FORUM ENERGY TECHNOLOGIES, INC. 10-Q

Item 1. Financial Statements Forum Energy Technologies, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Loss (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share information) 2023 2022 2023 2022 Revenue $ 179,253 $ 181,835 $ 553,659 $ 509,255 Cost of sales 128,231 130,472 399,229 370,700 Gross profit 51,022 51,363 154,430 138,555 Operating expenses Selling, general and administrative expenses 45,496 43,713 135,364 131,515 Loss (gain) on disposal of assets and other ( 145 ) ( 52 ) 137 ( 938 ) Total operating expenses 45,351 43,661 135,501 130,577 Operating income 5,671 7,702 18,929 7,978 Other expense (income) Interest expense 4,504 8,143 13,742 23,609 Foreign exchange and other losses (gains), net ( 8,279 ) ( 18,288 ) 1,129 ( 37,112 ) Total other expense (income), net ( 3,775 ) ( 10,145 ) 14,871 ( 13,503 ) Income before taxes 9,446 17,847 4,058 21,481 Income tax expense 1,477 1,370 6,154 4,939 Net income (loss) $ 7,969 $ 16,477 $ ( 2,096 ) $ 16,542 Weighted average shares outstanding Basic 10,235 5,778 10,208 5,736 Diluted 10,393 10,552 10,208 10,489 Earnings (loss) per share Basic $ 0.78 $ 2.85 $ ( 0.21 ) $ 2.88 Diluted $ 0.77 $ 1.82 $ ( 0.21 ) $ 2.37 Other comprehensive income (loss), net of tax of $ 0 : Net income (loss) $ 7,969 $ 16,477 $ ( 2,096 ) $ 16,542 Change in foreign currency translation ( 10,710 ) ( 22,690 ) 1,197 ( 46,199 ) Gain (loss) on pension liability ( 36 ) 66 ( 15 ) 153 Comprehensive loss $ ( 2,777 ) $ ( 6,147 ) $ ( 914 ) $ ( 29,504 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Forum Energy Technologies, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share information) September 30, 2023 December 31, 2022 Assets Current assets Cash and cash equivalents $ 37,151 $ 51,029 Accounts receivable—trade, net of allowances of $ 10,945 and $ 10,690 157,820 154,247 Inventories, net 302,304 269,828 Prepaid expenses and other current assets 24,670 21,957 Accrued revenue 771 665 Costs and estimated profits in excess of billings 8,440 15,139 Total current assets 531,156 512,865 Property and equipment, net of accumulated depreciation 61,397 62,963 Operating lease assets 56,363 57,270 Deferred financing costs, net 927 1,166 Intangible assets, net 173,394 191,481 Deferred income taxes, net 368 184 Other long-term assets 5,266 8,828 Total assets $ 828,871 $ 834,757 Liabilities and equity Current liabilities Current portion of long-term debt $ 1,076 $ 782 Accounts payable—trade 124,146 118,261 Accrued liabilities 64,184 76,544 Deferred revenue 14,140 14,401 Billings in excess of costs and profits recognized 4,739 305 Total current liabilities 208,285 210,293 Long-term debt, net of current portion 128,537 239,128 Deferred income taxes, net 904 902 Operating lease liabilities 62,569 64,626 Other long-term liabilities 11,456 12,773 Total liabilities 411,751 527,722 Commitments and contingencies Equity Common stock, $ 0.01 par value, 14,800,000 shares authorized, 10,901,878 and 6,223,454 shares issued 109 62 Additional paid-in capital 1,368,062 1,253,613 Treasury stock at cost, 708,900 and 570,247 shares ( 142,057 ) ( 138,560 ) Retained deficit ( 682,691 ) ( 680,595 ) Accumulated other comprehensive loss ( 126,303 ) ( 127,485 ) Total equity 417,120 307,035 Total liabilities and equity $ 828,871 $ 834,757 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Forum Energy Technologies, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, (in thousands) 2023 2022 Cash flows from operating activities Net income (loss) $ ( 2,096 ) $ 16,542 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation expense 7,920 9,678 Amortization of intangible assets 18,074 18,487 Inventory write down 1,918 1,580 Stock-based compensation expense 3,345 3,537 Deferred income taxes ( 93 ) ( 1,870 ) Noncash losses and other, net 4,702 5,480 Changes in operating assets and liabilities Accounts receivable—trade ( 4,779 ) ( 28,729 ) Inventories ( 35,613 ) ( 37,160 ) Prepaid expenses and other assets 413 1,408 Cost and