UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
___________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 20222023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 001-35504
FORUM ENERGY TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware61-1488595
(State or other jurisdiction of(I.R.S. Employer Identification No.)
incorporation or organization)
10344 Sam Houston Park Drive Suite 300HoustonTexas77064
(Address of Principal Executive Offices)(Zip Code)
(281)949-2500
(Registrant’s telephone number, including area code)
______________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockFETNew 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 every Interactive Data File required to be submitted 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 such 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 filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
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 ☐ No þ
As of May 2, 2022April 28, 2023, there were 5,720,95710,149,539 common shares outstanding.
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Table of Contents

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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements

Forum Energy Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive LossIncome (Loss)
(Unaudited)
Three Months Ended March 31, Three Months Ended March 31,
(in thousands, except per share information)(in thousands, except per share information)20222021(in thousands, except per share information)20232022
RevenueRevenue$155,174 $114,517 Revenue$188,957 $155,174 
Cost of salesCost of sales116,555 88,332 Cost of sales136,855 116,555 
Gross profitGross profit38,619 26,185 Gross profit52,102 38,619 
Operating expensesOperating expensesOperating expenses
Selling, general and administrative expensesSelling, general and administrative expenses44,305 41,474 Selling, general and administrative expenses45,511 44,305 
Loss (gain) on disposal of assets and otherLoss (gain) on disposal of assets and other22 (909)Loss (gain) on disposal of assets and other(260)22 
Total operating expensesTotal operating expenses44,327 40,565 Total operating expenses45,251 44,327 
Operating loss(5,708)(14,380)
Operating income (loss)Operating income (loss)6,851 (5,708)
Other expense (income)Other expense (income)Other expense (income)
Interest expenseInterest expense7,624 9,162 Interest expense4,549 7,624 
Foreign exchange and other losses (gains), netForeign exchange and other losses (gains), net(5,986)3,470 Foreign exchange and other losses (gains), net2,972 (5,986)
Loss on extinguishment of debt— 933 
Total other expenseTotal other expense1,638 13,565 Total other expense7,521 1,638 
Loss before income taxesLoss before income taxes(7,346)(27,945)Loss before income taxes(670)(7,346)
Income tax expenseIncome tax expense1,853 1,718 Income tax expense2,816 1,853 
Net lossNet loss(9,199)(29,663)Net loss$(3,486)$(9,199)
Weighted average shares outstandingWeighted average shares outstandingWeighted average shares outstanding
BasicBasic5,683 5,613 Basic10,179 5,683 
DilutedDiluted5,683 5,613 Diluted10,179 5,683 
Loss per shareLoss per shareLoss per share
BasicBasic$(1.62)$(5.28)Basic$(0.34)$(1.62)
DilutedDiluted(1.62)(5.28)Diluted$(0.34)$(1.62)
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss), net of tax of $0:Other comprehensive income (loss), net of tax of $0:
Net lossNet loss(9,199)(29,663)Net loss$(3,486)$(9,199)
Change in foreign currency translation, net of tax of $0(6,992)3,152 
Change in foreign currency translationChange in foreign currency translation4,158 (6,992)
Gain on pension liabilityGain on pension liability30 77 Gain on pension liability15 30 
Comprehensive loss$(16,161)$(26,434)
Comprehensive income (loss)Comprehensive income (loss)$687 $(16,161)
The accompanying notes are an integral part of these condensed consolidated financial statements.

3


Forum Energy Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share information)(in thousands, except share information)March 31, 2022December 31, 2021(in thousands, except share information)March 31, 2023December 31, 2022
AssetsAssetsAssets
Current assetsCurrent assetsCurrent assets
Cash and cash equivalentsCash and cash equivalents$20,602 $46,858 Cash and cash equivalents$46,764 $51,029 
Accounts receivable—trade, net of allowances of $9,965 and $11,114132,211 123,903 
Accounts receivable—trade, net of allowances of $11,102 and $10,690Accounts receivable—trade, net of allowances of $11,102 and $10,690164,033 154,247 
Inventories, netInventories, net263,779 241,740 Inventories, net287,614 269,828 
Prepaid expenses and other current assetsPrepaid expenses and other current assets23,417 23,702 Prepaid expenses and other current assets23,196 21,957 
Accrued revenueAccrued revenue1,240 2,245 Accrued revenue671 665 
Costs and estimated profits in excess of billingsCosts and estimated profits in excess of billings15,020 8,285 Costs and estimated profits in excess of billings14,538 15,139 
Total current assetsTotal current assets456,269 446,733 Total current assets536,816 512,865 
Property and equipment, net of accumulated depreciationProperty and equipment, net of accumulated depreciation91,162 94,005 Property and equipment, net of accumulated depreciation62,596 62,963 
Operating lease assetsOperating lease assets24,733 25,431 Operating lease assets57,039 57,270 
Deferred financing costs, netDeferred financing costs, net1,404 1,484 Deferred financing costs, net1,086 1,166 
Intangible assets, netIntangible assets, net210,874 217,405 Intangible assets, net185,629 191,481 
Deferred income taxes, netDeferred income taxes, net460 203 Deferred income taxes, net99 184 
Other long-term assetsOther long-term assets6,027 6,075 Other long-term assets6,691 8,828 
Total assetsTotal assets$790,929 $791,336 Total assets$849,956 $834,757 
Liabilities and equityLiabilities and equityLiabilities and equity
Current liabilitiesCurrent liabilitiesCurrent liabilities
Current portion of long-term debtCurrent portion of long-term debt$751 $860 Current portion of long-term debt$988 $782 
Accounts payable—tradeAccounts payable—trade115,177 99,379 Accounts payable—trade129,934 118,261 
Accrued liabilitiesAccrued liabilities62,426 58,436 Accrued liabilities58,839 76,544 
Deferred revenueDeferred revenue7,904 7,276 Deferred revenue13,420 14,401 
Billings in excess of costs and profits recognizedBillings in excess of costs and profits recognized5,851 9,705 Billings in excess of costs and profits recognized421 305 
Total current liabilitiesTotal current liabilities192,109 175,656 Total current liabilities203,602 210,293 
Long-term debt, net of current portionLong-term debt, net of current portion233,742 232,370 Long-term debt, net of current portion151,999 239,128 
Deferred income taxes, netDeferred income taxes, net1,188 834 Deferred income taxes, net1,051 902 
Operating lease liabilitiesOperating lease liabilities32,763 34,745 Operating lease liabilities64,299 64,626 
Other long-term liabilitiesOther long-term liabilities16,371 18,605 Other long-term liabilities12,162 12,773 
Total liabilitiesTotal liabilities476,173 462,210 Total liabilities433,113 527,722 
Commitments and contingenciesCommitments and contingencies00Commitments and contingencies
EquityEquityEquity
Common stock, $0.01 par value, 14,800,000 shares authorized, 6,188,106 and 6,100,886 shares issued62 61 
Common stock, $0.01 par value, 14,800,000 shares authorized, 10,858,424 and 6,223,454 shares issuedCommon stock, $0.01 par value, 14,800,000 shares authorized, 10,858,424 and 6,223,454 shares issued109 62 
Additional paid-in capitalAdditional paid-in capital1,251,752 1,249,962 Additional paid-in capital1,366,184 1,253,613 
Treasury stock at cost, 467,153 shares(135,562)(135,562)
Treasury stock at cost, 708,885 and 570,247 sharesTreasury stock at cost, 708,885 and 570,247 shares(142,057)(138,560)
Retained deficitRetained deficit(693,506)(684,307)Retained deficit(684,081)(680,595)
Accumulated other comprehensive lossAccumulated other comprehensive loss(107,990)(101,028)Accumulated other comprehensive loss(123,312)(127,485)
Total equityTotal equity314,756 329,126 Total equity416,843 307,035 
Total liabilities and equityTotal liabilities and equity$790,929 $791,336 Total liabilities and equity$849,956 $834,757 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


