices)

(Zip Code)

~~(Address of principal executive offices)~~

Securities registered pursuant to Section 12(b) of the Act


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	FET	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such ~~files.~~files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☑

~~Large accelerated filer~~ þ

~~Accelerated filer~~ o

~~Non-accelerated filer~~ o

~~(Do not check if a smaller reporting company)~~

~~Smaller reporting company~~ o

Emerging growth companyo

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No þ

As of October ~~31, 2017,~~27, 2023, there were ~~108,096,622~~10,192,978 common shares outstanding.

~~Table of Contents~~

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Forum Energy Technologies, Inc. and ~~subsidiaries~~Subsidiaries

Condensed ~~consolidated statements~~Consolidated Statements of ~~comprehensive income (loss)~~Comprehensive Loss

(Unaudited)

Three months ended September 30, Nine months ended September 30,
(in thousands, except per share information) 2017 2016 2017 2016
Net sales $ 198,709
$ 138,268
$ 570,920
$ 440,432
Cost of sales 151,150
108,984
435,127
371,310
Gross profit 47,559
29,284
135,793
69,122
Operating expenses
Selling, general and administrative expenses 63,191
53,362
185,760
171,638
Transaction expenses 882
341
1,755
571
Goodwill and intangible asset impairment 638
—
68,642
—
Loss on sale of assets and other 128
2,217
1,517
2,233
Total operating expenses 64,839
55,920
257,674
174,442
Earnings from equity investment 3,361
414
7,391
1,207
Operating loss (13,919 ) (26,222 ) (114,490 ) (104,113 )
Other expense (income)
Interest expense 6,366
6,746
19,331
20,664
Deferred financing costs written off —
—
—
2,588
Foreign exchange losses (gains) and other, net 2,360
(3,152 ) 6,508
(14,546 )
Total other expense 8,726
3,594
25,839
8,706
Loss before income taxes (22,645 ) (29,816 ) (140,329 ) (112,819 )
Income tax benefit (7,817 ) (11,821 ) (31,860 ) (43,374 )
Net loss (14,828 ) (17,995 ) (108,469 ) (69,445 )
Less: Income (loss) attributable to noncontrolling interest —
(6 ) —
24
Net loss attributable to common stockholders (14,828 ) (17,989 ) (108,469 ) (69,469 )

Weighted average shares outstanding
Basic 96,275
90,860
96,103
90,682
Diluted 96,275
90,860
96,103
90,682
Loss per share
Basic $ (0.15 ) $ (0.20 ) $ (1.13 ) $ (0.77 )
Diluted $ (0.15 ) $ (0.20 ) $ (1.13 ) $ (0.77 )

Other comprehensive income (loss), net of tax:
Net loss (14,828 ) (17,995 ) (108,469 ) (69,445 )
Change in foreign currency translation, net of tax of $0 11,547
(6,243 ) 34,094
(25,618 )
Loss on pension liability (36 ) (14 ) (133 ) (33 )
Comprehensive loss (3,317 ) (24,252 ) (74,508 ) (95,096 )
Less: comprehensive income attributable to noncontrolling interests —
(27 ) —
(156 )
Comprehensive loss attributable to common stockholders $ (3,317 ) $ (24,279 ) $ (74,508 ) $ (95,252 )


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share information)	2023		2022		2023		2022
Revenue	$	179,253	$	181,835	$	553,659	$	509,255
Cost of sales	128,231		130,472		399,229		370,700
Gross profit	51,022		51,363		154,430		138,555
Operating expenses
Selling, general and administrative expenses	45,496		43,713		135,364		131,515
Loss (gain) on disposal of assets and other	(145)		(52)		137		(938)
Total operating expenses	45,351		43,661		135,501		130,577
Operating income	5,671		7,702		18,929		7,978
Other expense (income)
Interest expense	4,504		8,143		13,742		23,609
Foreign exchange and other losses (gains), net	(8,279)		(18,288)		1,129		(37,112)

Total other expense (income), net	(3,775)		(10,145)		14,871		(13,503)
Income before taxes	9,446		17,847		4,058		21,481
Income tax expense	1,477		1,370		6,154		4,939
Net income (loss)	$	7,969	$	16,477	$	(2,096)	$	16,542

Weighted average shares outstanding
Basic	10,235		5,778		10,208		5,736
Diluted	10,393		10,552		10,208		10,489
Earnings (loss) per share
Basic	$	0.78	$	2.85	$	(0.21)	$	2.88
Diluted	$	0.77	$	1.82	$	(0.21)	$	2.37

Other comprehensive income (loss), net of tax of $0:
Net income (loss)	$	7,969	$	16,477	$	(2,096)	$	16,542
Change in foreign currency translation	(10,710)		(22,690)		1,197		(46,199)
Gain (loss) on pension liability	(36)		66		(15)		153
Comprehensive loss	$	(2,777)	$	(6,147)	$	(914)	$	(29,504)

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table of Contents~~

Forum Energy Technologies, Inc. and ~~subsidiaries~~Subsidiaries

Condensed ~~consolidated balance sheets~~Consolidated Balance Sheets

(Unaudited)

(in thousands, except share information) September 30,
2017 December 31,
2016
Assets
Current assets
Cash and cash equivalents $ 156,392
$ 234,422
Accounts receivable—trade, net 154,376
105,268
Inventories, net 394,103
338,583
Income tax receivable 1,872
32,801
Prepaid expenses and other current assets 27,705
29,443
Costs and estimated profits in excess of billings 9,395
9,199
Total current assets 743,843
749,716
Property and equipment, net of accumulated depreciation 149,016
152,212
Deferred financing costs, net 657
1,112
Intangible assets 224,565
216,418
Goodwill 619,632
652,743
Investment in unconsolidated subsidiary 64,499
59,140
Deferred income taxes, net 9,719
851
Other long-term assets 2,924
3,000
Total assets $ 1,814,855
$ 1,835,192
Liabilities and equity
Current liabilities
Current portion of long-term debt $ 1,133
$ 124
Accounts payable—trade 123,148
73,775
Accrued liabilities 64,718
55,604
Deferred revenue 8,506
8,338
Billings in excess of costs and profits recognized 1,530
4,004
Total current liabilities 199,035
141,845
Long-term debt, net of current portion 398,145
396,747
Deferred income taxes, net 4,175
26,185
Other long-term liabilities 34,858
34,654
Total liabilities 636,213
599,431
Commitments and contingencies

Equity
Common stock, $0.01 par value, 296,000,000 shares authorized, 104,789,172 and 103,682,128 shares issued 1,048
1,037
Additional paid-in capital 1,016,458
998,169
Treasury stock at cost, 8,190,362 and 8,174,963 shares (134,293 ) (133,941 )
Retained earnings 389,705
498,174
Accumulated other comprehensive loss (94,276 ) (128,237 )
Total stockholders’ equity 1,178,642
1,235,202
Noncontrolling interest in subsidiary —
559
Total equity 1,178,642
1,235,761
Total liabilities and equity $ 1,814,855
$ 1,835,192

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Condensed consolidated statements of cash flows~~

~~(Unaudited)~~

Nine Months Ended September 30,
(in thousands, except share information) 2017 2016
Cash flows from operating activities
Net loss $ (108,469 ) $ (69,445 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation expense 25,212
27,141
Amortization of intangible assets 20,030
19,709
Goodwill and intangible asset impairment 68,642
—
Share-based compensation expense 15,219
15,521
Inventory write down 1,376
24,479
Deferred income taxes (31,041 ) (12,988 )
Deferred loan cost written off —
2,588
Earnings from unconsolidated subsidiary, net of distributions (4,317 ) (804 )
Other 4,548
4,137
Changes in operating assets and liabilities
Accounts receivable—trade (43,167 ) 35,673
Inventories (44,288 ) 44,538
Prepaid expenses and other current assets 1,684
7,113
Income tax receivable 30,929
(32,801 )
Accounts payable, deferred revenue and other accrued liabilities 49,126
(15,130 )
Costs and estimated profits in excess of billings, net (2,567 ) (5,511 )
Net cash provided by (used in) operating activities $ (17,083 ) $ 44,220
Cash flows from investing activities
Acquisition of businesses, net of cash acquired (47,890 ) (2,700 )
Capital expenditures for property and equipment (19,656 ) (13,438 )
Proceeds from sale of business, property and equipment 1,849
3,710
Investment in unconsolidated subsidiary $ (1,041 ) $ —
Net cash used in investing activities $ (66,738 ) $ (12,428 )
Cash flows from financing activities
Repayment of debt (1,140 ) (254 )
Cash paid for net treasury shares withheld (4,667 ) (1,273 )
Proceeds from stock issuance 2,896
2,742
Deferred financing costs —
(513 )
Net cash provided by (used in) financing activities $ (2,911 ) $ 702
Effect of exchange rate changes on cash 8,702
(9,209 )
Net increase (decrease) in cash and cash equivalents (78,030 ) 23,285
Cash and cash equivalents
Beginning of period 234,422
109,249
End of period $ 156,392
$ 132,534
Noncash investing activities
Acquisition via issuance of stock $ 4,500
$ —


(in thousands, except share information)	September 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	37,151	$	51,029
Accounts receivable—trade, net of allowances of $10,945 and $10,690	157,820		154,247
Inventories, net	302,304		269,828
Prepaid expenses and other current assets	24,670		21,957
Accrued revenue	771		665
Costs and estimated profits in excess of billings	8,440		15,139
Total current assets	531,156		512,865
Property and equipment, net of accumulated depreciation	61,397		62,963
Operating lease assets	56,363		57,270
Deferred financing costs, net	927		1,166
Intangible assets, net	173,394		191,481
Deferred income taxes, net	368		184
Other long-term assets	5,266		8,828
Total assets	$	828,871	$	834,757
Liabilities and equity
Current liabilities
Current portion of long-term debt	$	1,076	$	782
Accounts payable—trade	124,146		118,261
Accrued liabilities	64,184		76,544
Deferred revenue	14,140		14,401
Billings in excess of costs and profits recognized	4,739		305
Total current liabilities	208,285		210,293
Long-term debt, net of current portion	128,537		239,128
Deferred income taxes, net	904		902
Operating lease liabilities	62,569		64,626
Other long-term liabilities	11,456		12,773
Total liabilities	411,751		527,722
Commitments and contingencies
Equity
Common stock, $0.01 par value, 14,800,000 shares authorized, 10,901,878 and 6,223,454 shares issued	109		62
Additional paid-in capital	1,368,062		1,253,613
Treasury stock at cost, 708,900 and 570,247 shares	(142,057)		(138,560)
Retained deficit	(682,691)		(680,595)
Accumulated other comprehensive loss	(126,303)		(127,485)
Total equity	417,120		307,035
Total liabilities and equity	$	828,871	$	834,757

The accompanying notes are an integral part of these condensed consolidated financial statements.

Forum Energy Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash flows from operating activities
Net income (loss)	$	(2,096)	$	16,542
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation expense	7,920		9,678
Amortization of intangible assets	18,074		18,487
Inventory write down	1,918		1,580
Stock-based compensation expense	3,345		3,537

Deferred income taxes	(93)		(1,870)
Noncash losses and other, net	4,702		5,480
Changes in operating assets and liabilities
Accounts receivable—trade	(4,779)		(28,729)
Inventories	(35,613)		(37,160)
Prepaid expenses and other assets	413		1,408
Cost and estimated profit in excess of billings	6,819		(10,251)
Accounts payable, deferred revenue and other accrued liabilities	(8,257)		(2,022)
Billings in excess of costs and estimated profits earned	4,570		(8,812)
Net cash used in operating activities	(3,077)		(32,132)
Cash flows from investing activities
Capital expenditures for property and equipment	(5,497)		(4,779)
Proceeds from sale of property and equipment	1,341		2,672
Payments related to business acquisitions and dispositions	—		(485)
Net cash used in investing activities	(4,156)		(2,592)
Cash flows from financing activities
Borrowings on Credit Facility	351,635		423,945
Repayments on Credit Facility	(351,635)		(413,205)

Payment of capital lease obligations	(910)		(746)
Repurchases of stock	(5,996)		(826)


Net cash provided by (used in) financing activities	(6,906)		9,168

Effect of exchange rate changes on cash	261		(1,524)

Net decrease in cash, cash equivalents and restricted cash	(13,878)		(27,080)
Cash, cash equivalents and restricted cash at beginning of period	51,029		46,858
Cash, cash equivalents and restricted cash at end of period	$	37,151	$	19,778

Noncash activities
Operating lease right of use assets obtained in exchange for lease obligations	$	5,194	$	3,248
Finance lease right of use assets obtained in exchange for lease obligations	1,521		458
Conversion of debt to common stock	113,650		—

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table~~

Forum Energy Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of ~~Contents~~Changes in Stockholders’ Equity

(Unaudited)


Nine Months Ended September 30, 2023
(in thousands)	Common stock		Additional paid-in capital		Treasury stock		Retained deficit		Accumulated other comprehensive income / (loss)		Total equity
Balance at December 31, 2022	$	62	$	1,253,613	$	(138,560)	$	(680,595)	$	(127,485)	$	307,035
Stock-based compensation expense	—		841		—		—		—		841
Restricted stock issuance, net of forfeitures	1		(1,874)		—		—		—		(1,873)
Conversion of debt to common stock	46		113,604		—		—		—		113,650
Treasury stock	—		—		(3,497)		—		—		(3,497)
Currency translation adjustment	—		—		—		—		4,158		4,158
Change in pension liability	—		—		—		—		15		15
Net loss	—		—		—		(3,486)		—		(3,486)
Balance at March 31, 2023	$	109	$	1,366,184	$	(142,057)	$	(684,081)	$	(123,312)	$	416,843
Stock-based compensation expense	—		1,257		—		—		—		1,257


Currency translation adjustment	—		—		—		—		7,749		7,749
Change in pension liability	—		—		—		—		6		6
Net loss	—		—		—		(6,579)		—		(6,579)
Balance at June 30, 2023	$	109	$	1,367,441	$	(142,057)	$	(690,660)	$	(115,557)	$	419,276
Stock-based compensation expense	—		1,247		—		—		—		1,247
Restricted stock issuance, net of forfeitures	—		(626)		—		—		—		(626)

Currency translation adjustment	—		—		—		—		(10,710)		(10,710)
Change in pension liability	—		—		—		—		(36)		(36)
Net income	—		—		—		7,969		—		7,969
Balance at September 30, 2023	$	109	$	1,368,062	$	(142,057)	$	(682,691)	$	(126,303)	$	417,120

The accompanying notes are an integral part of these condensed consolidated financial statements.

Forum Energy Technologies, Inc. and subsidiaries

~~Notes to~~Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)


Nine Months Ended September 30, 2022
(in thousands)	Common stock		Additional paid-in capital		Treasury stock		Retained deficit		Accumulated other comprehensive income / (loss)		Total equity
Balance at December 31, 2021	$	61	$	1,249,962	$	(135,562)	$	(684,307)	$	(101,028)	$	329,126
Stock-based compensation expense	—		2,151		—		—		—		2,151
Restricted stock issuance, net of forfeitures	1		(361)		—		—		—		(360)
Currency translation adjustment	—		—		—		—		(6,992)		(6,992)
Change in pension liability	—		—		—		—		30		30
Net loss	—		—		—		(9,199)		—		(9,199)
Balance at March 31, 2022	$	62	$	1,251,752	$	(135,562)	$	(693,506)	$	(107,990)	$	314,756
Stock-based compensation expense	—		621		—		—		—		621
Restricted stock issuance, net of forfeitures	—		(1)		—		—		—		(1)
Liability awards converted to share settled	—		275		—		—		—		275
Currency translation adjustment	—		—		—		—		(16,518)		(16,518)
Change in pension liability	—		—		—		—		57		57
Net income	—		—		—		9,264		—		9,264
Balance at June 30, 2022	$	62	$	1,252,647	$	(135,562)	$	(684,242)	$	(124,451)	$	308,454
Stock-based compensation expense	—		765		—		—		—		765
Restricted stock issuance, net of forfeitures	—		(467)		—		—		—		(467)
Currency translation adjustment	—		—		—		—		(22,690)		(22,690)
Change in pension liability	—		—		—		—		66		66
Net income	—		—		—		16,477		—		16,477
Balance at September 30, 2022	$	62	$	1,252,945	$	(135,562)	$	(667,765)	$	(147,075)	$	302,605

The accompanying notes are an integral part of these condensed consolidated financial ~~statements~~statements.

Table of Contents

Forum Energy Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Organization and ~~basis~~Basis of ~~presentation~~Presentation

Forum Energy Technologies, Inc. (the ~~"Company"~~“Company,” “FET,” “we,” “our,” or “us”), a Delaware corporation, is a global ~~oilfield products~~ company serving the ~~drilling, subsea, completion, production and infrastructure sectors of the~~ oil, ~~and~~ natural gas, ~~industry. The Company designs, manufactures~~industrial and ~~distributes products~~renewable energy industries. With headquarters located in Houston, Texas, FET provides value added solutions that increase the safety and ~~engages in aftermarket services, parts supply~~efficiency of energy exploration and ~~related services that complement the Company’s product offering.~~production.

Basis of ~~presentation~~Presentation

The Company's accompanying unaudited condensed consolidated financial statements ~~of the Company~~ include the accounts of the Company and its subsidiaries. All ~~significant~~ intercompany transactions have been eliminated in consolidation.

The Company's investment in an operating entity where the Company has the ability to exert significant influence, but does not control operating and financial policies is accounted for using the equity method. The Company's share of the net income of this entity is recorded as "Earnings from equity investment" in the condensed consolidated statements of comprehensive income (loss). The investment in this entity is included in "Investment in unconsolidated subsidiary" in the condensed consolidated balance sheets. The Company reports its share of equity earnings within operating income (loss) as the investee's operations are integral to the operations of the Company.

In ~~the~~management's opinion, ~~of management,~~ all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the ~~Company's~~Company’s financial position, results of operations and cash flows have been included. Operating results for the three and nine months endedSeptember 30, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017~~2023 or any other interim period.

These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ~~(the "SEC"~~(“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America ~~("GAAP")~~ for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, ~~2016~~,2022, which are included in the Company’s ~~2016~~2022 Annual Report on Form 10-K filed with the SEC on February 28, ~~2017 (the "Annual Report").~~2023.

2. Recent ~~accounting pronouncements~~Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, ~~("FASB"),~~ which ~~are adopted by~~ the Company adopts as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the ~~Company’s~~Company's consolidated financial statements upon adoption.

~~In September 2017, the FASB issued~~ Accounting Standard ~~Updates ("ASU"~~Adopted in 2023

Inflation Reduction Act of 2022. In August 2022, the Inflation Reduction Act of 2022 (“IRA”) ~~No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to~~was signed into law. The IRA, among other provisions, imposes a 15% corporate alternative minimum tax on the ~~Staff Announcement at the July 20, 2017 EITF Meeting and Rescission~~adjusted financial statement income of ~~Prior SEC Staff Announcements and Observer Comments. This ASU codifies the text of the SEC announcement, as it relates to revenue recognition and leases. The ASU also rescinds~~ certain codified SEC announcements and comments that are no longer applicable upon adoption of ASU No. 2014-09 and ASU No. 2016-02. These recent accounting pronouncements related to revenue and leases are discussed later in this footnote.

~~In May 2017, the FASB issued ASU No. 2017-09 Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting, which clarifies when to account~~large corporations effective for a change to the terms or conditions of a share based payment award as a modification. Under the new ASU, an entity should apply modification accounting unless the fair value, the vesting conditions, and the classification of the award as equity or liability of the modified award all remain the same as the original award. The ASU should be adopted prospectively for all entities for annual periods, and interim periods within those annual periods,tax years beginning after December ~~15, 2017. Early~~31, 2022 and a 1% excise tax on stock repurchases made by publicly traded U.S. corporations after December 31, 2022. The adoption ~~is permitted. This guidance is~~of this standard did not ~~expected to~~ have a material impact on our consolidated financial statements.

Reference Rate Reform (Topic 848). In March 2020, the ~~Company's Consolidated~~ Financial ~~Statements.~~

Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, which provides temporary, optional practical expedients and exceptions to enable a smoother transition to the new reference rates which will replace the London Interbank Offered Rate (“LIBOR”) and other reference rates expected to be discontinued. In January ~~2017,~~2021, the FASB issued ASU ~~No. 2017-04 Intangibles- Goodwill and Other (Topic 350) - Simplifying~~2021-01, which expanded the ~~Test for Goodwill Impairment, which simplifies~~scope to include derivative instruments impacted by the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test where the implied fair value of goodwill needs to be determined and compared to the carrying amount of that goodwill to measure the impairment loss. The Company is required to adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning afterdiscounting transition. In December ~~15, 2019 and~~

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

early adoption is permitted. The Company has early adopted the standard in the first quarter of 2017. During the second quarter of 2017, the Company applied this new ASU to perform the goodwill impairment analysis. See Note 6, Goodwill and intangible assets for more details.