estimated profit in excess of billings 6,819 ( 10,251 ) Accounts payable, deferred revenue and other accrued liabilities ( 8,257 ) ( 2,022 ) Billings in excess of costs and estimated profits earned 4,570 ( 8,812 ) Net cash used in operating activities ( 3,077 ) ( 32,132 ) Cash flows from investing activities Capital expenditures for property and equipment ( 5,497 ) ( 4,779 ) Proceeds from sale of property and equipment 1,341 2,672 Payments related to business acquisitions and dispositions — ( 485 ) Net cash used in investing activities ( 4,156 ) ( 2,592 ) Cash flows from financing activities Borrowings on Credit Facility 351,635 423,945 Repayments on Credit Facility ( 351,635 ) ( 413,205 ) Payment of capital lease obligations ( 910 ) ( 746 ) Repurchases of stock ( 5,996 ) ( 826 ) Net cash provided by (used in) financing activities ( 6,906 ) 9,168 Effect of exchange rate changes on cash 261 ( 1,524 ) Net decrease in cash, cash equivalents and restricted cash ( 13,878 ) ( 27,080 ) Cash, cash equivalents and restricted cash at beginning of period 51,029 46,858 Cash, cash equivalents and restricted cash at end of period $ 37,151 $ 19,778 Noncash activities Operating lease right of use assets obtained in exchange for lease obligations $ 5,194 $ 3,248 Finance lease right of use assets obtained in exchange for lease obligations 1,521 458 Conversion of debt to common stock 113,650 — The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Forum Energy Technologies, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) Nine Months Ended September 30, 2023 (in thousands) Common stock Additional paid-in capital Treasury stock Retained deficit Accumulated other comprehensive income / (loss) Total equity Balance at December 31, 2022 $ 62 $ 1,253,613 $ ( 138,560 ) $ ( 680,595 ) $ ( 127,485 ) $ 307,035 Stock-based compensation expense — 841 — — — 841 Restricted stock issuance, net of forfeitures 1 ( 1,874 ) — — — ( 1,873 ) Conversion of debt to common stock 46 113,604 — — — 113,650 Treasury stock — — ( 3,497 ) — — ( 3,497 ) Currency translation adjustment — — — — 4,158 4,158 Change in pension liability — — — — 15 15 Net loss — — — ( 3,486 ) — ( 3,486 ) Balance at March 31, 2023 $ 109 $ 1,366,184 $ ( 142,057 ) $ ( 684,081 ) $ ( 123,312 ) $ 416,843 Stock-based compensation expense — 1,257 — — — 1,257 Currency translation adjustment — — — — 7,749 7,749 Change in pension liability — — — — 6 6 Net loss — — — ( 6,579 ) — ( 6,579 ) Balance at June 30, 2023 $ 109 $ 1,367,441 $ ( 142,057 ) $ ( 690,660 ) $ ( 115,557 ) $ 419,276 Stock-based compensation expense — 1,247 — — — 1,247 Restricted stock issuance, net of forfeitures — ( 626 ) — — — ( 626 ) Currency translation adjustment — — — — ( 10,710 ) ( 10,710 ) Change in pension liability — — — — ( 36 ) ( 36 ) Net income — — — 7,969 — 7,969 Balance at September 30, 2023 $ 109 $ 1,368,062 $ ( 142,057 ) $ ( 682,691 ) $ ( 126,303 ) $ 417,120 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Forum Energy Technologies, Inc. and subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) Nine Months Ended September 30, 2022 (in thousands) Common stock Additional paid-in capital Treasury stock Retained deficit Accumulated other comprehensive income / (loss) Total equity Balance at December 31, 2021 $ 61 $ 1,249,962 $ ( 135,562 ) $ ( 684,307 ) $ ( 101,028 ) $ 329,126 Stock-based compensation expense — 2,151 — — — 2,151 Restricted stock issuance, net of forfeitures 1 ( 361 ) — — — ( 360 ) Currency translation adjustment — — — — ( 6,992 ) ( 6,992 ) Change in pension liability — — — — 30 30 Net loss — — — ( 9,199 ) — ( 9,199 ) Balance at March 31, 2022 $ 62 $ 1,251,752 $ ( 135,562 ) $ ( 693,506 ) $ ( 107,990 ) $ 314,756 Stock-based compensation expense — 621 — — — 621 Restricted stock issuance, net of forfeitures — ( 1 ) — — — ( 1 ) Liability awards converted to share settled — 275 — — — 275 Currency translation adjustment — — — — ( 16,518 ) ( 16,518 ) Change in pension liability — — — — 57 57 Net income — — — 9,264 — 9,264 Balance at June 