Forum Energy Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,Three Months Ended March 31,
(in thousands)(in thousands)20222021(in thousands)20232022
Cash flows from operating activitiesCash flows from operating activitiesCash flows from operating activities
Net lossNet loss$(9,199)$(29,663)Net loss$(3,486)$(9,199)
Adjustments to reconcile net loss to net cash used in operating activities:Adjustments to reconcile net loss to net cash used in operating activities:Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expenseDepreciation expense3,423 4,953 Depreciation expense2,570 3,423 
Amortization of intangible assetsAmortization of intangible assets6,218 6,357 Amortization of intangible assets6,016 6,218 
Inventory write downInventory write down194 1,410 Inventory write down892 194 
Stock-based compensation expenseStock-based compensation expense2,151 1,896 Stock-based compensation expense841 2,151 
Loss on extinguishment of debt— 933 
Deferred income taxesDeferred income taxes(266)265 Deferred income taxes421 (266)
Noncash losses and other, netNoncash losses and other, net2,283 2,065 Noncash losses and other, net1,398 2,283 
Changes in operating assets and liabilitiesChanges in operating assets and liabilitiesChanges in operating assets and liabilities
Accounts receivable—tradeAccounts receivable—trade(9,168)(8,999)Accounts receivable—trade(10,047)(9,168)
InventoriesInventories(23,031)13,726 Inventories(18,123)(23,031)
Prepaid expenses and other assetsPrepaid expenses and other assets1,298 (2,458)Prepaid expenses and other assets1,037 1,298 
Cost and estimated profit in excess of billingsCost and estimated profit in excess of billings(6,871)(281)Cost and estimated profit in excess of billings769 (6,871)
Accounts payable, deferred revenue and other accrued liabilitiesAccounts payable, deferred revenue and other accrued liabilities11,851 7,692 Accounts payable, deferred revenue and other accrued liabilities(5,527)11,851 
Billings in excess of costs and estimated profits earnedBillings in excess of costs and estimated profits earned(3,758)766 Billings in excess of costs and estimated profits earned111 (3,758)
Net cash used in operating activitiesNet cash used in operating activities$(24,875)$(1,338)Net cash used in operating activities$(23,128)$(24,875)
Cash flows from investing activitiesCash flows from investing activitiesCash flows from investing activities
Capital expenditures for property and equipmentCapital expenditures for property and equipment(860)(389)Capital expenditures for property and equipment(1,083)(860)
Proceeds from sale of property and equipmentProceeds from sale of property and equipment118 1,499 Proceeds from sale of property and equipment264 118 
Net cash provided by (used in) investing activities$(742)$1,110 
Net cash used in investing activitiesNet cash used in investing activities$(819)$(742)
Cash flows from financing activitiesCash flows from financing activitiesCash flows from financing activities
Borrowings on revolving Credit Facility95,883 — 
Repayments on revolving Credit Facility(95,883)(13,126)
Cash paid to repurchase 2025 Notes— (13,711)
Borrowings on Credit FacilityBorrowings on Credit Facility119,426 95,883 
Repayments on Credit FacilityRepayments on Credit Facility(94,426)(95,883)
Payment of capital lease obligationsPayment of capital lease obligations(239)(482)Payment of capital lease obligations(273)(239)
Repurchases of stockRepurchases of stock(360)(139)Repurchases of stock(5,370)(360)
Net cash used in financing activities$(599)$(27,458)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities$19,357 $(599)
Effect of exchange rate changes on cashEffect of exchange rate changes on cash(40)(121)Effect of exchange rate changes on cash325 (40)
Net decrease in cash, cash equivalents and restricted cashNet decrease in cash, cash equivalents and restricted cash(26,256)(27,807)Net decrease in cash, cash equivalents and restricted cash(4,265)(26,256)
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period46,858 128,617 Cash, cash equivalents and restricted cash at beginning of period51,029 46,858 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$20,602 $100,810 Cash, cash equivalents and restricted cash at end of period$46,764 $20,602 
Noncash activitiesNoncash activitiesNoncash activities
Operating lease right of use assets obtained in exchange for lease obligationsOperating lease right of use assets obtained in exchange for lease obligations1,320 284 Operating lease right of use assets obtained in exchange for lease obligations$1,835 $1,320 
Finance lease right of use assets obtained in exchange for lease obligationsFinance lease right of use assets obtained in exchange for lease obligations100 47 Finance lease right of use assets obtained in exchange for lease obligations926 100 
Conversion of debt to common stockConversion of debt to common stock113,650 — 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


Forum Energy Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
Three Months Ended March 31, 2022
Three Months Ended March 31, 2023Three Months Ended March 31, 2023
(in thousands)(in thousands)Common stockAdditional paid-in capitalTreasury stockRetained
deficit
Accumulated
other
comprehensive
income / (loss)
Total equity(in thousands)Common stockAdditional paid-in capitalTreasury stockRetained
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 
Balance at December 31, 2022Balance at December 31, 2022$62 $1,253,613 $(138,560)$(680,595)$(127,485)$307,035 
Stock-based compensation expenseStock-based compensation expense— 2,151 — — — 2,151 Stock-based compensation expense— 841 — — — 841 
Restricted stock issuance, net of forfeituresRestricted stock issuance, net of forfeitures(361)— — — (360)Restricted stock issuance, net of forfeitures(1,874)— — — (1,873)
Conversion of debt to common stockConversion of debt to common stock46 113,604 — — — 113,650 
Treasury stockTreasury stock— — (3,497)— — (3,497)
Currency translation adjustmentCurrency translation adjustment— — — — (6,992)(6,992)Currency translation adjustment— — — — 4,158 4,158 
Change in pension liabilityChange in pension liability— — — — 30 30 Change in pension liability— — — — 15 15 
Net lossNet loss— — — (9,199)— (9,199)Net loss— — — (3,486)— (3,486)
Balance at March 31, 2022$62 $1,251,752 $(135,562)$(693,506)$(107,990)$314,756 
Balance at March 31, 2023Balance at March 31, 2023$109 $1,366,184 $(142,057)$(684,081)$(123,312)$416,843 
The accompanying notes are an integral part of these condensed consolidated financial statements.


6


Forum Energy Technologies, Inc. and subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
Three Months Ended March 31, 2021
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
(in thousands)(in thousands)Common stockAdditional paid-in capitalTreasury stockRetained
deficit
Accumulated
other
comprehensive
income / (loss)
Total equity(in thousands)Common stockAdditional paid-in capitalTreasury stockRetained
deficit
Accumulated
other
comprehensive
income / (loss)
Total equity
Balance at December 31, 2020$60 $1,242,720 $(134,499)$(601,656)$(100,389)$406,236 
Balance at December 31, 2021Balance at December 31, 2021$61 $1,249,962 $(135,562)$(684,307)$(101,028)$329,126 
Stock-based compensation expenseStock-based compensation expense— 1,896 — — — 1,896 Stock-based compensation expense— 2,151 — — — 2,151 
Restricted stock issuance, net of forfeituresRestricted stock issuance, net of forfeitures— (139)— — — (139)Restricted stock issuance, net of forfeitures(361)— — — (360)
Currency translation adjustmentCurrency translation adjustment— — — — 3,152 3,152 Currency translation adjustment— — — — (6,992)(6,992)
Change in pension liabilityChange in pension liability— — — — 77 77 Change in pension liability— — — — 30 30 
Net lossNet loss— — — (29,663)— (29,663)Net loss— — — (9,199)— (9,199)
Balance at March 31, 2021$60 $1,244,477 $(134,499)$(631,319)$(97,160)$381,559 
Balance at March 31, 2022Balance at March 31, 2022$62 $1,251,752 $(135,562)$(693,506)$(107,990)$314,756 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)