~~In January 2017,~~2022, the FASB issued ASU ~~No. 2017-01 Business Combination (Topic 805) - Clarifying~~2022-06, which extended the ~~Definition~~temporary accounting rules from December 31, 2022 to December 31, 2024. Effective April 2023, the Company transitioned its Credit Facility from LIBOR to the Secured Overnight Financing Rate (“SOFR”). The adoption of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be effective for annual periods beginning after December 15, 2017, including interim periods within those periods, and isthis standard did not ~~expected to~~ have a material impact on the Company's consolidated financial statements.

~~In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flows (Topic 230) - Restricted Cash a consensus~~

3. Revenue

Revenue is recognized when control of the FASB Emerging Issues Task Force. This new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, and is not expected to have a material impact on the Company's consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16 Income Tax (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party.This new guidance eliminates this exception and requires the income tax consequences of an intra-entity transfer of an asset other than inventory be recognized when the transfer occurs. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, and should be applied on a modified retrospective basis through a direct cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The ASU is not expected to have a material impact on the Company's consolidated financial statements.

In August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15 Cash Flow Statement (Topic 230) - Classification of Certain Cash Receipts and Cash Payments. This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The only issue currently relevant to the Company is distributions received from equity method investees, where the new guidance allows an accounting policy election between the cumulative earnings approach and the nature of the distribution approach. The Company will continue to use the cumulative earnings approach, therefore the guidance is not expected to have a material impact on the Company's consolidated financial statements. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This new guidance includes provisions intended to simplify how share-based payments are accounted for and presented in the financial statements. The Company applied the update prospectively beginning January 1, 2017. This guidance did not have a material impact on the Company's Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. Under this new guidance, lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of greater than twelve months. The standard will take effect for public companies with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of this guidance.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services ~~are~~is transferred to our customers, in ~~amounts~~an amount that ~~reflect~~reflects the consideration ~~to which the company expects~~we expect to be entitled to receive in exchange for those goods or services. ~~Adoption~~For a detailed discussion of ~~the new rules could affect the timing of~~our revenue recognition for certain transactions. Entities must apply a five-step process to (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction pricepolicies, refer to the ~~performance obligations in the contract;~~Company’s 2022 Annual Report on Form 10-K.

Disaggregated Revenue

Refer to Note 9 Business Segments for disaggregated revenue by product line and ~~(5) recognize revenue when~~

geography.

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Forum Energy Technologies, Inc. and ~~subsidiaries~~Subsidiaries

Notes to ~~condensed consolidated financial statements (continued)~~Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Contract Balances

(Contract balances are determined on a contract by contract basis. Contract assets represent revenue recognized for goods and services provided to our customers when payment is conditioned on something other than the passage of time. Similarly, the Company records contract liability when we receive consideration, or ~~as)~~such consideration is unconditionally due, from a customer prior to transferring goods or services to the ~~entity satisfies~~customer under the terms of a ~~performance obligation. ASU 2014-09 also mandates disclosure~~sales contract. Such contract liabilities typically result from billings in excess of ~~sufficient information~~costs incurred on construction contracts and advance payments received on product sales.

The following table reflects the changes in our contract assets and contract liabilities balances for the nine months ended September 30, 2023 (in thousands):


	September 30, 2023		December 31, 2022		Increase / (Decrease)
					$		%
Accrued revenue	$	771	$	665
Costs and estimated profits in excess of billings	8,440		15,139
Contract assets - current	9,211		15,804
Contract assets - noncurrent	1,637		2,638
Contract assets	$	10,848	$	18,442	$	(7,594)	(41)	%

Deferred revenue	$	14,140	$	14,401
Billings in excess of costs and profits recognized	4,739		305
Contract liabilities	$	18,879	$	14,706	$	4,173	28	%

During the nine months ended September 30, 2023, our contract assets decreased by $7.6 million and our contract liabilities increased by $4.2 million primarily due to ~~enable users~~the timing of ~~financial statements to understand~~milestone billings for projects in our Subsea Technologies product line.

During the ~~nature, amount, timing and uncertainty~~nine months ended September 30, 2023, we recognized $12.6 million of revenue ~~and cash flows arising from contracts with customers. The disclosure requirements include qualitative and quantitative information about contracts with customers, significant judgments and changes~~that was included in ~~judgments, and assets recognized from~~ the ~~costs to obtain or fulfill a contract. The guidance permits~~contract liability balance at the entity to use either a full retrospective or modified retrospective transition method. The FASB issued several subsequent updates in 2015 through 2017 containing implementation guidance related to the new standard. These standards provide additional guidance related to principal versus agent considerations, licensing, and identifying performance obligations. Additionally, these standards provide narrow-scope improvements and practical expedients as well as technical corrections and improvements. Overall, the new guidance is to be effective for the fiscal year beginning ~~after December 15, 2017. Companies are able to early adopt the pronouncement, but not before fiscal years beginning after December 15, 2016.~~

~~The Company is currently evaluating the impact~~ of the ~~pending adoption~~period.

Substantially all of ~~the revised guidance. The status of implementation is as follows:~~

~~The Company has put~~our contracts are less than one year in ~~place an implementation team to provide training and to review contracts subject to the new revenue standard.~~

The implementation team continues to review contracts for the areas identified during the initial impact assessment and monitor the potential impact on the Company’s financial statements and related disclosures.

~~The implementation team is putting new processes and controls in place in anticipation of the new guidance.~~

~~The implementation team is providing internal training and awareness related to the revised guidance to key stakeholders throughout our organization.~~

~~The Company will adopt this standard using the modified retrospective method and elect~~duration. As such, we have elected to apply the ~~revenue standard only~~practical expedient which allows an entity to ~~contracts~~exclude disclosures about its remaining performance obligations if the performance obligation is part of a contract that ~~are not completed as of the date of initial application. The Company does not expect a material adjustment to the consolidated financial statements upon transition.~~

~~3. Cash and cash equivalents~~

~~Cash and cash equivalents at September 30, 2017 are comprised of bank deposits and short-term investments with~~has an original ~~maturity~~expected duration of ~~three months~~one year or ~~less, such as money market funds, the fair value of which is based on quoted market prices, a Level 1 fair value measure.~~less.

4. ~~Acquisitions~~

~~2017 Acquisitions~~

On January 9, 2017, the Company acquired substantially all of the assets of Cooper Valves, LLC as well as 100% of the general partnership interests of Innovative Valve Components (collectively, “Cooper”) for total aggregate consideration of $14.0 million, after settlement of working capital adjustments. The aggregate consideration includes the issuance of stock valued at $4.5 million and certain contingent cash payments. These acquisitions are included in the Production and Infrastructure segment. The acquired Cooper brands include the Accuseal® metal seated ball valves engineered to meet Class VI shut off standards for use in severe service applications, as well as a full line of cast and forged gate, globe, and check valves. Innovative Valve Components, in partnership with Cooper Valves, commercialized critical service valves and components for the power generation, mining and oil and natural gas industries. The fair values of the assets acquired and liabilities assumed have not been presented because they are not material to the consolidated financial statements. Pro forma results of operations for this acquisition have not been presented because the effects were not material to the consolidated financial statements.

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~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

On July 3, 2017, the Company acquired Multilift Welltec, LLC and Multilift Wellbore Technology Limited (collectively, "Multilift") for approximately $39.4 million in cash consideration. These acquisitions are included in the Completions segment. Based in Houston, Texas, Multilift manufactures the patented SandGuardTM and the CycloneTM completion tools. This acquisition increases the Company’s product offering related to artificial lift to our completions customers. The Company intends to utilize its distribution system to increase Multilift’s sales with additional customers and through geographic expansion. As the value of certain assets and liabilities are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances that existed at the acquisition date, including any post-closing purchase price adjustments. When the valuation is final, any changes to the preliminary valuation of acquired assets and liabilities could result in adjustments to identified intangibles and goodwill. The following table summarizes the current fair values of the assets acquired and liabilities assumed at the date of the acquisition (in thousands):

2017 Acquisitions
Current assets, net of cash acquired $ 3,767
Property and equipment 96
Intangible assets (primarily developed technologies and customer relationships) 17,211
Tax-deductible goodwill 16,711
Non-tax deductible goodwill 2,623
Current liabilities (1,014 )
Long-term liabilities —
Net assets acquired $ 39,394

Revenue and net income related to the 2017 acquisitions were not significant for the quarter ended September 30, 2017. Pro forma results of operations for the 2017 acquisitions have not been presented because the effects were not material to the consolidated financial statements.

~~Subsequent to September 30, 2017, the Company acquired the remaining membership interests in Global Tubing, LLC (“Global Tubing”). See Note 15, Subsequent event, for more details.~~

~~2016 Acquisition~~

In April 2016, the Company completed the acquisition of the wholesale completion packers business of Team Oil Tools, Inc. The acquisition includes a wide variety of completion and service tools, including retrievable and permanent packers, bridge plugs and accessories which are sold to oilfield service providers, packer repair companies and distributors on a global basis. This acquisition is included in the Completions segment. The fair values of the assets acquired and liabilities assumed have not been presented because they are not material to the consolidated financial statements. Pro forma results of operations for the 2016 acquisition have not been presented because the effects were not material to the consolidated financial statements.

5. Inventories

The Company's significant components of inventory at September 30, ~~2017~~2023 and December 31, ~~2016~~2022 were as follows (in thousands):


	September 30, 2023		December 31, 2022
Raw materials and parts	$	98,100	$	94,182
Work in process	31,529		27,489
Finished goods	211,035		187,448
Total inventories	340,664		309,119
Less: inventory reserve	(38,360)		(39,291)
Inventories, net	$	302,304	$	269,828

September 30,
2017 December 31,
2016
Raw materials and parts $ 119,572
$ 106,329
Work in process 45,580
23,303
Finished goods 290,657
277,303
Gross inventories 455,809
406,935
Inventory reserve (61,706 ) (68,352 )
Inventories $ 394,103
$ 338,583

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Forum Energy Technologies, Inc. and ~~subsidiaries~~Subsidiaries

Notes to ~~condensed consolidated financial statements (continued)~~Condensed Consolidated Financial Statements (Continued)

(Unaudited)

5. Intangible Assets

~~6. Goodwill and intangible assets~~

~~Goodwill~~

~~The changes in the carrying amount of goodwill from December 31, 2016 to~~ ~~September 30, 2017, were as follows (in thousands):~~

Drilling & Subsea Completions Production & Infrastructure Total
Goodwill Balance at December 31, 2016 $ 307,806
$ 327,293
$ 17,644
$ 652,743
Acquisitions, net of dispositions —
19,334
1,311
20,645
Impairment (68,004 ) —
—
(68,004 )
Impact of non-U.S. local currency translation 10,288
3,710
250
14,248
Goodwill Balance at September 30, 2017 $ 250,090
$ 350,337
$ 19,205
$ 619,632

~~The Company performs its annual impairment tests of goodwill as of October 1 or when there is an indication an impairment may have occurred.~~

In the second quarter of 2017, there was a decline in oil prices and a developing consensus view that production from lower cost oil basins would be sufficient to meet anticipated demand for a longer period, delaying the need for production from higher cost basins. With this indication of further delays in the recovery of the offshore market, the Company performed an impairment test and determined that the carrying value of the goodwill in our Subsea reporting unit was impaired. The Company recorded an impairment charge of $68.0 million for the quarter ended June 30, 2017. Following the impairment charge, the Subsea reporting unit has no remaining balance in goodwill. There was no indication an impairment may have occurred in the other reporting units.

The fair values used in the impairment analysis were determined using the net present value of the expected future cash flows for the reporting unit. During the Company’s goodwill impairment analysis, the Company determines the fair value of the reporting unit as a whole using a discounted cash flow analysis, which requires significant assumptions and estimates about future operations. The assumptions about future cash flows and growth rates are based on our current budget for the remainder of the current year, for future periods, as well as our strategic plans and management’s beliefs about future activity levels. The discount rate we used for future periods could change substantially if the cost of debt or equity were to significantly increase or decrease, or if we were to choose different comparable companies in determining the appropriate discount rate for our reporting units. Forecasted cash flows in future periods were estimated using a terminal value calculation, which considered long-term earnings growth rates. Accumulated impairment losses on goodwill were $236.8 million and $168.8 million as of September 30, 2017 and December 31, 2016.

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~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

~~Intangible assets~~

Intangible assets consisted of the following as of September 30, ~~2017~~2023and December 31, ~~2016,~~2022, respectively (in thousands):

September 30, 2017

Gross carrying
amount

Accumulated
amortization

Net amortizable
intangibles

Amortization
period (in years)
Customer relationships $ 280,116
$ (131,030 ) $ 149,086
4-15
Patents and technology 52,260
(14,797 ) 37,463
5-17
Non-compete agreements 6,621
(5,950 ) 671
3-6
Trade names 46,813
(20,836 ) 25,977
10-15
Distributor relationships 22,160
(16,022 ) 6,138
8-15
Trademark 5,230
—
5,230
Indefinite
Intangible Assets Total $ 413,200
$ (188,635 ) $ 224,565


	December 31, 2016									September 30, 2023
	Gross carrying amount		Accumulated amortization			Net amortizable intangibles		Amortization period (in years)		Gross Carrying Amount		Accumulated Amortization		Net Intangibles		Amortization Period (In Years)
Customer relationships	$	270,586	$	(115,381	)	$	155,205	4-15	Customer relationships	$	266,409	$	(159,402)	$	107,007	10 - 35
Patents and technology	33,936		(12,225		)	21,711		5-17	Patents and technology	88,793		(39,568)		49,225		5 - 19
Non-compete agreements	6,230		(5,594		)	636		3-6	Non-compete agreements	188		(188)		—		5
Trade names	44,494		(17,944		)	26,550		10-15	Trade names	42,605		(28,496)		14,109		7 - 19
Distributor relationships	22,160		(15,074		)	7,086		8-15
Trademark	5,230		—			5,230		Indefinite
Intangible Assets Total	$	382,636	$	(166,218	)	$	216,418
Trademarks									Trademarks	5,089		(2,036)		3,053		15
Total intangible assets									Total intangible assets	$	403,084	$	(229,690)	$	173,394

Intangible assets with definite lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. During the quarter ended September 30, 2017, an impairment loss of $0.6 million was recorded on certain intangible assets within the Subsea reporting unit for intangible assets related to a specific product line as the decision was made in the third quarter 2017 to abandon this specific product line.


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Intangibles		Amortization Period (In Years)
Customer relationships	$	266,537	$	(147,496)	$	119,041	10 - 35
Patents and technology	88,863		(35,298)		53,565		5 - 19
Non-compete agreements	188		(188)		—		5
Trade names	42,638		(27,071)		15,567		7 - 19
Trademarks	5,089		(1,781)		3,308		15
Total intangible assets	$	403,315	$	(211,834)	$	191,481

7.6. Debt

Notes payable and lines of credit as of September 30, ~~2017~~2023 and December 31, ~~2016~~2022 consisted of the following (in thousands):

September 30,
2017 December 31,
2016
6.25% Senior Notes due October 2021 $ 400,000
$ 400,000
Unamortized debt premium 1,684
1,989
Debt issuance cost (4,497 ) (5,324 )
Senior secured revolving credit facility —
—
Other debt 2,091
206
Total debt 399,278
396,871
Less: current maturities (1,133 ) (124 )
Long-term debt $ 398,145
$ 396,747


	September 30, 2023		December 31, 2022
2025 Notes	$	134,208	$	256,970
Unamortized debt discount	(5,785)		(15,314)
Debt issuance cost	(1,420)		(3,759)
Credit Facility	—		—
Other debt	2,610		2,013
Total debt	129,613		239,910
Less: current portion	(1,076)		(782)
Long-term debt, net of current portion	$	128,537	$	239,128

~~Senior Notes Due 2021~~

The Senior Notes bear interest at a rate of 6.250% per annum, payable on April 1 and October 1 of each year, and mature on October 1, 2021. The Senior Notes are senior unsecured obligations, and are guaranteed on a senior

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Forum Energy Technologies, Inc. and ~~subsidiaries~~Subsidiaries

Notes to ~~condensed consolidated financial statements (continued)~~Condensed Consolidated Financial Statements (Continued)

(Unaudited)

In August 2020, we exchanged $315.5 million principal amount of our previous 6.25% unsecured ~~basis by~~notes due 2021 for new 9.00% convertible secured notes due August 2025 (the “2025 Notes”). The 2025 Notes pay interest at the rate of 9.00%, of which 6.25% is payable in cash and 2.75% is payable in cash or additional notes, at the Company’s ~~subsidiaries that guarantee~~option. The 2025 Notes are secured by a first lien on substantially all of the Company’s assets, except for Credit Facility ~~and rank junior to, among other indebtedness,~~priority collateral, which secures the ~~Credit Facility to the extent of the value of the collateral securing the Credit Facility.~~

On February 25, 2016, we amended our credit facility with Wells Fargo Bank, National Association, as administrative agent, and several financial institutions as lenders (the “Credit Facility”) to reduce lender commitments to $200.0 million. On December 12, 2016, we further amended the Credit Facility (such further amendment, the “Amended Credit Facility”), to, among other things, reduce revolving credit line commitments from $200.0 million to $140.0 million, including up to $25.0 million available for letters of credit and up to $10.0 million in swingline loans. Availability under the Amended Credit Facility was subject to2025 Notes on a ~~borrowing base calculated by reference to eligible accounts receivable in the United States, United Kingdom and Canada, eligible inventory in the United States, and cash on hand.~~

~~As of~~ ~~September 30, 2017~~ and December 31, 2016, the Company had no borrowings outstanding under the Credit Facility. As of September 30, 2017, the Company had $7.3 million of outstanding letters of credit. At September 30, 2017, the Company had the capacity to borrow an additional ~~$113.3 million~~ ~~subject to certain limitations in the Credit Facility. Weighted average interest rates under the Credit Facility for~~second lien basis. During the nine months ended September 30, ~~2017 and~~2023, $122.8 million or 48% of the ~~year endedDecember 31, 2016 were~~principal amount of the 2025 Notes mandatorily converted into approximately ~~3.00%. As~~4.5 million shares of common stock.

Our senior secured revolving credit facility (“Credit Facility”), which has a maturity date of September ~~30, 2017, there had been no changes to the financial covenants described in Item 8 of the Annual Report and the Company was in compliance with all financial covenants.~~

~~On October 30, 2017, the Company further amended and restated the Credit Facility (such amended and restated credit agreement, the “2017 Credit Facility”) to, among other things, increase~~2026, provides revolving credit commitments ~~from $140.0~~of $179.0 million ~~to $300.0 million, including~~ (with a sublimit of up to ~~$30.0~~$70.0 million ~~available to certain Canadian subsidiaries of the Company for loans in United States or Canadian dollars, $25.0 million~~ available for the issuance of letters of credit ~~issued~~ for the account of the Company and certain of its domestic subsidiaries) (the “U.S. Line”), of which up to $20.0 million is available to certain of our Canadian subsidiaries ~~and~~for loans in U.S. or Canadian dollars (with a sublimit of up to $3.0 million available for the issuance of letters of credit ~~issued~~ for the account of our Canadian ~~subsidiaries of the Company.~~ subsidiaries) (the “Canadian Line”).

Availability under the ~~2017~~ Credit Facility is subject to a borrowing base calculated by reference to eligible accounts receivable in the ~~United States,~~U.S., Canada and certain other jurisdictions (subject to a cap) and eligible inventory in the ~~United States~~U.S. and Canada. Such eligible accounts receivable and eligible inventory serve as priority collateral for the Credit Facility, which is also secured on a second lien basis by substantially all of the Company's other assets. The ~~Company’s~~amount of eligible inventory included in the borrowing base is restricted to the lesser of $124.0 million (subject to a quarterly reduction of $0.5 million) and 80.0% of the total borrowing base. Our borrowing capacity under the ~~2017~~ Credit Facility could be reduced or eliminated, depending on future fluctuations in our receivables and ~~fluctuations~~inventory. As of September 30, 2023, our total borrowing base was $173.3 million, of which no amount was drawn and $18.5 million was used for security of outstanding letters of credit, resulting in remaining availability of $154.8 million.

Borrowings under the U.S. Line are subject to an interest rate equal to, at the Company's option, either (a) the SOFR, subject to a floor of 0.00%, plus a margin of 2.25% to 2.75%, or (b) a base rate plus a margin of 1.25% to 1.75%, in each case based upon the Company's quarterly total net leverage ratio, with the U.S. Line base rate determined by reference to the greatest of (i) the federal funds rate plus 0.50% per annum, (ii) the one-month adjusted SOFR plus 1.00% per annum, and (iii) the rate of interest announced, from time to time, by Wells Fargo at its principal office in San Francisco as its prime rate, subject to a floor of 0.00%.