30, 2022 $ 62 $ 1,252,647 $ ( 135,562 ) $ ( 684,242 ) $ ( 124,451 ) $ 308,454 Stock-based compensation expense — 765 — — — 765 Restricted stock issuance, net of forfeitures — ( 467 ) — — — ( 467 ) Currency translation adjustment — — — — ( 22,690 ) ( 22,690 ) Change in pension liability — — — — 66 66 Net income — — — 16,477 — 16,477 Balance at September 30, 2022 $ 62 $ 1,252,945 $ ( 135,562 ) $ ( 667,765 ) $ ( 147,075 ) $ 302,605 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 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,” “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. Basis of Presentation The Company's accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions have been eliminated in consolidation. In management's opinion, 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 and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any other interim period. These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“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 for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022, which are included in the Company’s 2022 Annual Report on Form 10-K filed with the SEC on February 28, 2023. 2. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, which the Company adopts as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption. Accounting Standard Adopted in 2023 Inflation Reduction Act of 2022. In August 2022, the Inflation 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 tax years beginning after December 31, 2022 and a 1% excise tax on stock repurchases made by publicly traded U.S. corporations after December 31, 2022. The adoption of this standard did not have a material impact on our consolidated 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 (“SOFR”). The adoption of this standard did not 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 2022 Annual Report on Form 10-K. Disaggregated Revenue Refer to Note 9 Business Segments for disaggregated revenue by product line and geography. 9 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, the Company records 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 nine months ended September 30, 2023 (in thousands): September 30, 2023 December 31, 2022 Increase / (Decrease) $ % Accrued revenue $ 771 $ 665 Costs and estimated profits in excess of billings 8,440 15,139 Contract assets - current 9,211 15,804 Contract assets - noncurrent 1,637 2,638 Contract assets $ 10,848 $ 18,442 $ ( 7,594 ) ( 41 ) % Deferred revenue $ 14,140 $ 14,401 Billings in excess of costs and profits recognized 4,739 305 Contract liabilities $ 18,879 $ 14,706 $ 4,173 28 % During the nine months ended September 30, 2023, our contract assets decreased by $ 7.6 million and our contract liabilities increased by $ 4.2 million primarily due to the timing of milestone billings for projects in our Subsea Technologies product line. During the nine months ended September 30, 2023, we recognized $ 12.6 million of revenue that was included in the contract liability balance at the beginning of the period. Substantially all of our contracts are less than one year in 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. Inventories The Company's significant components of inventory at September 30, 2023 and December 31, 2022 were as follows (in thousands): September 30, 2023 December 31, 2022 Raw materials and parts $ 98,100 $ 94,182 Work in process 31,529 27,489 Finished goods 211,035 187,448 Total inventories 340,664 309,119 Less: inventory reserve ( 38,360 ) ( 39,291 ) Inventories, net $ 302,304 $ 269,828 10 Table of Contents Forum Energy Technologies, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 5. Intangible Assets Intangible assets consisted of the following as of September 30, 2023 and December 31, 2022, respectively (in thousands): September 30, 2023 Gross Carrying Amount Accumulated Amortization Net Intangibles Amortization Period (In Years) Customer relationships $ 266,409 $ ( 159,402 ) $ 107,007 10 - 35 Patents and technology 88,793 ( 39,568 ) 49,225 5 - 19 Non-compete agreements 188 ( 188 ) — 5 Trade names 42,605 ( 28,496 ) 14,109 7 - 19 Trademarks 5,089 ( 2,036 ) 3,053 15 Total intangible assets $ 403,084 $ ( 229,690 ) $ 173,394 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Intangibles Amortization Period (In Years) Customer relationships $ 266,537 $ ( 147,496 ) $ 119,041 10 - 35 Patents and technology 88,863 ( 35,298 ) 53,565 5 - 19 Non-compete agreements 188 ( 188 ) — 5 Trade names 42,638 ( 27,071 ) 15,567 7 - 19 Trademarks 5,089 ( 1,781 ) 3,308 15 Total intangible assets $ 403,315 $ ( 211,834 ) $ 191,481 6. Debt Notes payable and lines of credit as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands): September 30, 2023 December 31, 2022 2025 Notes $ 134,208 $ 256,970 Unamortized debt discount ( 5,785 ) ( 15,314 ) Debt issuance cost ( 1,420 ) ( 3,759 ) Credit Facility — — Other debt 2,610 2,013 Total debt 129,613 239,910 Less: current portion ( 1,076 ) ( 782 ) Long-term debt, net of current portion $ 128,537 $ 239,128 11 Table of Contents Forum Energy Technologies, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 2025 Notes In August 2020, we exchanged $ 315.5 million principal amount of our previous 6.25 % unsecured notes due 2021 for new 9.00 % convertible secured notes due August 2025 (the “2025 Notes”). The 2025 Notes pay interest at the rate of 9.00 %, of which 6.25 % is payable in cash and 2.75 % is payable in cash or additional notes, at the Company’s 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. During the nine months ended September 30, 2023, $ 122.8 million or 48 % of the principal amount of the 2025 Notes mandatorily converted into approximately 4.5 million shares of common stock. Credit Facility Our senior secured revolving credit facility ( “ Credit Facility”), which has a maturity date of September 2026, provides revolving credit commitments of $ 179.0 million (with a sublimit of up to $ 70.0 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 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 $ 124.0 million (subject to a quarterly reduction of $ 0.5 million) and 80.0 % of the total borrowing base. Our borrowing capacity under the Credit Facility could be reduced or eliminated, depending on future fluctuations in our receivables and inventory. As of September 30, 2023, our total borrowing base was $ 173.3 million, of which no amount was drawn and $ 18.5 million was used for security of outstanding letters of credit, resulting in remaining availability of $ 154.8 million. Borrowings under the U.S. Line are subject to an interest rate equal to, at the Company's option, either (a) the SOFR, subject to a floor of 0.00 %, plus a margin of 2.25 % to 2.75 %, or (b) a base rate plus a margin of 1.25 % to 1.75 %, in each case based upon the Company's quarterly total net leverage ratio, with the U.S. Line base rate determined by reference to the greatest of (i) the federal funds rate plus 0.50 % per annum, (ii) the one-month adjusted SOFR plus 1.00 % per annum, and (iii) the rate of interest announced, from time to time, by Wells Fargo at its principal office in San Francisco as its prime rate, subject to a floor of 0.00 %. Borrowings under the Canadian Line were subject to an interest rate during the reporting period equal to, our subsidiary's option, either (a) the Canadian Dollar Offered Rate (“CDOR”), subject to a floor of 0.00 %, plus a margin of 2.25 % to 2.75 %, or (b) a base rate plus a margin of 1.25 % to 1.75 %, in each case based upon the Company's quarterly net leverage ratio. The Canadian line base rate is determined by reference to the greater of (i) the one-month CDOR plus 1.00 % and (ii) the prime rate for Canadian dollar commercial loans made in Canada as reported by Thomson Reuters, subject to a floor of 0.00 %. The weighted average interest rate under the Credit Facility was approximately 8.28 % for the nine months ended September 30, 2023. The Credit Facility also provides for a commitment fee in the 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. 