1. Organization and Basis of Presentation
Forum Energy Technologies, Inc. (the “Company,” "FET,"“FET,” “we,” “our,” or “us”), a Delaware corporation, is a global company serving the oil, natural gas, industrial and renewable energy industries. With headquarters located in Houston, Texas, FET provides value added solutions that increase the safety and efficiency of energy exploration and production. We are an environmentally and socially responsible company headquartered in Houston, Texas with manufacturing, distribution and service facilities strategically located throughout the world.
Basis of Presentation
The Company's accompanying unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its subsidiaries. All intercompany transactions have been eliminated in consolidation.
In themanagement's opinion, of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 20222023 are not necessarily indicative of the results that may be expected for the year ending December 31, 20222023 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, 2021,2022, which are included in the Company’s 20212022 Annual Report on Form 10-K filed with the SEC on March 4, 2022.
COVID-19 Impacts
The outbreak of COVID-19 in 2020 caused significant disruptions in the U.S. and world economies which led to significant reductions in demand for crude oil. During 2021, distribution of vaccines resulted in reopening of certain economies and increasing demand for oil and natural gas. However, ongoing COVID-19 outbreaks and related work restrictions continue to contribute to disruptions in global supply chains which have led to inflationary pressures for certain goods and services. We anticipate that our liquidity, financial condition and future results of operations will continue to be impacted by ongoing developments from the COVID-19 pandemic.February 28, 2023.
2. Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, (“FASB”), which we adoptthe 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 ourthe Company's consolidated financial statements upon adoption.
Accounting StandardsStandard Adopted in 20222023
Convertible Debt.Inflation Reduction Act of 2022. In August 2020,2022, the FASB issued ASU No. 2020-06 AccountingInflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA, among other provisions, imposes a 15% corporate alternative minimum tax on the adjusted financial statement income of certain large corporations effective for Convertible Instrumentstax years beginning after December 31, 2022 and Contracts in an Entity's Own Equity. This update reduces the number of accounting models for convertible debt instruments resulting in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. In addition, this update also makes targeted changes to the disclosures for convertible instruments and earnings-per-share guidance. We adopted this new standard as of January 1,a 1% excise tax on stock repurchases made by publicly traded U.S. corporations after December 31, 2022. The adoption of this new standard did not have a material impact on our unaudited condensedconsolidated financial statements.
Reference Rate Reform (Topic 848). In March 2020, the Financial 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 2021, the FASB issued ASU 2021-01, which expanded the scope to include derivative instruments impacted by the discounting transition. In December 2022, the FASB issued ASU 2022-06, which extended the 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. The Company plans to adopt the guidance prospectively in second quarter 2023 and does not expect it to have a material impact on the Company's consolidated financial statements.
3. Revenue
Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. For a detailed discussion of our revenue recognition policies, refer to the Company’s 20212022 Annual Report on Form 10-K.
Disaggregated Revenue
Refer to Note 109 Business Segments for disaggregated revenue by product line and geography.
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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to 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, we recordthe Company records a contract liability when we receive consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract. Such contract liabilities typically result from billings in excess of 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 three months ended March 31, 20222023 (in thousands):
March 31, 2022December 31, 2021Increase / (Decrease)March 31, 2023December 31, 2022Decrease
$%$%
Accrued revenueAccrued revenue$1,240 $2,245 Accrued revenue$671 $665 
Costs and estimated profits in excess of billingsCosts and estimated profits in excess of billings15,020 8,285 Costs and estimated profits in excess of billings14,538 15,139 
Contract assets - currentContract assets - current15,209 15,804 
Contract assets - noncurrentContract assets - noncurrent2,413 2,638 
Contract assetsContract assets$16,260 $10,530 $5,730 54 %Contract assets$17,622 $18,442 $(820)(4)%
Deferred revenueDeferred revenue$7,904 $7,276 Deferred revenue$13,420 $14,401 
Billings in excess of costs and profits recognizedBillings in excess of costs and profits recognized5,851 9,705 Billings in excess of costs and profits recognized421 305 
Contract liabilitiesContract liabilities$13,755 $16,981 $(3,226)(19)%Contract liabilities$13,841 $14,706 $(865)(6)%
During the three months ended March 31, 2022,2023, our contract assets increaseddecreased by $5.7$0.8 million due to increasing project activity for process oil treatment equipment in our Production Equipment product line and our contract liabilities decreased by $3.2$0.9 million primarily due to lower customer advance paymentsthe timing of milestone billings for projects in our Subsea Technologies product line.
During the three months ended March 31, 2022,2023, we recognized $10.8$7.3 million of revenue that was included in the contract liability balance at the beginning of the period.
AsSubstantially all of our contracts are less than one year in duration,duration. As such, we have elected to apply the practical expedient which allows an entity to exclude disclosures about its remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.
4. AcquisitionsInventories
2021 AcquisitionThe Company's significant components of Hawker Equipment Solutionsinventory at March 31, 2023 and December 31, 2022 were as follows (in thousands):
On December 20, 2021, we acquired certain assets of Hawker Equipment Solutions, LLC (“Hawker”) for total cash consideration of $5.1 million, of which, $3.4 million was paid in the fourth quarter of 2021 with the balance expected to be paid over the next five years. Hawker is a manufacturer of hydraulic pickup and laydown units. This acquisition is included in the Drilling product line within the Drilling and Downhole segment. The fair values of the assets acquired and liabilities assumed, as well as the pro forma results of operations for this acquisition, have not been presented because they are not material to the consolidated financial statements.
March 31, 2023December 31, 2022
Raw materials and parts$95,435 $94,182 
Work in process34,240 27,489 
Finished goods197,566 187,448 
Total inventories327,241 309,119 
Less: inventory reserve(39,627)(39,291)
Inventories, net$287,614 $269,828 

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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
5. Inventories
Our significant components of inventory at March 31, 2022 and December 31, 2021 were as follows (in thousands):
March 31, 2022December 31, 2021
Raw materials and parts$103,917 $97,053 
Work in process30,045 24,618 
Finished goods189,523 182,954 
Gross inventories323,485 304,625 
Inventory reserve(59,706)(62,885)
Inventories$263,779 $241,740 

6. Intangible Assets
Intangible assets consisted of the following as of March 31, 20222023 and December 31, 2021,2022, respectively (in thousands):
March 31, 2022March 31, 2023
Gross Carrying AmountAccumulated AmortizationNet IntangiblesAmortization Period (In Years)Gross Carrying AmountAccumulated AmortizationNet IntangiblesAmortization Period (In Years)
Customer relationshipsCustomer relationships$268,946 $(137,072)$131,874 10 - 15Customer relationships$266,996 $(151,891)$115,105 10 - 35
Patents and technologyPatents and technology89,213 (31,129)58,084 5 - 19Patents and technology88,984 (36,794)52,190 5 - 19
Non-compete agreementsNon-compete agreements190 (181)2 - 6Non-compete agreements188 (188)— 5
Trade namesTrade names43,027 (25,682)17,345 7 - 19Trade names42,710 (27,599)15,111 7 - 19
TrademarksTrademarks5,089 (1,527)3,562 15Trademarks5,089 (1,866)3,223 15
Intangible Assets Total$406,465 $(195,591)$210,874 
Total intangible assetsTotal intangible assets$403,967 $(218,338)$185,629 
December 31, 2021
Gross Carrying AmountAccumulated AmortizationNet IntangiblesAmortization Period (In Years)
Customer relationships$269,589 $(133,451)$136,138 10 - 15
Patents and technology89,449 (29,785)59,664 5 - 19
Non-compete agreements191 (173)18 2 - 6
Trade names43,125 (25,187)17,938 7 - 19
Trademarks5,089 (1,442)3,647 15
Intangible Assets Total$407,443 $(190,038)$217,405 

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December 31, 2022
Gross Carrying AmountAccumulated AmortizationNet IntangiblesAmortization Period (In Years)
Customer relationships$266,537 $(147,496)$119,041 10 - 35
Patents and technology88,863 (35,298)53,565 5 - 19
Non-compete agreements188 (188)— 5
Trade names42,638 (27,071)15,567 7 - 19
Trademarks5,089 (1,781)3,308 15
Total intangible assets$403,315 $(211,834)$191,481 

Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
7.6. Debt
Notes payable and lines of credit as of March 31, 20222023 and December 31, 20212022 consisted of the following (in thousands): 
March 31, 2022December 31, 2021March 31, 2023December 31, 2022
2025 Notes2025 Notes256,970 256,970 2025 Notes$134,208 $256,970 
Unamortized debt discountUnamortized debt discount(18,909)(20,035)Unamortized debt discount(7,143)(15,314)
Debt issuance costDebt issuance cost(4,641)(4,918)Debt issuance cost(1,753)(3,759)
Credit FacilityCredit Facility— — Credit Facility25,000 — 
Other debtOther debt1,073 1,213 Other debt2,675 2,013 
Total debtTotal debt234,493 233,230 Total debt152,987 239,910 
Less: current maturities(751)(860)
Long-term debt$233,742 $232,370 
Less: current portionLess: current portion(988)(782)
Long-term debt, net of current portionLong-term debt, net of current portion$151,999 $239,128 
2025 Notes
In August 2020, we exchanged $315.5 million principal amount of our previous 6.25% unsecured notes due 2021 (“2021 Notes”) for new 9.00% convertible secured notes due August 2025 (the “2025 Notes”). This transaction was accounted for as an extinguishment of the 2021 Notes with the new 2025 Notes recorded at fair value on the transaction date. We estimated the fair value of the 2025 Notes to be $282.6 million at the issuance date, resulting in a $32.9 million discount (“Debt Discount”) at issuance. As a result, we recognized a $28.7 million gain on extinguishment of debt that reflects the difference in the $314.8 million net carrying value of the 2021 Notes exchanged, including debt issuance costs and unamortized debt premium, less the $282.6 million estimated fair value of 2025 Notes and a $3.5 million early participation fee paid to bondholders that participated in the exchange. The Debt Discount is being amortized as non-cash interest expense over the term of the 2025 Notes using the effective interest method.
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 option. The 2025 Notes are secured by a first lien on substantially all of the Company’s assets, except for Credit Facility priority collateral, which secures the 2025 Notes on a second lien basis. As ofDuring the quarter ended March 31, 2022, approximately $116.02023, $122.8 million or 48% of the principal amount of the 2025 Notes is mandatorily convertibleconverted into approximately 4.5 million shares of our common stock at a conversion ratestock.