Borrowings under the Canadian Line were subject to an interest rate during the reporting period equal to, our subsidiary's option, either (a) the Canadian Dollar Offered Rate (“CDOR”), subject to a floor of 0.00%, plus a margin of 2.25% to 2.75%, or (b) a base rate plus a margin of 1.25% to 1.75%, in each case based upon the Company's quarterly net leverage ratio. The Canadian line base rate is determined by reference to the greater of (i) the one-month CDOR plus 1.00% and (ii) the prime rate for Canadian dollar commercial loans made in Canada as reported by Thomson Reuters, subject to a floor of 0.00%.

The weighted average interest rate under the Credit Facility was approximately 8.28% for the nine months ended September 30, 2023.

The Credit Facility also provides for a commitment fee in the ~~Company’s inventory. The 2017~~amount of (a) 0.375% on the unused portion of commitments if average usage of the Credit Facility ~~matures in July 2021, but~~is greater than 50% and (b) 0.500% on the unused portion of commitments if ~~the Company’s outstanding Notes due October 2021 are refinanced or replaced with indebtedness maturing in or after February 2023, the final maturity~~average usage of the ~~2017~~ Credit Facility ~~will automatically extend~~is less than or equal to ~~October 2022.~~

If excess availability under the ~~2017~~ Credit Facility falls below the greater of ~~10.0%~~12.5% of the ~~line cap~~borrowing base and ~~$20.0~~$22.4 million, ~~the Company~~we will be required to maintain a fixed charge coverage ratio of at least 1.00:1.00 as of the end of each fiscal quarter until excess availability under the ~~2017~~ Credit Facility exceeds such thresholds for at least 60 consecutive days. Furthermore, the Credit Facility includes an obligation to prepay outstanding loans with cash on hand in excess of certain thresholds and includes a cross-default to the 2025 Notes.

8.We have incurred loan costs that have been deferred and are amortized to interest expense over the term of the 2025 Notes and the Credit Facility. In connection with the September 2021 Credit Facility amendment, we deferred approximately $1.6 million of loan costs that will be amortized over the facility's remaining life.

Table of Contents

Forum Energy Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Other debt consists primarily of various finance leases of equipment.

Letters of Credit and Guarantees

We execute letters of credit in the normal course of business to secure the delivery of product from specific vendors and also to guarantee our fulfillment of performance obligations relating to certain large contracts. The Company had $18.5 million and $21.8 million in total outstanding letters of credit as of September 30, 2023 and December 31, 2022, respectively.

7. Income ~~taxes~~Taxes

~~The Company's~~For interim periods, our income tax expense or benefit is computed based on our estimated annual effective tax rate ~~was~~ ~~22.7%~~ ~~for~~and any discrete items that impact the ~~nine months endedSeptember 30, 2017~~ ~~and~~ ~~38.4%~~ ~~for the~~ ~~nine months endedSeptember 30, 2016. The effective tax rate was 34.5% for the three months ended September 30, 2017 and 39.6% for the three months ended September 30, 2016. Impacting the tax rate for~~interim periods. For the three and nine months ended September 30, ~~2017 was~~2023, the ~~change in~~Company recorded a tax expense of $1.5 million and $6.2 million, respectively. For the proportion of losses being generated in the United States, which are benefited at a higher statutory tax rate, as compared to earnings being generated outside the United States in jurisdictions subject to lower tax rates. Also impacting the tax rate for thethree and nine months ended September 30, ~~2017 was~~2022, the ~~implementation~~Company recorded a tax expense of ~~new accounting guidance~~$1.4 million and $4.9 million, respectively. The estimated annual effective tax rates for all periods were impacted by losses in jurisdictions where the recording of a tax benefit is not available. Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company’s relative mix of earnings and losses by jurisdiction. Finally, the Company believes that it is reasonably possible that a decrease of approximately $1.5 million of noncurrent unrecognized tax benefits may occur by the end of 2023 as a result of a lapse of the statute of limitations.

We have deferred tax assets related to ~~employee share-based compensation accounting, along with~~net operating loss and other tax carryforwards in the ~~impairment loss related~~U.S. and in certain states and foreign jurisdictions. We recognize deferred tax assets to ~~non-tax deductible goodwill.~~

~~9. Fair value measurements~~

At the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning and recent operating results. As of September 30, ~~2017~~2023, we do not anticipate being able to fully utilize all of the losses prior to their expiration in the following jurisdictions: the U.S., the U.K., Germany, Singapore, China and ~~December 31, 2016, the~~Saudi Arabia. As a result, we have certain valuation allowances against our deferred tax assets as of September 30, 2023.

8. Fair Value Measurements

The Company had no ~~debt~~borrowings outstanding under the Credit ~~Facility. At~~Facility as of September 30, ~~2017,~~2023. The Credit Facility incurs interest at a variable interest rate, and therefore, the ~~Company had $7.3 million of outstanding letters of credit.~~

carrying amount approximates fair value. The fair value of the ~~Company’s Senior~~debt is classified as a Level 2 measurement because interest rates charged are similar to other financial instruments with similar terms and maturities.

The fair value of our 2025 Notes is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those or similar instruments. At September 30, ~~2017~~,2023, the fair value and the carrying value of ~~the Company’s Senior~~our 2025 Notes approximated ~~$402.7~~$130.1 million and ~~$401.7~~$127.0 million, respectively. At December 31, ~~2016~~,2022, the fair value and the carrying value of ~~the Company’s Senior~~our 2025 Notes ~~each~~ approximated ~~$402.0 million.~~$272.8 million and $237.9 million, respectively.

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

There were no other significant outstanding financial ~~assets~~instruments as of September 30, ~~2017~~2023 and December 31, ~~2016~~2022 that required measuring the amounts at fair ~~value. The Company~~value on a recurring basis. We did not change ~~its~~our valuation techniques associated with recurring fair value measurements from prior periods, and there were no transfers between levels of the fair value hierarchy during the nine months endedSeptember 30, ~~2017~~.2023.

Table of Contents

Forum Energy Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

9. Business ~~segments~~Segments

The Company reports ~~its~~ results of operations in the following three ~~reportable~~reporting segments: Drilling & ~~Subsea,~~Downhole, Completions, and ~~Production & Infrastructure.~~

In order to better align with the predominant customer base of the segment, the Company has moved management and financial reporting of our AMC branded fully rotational torque machine operations from the Drilling and Subsea segment to the Completions segment. Prior period financial information has been revised to conform with current period presentation with no impact to total segment operating results.

Production. The amounts indicated below as ~~"Corporate"~~“Corporate” relate to costs and assets not allocated to the reportable segments. Summary financial data by segment follows (in thousands):

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Revenue:
Drilling & Subsea $ 54,700
$ 50,565
$ 180,607
$ 170,120
Completions 60,037
34,393
156,938
95,920
Production & Infrastructure 84,979
54,030
235,676
176,364
Intersegment eliminations (1,007 ) (720 ) (2,301 ) (1,972 )
Total Revenue $ 198,709
$ 138,268
$ 570,920
$ 440,432

Operating income (loss):
Drilling & Subsea $ (8,872 ) $ (10,869 ) $ (23,580 ) $ (41,545 )
Completions 1,614
(5,676 ) (1,223 ) (39,838 )
Production & Infrastructure 4,258
(713 ) 7,124
494
Corporate (9,271 ) (6,406 ) (24,897 ) (20,420 )
Total segment operating loss (12,271 ) (23,664 ) (42,576 ) (101,309 )
Transaction expenses 882
341
1,755
571
Goodwill and intangible asset impairment 638
—
68,642
—
Loss on sale of assets and other 128
2,217
1,517
2,233
Operating loss $ (13,919 ) $ (26,222 ) $ (114,490 ) $ (104,113 )


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Revenue
Drilling & Downhole	$	81,181	$	75,723	$	238,652	$	223,476
Completions	62,473		72,246		208,239		190,867
Production	36,877		34,238		108,918		95,622
Eliminations	(1,278)		(372)		(2,150)		(710)
Total revenue	$	179,253	$	181,835	$	553,659	$	509,255

Segment operating income
Drilling & Downhole	$	8,437	$	9,481	$	25,165	$	23,995
Completions	2,147		5,915		9,893		8,787
Production	1,803		665		4,546		(1,241)
Corporate	(6,861)		(8,411)		(20,538)		(24,501)
Segment operating income	5,526		7,650		19,066		7,040
Loss (gain) on disposal of assets and other	(145)		(52)		137		(938)
Operating income	$	5,671	$	7,702	$	18,929	$	7,978

A summary of consolidated assets by reportable segment is as follows (in thousands):

September 30,
2017 December 31,
2016
Assets
Drilling & Subsea $ 650,136
$ 766,234
Completions 768,998
696,208
Production & Infrastructure 241,433
175,940
Corporate 154,288
196,810
Total assets $ 1,814,855
$ 1,835,192


	September 30, 2023		December 31, 2022
Drilling & Downhole	$	347,503	$	340,819
Completions	357,174		366,771
Production	100,149		95,089
Corporate	24,045		32,078
Total assets	$	828,871	$	834,757

Corporate assets primarily include ~~among other items,~~cash, certain prepaid assets ~~cash~~ and deferred ~~financing~~loan costs.

Table of Contents

Forum Energy Technologies, Inc. and ~~subsidiaries~~Subsidiaries

Notes to ~~condensed consolidated financial statements (continued)~~Condensed Consolidated Financial Statements (Continued)

(Unaudited)

The following table presents our revenues disaggregated by product line (in thousands):

~~11.~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Drilling Technologies	$	42,953	$	38,159	$	128,995	$	100,934
Downhole Technologies	23,480		21,916		68,763		62,902
Subsea Technologies	14,748		15,648		40,894		59,640
Stimulation and Intervention	32,545		43,647		126,266		111,143
Coiled Tubing	29,928		28,599		81,973		79,724
Production Equipment	21,706		18,463		59,268		50,055
Valve Solutions	15,171		15,775		49,650		45,567
Eliminations	(1,278)		(372)		(2,150)		(710)
Total revenue	$	179,253	$	181,835	$	553,659	$	509,255

The following table presents our revenues disaggregated by geography (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
United States	$	103,453	$	124,896	$	352,183	$	336,754
Middle East	27,359		12,751		64,058		38,700
Canada	12,333		14,169		40,400		35,761
Europe & Africa	16,832		14,291		39,177		45,186
Latin America	9,185		6,191		30,218		25,891
Asia-Pacific	10,091		9,537		27,623		26,963
Total revenue	$	179,253	$	181,835	$	553,659	$	509,255

10. Commitments and ~~contingencies~~Contingencies

In the ordinary course of business, the Company is, and in the future could be, involved in various pending or threatened legal actions, ~~that~~some of which may or may not be covered by insurance. Management has reviewed such pending judicial and legal proceedings, the reasonably anticipated costs and expenses in connection with such proceedings, and the availability and limits of insurance coverage, and has established reserves that are believed to be appropriate in light of those outcomes that are ~~considered~~believed to be probable and can be ~~reasonably~~ estimated. The reserves accrued at September 30, ~~2017~~2023 and December 31, ~~2016~~,2022, respectively, are immaterial. ~~It is management's~~In the opinion ~~that~~of management, the ~~Company's~~Company’s ultimate liability, if any, with respect to these actions is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In October of 2017, one of our subsidiaries, Global Tubing LLC (“Global Tubing”), filed suit against Tenaris Coiled Tubes, LLC and Tenaris, S.A. (together “Tenaris”) in the United States District Court for the Southern District of Texas seeking a declaration that its DURACOILTM products do not infringe certain Tenaris patents related to coiled tubing. Tenaris filed counterclaims against Global Tubing alleging DURACOILTM products infringe three patents. Tenaris sought unspecified damages and a permanent injunction. In response, Global Tubing alleged that its products do not infringe and the Tenaris patents are invalid and unenforceable. On March 20, 2023, the court agreed with Global Tubing, finding all patents unenforceable and dismissing all Tenaris infringement claims. Global Tubing intends to seek an award of its attorneys’ fees and costs incurred as a result of the litigation. Tenaris has appealed the final judgment and Global Tubing has filed a cross-appeal.

~~12.~~For further disclosure regarding certain litigation matters, refer to Note 12 of the notes to the consolidated financial statements included in Item 8 of the Company’s 2022 Annual Report on Form 10-K filed with the SEC on February 28, 2023.

Table of Contents

Forum Energy Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

11. Earnings ~~per share~~(Loss) Per Share

The calculation of basic and diluted earnings per share for each period presented was as follows (dollars and shares in thousands, except per share amounts):

The calculation of diluted ~~loss~~earnings per share ~~calculation excludes all stock options~~excluded approximately 46 thousand shares that were anti-dilutive for the three months ended September 30, 2023. For the nine months ended September 30, 2023, we excluded all potentially dilutive restricted shares and stock options in calculating diluted earnings per share as the effect was anti-dilutive due to net losses incurred for the period. For the three months and nine months ended September 30, ~~2017~~2022, the diluted earnings per share calculation excluded approximately 54 thousand and ~~September 30, 2016 because there~~95 thousand shares, respectively. Diluted earnings per share was ~~a net loss~~calculated using treasury stock method for the ~~periods.~~restricted shares and stock options; and if-converted method for the convertible notes.

~~13.~~12. Stockholders' ~~equity~~Equity

~~Shares issued for Acquisition~~

~~Subsequent to September 30, 2017, the Company issued 11.5 million shares to acquire the remaining membership interests in Global Tubing. See Note15 for further information.~~

~~Share-based~~Stock-based compensation

During the nine months ended September 30, ~~2017~~,2023, the Company granted ~~278,958 options and 971,722 shares of restricted stock or~~86,912 time-based restricted stock units ~~which includes 124,213~~to employees that vest ratably over three years.

In addition, during the nine months ended September 30, 2023, the Company granted 86,912 performance ~~share awards with a market condition. The stock options were granted with an exercise price of $20.10. Of the restricted stock or~~ restricted stock units ~~granted, 789,762 generally~~to employees (assuming target performance) that vest ratably over four years on each anniversary of the date of grant. 55,971 shares of restricted stock or restricted stock units were granted to the non-employee members of the Board of Directors, which have a twelve month vesting period from the date of grant. The performance share awards granted may settle for between zero and two shares of the Company's common stock. The number of shares issued pursuant to the performance share awards will be determined based onupon the total shareholder return of the Company's common stock as compared to a group of peer companies ~~measured annually~~ over ~~a one year, two year~~three different performance periods. The performance periods run from January 1, 2023 through December 31, 2023, January 1, 2023 through December 31, 2024 and ~~three year~~January 1, 2023 through December 31, 2025, and 1/3 of each award is allocated to each performance period. The performance restricted stock units may settle for between 0% and 200% of the target units granted in shares of the Company’s common stock.

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

~~14.~~13. Related ~~party transactions~~Party Transactions

The Company has sold and purchased ~~equipment~~inventory, services and ~~services~~fixed assets to and from ~~certain~~various affiliates of ~~our~~certain directors. The dollar amounts ~~related to~~of these related party activities are not ~~material~~significant to the Company’s unaudited condensed consolidated financial statements.

~~15. Subsequent event~~

On October 2, 2017, the Company acquired the remaining membership interests in Global Tubing from its joint venture partner and management for total consideration of approximately $294.0 million, including approximately $120.5 million in cash and approximately 11.5 million shares of the Company’s common stock. The Company acquired Global Tubing with a joint venture partner in 2013. Prior to acquiring a 100% ownership interest in Global Tubing, the Company reported this investment through its Completions segment using the equity method of accounting. Located in Dayton, Texas, Global Tubing provides coiled tubing, coiled line pipe and related services to customers worldwide.

Table of Contents

Forum Energy Technologies, Inc. and ~~subsidiaries~~Subsidiaries

Notes to ~~condensed consolidated financial statements (continued)~~Condensed Consolidated Financial Statements (Continued)

(Unaudited)

~~16. Condensed consolidating financial statements~~14. Subsequent Events

On November 1, 2023, the Company and its wholly owned subsidiary entered into a purchase agreement with Variperm Holdings Ltd. ("Variperm") and its shareholders to acquire all of the issued and outstanding common shares of Variperm. The ~~Senior Notes are guaranteed by our domestic subsidiaries which are 100% owned, directly~~Company expects the transaction to close during January 2024. Variperm, headquartered in Canada, is a manufacturer of downhole technology solutions, providing sand and flow control products for heavy oil applications.

Total consideration for the acquisition includes approximately $150.0 million of cash and 2.0 million shares of the Company's common stock, subject to customary purchase price adjustments set forth in the purchase agreement. The purchase agreement was filed in the Company's Current Report on Form 8-K on November 3, 2023.

On November 1, 2023, the Company entered into an amendment to the Credit Facility that, among other things, permits the acquisition of Variperm, permits the incurrence of either new secured notes in an amount not to exceed $200.0 million or ~~indirectly, by~~other financing, extends the ~~Company. The guarantees are full~~maturity date of the Credit Agreement to September 8, 2028,increases the aggregate revolving commitments to $250.0 million from $179.0 million, and ~~unconditional, joint and several, and on an unsecured basis.~~updates the CDOR provisions with Canadian Overnight Repo Rate Average.

Condensed consolidating statements of comprehensive income (loss)

Three months ended September 30, 2017
FET (Parent) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
(in thousands)
Net sales $ —
$ 171,031
$ 43,121
$ (15,443 ) $ 198,709
Cost of sales —
133,503
32,877
(15,230 ) 151,150
Gross profit —
37,528
10,244
(213 ) 47,559
Operating expenses
Selling, general and administrative expenses —
51,127
12,064
—
63,191
Transaction expenses —
882
—
—
882
Goodwill and intangible asset impairment —
638
—
—
638
Loss on sale of assets and other —
91
37
—
128
Total operating expenses —
52,738
12,101
—
64,839
Earnings from equity investment —
3,361
—
—
3,361
Equity earnings from affiliate, net of tax (10,467 ) (3,959 ) —
14,426
—
Operating income (loss) (10,467 ) (15,808 ) (1,857 ) 14,213
(13,919 )
Other expense (income)
Interest expense (income) 6,710
(188 ) (156 ) —
6,366
Deferred loan costs written off —
—
—
—
—
Foreign exchange (gains) losses and other, net —
(110 ) 2,470
—
2,360
Total other expense (income) 6,710
(298 ) 2,314
—
8,726
Income (loss) before income taxes (17,177 ) (15,510 ) (4,171 ) 14,213
(22,645 )
Benefit for income tax expense (2,349 ) (5,043 ) (425 ) —
(7,817 )
Net income (loss) (14,828 ) (10,467 ) (3,746 ) 14,213
(14,828 )
Less: Income (loss) attributable to noncontrolling interest —
—
—
—
—
Net income (loss) attributable to common stockholders (14,828 ) (10,467 ) (3,746 ) 14,213
(14,828 )

Other comprehensive income (loss), net of tax:
Net income (loss) (14,828 ) (10,467 ) (3,746 ) 14,213
(14,828 )
Change in foreign currency translation, net of tax of $0 11,547
11,547
11,547
(23,094 ) 11,547
Change in pension liability (36 ) (36 ) (36 ) 72
(36 )
Comprehensive income (loss) (3,317 ) 1,044
7,765
(8,809 ) (3,317 )
Less: comprehensive (income) loss attributable to noncontrolling interests —
—
—
—
—
Comprehensive income (loss) attributable to common stockholders $ (3,317 ) $ 1,044
$ 7,765
$ (8,809 ) $ (3,317 )

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

Condensed consolidating statements of comprehensive income (loss)

Three months ended September 30, 2016
FET (Parent) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
(in thousands)
Net sales $ —
$ 101,357
$ 44,869
$ (7,958 ) $ 138,268
Cost of sales —
81,250
36,767
(9,033 ) 108,984
Gross profit —
20,107
8,102
1,075
29,284
Operating expenses
Selling, general and administrative expenses —
42,569
10,793
—
53,362
Transaction Expense —
306
35
—
341
Loss (gain) on sale of assets and other —
2,130
87
—
2,217
Total operating expenses —
45,005
10,915
—
55,920
Earnings from equity investment —
414
—
—
414
Equity earnings from affiliates, net of tax (13,579 ) 1,620
—
11,959
—
Operating income (loss) (13,579 ) (22,864 ) (2,813 ) 13,034
(26,222 )
Other expense (income)
Interest expense (income) 6,785
(84 ) 45
—
6,746
Foreign exchange gains and other, net —
(19 ) (3,133 ) —
(3,152 )
Total other expense (income) 6,785
(103 ) (3,088 ) —
3,594
Income before income taxes (20,364 ) (22,761 ) 275
13,034
(29,816 )
Provision for income tax expense (benefit) (2,375 ) (9,182 ) (264 ) —
(11,821 )
Net income (loss) (17,989 ) (13,579 ) 539
13,034
(17,995 )
Less: Income (loss) attributable to noncontrolling interest —
—
(6 ) —
(6 )
Net income (loss) attributable to common stockholders (17,989 ) (13,579 ) 545
13,034
(17,989 )

