Estimate Update
We are updating our estimates to reflect higher expected interest expense in 2Q24. On the May 3, 2024, earnings call to discuss 1Q24 results, management indicated that 2Q24 interest expense would be ~$8 million. Our previously published 2Q24 interest expense estimate was $7.1 million. Our updated 2Q24 adjusted EPS estimate is $0.04 versus our prior $0.12 estimate. Management’s 2Q24 adjusted EBITDA outlook was $24-28 million. The 2Q24 outlook is based on estimated revenue of $200-220 million. By comparison, 2Q23 revenue was $185.4 million and adjusted EBITDA was $17.4 million. The Y/Y improvement is partially attributed to the Variperm acquisition, which closed in January 2024. Variperm added a margin accretive business exposing FET to the Canadian oilsands market. Variperm’s primary product lines include sand and flow control products. The products are customized to meet the requirements of oilsands reservoirs, optimizing production and steam injection by preventing unconsolidated sand and debris from entering the wellbore. Management believes FET will benefit from revenue pull through generated by expanding service relationships with Variperm’s Canadian customer base. Over time, new business opportunities could be created in FET’s international customer base for Variperm’s products in new markets. Like 1Q24, the margin accretion from the Variperm business should be evident in FET’s 2Q24 financial results. FET’s 1Q24 adjusted EBITDA margin in the Artificial Lift & Downhole segment, which includes Variperm, was 21.6% in 1Q24 compared with 14.8% in 4Q23 and 16.2% in 1Q23. Overall, adjusted EBITDA margin improved to 12.9% in 1Q23 from 8.3% in 4Q23 and 9.4% in 1Q23. FET’s FY24 latest (May 3, 2024) adjusted EBITDA guidance was $100-120 million. Further, management expected FY24 free cash flow in the range of $40-60 million. FET expects its existing liquidity and free cash flow will enable it to significantly improve the leverage profile by mid-2025. As of March 31, 2025, the outstanding balance on the 2025 senior notes was $134 million and the balance on the seller term loan issued in the Variperm transaction was $59.7 million. We will adjust our model to reflect the balance changes once the timing becomes more certain. Pro forma for the expected debt retirement, management expects FET’s leverage ratio to be around 1.0x adjusted EBITDA, at which point it could consider a plan to return cash to shareholders. We hosted a fireside chat on May 21, 2024, to discuss FET’s “Beat the Market” strategy to deliver value. The accompanying Management Series report can be accessed via a link in our full report.
Water Tower Research is built on the foundation of democratizing information flow. We bridge the growing information gap between companies and investors through our investor engagement strategies and open-access research platform.
Our research analysts are Wall Street veterans with the experience and knowledge to work with companies and investors in tandem. We provide access to the information and content that anchors the due diligence process for both professional money managers and individual investors. We leverage traditional research distribution channels and the best of modern digital strategies and tactics to amplify this information flow globally to engage all categories of investors and stakeholders.
Information flow is the foundation for creating investor awareness, knowledge, and engagement. Our mission is to help companies and investors have the tools they need and achieve their goals.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.