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Table of 37.0370 shares per $1,000 principal amount of 2025 Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes converted, equivalent to a conversion price of $27.00 per share, subject, however, to the condition that the average of the daily trading prices for the common stock over the preceding 20-trading day period is at least $30.00 per share. Holders of the 2025 Notes also have optional conversion rights in the event that the Company elects to redeem the 2025 Notes in cash and at the final maturity of the new notes. Any interest that the Company elects to pay in additional notes is also subject to the mandatory and optional conversion rights.Condensed Consolidated Financial Statements (Continued)
During the three months ended March 31, 2021, we repurchased an aggregate $16.5 million of principal amount of our 2025 Notes for $15.6 million. The net carrying value of the extinguished debt, including unamortized debt discount and debt issuance costs, was $14.7 million, resulting in a $0.9 million loss on extinguishment of debt.(Unaudited)
Credit Facility
In September 2021, we amended our senior secured revolving credit facility ("(Credit Facility"Facility”) to, among other things, extend the maturity date to September 2026, reduce the aggregate amount of the commitment under the Credit Facility, and change the interest rate applicable to outstanding loans. Following such amendment, our Credit Facility provides revolving credit commitments of $179.0 million (with a sublimit of up to $45.0 million available for the issuance of letters of credit 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 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 for the account of our Canadian subsidiaries) (the “Canadian Line”).
Availability under the Credit Facility is subject to a borrowing base calculated by reference to eligible accounts receivable in the U.S., Canada and certain other jurisdictions (subject to a cap) and eligible inventory in the U.S. and Canada. Such eligible accounts receivable and eligible inventory serve as priority collateral for the Credit
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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Facility, which is also secured on a second lien basis by substantially all of the Company's other assets. The amount of eligible inventory included in the borrowing base is restricted to the lesser of $127.0$125.0 million (subject to a quarterly reduction of $0.5 million) and 80.0% of the total borrowing base. Our borrowing capacity under the Credit Facility could be reduced or eliminated, depending on future fluctuations in our receivables and inventory. As of March 31, 2022,2023, our total borrowing base was $158.8$178.3 million, of which no amounts were$25.0 million was drawn and $17.6$24.0 million was used for security of outstanding letters of credit, resulting in remaining availability of $141.2$129.3 million.
BorrowingsPrior to the amendment discussed below, borrowings under the U.S. Line bearwere subject to an interest at a rate equal to, at ourthe Company's option, either (a) the LIBOR, rate, 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. Theratio, with the U.S. Line base rate is determined by reference to the greatest of (i) the federal funds rate plus 0.50% per annum, (ii) the one-month adjusted LIBOR 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 bearwere subject to an interest at a rate during the reporting period equal to, at Forum Canada’sour subsidiary's option, either (a) the CDOR rate,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 rate 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 7.96% for the three months ended March 31, 2023.
The Credit Facility also provides for a commitment fee in the amount of (a) 0.375% on the unused portion of commitments if average usage of the Credit Facility is greater than 50% and (b) 0.500% on the unused portion of commitments if average usage of the Credit Facility is less than or equal to 50%.
If excess availability under the Credit Facility falls below the greater of 12.5% of the borrowing base and $22.4 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 excess availability under the 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.
In April 2023, the Credit Facility was amended to, among other things, (a) replace the interest rate benchmark for borrowings denominated in U.S. dollars from LIBOR to the Secured Overnight Financing Rate; (b) reset existing capacity under the general "Permitted Dispositions" basket; and (c) increase the domestic letter of credit sublimit from $45.0 million to $70.0 million.
Deferred Loan Costs
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.
Other Debt
Other debt consists primarily of various finance leases of equipment.
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Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
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. We had $17.6$24.0 million and $18.7$21.8 million in total outstanding letters of credit as of March 31, 20222023 and December 31, 2021,2022, respectively.
8.7. Income Taxes
For interim periods, our income tax expense or benefit is computed based on our estimated annual effective tax rate and any discrete items that impact the interim periods. For the three months ended March 31, 2023 and 2022, and March 31, 2021, wethe Company recorded a tax expense of $1.9$2.8 million and $1.7$1.9 million, respectively. The estimated annual effective tax rates for the three months ended March 31, 2022 and 2021all 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.
We have deferred tax assets related to net operating loss and other tax carryforwards in the U.S. and in certain states and foreign jurisdictions. We recognize deferred tax assets to 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 March 31, 2022,2023, 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
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Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Saudi Arabia. As a result, we have certain valuation allowances against our deferred tax assets as of March 31, 2022.2023.
9.8. Fair Value Measurements
The Company had no$25.0 million of borrowings outstanding under the Credit Facility as of March 31, 2022 and December 31, 2021.2023. The Credit Facility incurs interest at a variable interest rate, and therefore, the carrying amount approximates fair value. The fair value of the 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 March 31, 2023, the fair value and the carrying value of our 2025 Notes approximated $130.3 million and $125.3 million, respectively. At December 31, 2022, the fair value and the carrying value of our 2025 Notes approximated $250.5$272.8 million and $233.4 million, respectively. At December 31, 2021, the fair value and the carrying value of our 2025 Notes approximated $225.0 million and $232.0$237.9 million, respectively.
There were no other significant outstanding financial instruments as of March 31, 20222023 and December 31, 20212022 that required measuring the amounts at fair value on a recurring basis. We did not change 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 three months ended March 31, 2022.2023.
10.
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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
9. Business Segments
The Company reports results of operations in the following 3three reporting segments: Drilling & Downhole, Completions, and Production. The amounts indicated below as “Corporate” relate to costs and assets not allocated to the reportable segments. Summary financial data by segment follows (in thousands):
Three Months Ended March 31,Three Months Ended March 31,
2022202120232022
Revenue:
RevenueRevenue
Drilling & DownholeDrilling & Downhole71,260 48,656 Drilling & Downhole$76,794 $71,260 
CompletionsCompletions52,542 37,843 Completions73,667 52,542 
ProductionProduction31,505 28,031 Production38,995 31,505 
EliminationsEliminations(133)(13)Eliminations(499)(133)
Total revenueTotal revenue$155,174 $114,517 Total revenue$188,957 $155,174 
Operating income (loss):
Segment operating income (loss)Segment operating income (loss)
Drilling & DownholeDrilling & Downhole$5,986 $(4,506)Drilling & Downhole$8,438 $5,986 
CompletionsCompletions(715)68 Completions3,556 (715)
ProductionProduction(1,752)(3,841)Production1,629 (1,752)
CorporateCorporate(9,205)(7,010)Corporate(7,032)(9,205)
Segment operating loss(5,686)(15,289)
Total segment operating income (loss)Total segment operating income (loss)6,591 (5,686)
Loss (gain) on disposal of assets and otherLoss (gain) on disposal of assets and other22 (909)Loss (gain) on disposal of assets and other(260)22 
Operating loss$(5,708)$(14,380)
Operating income (loss)Operating income (loss)$6,851 $(5,708)
A summary of consolidated assets by reportable segment is as follows (in thousands):
March 31, 2023December 31, 2022
Drilling & Downhole$348,581 $340,819 
Completions373,222 366,771 
Production98,427 95,089 
Corporate29,726 32,078 
Total assets$849,956 $834,757 
Corporate assets primarily include cash, certain prepaid assets and deferred loan costs.
The following table presents our revenues disaggregated by product line (in thousands):
Three Months Ended March 31,
20232022
Drilling Technologies$40,777 $29,235 
Downhole Technologies23,211 19,564 
Subsea Technologies12,806 22,461 
Stimulation and Intervention47,326 30,159 
Coiled Tubing26,341 22,383 
Production Equipment19,896 15,167 
Valve Solutions19,099 16,338 
Eliminations(499)(133)
Total revenue$188,957 $155,174 
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Table of Contents
Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
A summary of consolidated assets by reportable segment is as follows (in thousands):
March 31, 2022December 31, 2021
Drilling & Downhole$313,151 $313,493 
Completions365,450 351,908 
Production88,011 83,150 
Corporate24,317 42,785 
Total assets$790,929 $791,336 
Corporate assets primarily include cash and certain prepaid assets.
The following table presents our revenues disaggregated by product line (in thousands):
Three Months Ended March 31,
20222021
Drilling Technologies$29,235 $18,520 
Downhole Technologies19,564 15,093 
Subsea Technologies22,461 15,043 
Stimulation and Intervention30,159 18,702 
Coiled Tubing22,383 19,141 
Production Equipment15,167 14,394 
Valve Solutions16,338 13,637 
Eliminations(133)(13)
Total revenue$155,174 $114,517 
The following table presents our revenues disaggregated by geography (in thousands):
Three Months Ended March 31,
20222021
United States$97,232 $68,314 
Canada11,389 8,961 
Europe & Africa15,377 12,664 
Middle East11,153 10,341 
Asia-Pacific9,059 8,880 
Latin America10,964 5,357 
Total Revenue$155,174 $114,517 