Other comprehensive income (loss), net of tax:
Net income (loss) (17,989 ) (13,579 ) 539
13,034
(17,995 )
Change in foreign currency translation, net of tax of $0 (6,243 ) (6,243 ) (6,243 ) 12,486
(6,243 )
Change in pension liability (14 ) (14 ) (14 ) 28
(14 )
Comprehensive income (loss) (24,246 ) (19,836 ) (5,718 ) 25,548
(24,252 )
Less: comprehensive (income) loss attributable to noncontrolling interests —
—
(27 ) —
(27 )
Comprehensive income (loss) attributable to common stockholders $ (24,246 ) $ (19,836 ) $ (5,745 ) $ 25,548
$ (24,279 )

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

Condensed consolidating statements of comprehensive income (loss)

Nine months ended September 30, 2017
FET (Parent) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
(in thousands)
Revenue $ —
$ 486,683
$ 133,798
$ (49,561 ) $ 570,920
Cost of sales —
375,990
108,390
(49,253 ) 435,127
Gross profit —
110,693
25,408
(308 ) 135,793
Operating expenses
Selling, general and administrative expenses —
149,030
36,730
—
185,760
Transaction expenses —
1,644
111
—
1,755
Goodwill and intangible asset impairment —
32,881
35,761
—
68,642
Loss on sale of assets and other —
1,433
84
—
1,517
Total operating expenses —
184,988
72,686
—
257,674
Earnings from equity investment —
7,391
—
—
7,391
Equity earnings from affiliates, net of tax (95,415 ) (48,535 ) —
143,950
—
Operating income (loss) (95,415 ) (115,439 ) (47,278 ) 143,642
(114,490 )
Other expense (income)
Interest expense (income) 20,083
(374 ) (378 ) —
19,331
Foreign exchange (gains) losses and other, net —
(297 ) 6,805
—
6,508
Total other expense (income) 20,083
(671 ) 6,427
—
25,839
Income (loss) before income taxes (115,498 ) (114,768 ) (53,705 ) 143,642
(140,329 )
Provision (benefit) for income tax expense (7,029 ) (19,353 ) (5,478 ) —
(31,860 )
Net income (loss) (108,469 ) (95,415 ) (48,227 ) 143,642
(108,469 )
Less: Income (loss) attributable to noncontrolling interest —
—
—
—
—
Net income (loss) attributable to common stockholders (108,469 ) (95,415 ) (48,227 ) 143,642
(108,469 )

Other comprehensive income (loss), net of tax:
Net income (loss) (108,469 ) (95,415 ) (48,227 ) 143,642
(108,469 )
Change in foreign currency translation, net of tax of $0 34,094
34,094
34,094
(68,188 ) 34,094
Change in pension liability (133 ) (133 ) (133 ) 266
(133 )
Comprehensive income (loss) (74,508 ) (61,454 ) (14,266 ) 75,720
(74,508 )
Less: comprehensive (income) loss attributable to noncontrolling interests —
—
—
—
—
Comprehensive income (loss) attributable to common stockholders $ (74,508 ) $ (61,454 ) $ (14,266 ) $ 75,720
$ (74,508 )

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

Condensed consolidating statements of comprehensive income (loss)

Nine Months Ended September 30, 2016
FET (Parent) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
(in thousands)
Revenue $ —
$ 321,734
$ 151,383
$ (32,685 ) $ 440,432
Cost of sales —
281,666
123,631
(33,987 ) 371,310
Gross profit —
40,068
27,752
1,302
69,122
Operating expenses
Selling, general and administrative expenses —
137,099
34,539
—
171,638
Transaction expenses —
536
35
—
571
Loss (gain) on sale of assets and other —
2,310
(77 ) —
2,233
Total operating expenses —
139,945
34,497
—
174,442
Earnings from equity investment —
1,207
—
—
1,207
Equity earnings from affiliates, net of tax (54,323 ) 7,765
—
46,558
—
Operating income (loss) (54,323 ) (90,905 ) (6,745 ) 47,860
(104,113 )
Other expense (income)
Interest expense (income) 20,713
(97 ) 48
—
20,664
Deferred loan costs written off 2,588
—
—
—
2,588
Foreign exchange gains and other, net —
(553 ) (13,993 ) —
(14,546 )
Total other expense (income) 23,301
(650 ) (13,945 ) —
8,706
Income (loss) before income taxes (77,624 ) (90,255 ) 7,200
47,860
(112,819 )
Provision (benefit) for income tax expense (8,155 ) (35,932 ) 713
—
(43,374 )
Net income (loss) (69,469 ) (54,323 ) 6,487
47,860
(69,445 )
Less: Income (loss) attributable to noncontrolling interest —
—
24
—
24
Net income (loss) attributable to common stockholders (69,469 ) (54,323 ) 6,463
47,860
(69,469 )

Other comprehensive income (loss), net of tax:
Net income (loss) (69,469 ) (54,323 ) 6,487
47,860
(69,445 )
Change in foreign currency translation, net of tax of $0 (25,618 ) (25,618 ) (25,618 ) 51,236
(25,618 )
Change in pension liability (33 ) (33 ) (33 ) 66
(33 )
Comprehensive income (loss) (95,120 ) (79,974 ) (19,164 ) 99,162
(95,096 )
Less: comprehensive (income) loss attributable to noncontrolling interests —
—
(156 ) —
(156 )
Comprehensive income (loss) attributable to common stockholders $ (95,120 ) $ (79,974 ) $ (19,320 ) $ 99,162
$ (95,252 )

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

Condensed consolidating balance sheets

September 30, 2017
FET (Parent) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
(in thousands)
Assets
Current assets
Cash and cash equivalents $ 413
$ 86,552
$ 69,427
$ —
$ 156,392
Accounts receivable—trade, net —
121,199
33,177
—
154,376
Inventories —
324,444
78,407
(8,748 ) 394,103
Income tax receivable —
1,872
—
—
1,872
Cost and profits in excess of billings —
8,515
880
—
9,395
Other current assets —
16,251
11,454
—
27,705
Total current assets 413
558,833
193,345
(8,748 ) 743,843
Property and equipment, net of accumulated depreciation —
122,196
26,820
—
149,016
Deferred financing costs, net 657
—
—
—
657
Deferred income taxes, net —
1,279
8,440
—
9,719
Intangibles —
171,865
52,700
—
224,565
Goodwill —
467,337
152,295
—
619,632
Investment in unconsolidated subsidiary —
64,499
—
—
64,499
Investment in affiliates 1,020,649
443,255
—
(1,463,904 ) —
Long-term advances to affiliates 566,987
—
76,105
(643,092 ) —
Other long-term assets —
2,260
664
—
2,924
Total assets $ 1,588,706
$ 1,831,524
$ 510,369
$ (2,115,744 ) $ 1,814,855
Liabilities and equity
Current liabilities
Current portion of long-term debt $ —
$ 1,023
$ 110
$ —
$ 1,133
Accounts payable—trade —
104,244
18,904
—
123,148
Accrued liabilities 12,877
41,691
10,150
—
64,718
Deferred revenue —
3,889
4,617
—
8,506
Billings in excess of costs and profits —
1,018
512
—
1,530
Total current liabilities 12,877
151,865
34,293
—
199,035
Long-term debt, net of current portion 397,187
949
9
—
398,145
Long-term payables to affiliates —
643,092
—
(643,092 ) —
Deferred income taxes, net —
—
4,175
—
4,175
Other long-term liabilities —
14,969
19,889
—
34,858
Total liabilities 410,064
810,875
58,366
(643,092 ) 636,213

Total stockholder's equity 1,178,642
1,020,649
452,003
(1,472,652 ) 1,178,642
Noncontrolling interest in subsidiary —
—
—
—
—
Equity 1,178,642
1,020,649
452,003
(1,472,652 ) 1,178,642
Total liabilities and equity $ 1,588,706
$ 1,831,524
$ 510,369
$ (2,115,744 ) $ 1,814,855

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

Condensed consolidating balance sheets

December 31, 2016
FET (Parent) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
(in thousands)
Assets
Current assets
Cash and cash equivalents $ 65
$ 143,275
$ 91,082
$ —
$ 234,422
Accounts receivable—trade, net —
77,229
28,039
—
105,268
Inventories —
269,036
77,987
(8,440 ) 338,583
Income tax receivable —
32,801
—
—
32,801
Cost and profits in excess of billings —
4,477
4,722
—
9,199
Other current assets —
21,013
8,430
—
29,443
Total current assets 65
547,831
210,260
(8,440 ) 749,716
Property and equipment, net of accumulated depreciation —
127,094
25,118
—
152,212
Deferred financing costs, net 1,112
—
—
—
1,112
Deferred income taxes, net —
—
851
—
851
Intangibles —
166,437
49,981
—
216,418
Goodwill —
481,374
171,369
—
652,743
Investment in unconsolidated subsidiary —
59,140
—
—
59,140
Investment in affiliates 1,080,337
460,166
—
(1,540,503 ) —
Long-term advances to affiliates 557,061
—
71,057
(628,118 ) —
Other long-term assets —
2,322
678
—
3,000
Total assets $ 1,638,575
$ 1,844,364
$ 529,314
$ (2,177,061 ) $ 1,835,192
Liabilities and equity
Current liabilities
Current portion of long-term debt $ —
$ 23
$ 101
$ —
$ 124
Accounts payable—trade —
59,261
14,514
—
73,775
Accrued liabilities 6,708
40,630
8,266
—
55,604
Deferred revenue —
1,206
7,132
—
8,338
Billings in excess of costs and profits recognized —
1,799
2,205
—
4,004
Total current liabilities 6,708
102,919
32,218
—
141,845
Long-term debt, net of current portion 396,665
—
82
—
396,747
Long-term payables to affiliates —
628,118
—
(628,118 ) —
Deferred income taxes, net —
17,650
8,535
—
26,185
Other long-term liabilities —
15,340
19,314
—
34,654
Total liabilities 403,373
764,027
60,149
(628,118 ) 599,431

Total stockholder's equity 1,235,202
1,080,337
468,606
(1,548,943 ) 1,235,202
Noncontrolling interest in subsidiary —
—
559
—
559
Equity 1,235,202
1,080,337
469,165
(1,548,943 ) 1,235,761
Total liabilities and equity $ 1,638,575
$ 1,844,364
$ 529,314
$ (2,177,061 ) $ 1,835,192

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

Condensed consolidating statements of cash flows

Nine months ended September 30, 2017
FET (Parent) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
(in thousands)
Cash flows from (used in) operating activities $ (7,671 ) $ 2,262
$ (11,674 ) $ —
$ (17,083 )
Cash flows from investing activities
Acquisition of businesses, net of cash acquired —
(42,204 ) (5,686 ) —
(47,890 )
Capital expenditures for property and equipment —
(14,625 ) (5,031 ) —
(19,656 )
Investment in unconsolidated subsidiary —
(1,041 ) —
—
—
(1,041 )
Long-term loans and advances to affiliates 9,790
7,902
—
(17,692 ) —
Other —
1,849
—
—
1,849
Net cash provided by (used in) investing activities $ 9,790
$ (48,119 ) $ (10,717 ) $ (17,692 ) $ (66,738 )
Cash flows from financing activities
Repayment of long-term and short-term debt —
(1,076 ) (64 ) —
(1,140 )
Long-term loans and advances to affiliates —
(9,790 ) (7,902 ) 17,692
—
Net treasury shares withheld

(4,667 ) —
—
—
(4,667 )
Proceeds from stock issuance 2,896
—
—
—
2,896
Net cash provided by (used in) financing activities $ (1,771 ) $ (10,866 ) $ (7,966 ) $ 17,692
$ (2,911 )
Effect of exchange rate changes on cash —
—
8,702
—
8,702
Net increase (decrease) in cash and cash equivalents 348
(56,723 ) (21,655 ) —
(78,030 )
Cash and cash equivalents
Beginning of period 65
143,275
91,082
—
234,422
End of period $ 413
$ 86,552
$ 69,427
$ —
$ 156,392

~~Table of Contents~~

~~Forum Energy Technologies, Inc. and subsidiaries~~

~~Notes to condensed consolidated financial statements (continued)~~

~~(Unaudited)~~

Condensed consolidating statements of cash flows

Nine Months Ended September 30, 2016
FET (Parent) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
(in thousands)
Cash flows from (used in) operating activities $ (6,940 ) $ 20,042
$ 51,118
$ (20,000 ) $ 44,220
Cash flows from investing activities
Acquisition of businesses, net of cash acquired —
(2,700 ) —
—
(2,700 )
Capital expenditures for property and equipment —
(9,530 ) (3,908 ) —
(13,438 )
Long-term loans and advances to affiliates 6,049
3,148
—
(9,197 ) —
Other —
3,389
321
—
3,710
Net cash provided by (used in) investing activities $ 6,049
$ (5,693 ) $ (3,587 ) $ (9,197 ) $ (12,428 )
Cash flows from financing activities
Repayment of long-term debt —
(254 ) —
—
(254 )
Long-term loans and advances to affiliates —
(6,049 ) (3,148 ) 9,197
—
Dividend paid to affiliates —
—
(20,000 ) 20,000
—
Other 956
—
—
—
956
Net cash provided by (used in) financing activities $ 956
$ (6,303 ) $ (23,148 ) $ 29,197
$ 702
Effect of exchange rate changes on cash —
—
(9,209 ) —
(9,209 )
Net increase (decrease) in cash and cash equivalents 65
8,046
15,174
—
23,285
Cash and cash equivalents
Beginning of period —
36,884
72,365
—
109,249
End of period $ 65
$ 44,930
$ 87,539
$ —
$ 132,534

~~Management's Discussion and Analysis~~

~~of Financial Condition and Results of Operations~~

Item 2. Management’s discussion and analysis of financial condition and results of operations

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the ~~"Exchange Act"~~“Exchange Act”). These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the ~~Company's~~Company’s control. All statements, other than statements of historical fact, included in this Quarterly Report on Form 10-Q regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “will,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

~~Forward-looking statements may include statements about:~~

•~~business strategy;~~

•~~cash flows and liquidity;~~

•~~the volatility and impact of fluctuations in oil and natural gas prices;~~

•~~the availability of raw materials and specialized equipment;~~

•~~our ability to accurately predict customer demand;~~

•~~customer order cancellations or deferrals;~~

•~~competition in the oil and gas industry;~~

•~~governmental regulation and taxation of the oil and natural gas industry;~~

•~~environmental liabilities;~~

•~~political, social and economic issues affecting the countries in which we do business;~~

•~~our ability to deliver our backlog in a timely fashion;~~

•~~our ability to implement new technologies and services;~~

•~~availability and terms of capital;~~

•~~general economic conditions;~~

•~~our ability to successfully manage our growth, including risks and uncertainties associated with integrating and retaining key employees of the businesses we acquire;~~

•~~benefits of our acquisitions;~~

•~~availability of key management personnel;~~

•~~availability of skilled and qualified labor;~~

•~~operating hazards inherent in our industry;~~

•~~the continued influence of our largest shareholder;~~

•~~the ability to establish and maintain effective internal control over financial reporting;~~

•~~financial strategy, budget, projections and operating results;~~

•~~uncertainty regarding our future operating results; and~~

•~~plans, objectives, expectations and intentions contained in this report that are not historical.~~

All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We disclaim any obligation to update or revise these statements unless required by law, and you should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report on Form 10-Q are reasonable, ~~we can give no assurance~~forward-looking statements are not guarantees of future performance and involve risks and uncertainties that ~~these plans, intentions or expectations will be achieved. We disclose important factors that~~

~~could~~may cause ~~our~~ actual results to differ materially from our ~~expectations~~plans, intentions or expectations. This may be the result of various factors, including, but not limited to, those factors discussed in ~~"Risk Factors"~~“Risk Factors” and ~~"Management's~~“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” in our Annual Report on Form 10-K filed with the ~~Securities and Exchange Commission (the "SEC")~~SEC on February 28, ~~2017,~~2023, and elsewhere in this Quarterly Report on Form 10-Q. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

We are a global ~~oilfield products~~ company serving the ~~drilling, subsea, completion, production and infrastructure sectors of the~~ oil, ~~and~~ natural gas, ~~industry. We design, manufacture~~industrial and ~~distribute products,~~renewable energy industries. With headquarters located in Houston, Texas, FET provides value added solutions aimed at improving the safety, efficiency, and ~~engage in aftermarket services, parts supply and related services that complement~~environmental impact of our ~~product offering.~~customers' operations. Our ~~product offering includes a mix of~~ highly engineered products include capital ~~products~~equipment and frequently replaced items that are used in the exploration, development, production and transportation of oil and natural gas. Our capital products are directed at: drilling rig equipment for new rigs, upgrades and refurbishment projects; subsea construction and development projects; the placement of production equipment on new producing wells; pressure pumping equipment; and downstream capital projects. Our engineered systems are critical components used on drilling rigs, for completions or in the course of subsea operations, while our consumable products are used to maintain efficient and safe operations at well sites in the well construction process, within the supporting infrastructure, and at processing centers and refineries. Historically, over 60% of our revenue is derived from consumable products and activity-based equipment, while the balance is derived from capital products, and a small amount from rental and other services.

~~We seek to design, manufacture and supply reliable products that create value for our diverse customer base, which includes, among others,~~products. FET’s customers include oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, pipeline and refinery operators, and renewable energy and new energy companies. Consumable products are used by our customers in drilling, well construction and completions activities and at processing centers and refineries. Our capital products are directed at drilling rig equipment for constructing new and upgrading existing rigs, subsea construction and ~~service companies,~~development projects, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and ~~pipeline~~capital equipment for renewable energy projects. For the nine months ended September 30, 2023, approximately 65% of our revenue was derived from consumable products and ~~refinery operators.~~activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services.

~~We operate three business segments:~~A summary of the products and services offered by each segment is as follows:

•Drilling & ~~Subsea segment~~Downhole. This segment designs, manufactures and ~~manufactures~~supplies products and provides related services to the drilling, well construction, artificial lift and subsea energy ~~subsea~~ construction markets, including applications in oil and ~~services markets, and other markets such as alternative~~natural gas, renewable energy, defense, and communications. The products and related services consist primarily of: (i) capital equipment and a broad line of expendable ~~drilling~~ products consumed in the drilling process; (ii) well construction casing and ~~(ii)~~cementing equipment and protection products for artificial lift equipment and cables; and (iii) subsea remotely operated vehicles (“ROVs”) and trenchers, submarine rescue vehicles, specialty components and tooling, ~~products used in subsea pipeline infrastructure,~~ and ~~a broad suite of~~ complementary subsea technical ~~services and rental items.~~

services.

~~Completions segment.~~ •Completions. This segment designs, manufactures and supplies products and provides related services to the coiled tubing, well ~~construction, completion,~~ stimulation and intervention markets. The products and related services consist primarily of: (i) ~~well construction casing and cementing equipment, cable protectors used in completions, composite plugs used for zonal isolation in hydraulic fracturing and wireline flow-control products; and (ii)~~ capital and consumable products sold to the pressure pumping, hydraulic fracturing and flowback services markets, including hydraulic fracturing pumps, ~~pump consumables~~cooling systems, high-pressure flexible hoses and flow iron as well as ~~coiled tubing,~~ wireline cable and pressure control equipment used in the well completion and intervention service ~~markets.~~markets; and (ii) coiled tubing strings and coiled line pipe and related services.

•Production ~~& Infrastructure segment~~. This segment designs, manufactures and supplies products and provides related equipment and services for production and infrastructure markets. The products and related services consist primarily of: (i) engineered process systems, production equipment, ~~and related field services,~~ as well as ~~oil and produced water treatment~~specialty separation equipment; and (ii) a wide range of industrial valves focused on serving ~~upstream, midstream, and downstream~~ oil and natural gas customers as well as power generation, renewable energy and other general ~~industries.~~

industrial applications.

Market Conditions

~~The level of demand~~Demand for our products and services is directly related to ~~activity levels and the~~our customers' capital and operating budgets. These budgets are heavily influenced by current and expected energy prices. In addition, demand for our capital products is driven by the utilization of ~~our customers, which~~service company equipment. Utilization is a function of equipment capacity and durability in ~~turn are influenced heavily by~~demanding environments.