Three Months Ended March 31,
20232022
United States$129,186 $97,232 
Middle East17,982 11,153 
Canada13,668 11,389 
Europe & Africa11,672 15,377 
Latin America8,768 10,964 
Asia-Pacific7,681 9,059 
Total revenue$188,957 $155,174 
11.10. Commitments and Contingencies
In the ordinary course of business, the Company is, and in the future could be, involved in various pending or threatened legal actions, 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 believed to be probable and can be estimated. The reserves accrued at March 31, 20222023 and December 31, 2021,2022, respectively, are immaterial. In the opinion of management, the 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.
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.
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Forum Energy Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
For further disclosure regarding certain litigation matters, refer to Note 13 of the notes to the consolidated financial statements included in Item 8 of the Company’s 2021 Annual Report on Form 10-K filed with the SEC on March 4, 2022. There have been no material changes related to these matters during the three months ended March 31, 2022.
12. Loss11. Earnings (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):
Three Months Ended March 31,
20232022
Three Months Ended March 31,
20222021
Net lossNet loss(9,199)(29,663)Net loss$(3,486)$(9,199)
Basic - weighted average shares outstanding5,683 5,613 
Weighted average shares outstanding - basicWeighted average shares outstanding - basic10,179 5,683 
Dilutive effect of stock options and restricted stockDilutive effect of stock options and restricted stock— — Dilutive effect of stock options and restricted stock— — 
Dilutive effect of convertible notes due 2025Dilutive effect of convertible notes due 2025— — Dilutive effect of convertible notes due 2025— — 
Diluted - weighted average shares outstanding5,683 5,613 
Weighted average shares outstanding - dilutedWeighted average shares outstanding - diluted10,179 5,683 
Loss per shareLoss per shareLoss per share
BasicBasic$(1.62)$(5.28)Basic$(0.34)$(1.62)
DilutedDiluted$(1.62)$(5.28)Diluted$(0.34)$(1.62)
For all periods presented,the three months ended March 31, 2023 and 2022, we excluded all potentially dilutive restricted shares and stock options and the assumed conversion of the 2025 Notes in calculating diluted earnings per share as the effect was anti-dilutive due to net losses incurred for these periods.
13.12. Stockholders' Equity
Stock-based compensation
During the three months ended March 31, 2022,2023, the Company granted 101,11186,912 time-based restricted stock units to employees that vest ratably over three years.
Liability-classified awards
DuringIn addition, during the three months ended March 31, 2022,2023, the Company granted 101,111 cash-settled contingent86,912 performance restricted stock units to employees (assuming target performance) that vest ratablybased upon the total shareholder return of the Company's common stock as compared to a group of peer companies over three years dependent upon achieving a minimum stock pricedifferent performance periods. The performance periods run from January 1, 2023 through December 31, 2023, January 1, 2023 through December 31, 2024 and January 1, 2023 through December 31, 2025, and 1/3 of $23.68 for 20 trading days duringeach 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.
14.13. Related Party Transactions
The Company has sold and purchased inventory, services and fixed assets to and from certain affiliates of certain directors.a former director. The dollar amounts of these related party activities are not significant to the Company’s unaudited condensed consolidated financial statements.
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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”). These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the 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
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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.
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 assuranceforward-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 couldmay cause our actual results to differ materially from our expectationsplans, intentions or expectations. This may be the result of various factors, including, but not limited to, those factors discussed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 4, 2022,February 28, 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.
Overview
We are a global company serving the oil, natural gas, industrial and renewable energy industries. With headquarters located in Houston, Texas, FET provides value added solutions aimed at improving the safety, efficiency, and environmental impact of our customers' operations. We are an environmentally and socially responsible company headquartered in Houston, Texas with manufacturing, distribution and service facilities strategically located throughout the world. Our highly engineered products include highly engineered capital equipment as well asand consumable products. These consumableFET’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 within the supporting infrastructure, and at processing centers and refineries. Our engineered capital products are directed at drilling rig equipment for constructing new rigs, upgrades and refurbishment projects,upgrading existing rigs, subsea construction and development projects, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and capital equipment for renewable energy projects. For the three months ended March 31, 2022,2023, approximately 76%65% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services.
We design, manufacture and supply high quality reliable products that create value for our diverse customer base, which includes, among others, oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, subsea construction and service companies, and pipeline and refinery operators. In addition, we offer some of our products to renewable energy and new energy companies.
We expect that the world's long-term energy demand will continue to rise. We also expect hydrocarbons will continue to play a vital role in meeting the world's long-term energy needs while renewable energy sources continue to develop. As such, we remain focused on serving our customers in both oil and natural gas as well as renewable energy applications. We are also continuing to develop products to help oil and natural gas operators lower their current emissions while also deploying our existing product technologies in renewable energy applications and seeking to develop innovative equipment.
A summary of the products and services offered by each segment is as follows:
Drilling & Downhole. This segment designs, manufactures and supplies products and provides related services to the drilling, well construction, artificial lift and subsea energy construction markets, including applications in oil and natural gas, renewable energy, defense, and communications. The products and related services consist primarily of: (i) capital equipment and a broad line of expendable products consumed in the drilling process; (ii) well construction casing and 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, and complementary subsea technical services.
Completions. This segment designs, manufactures and supplies products and provides related services to the coiled tubing, well stimulation and intervention markets. The products and related services consist primarily of: (i) capital and consumable products sold to the pressure pumping, hydraulic fracturing and flowback services markets, including hydraulic fracturing pumps, cooling systems, high-pressure flexible
16


hoses and flow iron as well as wireline cable and pressure control equipment used in the well completion and intervention service markets; and (ii) coiled tubing strings and coiled line pipe and related services.
16