Recent inflationary pressures and rising interest rates have created a heightened concern of a global recession. Oil and natural gas prices softened in the first half of 2023 as a result of such global recessionary fears, but rebounded during the third quarter as supply tightened from further OPEC+ production cuts. The recent conflict in the Middle East could lead to a disruption to world energy ~~prices~~markets and international supply chains. Despite these near-term macroeconomic challenges, we expect that the ~~expectation~~world's long-term energy demand will continue to rise and may outpace global supply as OPEC+ remains committed to ~~future trends~~maintaining stable oil prices. We expect that hydrocarbons will continue to play a vital role in ~~those prices.~~meeting the world's long-term energy needs while renewable energy sources become increasingly prominent.

The ~~probability~~price of ~~any cyclical change~~oil has varied dramatically over the last several years. The spot prices for West Texas Intermediate (“WTI”) and United Kingdom Brent (“Brent”) crude oil fell from $61.14 and $67.77 per barrel, respectively, as of December 31, 2019 to lows below $15.00 per barrel in ~~energy prices and the extent and duration of such a change are difficult to predict. In November 2016 the Organization of Petroleum Exporting Countries and other unaffiliated countries~~

~~announced~~April 2020. Since that ~~their production levels would be capped or reduced, which led to a modest increase in~~time, oil prices rebounded to highs above $120.00 per barrel in ~~late 2016~~March 2022 but have softened to an average of $82.25 and ~~early 2017. These increases~~$86.65, for WTI and Brent, respectively, in the third quarter 2023. In addition, natural gas prices have decreased by 67.7% comparing the third quarter 2023 to the third quarter 2022.

Our revenues, over the long-term, are highly correlated to the global drilling rig count, which averaged 1,788 rigs during the third quarter 2023 from an average of 1,030 rigs in the third quarter 2020. The average U.S. rig count for the third quarter 2023 was 9.7% lower and 14.7% lower compared to the ~~expectation of an improvement in supply~~second quarter 2023 and ~~demand balance led~~third quarter 2022, respectively. The international rig count for the third quarter 2023 was 0.9% lower and 11.0% higher compared to ~~higher~~the second quarter 2023 and third quarter 2022, respectively.

Global drilling and completions activity remains below pre-pandemic levels. Markets outside North America are expected to grow and ~~spending by our customers primarily~~outpace the U.S. in ~~North America. The volume of rigs drilling for~~2023. In the U.S., publicly owned exploration and production companies are expected to continue to exercise disciplined capital spending. Privately owned exploration and production companies tend to fluctuate their activity more readily in response to changes in oil and natural gas in North America is a driver for our revenue from this region, and the number of those rigs has increased substantially over the past year. Exploration and production operators have continued to drill and complete wells and continue to have improved well economics derived from concentrating activity in basins with the best returns on investment, and enhanced drilling and completion techniques. This increased activity has caused us to experience improved revenue and orders during the first nine months of 2017. Activity in high cost areas, however, especially offshore and in some international areas, is lagging the North America onshore activity recovery. The pace and strength of a recovery in energy markets and in our results remain uncertain.prices.

The table below shows average crude oil and natural gas prices for ~~West Texas Intermediate crude oil ("WTI"), United Kingdom~~WTI, Brent, ~~crude oil ("Brent"),~~ and Henry ~~Hub natural gas:~~Hub:


	Three Months Ended
	September 30,		June 30,		September 30,
	2023		2023		2022
Average global oil, $/bbl
West Texas Intermediate	$	82.25	$	73.54	$	93.06
United Kingdom Brent	$	86.65	$	77.99	$	100.71

Average North American Natural Gas, $/Mcf
Henry Hub	$	2.59	$	2.16	$	8.03

Three months ended
September 30, June 30, September 30,
2017 2017 2016
Average global oil, $/bbl
West Texas Intermediate $ 48.18
$ 48.10
$ 44.85
United Kingdom Brent $ 52.10
$ 49.55
$ 45.80

Average North American Natural Gas, $/Mcf
Henry Hub $ 2.95
$ 3.08
$ 2.88

Average WTI and Brent oil prices were flat and 5% higher, respectively, in the third quarter of 2017 than in the second quarter of 2017, and were 7% and 14% higher, respectively, than in the third quarter of 2016. Average natural gas prices were 4% lower in the third quarter of 2017 compared to the second quarter of 2017, and 2% higher than in the third quarter of 2016.

The table below shows the average number of active drilling rigs ~~based on the weekly Baker Hughes Incorporated rig count,~~ operating by geographic area and drilling for different ~~purposes.~~

Three months ended
September 30, June 30, September 30,
2017 2017 2016
Active Rigs by Location
United States 946
895
479
Canada 208
117
121
International 947
958
936
Global Active Rigs 2,101
1,970

1,536

Land vs. Offshore Rigs
Land 1,883
1,748
1,291
Offshore 218
222
245
Global Active Rigs 2,101
1,970

1,536

U.S. Commodity Target
Oil/Gas 759
717
389
Gas 186
177
88
Unclassified 1
1
2
Total U.S. Active Rigs 946
895

479

U.S. Well Path
Horizontal 799
751
372
Vertical 70
77
62
Directional 77
67
45
Total U.S. Active Rigs 946
895

479

~~The U.S.~~purposes, based on the weekly rig count reached a trough of 404 rigs in the second quarter of 2016. Since then the number of working rigs has increased to 940 rigs at the end of September 2017. The average U.S. rig count increased 6% from the second quarter of 2017. A substantial portion of our revenue is impactedinformation published by ~~the level of rig activity and the number of wells completed. While the U.S. land rig count has continued to recover, it remains low compared to historical norms~~.Baker Hughes Company.


	Three Months Ended
	September 30,	June 30,	September 30,
	2023	2023	2022
Active Rigs by Location
United States	649	719	761
Canada	188	117	199
International	951	960	857
Global Active Rigs	1,788	1,796	1,817

Land vs. Offshore Rigs
Land	1,539	1,546	1,590
Offshore	249	250	227
Global Active Rigs	1,788	1,796	1,817

U.S. Commodity Target
Oil/Gas	521	572	599
Gas	122	143	158
Unclassified	6	4	4
Total U.S. Active Rigs	649	719	761

U.S. Well Path
Horizontal	578	650	692
Vertical	17	19	28
Directional	54	50	41
Total U.S. Active Rigs	649	719	761

The table below shows the amount of total inbound orders by segment:


	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
(in millions of dollars)	2023		2023		2022		2023		2022
Drilling & Downhole	$	95.0	$	82.1	$	73.3	$	258.1	$	218.6
Completions	65.1		62.7		78.7		193.8		197.1
Production	38.7		41.5		45.7		112.1		149.9
Total Orders	$	198.8	$	186.3	$	197.7	$	564.0	$	565.6

(in millions of dollars) Three months ended September 30, Nine months ended September 30, 2017
2017 2016 2017 2016
Orders:
Drilling & Subsea $ 49.3
$ 46.3
$ 170.1
$ 150.8
Completions 72.4
33.1
190.8
92.2
Production & Infrastructure 108.7
65.6
277.5
171.5
Total Orders $ 230.4
$ 145.0
$ 638.4
$ 414.5

Results of operations

Three months ended September 30, ~~2017~~2023 compared with three months ended September 30, ~~2016~~2022


	Three Months Ended September 30,						Change
(in thousands of dollars, except per share information)	2023			2022			$		%
Revenue
Drilling & Downhole	$	81,181		$	75,723		$	5,458	7.2	%
Completions	62,473			72,246			(9,773)		(13.5)	%
Production	36,877			34,238			2,639		7.7	%
Eliminations	(1,278)			(372)			(906)		*
Total revenue	179,253			181,835			(2,582)		(1.4)	%
Segment operating income
Drilling & Downhole	8,437			9,481			(1,044)		(11.0)	%
Operating margin %	10.4		%	12.5		%
Completions	2,147			5,915			(3,768)		(63.7)	%
Operating margin %	3.4		%	8.2		%
Production	1,803			665			1,138		171.1	%
Operating margin %	4.9		%	1.9		%
Corporate	(6,861)			(8,411)			1,550		18.4	%
Total segment operating income	5,526			7,650			(2,124)		(27.8)	%
Operating margin %	3.1		%	4.2		%
Gain on disposal of assets and other	(145)			(52)			(93)		*
Operating income	5,671			7,702			(2,031)		(26.4)	%
Interest expense	4,504			8,143			(3,639)		(44.7)	%
Foreign exchange gains and other, net	(8,279)			(18,288)			10,009		*

Total other income	(3,775)			(10,145)			6,370		62.8	%
Income before income taxes	9,446			17,847			(8,401)		(47.1)	%
Income tax expense	1,477			1,370			107		7.8	%
Net income	$	7,969		$	16,477		$	(8,508)	(51.6)	%

Weighted average shares outstanding
Basic	10,235			5,778
Diluted	10,393			10,552
Earnings per share
Basic	$	0.78		$	2.85
Diluted	$	0.77		$	1.82
* not meaningful

Three months ended September 30, Favorable / (Unfavorable)
2017 2016 $ %
(in thousands of dollars, except per share information)
Revenue:
Drilling & Subsea $ 54,700
$ 50,565
$ 4,135
8.2 %
Completions 60,037
34,393
25,644
74.6 %
Production & Infrastructure 84,979
54,030
30,949
57.3 %
Eliminations (1,007 ) (720 ) (287 ) *
Total revenue $ 198,709
$ 138,268
$ 60,441
43.7 %
Operating income (loss):
Drilling & Subsea $ (8,872 ) $ (10,869 ) $ 1,997
18.4 %
Operating income margin % (16.2 )% (21.5 )%
Completions 1,614
(5,676 ) 7,290
128.4 %
Operating income margin % 2.7 % (16.5 )%
Production & Infrastructure 4,258
(713 ) 4,971
697.2 %
Operating income margin % 5.0 % (1.3 )%
Corporate (9,271 ) (6,406 ) (2,865 ) (44.7 )%
Total segment operating loss $ (12,271 ) $ (23,664 ) $ 11,393
48.1 %
Operating income margin % (6.2 )% (17.1 )%
Transaction expenses 882
341
(541 ) *
Goodwill and intangible asset impairment 638
—
(638 ) *
Loss on sale of assets and other 128
2,217
2,089
*
Operating loss (13,919 ) (26,222 ) 12,303
46.9 %
Interest expense, net 6,366
6,746
380
5.6 %
Foreign exchange losses (gains) and other, net 2,360
(3,152 ) (5,512 ) *
Other (income) expense, net 8,726
3,594
(5,132 ) *
Loss before income taxes (22,645 ) (29,816 ) 7,171
24.1 %
Income tax benefit (7,817 ) (11,821 ) (4,004 ) (33.9 )%
Net loss (14,828 ) (17,995 ) 3,167
17.6 %
Less: Income attributable to non-controlling interest —
(6 ) 6
*
Loss attributable to common stockholders $ (14,828 ) $ (17,989 ) $ 3,161
17.6 %

Weighted average shares outstanding
Basic 96,275
90,860

Diluted 96,275
90,860

Loss per share
Basic $ (0.15 ) $ (0.20 )
Diluted $ (0.15 ) $ (0.20 )
* not meaningful

Revenue

Our revenue for the three months ended September 30, ~~2017 increased $60.4~~2023 was $179.3 million, a decrease of $2.6 million, or ~~43.7%~~1.4%, ~~to $198.7 million~~ compared to the three months ended September 30, 2016. In general, the increase in revenue is due to the higher market activity resulting from higher commodity prices. In the third quarter of 2017, we were adversely affected by Hurricane Harvey, which temporarily idled facilities and operations, resulting in foregone revenue.2022. For the three months endedSeptember 30, ~~2017,~~2023, our Drilling & ~~Subsea,~~Downhole, Completions, and Production segments comprised 45.3%, 34.1%, and ~~Production & Infrastructure segments comprised 27.0%~~, ~~30.2%, and 42.8%~~20.6% of our total revenue, respectively, which compared to ~~36.0%~~41.6%, ~~24.9%~~39.6%, and ~~39.1%~~18.8% of our total revenue, respectively, for the three months ended September 30, ~~2016.~~2022. The overall decrease in revenue is primarily related to lower U.S. hydraulic fracturing activity in the third quarter 2023 compared to the third quarter 2022. The changes in revenue by operating segment consisted of the following:

Drilling & ~~Subsea~~Downhole segment — Revenue ~~increased $4.1~~was $81.2 million or ~~8.2%, to~~ ~~$54.7 million~~ ~~during~~for the three months endedSeptember 30, ~~2017~~2023, an increase of $5.5 million, or 7.2%, compared to the three months endedSeptember 30, ~~2016. The~~2022. This increase was led by a $4.8 million, or 12.6%, increase in ~~segment~~ revenue ~~is attributable~~for our Drilling Technologies product line due to ~~increased~~higher sales volumes of capital equipment, partially offset by lower sales volumes of consumable products. Revenue for our ~~drilling~~Downhole Technologies product line increased by $1.6 million, or 7.1%, primarily due to higher sales volumes of artificial lift products ~~caused by the significant increase~~ in the ~~average U.S. rig count of 97%~~third quarter 2023 compared to the ~~prior year period. In these drilling products, the~~third quarter 2022. Revenue for our Subsea Technologies product line decreased by $0.9 million, or 5.8%, from lower volumes of cable management systems partially offset by an increase ~~was primarily volume driven as we had particularly strong increases in drilling consumable products to serve the~~from higher ~~rig count. Partially offsetting this increase was a $4.3 million decrease in the volume of sales of our remotely operated subsea vehicles,~~project revenue recognized from ROVs and ~~associated systems and other offshore products, which was largely attributable to reduced investment in global offshore projects.~~after-market part sales.

Completions segment — Revenue ~~increased $25.6~~was $62.5 million ~~or 74.6%, to $60.0 million during~~for the three months ended September 30, ~~2017~~2023, a decrease of $9.8 million, or 13.5%, compared to the three months ended September 30, ~~2016.~~2022. This change includes a revenue decrease of $11.1 million, or 25.4%, for our Stimulation & Intervention product line primarily due to lower U.S. hydraulic fracturing activity levels and delays in capital equipment spending by customers during the third quarter 2023. This decline was partially offset by a $1.3 million increase in revenue for our Coiled Tubing product line due to higher international sales volumes.

Production segment — Revenue was $36.9 million for the three months ended September 30, 2023, an increase of $2.6 million, or 7.7%, compared to the three months ended September 30, 2022. The increase was driven by a $3.2 million, or 17.6%, increase in ~~drilling and completions budgets of exploration and production companies have led~~sales for our Production Equipment product line primarily due to an increase in ~~market demand for~~revenues recognized from our ~~completions products. Approximately $20.5~~processing oil treatment equipment, partially offset by a $0.6 million, ~~of the increase is a result of this increased demand, particularly~~or 3.8%, decrease in ~~North America, for our well stimulation and intervention products. The remaining segment revenue increase was due to higher~~ sales of our ~~downhole~~valve products ~~including revenue from~~within our ~~acquisition of Multilift in the third quarter of 2017. Substantially all of the increase in segment revenue was attributable to higher volumes.~~

~~Production & Infrastructure segment~~ ~~— Revenue increased $30.9 million, or 57.3%, to $85.0 million during the~~ ~~three months ended~~ ~~September 30, 2017 compared to the~~ ~~three months ended~~ ~~September 30, 2016.~~The increase in drilling and completions budgets of exploration and production companies and resulting infrastructure spending have led to increased sales of our surface production equipment and valve products. Approximately half of the increase in segment revenue is attributable to higher sales volumes in our activity-based production equipment. The remaining segment revenue increase was due to higher sales of valves, including revenue from our acquisition of Cooper in the first quarter of 2017.Valve Solutions product line.

Segment operating ~~loss~~income (loss) and segment operating margin percentage

Segment operating ~~loss~~income for the three months ended September 30, ~~2017, improved $11.4~~2023 was $5.5 million, ~~from $(23.7)~~a $2.1 million decrease compared to an income of $7.7 million for the three months ended September 30, ~~2016 to $(12.3) million for~~2022. For the three months ended September 30, ~~2017. For the~~ ~~three months ended~~ ~~September 30, 2017, the~~2023, segment operating margin percentage ~~of (6.2)% represents an improvement from~~was 3.1% compared to 4.2% for the ~~(17.1)% operating margin percentage for~~ three months ended September 30, 2016. In the third quarter of 2017, we were adversely affected by Hurricane Harvey, which temporarily idled facilities and operations, resulting in foregone revenue and under-absorption of manufacturing costs. The segment2022. Segment operating margin percentage is calculated by dividing segment operating ~~loss~~income (loss) by revenue for the period. The change in operating ~~margin percentage~~income (loss) for each segment is explained as follows:

Drilling & ~~Subsea~~Downhole segment — ~~The~~Segment operating ~~margin percentage for this segment improved to~~ ~~(16.2)%~~ ~~for the~~ ~~three months endedSeptember 30, 2017, from~~ ~~(21.5)%~~ ~~for the~~ ~~three months endedSeptember 30, 2016. The third quarter of 2017 included $2.0~~income was $8.4 million, of severance and facility closure costs. The third quarter of 2016 included $1.0 million of inventory write-downs due to lower activity levels and reduced pricing and severance and facility closure costs. Operating margins improved in our drilling product line due to higher activity levels, which caused an improvement in manufacturing scale efficiencies, as well as a better mix of higher margin products sales.

~~Completions segment~~ ~~— The operating margin percentage for this segment improved to 2.7%~~or 10.4%, for the three months ended September 30, ~~2017, from (16.5)%~~2023 compared to operating income of $9.5 million, or 12.5%, for the three months ended September 30, ~~2016.~~2022. The ~~increase~~$1.0 million decrease in segment operating ~~margin percentage~~results is ~~due~~primarily attributable to ~~increased~~lower volume and profitability of our Subsea product line projects, partially offset by higher gross profit from our Downhole Technologies product line.

Completions segment — Segment operating ~~leverage on higher revenue and higher volumes, primarily for our stimulation and intervention products. Operating~~ income was ~~positively impacted by better earnings from our investment in Global Tubing, LLC~~.

~~Production & Infrastructure segment~~ ~~— The operating margin percentage for this segment has improved to 5.0%~~$2.1 million, or 3.4%, for the three months ended September 30, ~~2017,~~2023 compared to ~~(1.3)%~~segment operating income of $5.9 million, or 8.2%, for the three months ended September 30, ~~2016. Operating margins improved with~~2022. The $3.8 million decrease in segment operating results was primarily due to lower sales volumes of our well stimulation products.

Production segment — Segment operating income was $1.8 million, or 4.9%, for the ~~increased volume~~three months ended September 30, 2023 compared to an income of $0.7 million, or 1.9%, for the three months ended September 30, 2022. The $1.1 million increase in segment operating results was driven by an increase in project revenue ~~in activity-based equipment. Our valves products also had~~recognized from our process oil treatment equipment driving higher gross ~~margins on increased sales activity.~~profit.

Corporate — Selling, general and administrative expenses for Corporate ~~increased by $2.9 million, or 44.7% to $9.3~~were $6.9 million for the three months ended September 30, ~~2017~~2023 compared to $8.4 million for the three months ended September 30, ~~2016, due~~2022. This decrease was primarily related to ~~higher personnel costs and higher professional fees.~~lower variable compensation costs. Corporate costs include, among other items, payroll related costs for ~~general~~ management, administration, finance, legal, and ~~management of finance and administration, legal,~~ human ~~resources;~~resources personnel; professional fees for legal, accounting and related services; and marketing costs.

Other items not included in segment operating ~~loss~~income (loss)

~~Several items are~~Gain (loss) on the disposal of assets and other is not included in segment operating ~~loss,~~income (loss), but ~~are~~is included in total operating loss. These items include transaction expenses, gains and losses from the sale of assets, and goodwill and intangible assets impairment. Transaction expenses relate to legal and other advisory costs incurred in acquiring businesses and are not considered to be part of segment operating loss. These costs were $0.9 million for the three months ended September 30, 2017 and $0.3 million for the three months ended September 30, 2016.

The Company recorded a goodwill impairment charge of $68.0 million during the quarter ended June 30, 2017. The Company recorded an impairment charge of $0.6 million in the quarter ended September 30, 2017 for intangible assets related to a specific product line as the decision was made in the third quarter 2017 to abandon this specific product line. This product line, where the impairment charge was incurred, is within the Subsea reporting unit. No impairment losses on goodwill or indefinite-lived intangible assets were recorded for the three months ended September 30, 2017.income (loss).

Other income and expense

Other income and expense includes interest expense and foreign exchange gains (losses) and ~~losses.~~other. We incurred ~~$6.4~~$4.5 million of interest expense during the three months ended September 30, ~~2017,~~2023, a decrease of ~~$0.4~~$3.6 million ~~from~~compared to the three months ended September 30, ~~2016, primarily~~2022, due to ~~lower commitment fees on~~ the ~~reduced size~~decline in the balance of 2025 Notes upon conversion of $122.8 million aggregate principal amount of our ~~undrawn revolving credit line.~~ 2025 Notes to common stock in January 2023. See Note 6 Debt for further details related to the 2025 Notes and Credit Facility.

The foreign exchange gains ~~or losses~~(losses) are primarily the result of movements in the British pound, Euro and ~~the Euro~~Canadian dollar relative to the U.S. dollar. These movements in exchange ~~rate movements~~rates create foreign exchange gains or losses when applied to monetary assets or liabilities denominated in currencies other than the location’s functional ~~currency. The primary drivers impacting our consolidated statements of comprehensive income (loss) were gains on~~currency, primarily U.S. dollar denominated cash, trade account receivables and net intercompany receivable balances for our entities using a functional currency other than the U.S. dollar.

Taxes

~~Tax benefit includes current income taxes expected to be due based on taxable income to be reported during the periods in the various jurisdictions in which we conduct business~~We recorded tax expense of $1.5 million and deferred income taxes based on changes in the tax effect of temporary differences between the bases of assets and liabilities for financial reporting and tax purposes at the beginning and end of the respective periods. The effective tax rate, calculated by dividing total tax expense by income before income taxes, was 34.5% for the ~~three months ended~~ ~~September 30, 2017 and 39.6% for the~~ ~~three months ended~~ ~~September 30, 2016. Impacting the tax rate~~$1.4 million for the three months ended September 30, ~~2017 was~~2023 and 2022, respectively. The estimated annual effective tax rates for the ~~change in the proportion of~~three months ended September 30, 2023 and 2022 were impacted by losses ~~being generated in the United States, which are benefited at a higher statutory tax rate, as compared to earnings being generated outside the United States~~ in jurisdictions ~~subject to lower~~where the recording of a tax ~~rates. The effective~~benefit is not available. Furthermore, the tax ~~rate~~expense or benefit recorded can vary from period to period depending on the ~~Company's~~Company’s relative mix of ~~U.S.~~earnings and ~~non-U.S. earnings.~~losses by jurisdiction.

Nine months ended September 30, ~~2017~~2023 compared with ~~Nine~~nine months ended September 30, ~~2016~~2022

We made two acquisitions in the first nine months of 2017 and one in the first nine months of 2016. For additional information about these acquisitions, see Note 4 to the condensed consolidated financial statements in Item 1 of Part I of this quarterly report. Due to these acquisitions, our results of operations for the 2017 period presented may not be comparable to historical results of operations for the 2016 periods.


	Nine Months Ended September 30,						Change
(in thousands of dollars, except per share information)	2023			2022			$		%
Revenue
Drilling & Downhole	$	238,652		$	223,476		$	15,176	6.8	%
Completions	208,239			190,867			17,372		9.1	%
Production	108,918			95,622			13,296		13.9	%
Eliminations	(2,150)			(710)			(1,440)		*
Total revenue	553,659			509,255			44,404		8.7	%
Segment operating income
Drilling & Downhole	25,165			23,995			1,170		4.9	%
Operating margin %	10.5		%	10.7		%
Completions	9,893			8,787			1,106		12.6	%
Operating margin %	4.8		%	4.6		%
Production	4,546			(1,241)			5,787		466.3	%
Operating margin %	4.2		%	(1.3)		%
Corporate	(20,538)			(24,501)			3,963		16.2	%
Total segment operating income	19,066			7,040			12,026		170.8	%
Operating margin %	3.4		%	1.4		%
Loss (gain) on disposal of assets and other	137			(938)			1,075		*
Operating income	18,929			7,978			10,951		137.3	%
Interest expense	13,742			23,609			(9,867)		(41.8)	%
Foreign exchange losses (gains) and other, net	1,129			(37,112)			38,241		*

Total other (income) expense, net	14,871			(13,503)			28,374		210.1	%
Income before income taxes	4,058			21,481			(17,423)		(81.1)	%
Income tax expense	6,154			4,939			1,215		24.6	%
Net income (loss)	$	(2,096)		$	16,542		$	(18,638)	(112.7)	%

Weighted average shares outstanding
Basic	10,208			5,736
Diluted	10,208			10,489
Earnings per share
Basic	$	(0.21)		$	2.88
Diluted	$	(0.21)		$	2.37
* not meaningful

Nine months ended September 30 Favorable / (Unfavorable)
2017 2016 $ %
(in thousands of dollars, except per share information)
Revenue:
Drilling & Subsea $ 180,607
$ 170,120
$ 10,487
6.2 %
Completions 156,938
95,920
61,018
63.6 %
Production & Infrastructure 235,676
176,364
59,312
33.6 %
Eliminations (2,301 ) (1,972 ) (329 ) *
Total revenue $ 570,920
$ 440,432
$ 130,488
29.6 %
Operating income (loss):
Drilling & Subsea $ (23,580 ) $ (41,545 ) $ 17,965
43.2 %
Operating income margin % (13.1 )% (24.4 )%
Completions (1,223 ) (39,838 ) 38,615
96.9 %
Operating income margin % (0.8 )% (41.5 )%
Production & Infrastructure 7,124
494
6,630
*
Operating income margin % 3.0 % 0.3 %
Corporate (24,897 ) (20,420 ) (4,477 ) (21.9 )%
Total segment operating loss $ (42,576 ) $ (101,309 ) $ 58,733
58.0 %
Operating income margin % (7.5 )% (23.0 )%
Transaction expenses 1,755
571
(1,184 ) *
Goodwill and intangible asset impairment 68,642
—
(68,642 ) *
Loss on sale of assets and other 1,517
2,233
716
*
Operating loss (114,490 ) (104,113 ) (10,377 ) (10.0 )%
Interest expense, net 19,331
20,664
1,333
6.5 %
Deferred loan costs written off —
2,588
2,588
*
Foreign exchange losses (gains) and other, net 6,508
(14,546 ) (21,054 ) *
Other expense, net 25,839
8,706
(17,133 ) *
Loss before income taxes (140,329 ) (112,819 ) (27,510 ) (24.4 )%
Income tax benefit (31,860 ) (43,374 ) (11,514 ) (26.5 )%
Net loss (108,469 ) (69,445 ) (39,024 ) (56.2 )%
Less: Income attributable to non-controlling interest —
24
(24 ) *
Loss attributable to common stockholders $ (108,469 ) $ (69,469 ) $ (39,000 ) (56.1 )%

Weighted average shares outstanding
Basic 96,103
90,682

Diluted 96,103
90,682

Loss per share
Basic $ (1.13 ) $ (0.77 )
Diluted $ (1.13 ) $ (0.77 )
* not meaningful

Revenue

Our revenue for the nine months ended September 30, ~~2017 increased $130.5~~2023 was $553.7 million, an increase of $44.4 million, or ~~29.6%~~8.7%, ~~to $570.9 million~~ compared to the nine months ended September 30, 2016. In general, the increase in revenue is due to the higher market activity resulting from higher commodity prices. In the third quarter of 2017, we were adversely affected by Hurricane Harvey, which temporarily idled facilities and operations, resulting in foregone revenue.2022. For the nine months ended September 30, ~~2017,~~2023, our Drilling & ~~Subsea, Completionst,~~Downhole, Completions, and Production ~~& Infrastructure~~ segments comprised ~~31.2%~~43.1%, ~~27.5%~~ 37.2%, and ~~41.3%~~19.7% of our total revenue, respectively, which compared to ~~38.2%~~43.9%, ~~21.8%~~37.3%, and ~~40.0%~~18.8% of our total revenue, respectively, for the nine months ended September 30, ~~2016.~~2022. The overall increase in revenue is primarily related to increases in market activity and global rig count in 2023 compared to 2022. The changes in revenue by operating segment consisted of the following:

Drilling & ~~Subsea~~Downhole segment — Revenue ~~increased $10.5~~was $238.7 million ~~or 6.2%, to $180.6 million during~~for the nine months ended September 30, ~~2017~~2023, an increase of $15.2 million, or 6.8%, compared to the nine months ended September 30, ~~2016. Approximately $32~~2022. This increase was led by a $28.1 million, ~~of the~~or 27.8%, increase ~~relates~~in revenue for our Drilling Technologies product line due to ~~increased~~higher sales volumes of both consumable products and capital equipment driven by increased market activity. Revenue for our ~~drilling~~Downhole Technologies product line increased by $5.9 million, or 9.3%, primarily due to higher sales volumes of artificial lift products ~~caused by the 79% increase~~ in ~~the average U.S. rig count~~2023 compared to ~~the prior year period. In~~2022. Revenue for our ~~drilling products, the increase was primarily volume driven as we had particularly strong increases in drilling consumable products sold to drilling contractors both for rig mud pump upgrades~~Subsea Technologies product line decreased by $18.7 million, or 31.4%, from lower project revenue recognized from ROVs and ~~to serve the higher rig count. The increase in the drilling products was~~cable management systems, partially offset by ~~lower volume of sales and lower demand for our remotely operated subsea vehicles, and associated systems and other offshore products, which was largely attributable to reduced investment~~an increase in ~~global offshore projects~~.part sales.

Completions segment — Revenue ~~increased $61.0~~was $208.2 million ~~or 63.6%, to $156.9 million during~~for the nine months ended September 30, ~~2017~~2023, an increase of $17.4 million, or 9.1%, compared to the nine months ended September 30, ~~2016. The~~2022. This change includes a revenue increase ~~in drilling and completions budgets~~ of ~~exploration and production companies have led to an increase in market demand~~$15.1 million, or 13.6%, for our ~~completions products, particularly for our well stimulation products~~Stimulation & Intervention product line primarily due to ~~the increased~~higher demand of radiators and wireline cable, partially offset by lower sales volumes in ~~North America activity. Substantially all of the increase in~~power ends and high-pressure hoses.

Production segment ~~revenue was attributable to higher volumes.~~

~~Production & Infrastructure segment~~ — Revenue ~~increased $59.3~~was $108.9 million ~~or 33.6%, to $235.7 million during~~for the nine months ended September 30, ~~2017~~2023, an increase of $13.3 million, or 13.9%, compared to the nine months ended September 30, ~~2016.~~2022. The increase was driven by a $9.2 million, or 18.4%, increase in ~~drilling~~project revenue recognized from our process oil treatment equipment within our Production Equipment product line, and ~~completions budgets of exploration and production companies and resulting infrastructure spending have led to increased~~a $4.1 million, or 9.0%, increase in sales of our ~~surface production equipment and~~ valve products. Approximately half of the increase is attributable to higher sales volumes in our activity-based production equipment. The remaining segment revenue increase was due to higher sales of valves, including revenue from our acquisition of Cooper in the first quarter of 2017.

Segment operating ~~loss~~income (loss) and segment operating margin percentage

Segment operating ~~loss~~income for the nine months ended September 30, ~~2017, improved $58.7~~2023 was $19.1 million, ~~from $(101.3)~~a $12.0 million increase compared to an income of $7.0 million for the nine months ended September 30, ~~2016~~2022. For the nine months ended September 30, 2023, segment operating margin percentage was 3.4% compared to ~~$(42.6) million~~1.4% for the nine months ended September 30, 2017. For the nine months ended September 30, 2017, the segment operating margin percentage of (7.5)% represents an improvement from the (23.0)% operating margin percentage for nine months ended September 30, 2016. In the third quarter of 2017, we were adversely affected by Hurricane Harvey, which temporarily idled facilities and operations, resulting in foregone revenue and under-absorption of manufacturing costs. The segment2022. Segment operating margin percentage is calculated by dividing segment operating ~~loss~~income (loss) by revenue for the period. The change in operating ~~margin percentage~~income (loss) for each segment is explained as follows:

Drilling & ~~Subsea~~Downhole segment — ~~The~~Segment operating ~~margin percentage for this segment improved to (13.1)%~~income was $25.2 million, or 10.5%, for the nine months ended September 30, ~~2017, from (24.4)%~~2023 compared to operating income of $24.0 million, or 10.7%, for the nine months ended September 30, ~~2016. Operating margins improved~~2022. The $1.2 million increase in ~~our drilling product line due~~segment operating results is primarily attributable to higher ~~activity levels, which caused an improvement~~gross profit from the 6.8% increase in ~~manufacturing scale efficiencies, as well as a better mix of higher margin products sales. The nine months ended September 30, 2017 included $2.6 million of severance~~segment revenues and facility closure costs. The nine months ended September 30, 2016 included $10.3 million of inventory write-downs due to lower activity levels and reduced pricing and severance and facility closure costs. For the segment, the margin improvement for drilling productsfavorable product mix. These gains were partially offset ~~with~~by lower ~~margins for our subsea products due to lower~~project revenue ~~levels resulting~~ in ~~a loss of operating leverage compared to the prior year period.~~Subsea Technologies product line.

Completions segment — ~~The~~Segment operating ~~margin percentage for this segment improved to (0.8)%~~income was $9.9 million, or 4.8%, for the nine months ended September 30, ~~2017, from (41.5)%~~2023 compared to segment operating income of $8.8 million, or 4.6%, for the nine months ended September 30, ~~2016.~~2022. The ~~nine months ended 2016 included $20.4~~$1.1 million ~~of inventory write-downs attributable to lower activity levels and reduced pricing and facility closure costs. The~~ increase in segment operating ~~margin percentage is~~results was primarily due to ~~increased operating leverage on~~ higher ~~revenue~~gross profit from the 9.1% increase in revenues and favorable product mix, partially offset by higher ~~volumes. Lastly,~~freight costs.

Production segment — Segment operating income ~~(loss)~~ was ~~positively impacted by better earnings from our investment in Global Tubing, LLC.~~

~~Production & Infrastructure segment~~ ~~— The operating margin percentage for this segment improved to 3.0%~~$4.5 million, or 4.2%, for the nine months ended September 30, ~~2017, from 0.3%~~2023 compared to a loss of $1.2 million, or 1.3%, for the nine months ended September 30, ~~2016.~~2022. The ~~nine months ended 2017~~$5.8 million increase in segment operating results was driven by the 13.9% increase in revenues and 2016 included $0.6 million and $3.8 million, respectively, of costs related to facility consolidation and severance. When taking into consideration the facility consolidation costs in the prior year period, operating margin increased slightly, attributable to the higher activity levels leading to increased operating ~~leverage in our activity-based production equipment products.~~leverage.

Corporate — Selling, general and administrative expenses for Corporate ~~increased by $4.5 million, or 21.9% to $24.9~~were $20.5 million for the nine months ended September 30, ~~2017~~2023 compared to $24.5 million for the nine months ended September 30, ~~2016, due~~2022. This decrease was primarily related to ~~higher personnel costs~~a charge recognized in the nine months ended September 30, 2022 related to a modification of long-term incentive awards associated with executive leadership transition and ~~higher professional fees.~~lower variable compensation costs. Corporate costs include, among other items, payroll related costs for ~~general~~ management, administration, finance, legal, and ~~management of finance and administration, legal,~~ human ~~resources;~~resources personnel; professional fees for legal, accounting and related services; and marketing costs.

Other items not included in segment operating ~~loss~~income (loss)

~~Several items are~~Gain (loss) on the disposal of assets and other is not included in segment operating ~~loss,~~income (loss), but ~~are~~is included in total operating loss. These items include transaction expenses, gains and losses from the sale of assets, and goodwill impairment. Transaction expenses relate to legal and other advisory costs incurred in acquiring businesses and are not considered to be part of segment operating loss. These costs were $1.8 million for the nine months ended September 30, 2017 and $0.6 million for the nine months ended September 30, 2016.

The Company recorded a goodwill impairment charge of $68.0 million for the nine months ended September 30, 2017. The Company also recorded an impairment charge of $0.6 million for the nine months ended September 30, 2017 related to intangible assets in the Subsea reporting unit.income (loss).

Other income and expense

Other income and expense includes interest expense and foreign exchange gains (losses) and ~~losses.~~other. We incurred ~~$19.3~~$13.7 million of interest expense during the nine months ended September 30, ~~2017,~~2023, a decrease of ~~$1.3~~$9.9 million ~~from~~ compared to the nine months ended September 30, ~~2016 primarily~~2022, due to ~~lower commitment fees on~~ the ~~reduced size~~decline in the balance of ~~undrawn revolving credit line.~~ our 2025 Notes upon conversion of $122.8 million aggregate principal amount of our 2025 Notes to common stock in January 2023. See Note 6 Debt for further details related to the 2025 Notes and Credit Facility.

The foreign exchange gains ~~or losses~~(losses) are primarily the result of movements in the British pound, Euro and ~~the Euro~~Canadian dollar relative to the U.S. dollar. These movements in ~~the~~ exchange rates create foreign exchange gains or losses when applied to monetary assets or liabilities denominated in currencies other than the location’s functional ~~currency. The primary drivers impacting our consolidated statements of comprehensive income (loss) were gains on~~currency, primarily U.S. dollar denominated cash, trade account receivables and net intercompany receivable balances for our entities using a functional currency other than the U.S. dollar. ~~We wrote off $2.6 million of deferred financing costs as a result of the amendment of our Credit Facility in the first half of 2016 reducing the size of the undrawn revolving credit line.~~

Taxes

~~Tax~~We recorded tax expense of $6.2 million and $4.9 million for the nine months ended September 30, 2023 and 2022, respectively. The estimated annual effective tax rates for the nine months ended September 30, 2023 and 2022 were impacted by losses in jurisdictions where the recording of a tax benefit includes current income taxes expected to be due based on taxable income to be reported during the periods in the various jurisdictions in which we conduct business and deferred income taxes based on changes inis not available. Furthermore, the tax effect of temporary differences between the bases of assets and liabilities for financial reporting and tax purposes at the beginning and end of the respective periods. The effective tax rate, calculated by dividing total tax expense by income before income taxes, was 22.7% for the nine months ended September 30, 2017 and 38.4% for the nine months ended September 30, 2016. One item impacting the tax rate for the nine months ended September 30, 2017 was the impairment loss related to non-tax deductible goodwill. Also impacting the tax rate was the implementation of new accounting guidance related to employee share-based compensation accounting. The new guidance now requires that all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement. The Company had a tax related benefit of $2.3 million from share-based compensation awards in the nine months ended September 30, 2017, resulting in an increase in the tax benefit rate for the period on the pre-tax loss. Another item impacting the tax rate is the change in the proportion of losses being generated in the United States, which are benefited at a higher statutory tax rate, as compared to earnings being generated outside the United States in jurisdictions subject to lower tax rates; and the impairment loss related to non-tax deductible goodwill. The effective tax raterecorded can vary from period to period depending on the ~~Company's~~Company’s relative mix of ~~U.S.~~earnings and ~~non-U.S. earnings.~~losses by jurisdiction.

Liquidity and capital resources

Sources and uses of liquidity

AtOur internal sources of liquidity are cash on hand and cash flows from operations, while our primary external sources include trade credit, the Credit Facility and the 2025 Notes. Our primary uses of capital have been for inventory, sales on credit to our customers, maintenance and growth capital expenditures, and debt repayments. We continually monitor other potential capital sources, including equity and debt financing, to meet our investment and target liquidity requirements. Our future success and growth will be highly dependent on our ability to generate positive operating cash flow and access outside sources of capital.

As of September 30, ~~2017,~~2023, we had $134.2 million principal amount of 2025 Notes outstanding and no borrowings outstanding under our revolving Credit Facility. The 2025 Notes mature in August 2025 and, subject to certain exceptions, the Credit Facility matures in September 2026. See Note 6 Debt for further details related to the terms for our 2025 Notes and Credit Facility.

As of September 30, 2023, we had cash and cash equivalents of ~~$156.4~~$37.2 million and ~~total debt~~$154.8 million of ~~$399.3 million.~~availability under the Credit Facility. We ~~believe~~anticipate that ~~cash on hand and cash generated from~~our future working capital requirements for our operations will fluctuate directionally with revenues. Furthermore, availability under the Credit Facility will fluctuate directionally based on the level of our eligible accounts receivable and inventory subject to applicable sublimits. In addition, we continue to expect total 2023 capital expenditures to be ~~sufficient to fund operations, working capital needs, capital expenditure requirements and financing obligations for the foreseeable future.~~

~~We elected to carry back our 2016 U.S. net operating loss to recover taxes paid in earlier periods, and we received a tax refund of approximately $30.9~~less than $10.0 million, ~~in the second quarter of 2017.~~

~~Our total 2017 capital expenditure budget is approximately $30.0 million, which consists~~consisting of, among other items, ~~investments in maintaining certain manufacturing facilities,~~ replacing end of life machinery and ~~equipment, maintaining~~equipment.

We expect our ~~rental fleet of subsea equipment, continuing~~available cash on-hand, cash generated by operations, and estimated availability under the ~~implementation~~Credit Facility to be adequate to fund current operations during the next 12 months. In addition, based on existing market conditions and our expected liquidity needs, among other factors, we may use a portion of our ~~enterprise resource planning solution globally, and general~~cash flows from operations, proceeds from divestitures, securities offerings or other eligible capital expenditures. The budgeted general capital expenditures include our investment in a new production facility in Saudi Arabia. This budget does not include expenditures for potential business acquisitions.