Production. 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, as well as specialty separation equipment; and (ii) a wide range of industrial valves focused on serving oil and natural gas customers as well as power generation, renewable energy and other general industrial applications.
Market Conditions
The level of demandDemand for our products and services is directly related to the activity levels and theour customers' capital and operating budgets. These budgets of our customers, which in turn are heavily influenced by current and expected energy prices and expectations as to future price trends.prices. In addition, the availability of existing capital equipment adequate to serve exploration and production requirements, or lack thereof, drives demand for our capital products is driven by the utilization of service company equipment. Utilization is a function of equipment products.capacity and durability in demanding environments.
In 2021, distribution of vaccines and reopening of certain economies led to an increase in demand for oil and natural gas following the unprecedented decline in demand that resulted from the COVID-19 pandemic. At the same time, the supply of oil and natural gas was impacted by ongoing capacity constraints by OPEC+ and North American exploration and production companies. As a result of these supply and demand factors, commodity prices increased substantially in 2021. During the first quarter of 2022, the supply of oil and natural gas was further impacted by political and social responses to the Russia and Ukraine war resulting in further increases in energy prices, especially in Europe. In addition, ongoing COVID-19 related shutdowns in China and worldwide labor constraints continue to cause disruptions in global supply chains, which have led toRecent inflationary pressures, for certain goodsrising interest rates and services.
Our revenues are highly correlated tovolatility in the U.S. drilling rig count, which has increased to 670 rigs asbanking sector have created a heightened concern of the end of the first quarter 2022 from a low of 244 rigs in August 2020. The level of active hydraulic fracturing fleets has also increased substantially in order to meet increasing oil demand. Despite these improvements, drilling and completions activity remains below pre-pandemic levels. In addition, publicly owned exploration and production companies in North America remain under pressure by investors to generate positive cash flows and constrain capital expenditures. In contrast, privately owned exploration and production companies in North America have increased their drilling and completions activity in response to the higher oil and natural gas price environment.
Activity levels have also increased in international markets, as well as in global offshore and subsea activity. As a result, demand for our drilling and subsea equipment offerings has increased due to an improved outlook for our international drilling and subsea customers.
The table below shows average crude oilrecession. Oil and natural gas prices for West Texas Intermediate crudesoftened in the first quarter 2023 in part as a result of such recessionary fears. Despite these macroeconomic challenges, we expect that the world's long-term energy demand will continue to rise and may outpace global supply as China's economy recovers from the COVID-19 pandemic shutdowns and OPEC+ remains committed to maintaining stable oil (“WTI”), United Kingdom Brent crude oil (“Brent”), and Henry Hub natural gas:
Three Months Ended
March 31,December 31,March 31,
202220212021
Average global oil, $/bbl
West Texas Intermediate$95.18 $77.33 $58.09 
United Kingdom Brent$100.87 $79.61 $61.04 
Average North American Natural Gas, $/Mcf
Henry Hub$4.67 $4.75 $3.50 
prices. We expect that hydrocarbons will continue to play a vital role in meeting the world's energy needs while renewable energy sources continue to develop.
The price of oil has varied dramatically over the last several years. The spot prices for WTI and Brent fell from $61.14 and $67.77 per barrel, respectively, as of December 31, 2019 to lows below $15.00 per barrel in April 2020. Since that time, oil prices rebounded to highs above $120.00 per barrel in March 2022 but have reboundedsoftened in the first quarter 2023 to an average of $95.18$75.93 and $100.87$81.07, for WTI and Brent, respectively, in the first quarter of 2022.respectively. In addition, natural gas prices have increased more than 30%decreased by 43.5% comparing the first quarter 20222023 to the first quarter 2021.2022.
Our revenues, over the long-term, are highly correlated to the global drilling rig count, which has increased to 1,896 rigs as of the end of the first quarter 2023 from a low of 1,030 rigs in the third quarter 2020. The average U.S. rig count for the first quarter 2023 was 2.1% lower and 20.1% higher compared to the fourth quarter 2022 and first quarter 2022, respectively. The international rig count for the first quarter 2023 was 0.9% higher and 11.2% higher compared to the fourth quarter 2022 and first quarter 2022, respectively.
Global drilling and completions activity remains below pre-pandemic levels. However, international markets are expected to grow throughout 2023 and outpace the U.S. In the U.S., publicly owned exploration and production companies are expected to continue to exercise disciplined capital spending while privately owned exploration and production companies fluctuate their activity in response to changes in oil and natural gas prices.
The table below shows average crude oil and natural gas prices for West Texas Intermediate crude oil (“WTI”), United Kingdom Brent crude oil (“Brent”), and Henry Hub natural gas:
Three Months Ended
March 31,December 31,March 31,
202320222022
Average global oil, $/bbl
West Texas Intermediate$75.93 $82.79 $95.18 
United Kingdom Brent$81.07 $88.72 $100.87 
Average North American Natural Gas, $/Mcf
Henry Hub$2.64 $5.55 $4.67 

17


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
March 31,December 31,March 31,
202220212021
Active Rigs by Location
United States633 559 393 
Canada198 160 145 
International823 817 698 
Global Active Rigs1,654 1,536 1,236 
Land vs. Offshore Rigs
Land1,446 1,337 1,052 
Offshore208 199 184 
Global Active Rigs1,654 1,536 1,236 
U.S. Commodity Target
Oil/Gas510 457 302 
Gas122 102 90 
Unclassified— 
Total U.S. Active Rigs633 559 393 
U.S. Well Path
Horizontal575 502 353 
Vertical24 26 22 
Directional34 31 18 
Total U.S. Active Rigs633 559 393 
A substantial portion of our revenue is impacted bypurposes, based on the level of rig activity and the number of wells completed. The average U.S.weekly rig count for the first quarter 2022 was 13% and 61% higher compared to the fourth quarter of 2021 and first quarter of 2021, respectively. The U.S. rig count started 2020 at 805 working rigs and fell 70% to a low of 244 rigs in August 2020. Since that time, the number of active rigs has partially recovered, ending the first quarter 2022 at 670 rigs. Despite this improvement, the U.S. drilling rig count remains below pre-pandemic levels.information published by Baker Hughes Company.
Three Months Ended
March 31,December 31,March 31,
202320222022
Active Rigs by Location
United States760 776 633 
Canada221 187 198 
International915 907 823 
Global Active Rigs1,896 1,870 1,654 
Land vs. Offshore Rigs
Land1,655 1,634 1,446 
Offshore241 236 208 
Global Active Rigs1,896 1,870 1,654 
U.S. Commodity Target
Oil/Gas603 618 510 
Gas155 156 122 
Unclassified
Total U.S. Active Rigs760 776 633 
U.S. Well Path
Horizontal697 708 575 
Vertical18 24 24 
Directional45 44 34 
Total U.S. Active Rigs760 776 633 
The table below shows the amount of total inbound orders by segment:
(in millions of dollars)Three Months Ended
March 31,December 31,March 31,
202220212021
Drilling & Downhole$70.9 $60.8 $57.9 
Completions53.7 52.8 47.2 
Production40.4 46.1 32.9 
Total Orders$165.0 $159.7 $138.0 

(in millions of dollars)Three Months Ended
March 31,December 31,March 31,
202320222022
Drilling & Downhole$81.0 $87.2 $70.9 
Completions66.0 81.4 53.7 
Production31.9 46.5 40.4 
Total Orders$178.9 $215.1 $165.0 
18