~~Although we do not budget for acquisitions, pursuing growth through acquisitions is a significant part~~to reduce the principal amount of our 2025 Notes outstanding or repurchase shares of our common stock under our repurchase program.

In November 2021, our board of directors approved a program for the repurchase of outstanding shares of our common stock with an aggregate purchase amount of up to $10.0 million. Shares may be repurchased under the program from time to time, in amounts and at prices that the company deems appropriate, subject to market and business ~~strategy. We expanded~~conditions, applicable legal requirements and ~~diversified our product portfolio with the acquisition of one business in~~other considerations. During the first ~~quarter~~nine months of ~~2017. We made one acquisition in the third quarter~~2023, we repurchased approximately 139 thousand shares of our common stock for ~~total cash~~aggregate consideration of approximately ~~$39~~$3.5 million with remaining authorization under this program of $2.4 million. We acquired the remaining interest of our equity method investment from our joint venture partner, which closed subsequent to September 30, 2017. For additional information, see Note 4, Acquisition, and Note 15, Subsequent event. We continue to actively review acquisition opportunities on an ongoing basis. Our ability to make significant additional acquisitions for cash may require us to pursue additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.

Our cash flows for the nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 are presented below (in millions):


	Nine Months Ended September 30,
	2023		2022
Net cash used in operating activities	$	(3.1)	$	(32.1)
Net cash used in investing activities	(4.2)		(2.6)
Net cash provided by (used in) financing activities	(6.9)		9.2
Effect of exchange rate changes on cash	0.3		(1.6)
Net decrease in cash, cash equivalents and restricted cash	$	(13.9)	$	(27.1)

Nine Months Ended September 30,
2017 2016
Net cash provided by (used in) operating activities $ (17.1 ) $ 44.2
Net cash used in investing activities (66.7 ) (12.4 )
Net cash provided by (used in) financing activities (2.9 ) 0.7
Net increase (decrease) in cash and cash equivalents $ (78.0 ) $ 23.3

~~Cash flows provided by (used in)~~Net cash used in operating activities

Net cash used in ~~and provided by~~ operating activities was ~~$17.1 million and $44.2~~$3.1 million for the nine months ended September 30, ~~2017 and 2016, respectively. Cash provided by (used in) operations decreased as a result of sequential increases~~2023 compared to $32.1 million for the nine months ended September 30, 2022. This improvement in ~~investments~~operating cash flow usage is primarily attributable to net decrease in cash used for working capital, inmainly accounts receivable, which used cash of $36.8 million for the ~~first~~ nine months ~~of 2017~~ended September 30, 2023 compared to ~~reductions in working capital in~~used cash of $85.6 million for the ~~same period in 2016. The change in working capital in the first~~ nine months of 2017 is primarily due to increased accounts receivable due to higher revenue; investment in inventory in anticipation of the recovery; offset by changes in accrued liability and prepaid assets, including $30.9 million tax refund received in second quarter of 2017.ended September 30, 2022.

~~Cash flows~~Net cash used in investing activities

Net cash used in investing activities was ~~$66.7 million and $12.4~~$4.2 million for the nine months ended September 30, ~~2017~~2023, including $5.5 million of capital expenditures, partially offset by $1.3 million of proceeds from the sale of property and ~~2016, respectively. The increase~~equipment. Net cash used in investing activities was ~~primarily due to $47.9~~$2.6 million ~~in consideration paid for acquisitions in the first nine months of 2017 compared to $2.7 million consideration paid for an acquisition in the first nine months of 2016. Capital expenditures~~ for the nine months ended September 30, ~~2017 were $19.7~~2022, including $4.8 million ~~as compared to $13.4~~of capital expenditures, partially offset by $2.7 million ~~for~~of proceeds from the comparable prior period. Investment in unconsolidated subsidiary for the nine months ended September 30, 2017 was $1.0 million as compared to no investment for the comparable prior period. Proceeds from salessale of ~~assets for the nine months ended September 30, 2017 was $1.8 million as compared to $3.7 million in the comparable prior period.~~property and equipment.

~~Cash flows~~Net cash provided by (used in) financing activities

Net cash used in financing activities was ~~$2.9~~$6.9 million for the nine months ended September 30, ~~2017,~~2023 compared to ~~net~~$9.2 million of cash provided by financing activities ~~of $0.7 million~~ for the nine months ended September 30, ~~2016.~~2022, respectively. The ~~increase~~change in net cash used in financing activities primarily resulted from ~~cash paid for shares withheld for taxes on~~$6.0 million of repurchases of common stock ~~based compensation of $4.7 million in~~under our share repurchase program and long-term incentive awards during the nine months ended September 30, ~~2017,~~2023 compared to ~~$1.3~~a net $10.7 million inof borrowings on the revolving Credit Facility during the nine months ended September 30, ~~2016.~~2022.

~~Senior Notes Due 2021~~Supplemental Guarantor Financial Information

The ~~Senior Notes bear interest at a rate of 6.250% per annum, payable on April 1 and October 1 of each year, and mature on October 1, 2021. The Senior~~Company’s 2025 Notes are ~~senior unsecured obligations~~ guaranteed ~~on a senior unsecured basis~~ by our domestic subsidiaries which are 100% owned, directly or indirectly, by the Company. The guarantees are full and unconditional, joint and several.

The guarantees of the 2025 Notes are (i) pari passu in right of payment with all existing and future senior indebtedness of such guarantor, including all obligations under our Credit Facility; (ii) secured by certain collateral of such guarantor, subject to permitted liens under the indenture governing the 2025 Notes; (iii) effectively senior to all unsecured indebtedness of that ~~guarantee the Credit Facility and rank junior to, among other indebtedness, the Credit Facility~~guarantor, to the extent of the value of the collateral securing the ~~Credit Facility.~~

~~Credit Facility~~

~~On February 25, 2016, we amended~~2025 Notes (after giving effect to the liens securing our credit facility with Wells Fargo Bank, National Association, as administrative agent, and several financial institutions as lenders (the “Credit Facility”) to reduce lender commitments to $200.0 million. On December 12, 2016, we further amended the Credit Facility ~~(such further amendment,~~and any other senior liens on the ~~“Amended Credit Facility”),~~collateral); and (iv) senior in right of payment to ~~among~~any future subordinated indebtedness of that guarantor.

In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor subsidiaries of the 2025 Notes, the non-guarantor subsidiaries of such notes will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Company or to any guarantors.

The 2025 Notes guarantees shall each be released upon (i) any sale or other ~~things, reduce revolving credit line commitments from $200.0 million to $140.0 million, including up to $25.0 million available for letters~~disposition of ~~credit and up to $10.0 million in swingline loans. Availability under~~all or substantially all of the ~~Amended Credit Facility was subject~~assets of such guarantor (by merger, consolidation or otherwise) to a ~~borrowing base calculated by reference~~person that is not (either before or after giving effect to ~~eligible accounts receivable in~~such transaction) the ~~United States, United Kingdom~~Company or a subsidiary, if the sale or other disposition does not violate the applicable provisions of the indenture governing such notes; (ii) any sale, exchange or transfer (by merger, consolidation or otherwise) of the equity interests of such guarantor after which the applicable guarantor is no longer a subsidiary, which sale, exchange or transfer does not violate the applicable provisions of the indenture governing such notes; (iii) legal or covenant defeasance or satisfaction and ~~Canada, eligible inventory in~~discharge of the ~~United States,~~indenture governing such notes; or (iv) dissolution of such guarantor, provided no default or event of default has occurred that is continuing.

The obligations of each guarantor of the 2025 Notes under its guarantee will be limited to the maximum amount as will, after giving effect to all other contingent and ~~cash on hand.~~

Asfixed liabilities of ~~September 30, 2017 and December 31, 2016, we had no borrowings outstanding~~such guarantor (including, without limitation, any guarantees under the Credit ~~Facility. As~~Facility) and any collections from or payments made by or on behalf of ~~September 30, 2017, we had $7.3 million~~any other guarantor in respect of ~~outstanding letters~~the obligations of ~~credit. At September 30, 2017, we had~~such other guarantor under its guarantee or pursuant to its contribution

obligations under the ~~capacity to borrow an additional $113.3 million~~applicable indenture, result in the obligations of such guarantor under its guarantee not constituting a fraudulent conveyance, fraudulent preference or fraudulent transfer or otherwise reviewable transaction under applicable law. Nonetheless, in the event of the bankruptcy, insolvency or financial difficulty of a guarantor, such guarantor’s obligations under its guarantee may be subject to ~~certain limitations in~~review and avoidance under applicable fraudulent conveyance, fraudulent preference, fraudulent transfer and insolvency laws.

We are presenting the ~~Credit Facility. Weighted average interest rates under the Credit Facility~~following summarized financial information for ~~the nine months ended September 30, 2017 and year ended~~December 31, 2016 were approximately 3.00%. As of September 30, 2017, there had been no changes to the financial covenants described in Item 8 of the Annual Report and we were in compliance with all financial covenants.

On October 30, 2017, we further amended and restated the Credit Facility (such amended and restated credit agreement, the “2017 Credit Facility”) to, among other things, increase revolving credit commitments from $140.0 million to $300.0 million, including up to $30.0 million available to certain Canadian subsidiaries of the Company for loans in United States or Canadian dollars, $25.0 million available for letters of credit issued for the account of the Company and ~~certain~~the subsidiary guarantors (collectively referred to as the “Obligated Group”) pursuant to Rule 13-01 of ~~its domestic~~Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. For purposes of the following summarized financial information, transactions between the Company and the subsidiary guarantors, presented on a combined basis, have been eliminated and information for the non-guarantor subsidiaries have been excluded. Amounts due to the non-guarantor subsidiaries and ~~$3.0 million available for letters of credit issued~~other related parties, as applicable, have been separately presented within the summarized financial information below.

Summarized financial information for the ~~account of Canadian subsidiaries of~~year-to-date interim period and the Company. Availability under the 2017 Credit Facility is subject to a borrowing base calculated by reference to eligible accounts receivable in the United States, Canada and certain other jurisdictions (subject to a cap) and eligible inventory in the United States and Canada. Our borrowing capacity under the 2017 Credit Facility could be reduced or eliminated, depending on future receivables and fluctuations in our inventory. The 2017 Credit Facility matures in July 2021, but if our outstanding Notes due October 2021 are refinanced or replaced with indebtedness maturing in or after February 2023, the final maturity of the 2017 Credit Facility will automatically extend to October 2022.most recent annual period was as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Summarized Statements of Operations	2023		2022		2023		2022
Revenue	$	133,202	$	145,028	$	424,210	$	398,412
Cost of sales	100,361		108,175		324,421		299,714
Operating income	6,034		19,013		14,910		39,096
Net income (loss)	7,969		16,477		(2,096)		16,542

If excess availability under the 2017 Credit Facility falls below the greater of 10.0% of the line cap and $20.0 million, we will be required to maintain a fixed charge coverage ratio of at least 1.00:1.00 as of the end of each fiscal quarter until availability under the 2017 Credit Facility exceeds such thresholds for at least 60 consecutive days.

~~Off-balance sheet arrangements~~

~~As of September 30, 2017, we had no off-balance sheet instruments or financial arrangements, other than operating leases and letters of credit entered into in the ordinary course of business.~~

~~Contractual obligations~~

Except for net repayments under the Amended Credit Facility, as of September 30, 2017, there have been no material changes in our contractual obligations and commitments disclosed in the Annual Report.


	September 30, 2023		December 31, 2022
Summarized Balance Sheet
Current assets	$	393,783	$	378,812
Non-current assets	258,480		279,389

Current liabilities	$	157,492	$	175,155
Payables to non-guarantor subsidiaries	174,264		132,839
Non-current liabilities	179,358		293,150

Critical accounting policies and estimates

There have been no material changes in our critical accounting policies and procedures during the nine months ended September 30, ~~2017.~~2023. For a detailed discussion of our critical accounting policies and estimates, refer to our ~~2016~~2022 Annual Report on Form 10-K.

For recent accounting pronouncements, refer to Note 2 Recent ~~accounting pronouncements in Part I, Item 1,~~ ~~Financial Statements.~~Accounting Pronouncements.

Item 3. Quantitative and qualitative disclosures about market risk

We are currently exposed to market risk from changes in foreign currency and changes in interest rates. From time to time, we may enter into derivative financial instrument transactions to manage or reduce our market risk, but we do not enter into derivative transactionsNot required under Regulation S-K for ~~speculative purposes.~~“smaller reporting companies.”

There have been no significant changes to our market risk since December 31, 2016. For a discussion of our exposure to market risk, refer to Part II, Item 7(a), “Quantitative and Qualitative Disclosures About Market Risk,” in our 2016 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures ~~(as~~as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our ~~management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our~~ disclosure controls and procedures ~~pursuant to Exchange Act Rule 13a-15(b) as of~~ ~~September 30, 2017. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of~~ ~~September 30, 2017~~have been designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Our disclosure controls and procedures include controls and procedures designed to ~~ensure~~provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of September 30, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023.

Changes in Internal Control over Financial Reporting

There ~~were~~have been no changes in our internal control over financial reporting during the quarter ended September 30, ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

~~Refer~~Information related to Item 1. Legal Proceedings is included in Note 11, 10 Commitments and Contingencies ~~in Part I, Item 1,~~ ~~Financial Statements~~, ~~for a discussion of our legal proceedings,~~ which is incorporated ~~into this Item 1 of Part II~~herein by reference.

Item 1A. Risk Factors

For additional information about our risk factors, see ~~"Risk Factors"~~“Risk Factors” in Item 1A of our 2022 Annual ~~Report.~~Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Share repurchases~~

~~Our Board~~In November 2021, our board of ~~Directors authorized on October 27, 2014,~~directors approved a ~~share repurchase~~ program for the repurchase of outstanding shares of our ~~Common Stock having~~common stock with an aggregate purchase ~~price~~amount of up to ~~$150~~$10.0 million. Shares may be repurchased under the program from time to time, in amounts and at prices that the Company deems appropriate, subject to market and business conditions, applicable legal requirements and other considerations. The program may be executed using open market purchases pursuant to Rule 10b-18 under the Exchange Act, in privately negotiated agreements, or by way of issuer tender offers, Rule 10b5-1 plans or other transactions. From the inception of the program through September 30, 2023, we have repurchased approximately 298 thousand shares of our common stock for aggregate consideration of approximately $7.6 million. Remaining authorization under this program is $2.4 million.

~~30,023~~No shares were purchased during the three months ended September 30, 2017 from employees in connection with the settlement of income tax and related benefit withholding obligations arising from the vesting of restricted stock grants. The shares of common stock purchased and placed in treasury during the three months ended September 30, 2017 are summarized in the table below.2023.

Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plan or programs
Maximum value of shares that may yet be purchased under the plan or program
(in thousands)
July 1, 2017 - July 31, 2017 30,023
$ 15.54
—
$ 49,752
August 1, 2017 - August 31, 2017 —
$ —
—
$ 49,752
September 1, 2017 - September 30, 2017 —
$ —
—
$ 49,752
Total 30,023
$ 15.54
—

~~Acquisition of Innovative Valve Components~~

On January 9, 2017, we acquired all of the issued and outstanding partnership interests of Innovative Valve Components. As partial consideration for the acquisition we issued 196,249 shares of our common stock. The issuance of our common stock was exempt from registration under the Securities Act pursuant to Rule 4(a)(2) thereof and the safe harbor provided by Rule 506 of Regulation D promulgated thereunder.

~~Acquisition of Global Tubing, LLC~~

On October 2, 2017, we acquired the remaining membership interests in Global Tubing from its joint venture partner and members of management. As partial consideration for the acquisition we issued 11,488,208 shares of our common stock. The issuance of our common stock in connection with the acquisitions was exempt from registration under the Securities Act pursuant to Rule 4(a)(2) thereof and the safe harbor provided by Rule 506 of Regulation D promulgated thereunder.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

~~None.~~Not applicable.

Item 5. Other Information

~~None.~~

None

~~Table of Contents~~

Item 6. Exhibits


Exhibit
Number				DESCRIPTION

10.1**			—	Form of Cash Award (Employees)


~~Exhibit~~
~~Number~~22.1*				~~DESCRIPTION~~

10.1*	—	~~Amendment No. 2 to the Registration Rights Agreement, dated August 25, 2017, by and among the Company and the stockholders party thereto (incorporated herein by reference to Exhibit 10.2 on~~Subsidiary guarantors of the Company's ~~Current Report on Form 8-K, filed on August 28, 2017).~~Convertible Secured Notes due 2025.

10.2*		Purchase and Sale Agreement, dated August 25, 2017, by and among Forum Energy Technologies, Inc., Q-GT (V) Investment Partners, LLC and, for the purposes of Sections 6.3, 6.10, 6.11 and 6.12, Global Tubing, LLC (incorporated herein by reference to Exhibit10.1 on the Company's Current Report on Form 8-K, filed on August 28, 2017).

31.1**			—	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**			—	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1***			—	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2***			—	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**			—	Inline XBRL Instance ~~Document.~~Document

101.SCH**			—	Inline XBRL Taxonomy Extension Schema Document.

101.CAL**			—	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB**			—	Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE**			—	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF**			—	Inline XBRL Taxonomy Extension Definition Linkbase Document.

104**			—	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Previously filed.

**Filed herewith.

***Furnished herewith.

#Identifies management contracts and compensatory plans or arrangements.

~~Table of Contents~~

SIGNATURES

As required by Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has authorized this report to be signed on its behalf by the undersigned authorized individuals.

FORUM ENERGY TECHNOLOGIES, INC.

Date:

November ~~1, 2017~~3, 2023

By:

/s/ ~~James W. Harris~~D. Lyle Williams, Jr.

~~James W. Harris~~D. Lyle Williams, Jr.