Results of operations
Three months ended March 31, 20222023 compared with three months ended March 31, 20212022
Three Months Ended March 31,ChangeThree Months Ended March 31,Change
(in thousands of dollars, except per share information)(in thousands of dollars, except per share information)20222021$%(in thousands of dollars, except per share information)20232022$%
Revenue:
RevenueRevenue
Drilling & DownholeDrilling & Downhole$71,260 $48,656 $22,604 46.5 %Drilling & Downhole$76,794 $71,260 $5,534 7.8 %
CompletionsCompletions52,542 37,843 14,699 38.8 %Completions73,667 52,542 21,125 40.2 %
ProductionProduction31,505 28,031 3,474 12.4 %Production38,995 31,505 7,490 23.8 %
EliminationsEliminations(133)(13)(120)*Eliminations(499)(133)(366)*
Total revenueTotal revenue155,174 114,517 40,657 35.5 %Total revenue188,957 155,174 33,783 21.8 %
Operating income (loss):
Segment operating income (loss)Segment operating income (loss)
Drilling & DownholeDrilling & Downhole$5,986 $(4,506)$10,492 232.8 %Drilling & Downhole8,438 5,986 2,452 41.0 %
Operating margin %Operating margin %8.4 %(9.3)%Operating margin %11.0 %8.4 %
CompletionsCompletions(715)68 (783)(1,151.5)%Completions3,556 (715)4,271 *
Operating margin %Operating margin %(1.4)%0.2 %Operating margin %4.8 %(1.4)%
ProductionProduction(1,752)(3,841)2,089 54.4 %Production1,629 (1,752)3,381 193.0 %
Operating margin %Operating margin %(5.6)%(13.7)%Operating margin %4.2 %(5.6)%
CorporateCorporate(9,205)(7,010)(2,195)(31.3)%Corporate(7,032)(9,205)2,173 23.6 %
Total segment operating loss(5,686)(15,289)9,603 62.8 %
Total segment operating income (loss)Total segment operating income (loss)6,591 (5,686)12,277 215.9 %
Operating margin %Operating margin %(3.7)%(13.4)%Operating margin %3.5 %(3.7)%
Loss (gain) on disposal of assets and otherLoss (gain) on disposal of assets and other22 (909)931 *Loss (gain) on disposal of assets and other(260)22 (282)*
Operating loss(5,708)(14,380)8,672 60.3 %
Operating income (loss)Operating income (loss)6,851 (5,708)12,559 220.0 %
Interest expenseInterest expense7,624 9,162 (1,538)(16.8)%Interest expense4,549 7,624 (3,075)(40.3)%
Foreign exchange losses (gains) and other, netForeign exchange losses (gains) and other, net(5,986)3,470 (9,456)*Foreign exchange losses (gains) and other, net2,972 (5,986)8,958 *
Loss on extinguishment of debt— 933 (933)*
Total other expenseTotal other expense1,638 13,565 (11,927)(87.9)%Total other expense7,521 1,638 5,883 359.2 %
Loss before income taxesLoss before income taxes(7,346)(27,945)20,599 73.7 %Loss before income taxes(670)(7,346)6,676 90.9 %
Income tax expenseIncome tax expense1,853 1,718 135 7.9 %Income tax expense2,816 1,853 963 52.0 %
Net lossNet loss$(9,199)$(29,663)$20,464 69.0 %Net loss$(3,486)$(9,199)$5,713 62.1 %
Weighted average shares outstandingWeighted average shares outstandingWeighted average shares outstanding
BasicBasic5,683 5,613 Basic10,179 5,683 
DilutedDiluted5,683 5,613 Diluted10,179 5,683 
Loss per shareLoss per shareLoss per share
BasicBasic$(1.62)$(5.28)Basic$(0.34)$(1.62)
DilutedDiluted$(1.62)$(5.28)Diluted$(0.34)$(1.62)
* not meaningful* not meaningful* not meaningful
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Revenue
Our revenue for the three months ended March 31, 20222023 was $155.2$189.0 million, an increase of $40.7$33.8 million, or 35.5%21.8%, compared to the three months ended March 31, 2021.2022. For the three months ended March 31, 2022,2023, our Drilling & Downhole, Completions, and Production segments comprised 45.9%40.6%, 33.8%38.8%, and 20.3%20.6% of our total revenue, respectively, which compared to 42.5%45.9%, 33.0%33.8%, and 24.5%20.3% of our total revenue, respectively, for the three months ended March 31, 2021.2022. The overall increase in revenue is primarily related to higher sales volumes due to higher drillingincreases in market activity and completions activity levelsglobal rig count in the first quarter 20222023 compared to the first quarter 2021.2022. The changes in revenue by operating segment consisted of the following:
Drilling & Downhole segment — Revenue was $71.3$76.8 million for the three months ended March 31, 2022,2023, an increase of $22.6$5.5 million, or 46.5%7.8%, compared to the three months ended March 31, 2021.2022. This increase was led by a $10.7$11.5 million, or 57.9%39.5%, increase in revenue for our Drilling Technologies product line due to higher sales volumes of both consumable products and capital equipment from the 34% year-over-year increase indriven by increased market activity and global rig count. Revenue for our Subsea Technologies product line increased by $7.4 million, or 49.3%, due to higher sales of ROVs and related support systems into international markets. Revenue for our Downhole Technologies product line increased by $4.5$3.6 million, or 29.6%18.6%, primarily due to higher sales volumes of artificial lift products due to the increase in the number of well completions and workover activitycasing equipment in the first quarter 20222023 compared to the first quarter 2021.2022. Revenue for our Subsea Technologies product line decreased by $9.7 million, or 43.0%, from lower volumes of ROVs partially offset by an increase in after-market part sales and service.
Completions segment — Revenue was $52.5$73.7 million for the three months ended March 31, 2022,2023, an increase of $14.7$21.1 million, or 38.8%40.2%, compared to the three months ended March 31, 2021.2022. This significant improvement includes a revenue increase of $11.5$17.2 million, or 61.3%56.9%, for our Stimulation & Intervention product line primarily due to higher capital equipment sales to pressure pumping customers to support increasing demand for hydraulic fracturing services.of power ends, radiators and wireline cable. Revenue for our Coiled Tubing product line increased by $3.2$4.0 million, or 16.9%, driven by increasing U.S. hydraulic fracturing activity levels17.7% in the first quarter 20222023 compared to the first quarter 2021.2022. These higher revenue levels were driven by increased hydraulic fracturing and well intervention service activity levels.
Production segment — Revenue was $31.5$39.0 million for the three months ended March 31, 2022,2023, an increase of $3.5$7.5 million, or 12.4%23.8%, compared to the three months ended March 31, 2021. This2022. The increase includeswas driven by a $2.7$4.7 million, or 19.8%31.2%, primarily due to increased demand for our processing equipment and technologies within our Production Equipment product line, and a $2.8 million, or 16.9%, increase in sales of our valve products primarily due to higher sales volumes into the North America downstream market, and a $0.8 million, or 5.4%, increase in revenue forwithin our Production EquipmentValve Solutions product line from higher sales volumes of surface production equipment for new producing wells.line.
Segment operating income (loss) and segment operating margin percentage
Segment operating lossincome for the three months ended March 31, 20222023 was $5.7$6.6 million, a $9.6$12.3 million improvement compared to a loss of $15.3$5.7 million for the three months ended March 31, 2021.2022. For the three months ended March 31, 2022,2023, segment operating margin percentage was (3.7)%3.5% compared to (13.4)(3.7)% for the three months ended March 31, 2021.2022. Segment operating margin percentage is calculated by dividing segment operating income (loss) by revenue for the period. The change in operating income (loss) for each segment is explained as follows:
Drilling & Downhole segment — Segment operating income was $8.4 million, or 11.0%, for the three months ended March 31, 2023 compared to operating income of $6.0 million, or 8.4%, for the three months ended March 31, 2022 compared to a loss of $4.5 million, or (9.3)%, for the three months ended March 31, 2021.2022. The $10.5$2.5 million improvement in segment operating results is primarily attributable to higher gross profit from the 46.5%7.8% increase in segment revenues. In addition, segmentrevenues, favorable product mix and improved operating income increased due to a $2.8 reduction in inventory write-downs.leverage. These gains were partially offset by higher freight and employee related costs.
Completions segment — Segment operating income was $3.6 million, or 4.8%, for the three months ended March 31, 2023 compared to segment operating loss wasof $0.7 million, or (1.4)%, for the three months ended March 31, 2022 compared to2022. The $4.3 million improvement in segment operating income of $0.1 million, or 0.2%, for the three months ended March 31, 2021. Results were flat year-over-year asresults was primarily due to higher gross profit from the 38.8%40.2% increase in revenues discussed above wasand from favorable product mix. These gains were partially offset by increases in raw material,higher steel, freight and employee related costs.
Production segment — Segment operating income was $1.6 million, or 4.2%, for the three months ended March 31, 2023 compared to a loss wasof $1.8 million, or (5.6)%, for the three months ended March 31, 2022 compared to a loss of $3.8 million, or (13.7)%, for the three months ended March 31, 2021.2022. The $2.1$3.4 million improvement in segment operating results was driven by the 12.4%23.8% increase in revenues discussed above as well as lower compensation, depreciation and other facility costs in connection with cost reductions implemented in 2021. These improvements were partially offset by higher freight and material costs as a result of inflationary pressures from global supply chains.costs.
Corporate — Selling, general and administrative expenses for Corporate were $7.0 million for the three months ended March 31, 2023 compared to $9.2 million for the three months ended March 31, 2022, a $2.2 million increase compared to the three months ended March 31, 2021. This increase was primarily related to a $2.7 million charge recognized in the three months ended March 31, 2022 related to a modification of long-term incentive awards associated with the recent executive leadership transition.2022. Corporate costs include, among other items, payroll related costs for management, administration, finance, legal, and human resources personnel; professional fees for legal, accounting and related services; and marketing costs. This decline was primarily due to a $2.7 million charge recognized in the three months ended March 31, 2022 related to a modification of long-term incentive awards associated with the executive leadership transition.
20


Other items not included in segment operating lossincome (loss)
Loss (gain)Gain on the disposal of assets and other is not included in segment operating loss,income (loss), but is included in total operating loss.
Other income and expense
Other income and expense includes interest expense and foreign exchange losses (gains)gains (losses) and other, and loss (gain) on extinguishment of debt.other. We incurred $7.6$4.5 million of interest expense during the three months ended March 31, 2022,2023, a decrease of $1.5$3.1 million compared to the three months ended March 31, 20212022, mainly due to lower debt balances outstandingthe decline in the three months ended March 31, 2022 comparedbalance of 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 three months outstanding March 31, 2021.our 2025 Notes and Credit Facility.
The foreign exchange losses (gains)gains (losses) are primarily the result of movements in the British pound, Euro and Canadian dollar relative to the U.S. dollar. These movements in 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, 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.
During the three months ended March 31, 2021, we repurchased an aggregate $16.5 million of principal amount of our 2025 Notes for $15.6 million. The net carrying value of the extinguished debt, including unamortized debt discount and debt issuance costs, was $14.7 million, resulting in a $0.9 million loss on extinguishment of debt.
Taxes
We recorded tax expense of $1.9$2.8 million and $1.7tax expense of $1.9 million for the three months ended March 31, 20222023 and March 31, 2021,2022, respectively. The estimated annual effective tax rates for the three months ended March 31, 20222023 and 20212022 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.
21