Executive Vice President and Chief Financial Officer

(As Duly Authorized Officer and Principal Financial Officer)

By:

/s/ ~~Tylar K. Schmitt~~Katherine C. Keller

~~Tylar K. Schmitt~~Katherine C. Keller

Vice President and ~~Chief~~Principal Accounting Officer

(As Duly Authorized Officer and Principal Accounting Officer)



PART I - FINANCIAL INFORMATION			34
Item 1. Financial Statements (Unaudited)			34
Condensed consolidated statements of comprehensive ~~income (loss)~~loss			34
Condensed consolidated balance sheets			45
Condensed consolidated statements of cash flows			56
Condensed consolidated statements of changes in stockholders’ equity			7
Notes to condensed consolidated financial statements			69
Item 2. Management's discussion and analysis of financial condition and results of operations			2418
Item 3. Quantitative and qualitative disclosures about market risk			3628
Item 4. Controls and procedures			3629
PART II - OTHER INFORMATION			3630
Item 1. Legal proceedings			3630
Item 1A. Risk factors			3630
Item 2. Unregistered sales of equity securities and use of proceeds			3630
Item 3. Defaults Upon Senior Securities			3730
Item 4. Mine Safety Disclosures			3730
Item 5. Other Information			3730
Item 6. Exhibits			3831
SIGNATURES			3932



o☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



(in thousands, except share information)	September 30, 2017			December 31, 2016
Assets
Current assets
Cash and cash equivalents	$	156,392		$	234,422
Accounts receivable—trade, net	154,376			105,268
Inventories, net	394,103			338,583
Income tax receivable	1,872			32,801
Prepaid expenses and other current assets	27,705			29,443
Costs and estimated profits in excess of billings	9,395			9,199
Total current assets	743,843			749,716
Property and equipment, net of accumulated depreciation	149,016			152,212
Deferred financing costs, net	657			1,112
Intangible assets	224,565			216,418
Goodwill	619,632			652,743
Investment in unconsolidated subsidiary	64,499			59,140
Deferred income taxes, net	9,719			851
Other long-term assets	2,924			3,000
Total assets	$	1,814,855		$	1,835,192
Liabilities and equity
Current liabilities
Current portion of long-term debt	$	1,133		$	124
Accounts payable—trade	123,148			73,775
Accrued liabilities	64,718			55,604
Deferred revenue	8,506			8,338
Billings in excess of costs and profits recognized	1,530			4,004
Total current liabilities	199,035			141,845
Long-term debt, net of current portion	398,145			396,747
Deferred income taxes, net	4,175			26,185
Other long-term liabilities	34,858			34,654
Total liabilities	636,213			599,431
Commitments and contingencies
Equity
Common stock, $0.01 par value, 296,000,000 shares authorized, 104,789,172 and 103,682,128 shares issued	1,048			1,037
Additional paid-in capital	1,016,458			998,169
Treasury stock at cost, 8,190,362 and 8,174,963 shares	(134,293		)	(133,941		)
Retained earnings	389,705			498,174
Accumulated other comprehensive loss	(94,276		)	(128,237		)
Total stockholders’ equity	1,178,642			1,235,202
Noncontrolling interest in subsidiary	—			559
Total equity	1,178,642			1,235,761
Total liabilities and equity	$	1,814,855		$	1,835,192



	Nine Months Ended September 30,
(in thousands, except share information)	2017			2016
Cash flows from operating activities
Net loss	$	(108,469	)	$	(69,445	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation expense	25,212			27,141
Amortization of intangible assets	20,030			19,709
Goodwill and intangible asset impairment	68,642			—
Share-based compensation expense	15,219			15,521
Inventory write down	1,376			24,479
Deferred income taxes	(31,041		)	(12,988		)
Deferred loan cost written off	—			2,588
Earnings from unconsolidated subsidiary, net of distributions	(4,317		)	(804		)
Other	4,548			4,137
Changes in operating assets and liabilities
Accounts receivable—trade	(43,167		)	35,673
Inventories	(44,288		)	44,538
Prepaid expenses and other current assets	1,684			7,113
Income tax receivable	30,929			(32,801		)
Accounts payable, deferred revenue and other accrued liabilities	49,126			(15,130		)
Costs and estimated profits in excess of billings, net	(2,567		)	(5,511		)
Net cash provided by (used in) operating activities	$	(17,083	)	$	44,220
Cash flows from investing activities
Acquisition of businesses, net of cash acquired	(47,890		)	(2,700		)
Capital expenditures for property and equipment	(19,656		)	(13,438		)
Proceeds from sale of business, property and equipment	1,849			3,710
Investment in unconsolidated subsidiary	$	(1,041	)	$	—
Net cash used in investing activities	$	(66,738	)	$	(12,428	)
Cash flows from financing activities
Repayment of debt	(1,140		)	(254		)
Cash paid for net treasury shares withheld	(4,667		)	(1,273		)
Proceeds from stock issuance	2,896			2,742
Deferred financing costs	—			(513		)
Net cash provided by (used in) financing activities	$	(2,911	)	$	702
Effect of exchange rate changes on cash	8,702			(9,209		)
Net increase (decrease) in cash and cash equivalents	(78,030		)	23,285
Cash and cash equivalents
Beginning of period	234,422			109,249
End of period	$	156,392		$	132,534
Noncash investing activities
Acquisition via issuance of stock	$	4,500		$	—



	2017 Acquisitions
Current assets, net of cash acquired	$	3,767
Property and equipment	96
Intangible assets (primarily developed technologies and customer relationships)	17,211
Tax-deductible goodwill	16,711
Non-tax deductible goodwill	2,623
Current liabilities	(1,014		)
Long-term liabilities	—
Net assets acquired	$	39,394



	Drilling & Subsea			Completions		Production & Infrastructure		Total
Goodwill Balance at December 31, 2016	$	307,806		$	327,293	$	17,644	$	652,743
Acquisitions, net of dispositions	—			19,334		1,311		20,645
Impairment	(68,004		)	—		—		(68,004		)
Impact of non-U.S. local currency translation	10,288			3,710		250		14,248
Goodwill Balance at September 30, 2017	$	250,090		$	350,337	$	19,205	$	619,632



	September 30, 2017
	Gross carrying amount		Accumulated amortization			Net amortizable intangibles		Amortization period (in years)
Customer relationships	$	280,116	$	(131,030	)	$	149,086	4-15
Patents and technology	52,260		(14,797		)	37,463		5-17
Non-compete agreements	6,621		(5,950		)	671		3-6
Trade names	46,813		(20,836		)	25,977		10-15
Distributor relationships	22,160		(16,022		)	6,138		8-15
Trademark	5,230		—			5,230		Indefinite
Intangible Assets Total	$	413,200	$	(188,635	)	$	224,565



	September 30, 2017			December 31, 2016
6.25% Senior Notes due October 2021	$	400,000		$	400,000
Unamortized debt premium	1,684			1,989
Debt issuance cost	(4,497		)	(5,324		)
Senior secured revolving credit facility	—			—
Other debt	2,091			206
Total debt	399,278			396,871
Less: current maturities	(1,133		)	(124		)
Long-term debt	$	398,145		$	396,747



Condensed consolidating statements of comprehensive income (loss)

	Three months ended September 30, 2017
	FET (Parent)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
							(in thousands)
Net sales	$	—		$	171,031		$	43,121		$	(15,443	)	$	198,709
Cost of sales	—			133,503			32,877			(15,230		)	151,150
Gross profit	—			37,528			10,244			(213		)	47,559
Operating expenses
Selling, general and administrative expenses	—			51,127			12,064			—			63,191
Transaction expenses	—			882			—			—			882
Goodwill and intangible asset impairment	—			638			—			—			638
Loss on sale of assets and other	—			91			37			—			128
Total operating expenses	—			52,738			12,101			—			64,839
Earnings from equity investment	—			3,361			—			—			3,361
Equity earnings from affiliate, net of tax	(10,467		)	(3,959		)	—			14,426			—
Operating income (loss)	(10,467		)	(15,808		)	(1,857		)	14,213			(13,919		)
Other expense (income)
Interest expense (income)	6,710			(188		)	(156		)	—			6,366
Deferred loan costs written off	—			—			—			—			—
Foreign exchange (gains) losses and other, net	—			(110		)	2,470			—			2,360
Total other expense (income)	6,710			(298		)	2,314			—			8,726
Income (loss) before income taxes	(17,177		)	(15,510		)	(4,171		)	14,213			(22,645		)
Benefit for income tax expense	(2,349		)	(5,043		)	(425		)	—			(7,817		)
Net income (loss)	(14,828		)	(10,467		)	(3,746		)	14,213			(14,828		)
Less: Income (loss) attributable to noncontrolling interest	—			—			—			—			—
Net income (loss) attributable to common stockholders	(14,828		)	(10,467		)	(3,746		)	14,213			(14,828		)

Other comprehensive income (loss), net of tax:
Net income (loss)	(14,828		)	(10,467		)	(3,746		)	14,213			(14,828		)
Change in foreign currency translation, net of tax of $0	11,547			11,547			11,547			(23,094		)	11,547
Change in pension liability	(36		)	(36		)	(36		)	72			(36		)
Comprehensive income (loss)	(3,317		)	1,044			7,765			(8,809		)	(3,317		)
Less: comprehensive (income) loss attributable to noncontrolling interests	—			—			—			—			—
Comprehensive income (loss) attributable to common stockholders	$	(3,317	)	$	1,044		$	7,765		$	(8,809	)	$	(3,317	)



Condensed consolidating statements of comprehensive income (loss)

	Three months ended September 30, 2016
	FET (Parent)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
							(in thousands)
Net sales	$	—		$	101,357		$	44,869		$	(7,958	)	$	138,268
Cost of sales	—			81,250			36,767			(9,033		)	108,984
Gross profit	—			20,107			8,102			1,075			29,284
Operating expenses
Selling, general and administrative expenses	—			42,569			10,793			—			53,362
Transaction Expense	—			306			35			—			341
Loss (gain) on sale of assets and other	—			2,130			87			—			2,217
Total operating expenses	—			45,005			10,915			—			55,920
Earnings from equity investment	—			414			—			—			414
Equity earnings from affiliates, net of tax	(13,579		)	1,620			—			11,959			—
Operating income (loss)	(13,579		)	(22,864		)	(2,813		)	13,034			(26,222		)
Other expense (income)
Interest expense (income)	6,785			(84		)	45			—			6,746
Foreign exchange gains and other, net	—			(19		)	(3,133		)	—			(3,152		)
Total other expense (income)	6,785			(103		)	(3,088		)	—			3,594
Income before income taxes	(20,364		)	(22,761		)	275			13,034			(29,816		)
Provision for income tax expense (benefit)	(2,375		)	(9,182		)	(264		)	—			(11,821		)
Net income (loss)	(17,989		)	(13,579		)	539			13,034			(17,995		)
Less: Income (loss) attributable to noncontrolling interest	—			—			(6		)	—			(6		)
Net income (loss) attributable to common stockholders	(17,989		)	(13,579		)	545			13,034			(17,989		)

Other comprehensive income (loss), net of tax:
Net income (loss)	(17,989		)	(13,579		)	539			13,034			(17,995		)
Change in foreign currency translation, net of tax of $0	(6,243		)	(6,243		)	(6,243		)	12,486			(6,243		)
Change in pension liability	(14		)	(14		)	(14		)	28			(14		)
Comprehensive income (loss)	(24,246		)	(19,836		)	(5,718		)	25,548			(24,252		)
Less: comprehensive (income) loss attributable to noncontrolling interests	—			—			(27		)	—			(27		)
Comprehensive income (loss) attributable to common stockholders	$	(24,246	)	$	(19,836	)	$	(5,745	)	$	25,548		$	(24,279	)



Condensed consolidating statements of comprehensive income (loss)

	Nine months ended September 30, 2017
	FET (Parent)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Revenue	$	—		$	486,683		$	133,798		$	(49,561	)	$	570,920
Cost of sales	—			375,990			108,390			(49,253		)	435,127
Gross profit	—			110,693			25,408			(308		)	135,793
Operating expenses
Selling, general and administrative expenses	—			149,030			36,730			—			185,760
Transaction expenses	—			1,644			111			—			1,755
Goodwill and intangible asset impairment	—			32,881			35,761			—			68,642
Loss on sale of assets and other	—			1,433			84			—			1,517
Total operating expenses	—			184,988			72,686			—			257,674
Earnings from equity investment	—			7,391			—			—			7,391
Equity earnings from affiliates, net of tax	(95,415		)	(48,535		)	—			143,950			—
Operating income (loss)	(95,415		)	(115,439		)	(47,278		)	143,642			(114,490		)
Other expense (income)
Interest expense (income)	20,083			(374		)	(378		)	—			19,331
Foreign exchange (gains) losses and other, net	—			(297		)	6,805			—			6,508
Total other expense (income)	20,083			(671		)	6,427			—			25,839
Income (loss) before income taxes	(115,498		)	(114,768		)	(53,705		)	143,642			(140,329		)
Provision (benefit) for income tax expense	(7,029		)	(19,353		)	(5,478		)	—			(31,860		)
Net income (loss)	(108,469		)	(95,415		)	(48,227		)	143,642			(108,469		)
Less: Income (loss) attributable to noncontrolling interest	—			—			—			—			—
Net income (loss) attributable to common stockholders	(108,469		)	(95,415		)	(48,227		)	143,642			(108,469		)

Other comprehensive income (loss), net of tax:
Net income (loss)	(108,469		)	(95,415		)	(48,227		)	143,642			(108,469		)
Change in foreign currency translation, net of tax of $0	34,094			34,094			34,094			(68,188		)	34,094
Change in pension liability	(133		)	(133		)	(133		)	266			(133		)
Comprehensive income (loss)	(74,508		)	(61,454		)	(14,266		)	75,720			(74,508		)
Less: comprehensive (income) loss attributable to noncontrolling interests	—			—			—			—			—
Comprehensive income (loss) attributable to common stockholders	$	(74,508	)	$	(61,454	)	$	(14,266	)	$	75,720		$	(74,508	)


(281)			949-2500



Condensed consolidating statements of comprehensive income (loss)

	Nine Months Ended September 30, 2016
	FET (Parent)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Revenue	$	—		$	321,734		$	151,383		$	(32,685	)	$	440,432
Cost of sales	—			281,666			123,631			(33,987		)	371,310
Gross profit	—			40,068			27,752			1,302			69,122
Operating expenses
Selling, general and administrative expenses	—			137,099			34,539			—			171,638
Transaction expenses	—			536			35			—			571
Loss (gain) on sale of assets and other	—			2,310			(77		)	—			2,233
Total operating expenses	—			139,945			34,497			—			174,442
Earnings from equity investment	—			1,207			—			—			1,207
Equity earnings from affiliates, net of tax	(54,323		)	7,765			—			46,558			—
Operating income (loss)	(54,323		)	(90,905		)	(6,745		)	47,860			(104,113		)
Other expense (income)
Interest expense (income)	20,713			(97		)	48			—			20,664
Deferred loan costs written off	2,588			—			—			—			2,588
Foreign exchange gains and other, net	—			(553		)	(13,993		)	—			(14,546		)
Total other expense (income)	23,301			(650		)	(13,945		)	—			8,706
Income (loss) before income taxes	(77,624		)	(90,255		)	7,200			47,860			(112,819		)
Provision (benefit) for income tax expense	(8,155		)	(35,932		)	713			—			(43,374		)
Net income (loss)	(69,469		)	(54,323		)	6,487			47,860			(69,445		)
Less: Income (loss) attributable to noncontrolling interest	—			—			24			—			24
Net income (loss) attributable to common stockholders	(69,469		)	(54,323		)	6,463			47,860			(69,469		)

Other comprehensive income (loss), net of tax:
Net income (loss)	(69,469		)	(54,323		)	6,487			47,860			(69,445		)
Change in foreign currency translation, net of tax of $0	(25,618		)	(25,618		)	(25,618		)	51,236			(25,618		)
Change in pension liability	(33		)	(33		)	(33		)	66			(33		)
Comprehensive income (loss)	(95,120		)	(79,974		)	(19,164		)	99,162			(95,096		)
Less: comprehensive (income) loss attributable to noncontrolling interests	—			—			(156		)	—			(156		)
Comprehensive income (loss) attributable to common stockholders	$	(95,120	)	$	(79,974	)	$	(19,320	)	$	99,162		$	(95,252	)



Condensed consolidating balance sheets

	September 30, 2017
	FET (Parent)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
					(in thousands)
Assets
Current assets
Cash and cash equivalents	$	413	$	86,552	$	69,427	$	—		$	156,392
Accounts receivable—trade, net	—		121,199		33,177		—			154,376
Inventories	—		324,444		78,407		(8,748		)	394,103
Income tax receivable	—		1,872		—		—			1,872
Cost and profits in excess of billings	—		8,515		880		—			9,395
Other current assets	—		16,251		11,454		—			27,705
Total current assets	413		558,833		193,345		(8,748		)	743,843
Property and equipment, net of accumulated depreciation	—		122,196		26,820		—			149,016
Deferred financing costs, net	657		—		—		—			657
Deferred income taxes, net	—		1,279		8,440		—			9,719
Intangibles	—		171,865		52,700		—			224,565
Goodwill	—		467,337		152,295		—			619,632
Investment in unconsolidated subsidiary	—		64,499		—		—			64,499
Investment in affiliates	1,020,649		443,255		—		(1,463,904		)	—
Long-term advances to affiliates	566,987		—		76,105		(643,092		)	—
Other long-term assets	—		2,260		664		—			2,924
Total assets	$	1,588,706	$	1,831,524	$	510,369	$	(2,115,744	)	$	1,814,855
Liabilities and equity
Current liabilities
Current portion of long-term debt	$	—	$	1,023	$	110	$	—		$	1,133
Accounts payable—trade	—		104,244		18,904		—			123,148
Accrued liabilities	12,877		41,691		10,150		—			64,718
Deferred revenue	—		3,889		4,617		—			8,506
Billings in excess of costs and profits	—		1,018		512		—			1,530
Total current liabilities	12,877		151,865		34,293		—			199,035
Long-term debt, net of current portion	397,187		949		9		—			398,145
Long-term payables to affiliates	—		643,092		—		(643,092		)	—
Deferred income taxes, net	—		—		4,175		—			4,175
Other long-term liabilities	—		14,969		19,889		—			34,858
Total liabilities	410,064		810,875		58,366		(643,092		)	636,213

Total stockholder's equity	1,178,642		1,020,649		452,003		(1,472,652		)	1,178,642
Noncontrolling interest in subsidiary	—		—		—		—			—
Equity	1,178,642		1,020,649		452,003		(1,472,652		)	1,178,642
Total liabilities and equity	$	1,588,706	$	1,831,524	$	510,369	$	(2,115,744	)	$	1,814,855



	Three months ended September 30,						Favorable / (Unfavorable)
	2017			2016			$			%
(in thousands of dollars, except per share information)
Revenue:
Drilling & Subsea	$	54,700		$	50,565		$	4,135		8.2	%
Completions	60,037			34,393			25,644			74.6	%
Production & Infrastructure	84,979			54,030			30,949			57.3	%
Eliminations	(1,007		)	(720		)	(287		)	*
Total revenue	$	198,709		$	138,268		$	60,441		43.7	%
Operating income (loss):
Drilling & Subsea	$	(8,872	)	$	(10,869	)	$	1,997		18.4	%
Operating income margin %	(16.2		)%	(21.5		)%
Completions	1,614			(5,676		)	7,290			128.4	%
Operating income margin %	2.7		%	(16.5		)%
Production & Infrastructure	4,258			(713		)	4,971			697.2	%
Operating income margin %	5.0		%	(1.3		)%
Corporate	(9,271		)	(6,406		)	(2,865		)	(44.7	)%
Total segment operating loss	$	(12,271	)	$	(23,664	)	$	11,393		48.1	%
Operating income margin %	(6.2		)%	(17.1		)%
Transaction expenses	882			341			(541		)	*
Goodwill and intangible asset impairment	638			—			(638		)	*
Loss on sale of assets and other	128			2,217			2,089			*
Operating loss	(13,919		)	(26,222		)	12,303			46.9	%
Interest expense, net	6,366			6,746			380			5.6	%
Foreign exchange losses (gains) and other, net	2,360			(3,152		)	(5,512		)	*
Other (income) expense, net	8,726			3,594			(5,132		)	*
Loss before income taxes	(22,645		)	(29,816		)	7,171			24.1	%
Income tax benefit	(7,817		)	(11,821		)	(4,004		)	(33.9	)%
Net loss	(14,828		)	(17,995		)	3,167			17.6	%
Less: Income attributable to non-controlling interest	—			(6		)	6			*
Loss attributable to common stockholders	$	(14,828	)	$	(17,989	)	$	3,161		17.6	%

Weighted average shares outstanding
Basic	96,275			90,860
Diluted	96,275			90,860
Loss per share
Basic	$	(0.15	)	$	(0.20	)
Diluted	$	(0.15	)	$	(0.20	)
* not meaningful



	Nine months ended September 30						Favorable / (Unfavorable)
	2017			2016			$			%
(in thousands of dollars, except per share information)
Revenue:
Drilling & Subsea	$	180,607		$	170,120		$	10,487		6.2	%
Completions	156,938			95,920			61,018			63.6	%
Production & Infrastructure	235,676			176,364			59,312			33.6	%
Eliminations	(2,301		)	(1,972		)	(329		)	*
Total revenue	$	570,920		$	440,432		$	130,488		29.6	%
Operating income (loss):
Drilling & Subsea	$	(23,580	)	$	(41,545	)	$	17,965		43.2	%
Operating income margin %	(13.1		)%	(24.4		)%
Completions	(1,223		)	(39,838		)	38,615			96.9	%
Operating income margin %	(0.8		)%	(41.5		)%
Production & Infrastructure	7,124			494			6,630			*
Operating income margin %	3.0		%	0.3		%
Corporate	(24,897		)	(20,420		)	(4,477		)	(21.9	)%
Total segment operating loss	$	(42,576	)	$	(101,309	)	$	58,733		58.0	%
Operating income margin %	(7.5		)%	(23.0		)%
Transaction expenses	1,755			571			(1,184		)	*
Goodwill and intangible asset impairment	68,642			—			(68,642		)	*
Loss on sale of assets and other	1,517			2,233			716			*
Operating loss	(114,490		)	(104,113		)	(10,377		)	(10.0	)%
Interest expense, net	19,331			20,664			1,333			6.5	%
Deferred loan costs written off	—			2,588			2,588			*
Foreign exchange losses (gains) and other, net	6,508			(14,546		)	(21,054		)	*
Other expense, net	25,839			8,706			(17,133		)	*
Loss before income taxes	(140,329		)	(112,819		)	(27,510		)	(24.4	)%
Income tax benefit	(31,860		)	(43,374		)	(11,514		)	(26.5	)%
Net loss	(108,469		)	(69,445		)	(39,024		)	(56.2	)%
Less: Income attributable to non-controlling interest	—			24			(24		)	*
Loss attributable to common stockholders	$	(108,469	)	$	(69,469	)	$	(39,000	)	(56.1	)%

Weighted average shares outstanding
Basic	96,103			90,682
Diluted	96,103			90,682
Loss per share
Basic	$	(1.13	)	$	(0.77	)
Diluted	$	(1.13	)	$	(0.77	)
* not meaningful



Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plan or programs	Maximum value of shares that may yet be purchased under the plan or program (in thousands)
July 1, 2017 - July 31, 2017	30,023	$	15.54	—	$	49,752
August 1, 2017 - August 31, 2017	—	$	—	—	$	49,752
September 1, 2017 - September 30, 2017	—	$	—	—	$	49,752
Total	30,023	$	15.54	—