Liquidity and capital resources
Sources and uses of liquidity
Our 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 March 31, 2022,2023, we had $257.0$134.2 million principal amount of 2025 Notes outstanding and no$25.0 million of 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 76 Debt for further details related to the terms for our 2025 Notes and Credit Facility.
As of March 31, 2022,2023, we had cash and cash equivalents of $20.6$46.8 million and $141.2$129.3 million of availability under the Credit Facility. We anticipate that 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 20222023 capital expenditures to be less than $10.0$15.0 million, consisting of, among other items, replacing end of life machinery and equipment.
We expect our available cash on-hand, cash generated by operations, and estimated availability under the 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 cash flows from operations, proceeds from divestitures, securities offerings or other eligible capital to reduce the principal amount of our 2025 Notes outstanding.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 conditions, applicable legal requirements and other considerations. To date,During the first quarter 2023, we have repurchased approximately 56,000139 thousand shares of our common stock for aggregate consideration of approximately $1.1 million. Remaining$3.5 million with remaining authorization under this program is $8.9of $2.4 million.
In the fourth quarter of 2021, we completed the acquisition of Hawker for total cash consideration of $5.1 million, of which, $3.4 million was paid in the fourth quarter of 2021 with the balance expected to be paid over the next five years. For additional information, see Note 4 Acquisitions. We may pursue other acquisitions in the future, which may be funded with cash and/or equity. Our ability to make significant acquisitions for cash may require us to pursue additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.
Our cash flows for the three months ended March 31, 20222023 and 20212022 are presented below (in millions):
  Three Months Ended March 31,
20222021
Net cash used in operating activities$(24.9)$(1.3)
Net cash provided by (used in) investing activities(0.7)1.1 
Net cash used in financing activities(0.6)(27.5)
Effect of exchange rate changes on cash(0.1)(0.1)
Net decrease in cash, cash equivalents and restricted cash$(26.3)$(27.8)
22


  Three Months Ended March 31,
20232022
Net cash used in operating activities$(23.1)$(24.9)
Net cash used in investing activities(0.8)(0.7)
Net cash provided by (used in) financing activities19.3 (0.6)
Effect of exchange rate changes on cash0.3 (0.1)
Net decrease in cash, cash equivalents and restricted cash$(4.3)$(26.3)
Net cash used in operating activities
Net cash used in operating activities was $24.9 million and $1.3$23.1 million for the three months ended March 31, 2022 and2023 compared to $24.9 million for the three months ended March 31, 2021, respectively.2022. This declineincrease in operating cash flows is primarily attributable to net increases in working capital, primarily inventory and accounts receivable, which used cash of $29.7 million for the three months endedMarch 31, 2022 compared to providing cash of $10.4 million for the three months ended March 31, 2021. This decline was partially offset by an improvement in net income adjusted for non-cash items, which provided $4.8$8.7 million of cash for the three months ended March 31, 20222023 compared to using $11.8provided $4.8 million for the three months ended March 31, 2021.2022.
Net cash provided by (used in)used in investing activities
Net cash used in investing activities was $0.8 million for the three months ended March 31, 2023, including $1.1 million of capital expenditures, partially offset by $0.3 million of proceeds from the sale of property and equipment. Net cash used in investing activities was $0.7 million for the three months ended March 31, 2022, including $0.9 million of capital expenditures, partially offset by $0.1 million of proceeds from the sale of property and equipment.
22


Net cash provided by investing(used in) financing activities
Net cash provided by financing activities was $1.1$19.4 million for the three months ended March 31, 2021 including $1.52023 compared to $0.6 million of proceeds from the sale of property and equipment, partially offset by $0.4 million of capital expenditures for property and equipment.
Net cash used in financing activities
Net cash used in financing activities was $0.6 million and $27.5 million for the three months ended March 31, 2022, and March 31, 2021, respectively. The decreasechange in net cash used inprovided by (used in) financing activities primarily resulted from $13.7$25.0 million of cash used to repurchase 2025 Notes and $13.1 million of repaymentsnet borrowings on the revolving Credit Facility, offset by $5.4 million of repurchases of common stock under our share repurchase program and long-term incentive awards during the three months ended March 31, 2021.2023.
Supplemental Guarantor Financial Information
The Company’s 2025 Notes are guaranteed 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 guarantor, to the extent of the value of the collateral securing the 2025 Notes (after giving effect to the liens securing our Credit Facility and any other senior liens on the collateral); and (v)(iv) senior in right of payment to 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 disposition of all or substantially all of the assets of such guarantor (by merger, consolidation or otherwise) to a person that is not (either before or after giving effect to such transaction) the 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 discharge of the 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 fixed liabilities of such guarantor (including, without limitation, any guarantees under the Credit Facility) and any collections from or payments made by or on behalf of any other guarantor in respect of the obligations of such other guarantor under its guarantee or pursuant to its contribution obligations under the 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 review and avoidance under applicable fraudulent conveyance, fraudulent preference, fraudulent transfer and insolvency laws.
We are presenting the following summarized financial information for the Company and the subsidiary guarantors (collectively referred to as the "Obligated Group"“Obligated Group”) pursuant to Rule 13-01 of 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
23


non-guarantor subsidiaries and other related parties, as applicable, have been separately presented within the summarized financial information below.
23


Summarized financial information for the year-to-date interim period and the most recent annual period was as follows (in thousands):
Three Months Ended March 31,Three Months Ended March 31,
Summarized Statements of OperationsSummarized Statements of Operations20222021Summarized Statements of Operations20232022
RevenueRevenue$116,360 $82,197 Revenue$151,263 $116,360 
Cost of salesCost of sales90,525 66,041 Cost of sales116,471 90,525 
Operating loss(2,643)(18,734)
Operating income (loss)Operating income (loss)2,667 (2,643)
Net lossNet loss(9,199)(29,663)Net loss(3,486)(9,199)
March 31, 2022December 31, 2021March 31, 2023December 31, 2022
Summarized Balance SheetSummarized Balance SheetSummarized Balance Sheet
Current assetsCurrent assets$342,073 $327,281 Current assets$397,664 $378,812 
Non-current assetsNon-current assets290,616 298,172 Non-current assets271,288 279,389 
Current liabilitiesCurrent liabilities$162,606 $144,487 Current liabilities$160,534 $175,155 
Payables to non-guarantor subsidiariesPayables to non-guarantor subsidiaries131,956 125,281 Payables to non-guarantor subsidiaries145,730 132,839 
Non-current liabilitiesNon-current liabilities257,315 259,622 Non-current liabilities204,644 293,150 
Critical accounting policies and estimates
There have been no material changes in our critical accounting policies and procedures during the three months ended March 31, 2022.2023. For a detailed discussion of our critical accounting policies and estimates, refer to our 20212022 Annual Report on Form 10-K. For recent accounting pronouncements, refer to Note 2 Recent Accounting Pronouncements.

Item 3. Quantitative and qualitative disclosures about market risk
Not required under Regulation S-K for “smaller reporting companies.”
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures 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 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 March 31, 2022.2023. 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 March 31, 2022.2023.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
24


 
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Information related to Item 1. Legal Proceedings is included in Note 1110 Commitments and Contingencies, which is incorporated herein by reference.
Item 1A. Risk Factors
For additional information about our risk factors, see “Risk Factors” in Item 1A of our 20212022 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table is a summary of our repurchases of our common stock during the three months ended March 31, 2023.
PeriodTotal number of shares purchased (a)Average price paid per shareTotal number of shares purchased as part of publicly announced plan or programs (a)Maximum value of shares that may yet be purchased under the plan or program (in thousands) (a)
January 1, 2023 - January 31, 2023$— $5,941 
February 1, 2023 - February 28, 2023$— 5,941 
March 1, 2023 - March 31, 2023138,638$25.22 138,6382,444 
Total138,638$25.22 138,638
(a) 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$10.0 million. Shares may be repurchased under the program from time to time, in amounts and at prices that the companyCompany 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 March 31, 2022,2023, we have repurchased approximately 56298 thousand shares of our common stock for aggregate consideration of approximately $1.1 million at an average price of $18.87 per share.$7.6 million. Remaining authorization under this program is $8.9$2.4 million. There is no expiration date for the program.
No shares were purchased during the three months ended March 31, 2022.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None
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Item 6. Exhibits
Exhibit
NumberDESCRIPTION
10.1**#
10.2**#
10.3*#
10.4**#
10.5**#
22.1*
31.1**
31.2**
32.1**
32.2**
101.INS**Inline XBRL Instance 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.
#Identifies management contracts and compensatory plans or arrangements.
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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:May 6, 20225, 2023By:/s/ D. Lyle Williams, Jr.
D. Lyle Williams, Jr.
Executive Vice President and Chief Financial Officer
(As Duly Authorized Officer and Principal Financial Officer)
By:/s/ John McElroyKatherine C. Keller
John McElroyKatherine C. Keller
Vice President and ChiefPrincipal Accounting Officer
(As Duly Authorized Officer and Principal Accounting Officer)


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