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. 12 Table of Contents Forum Energy Technologies, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Other Debt Other debt consists primarily of various finance leases of equipment. Letters of Credit and Guarantees We execute letters of credit in the normal course of business to secure the delivery of product from specific vendors and also to guarantee our fulfillment of performance obligations relating to certain large contracts. The Company had $ 18.5 million and $ 21.8 million in total outstanding letters of credit as of September 30, 2023 and December 31, 2022, respectively. 7. Income Taxes 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 and nine months ended September 30, 2023, the Company recorded a tax expense of $ 1.5 million and $ 6.2 million, respectively. For the three and nine months ended September 30, 2022, the Company recorded a tax expense of $ 1.4 million and $ 4.9 million, respectively. The estimated annual effective tax rates for all periods were impacted by losses in jurisdictions where the recording of a tax benefit is not available. Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company’s relative mix of earnings and losses by jurisdiction. Finally, the Company believes that it is reasonably possible that a decrease of approximately $ 1.5 million of noncurrent unrecognized tax benefits may occur by the end of 2023 as a result of a lapse of the statute of limitations. We have deferred tax assets related to 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 September 30, 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 Saudi Arabia. As a result, we have certain valuation allowances against our deferred tax assets as of September 30, 2023. 8. Fair Value Measurements The Company had no borrowings outstanding under the Credit Facility as of September 30, 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 September 30, 2023, the fair value and the carrying value of our 2025 Notes approximated $ 130.1 million and $ 127.0 million, respectively. At December 31, 2022, the fair value and the carrying value of our 2025 Notes approximated $ 272.8 million and $ 237.9 million, respectively. There were no other significant outstanding financial instruments as of September 30, 2023 and December 31, 2022 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 nine months ended September 30, 2023. 13 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 three 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 Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenue Drilling & Downhole $ 81,181 $ 75,723 $ 238,652 $ 223,476 Completions 62,473 72,246 208,239 190,867 Production 36,877 34,238 108,918 95,622 Eliminations ( 1,278 ) ( 372 ) ( 2,150 ) ( 710 ) Total revenue $ 179,253 $ 181,835 $ 553,659 $ 509,255 Segment operating income Drilling & Downhole $ 8,437 $ 9,481 $ 25,165 $ 23,995 Completions 2,147 5,915 9,893 8,787 Production 1,803 665 4,546 ( 1,241 ) Corporate ( 6,861 ) ( 8,411 ) ( 20,538 ) ( 24,501 ) Segment operating income 5,526 7,650 19,066 7,040 Loss (gain) on disposal of assets and other ( 145 ) ( 52 ) 137 ( 938 ) Operating income $ 5,671 $ 7,702 $ 18,929 $ 7,978 A summary of consolidated assets by reportable segment is as follows (in thousands): September 30, 2023 December 31, 2022 Drilling & Downhole $ 347,503 $ 340,819 Completions 357,174 366,771 Production 100,149 95,089 Corporate 24,045 32,078 Total assets $ 828,871 $ 834,757 Corporate assets primarily include cash, certain prepaid assets and deferred loan costs. 14 Table of Contents Forum Energy Technologies, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) The following table presents our revenues disaggregated by product line (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Drilling Technologies $ 42,953 $ 38,159 $ 128,995 $ 100,934 Downhole Technologies 23,480 21,916 68,763 62,902 Subsea Technologies 14,748 15,648 40,894 59,640 Stimulation and Intervention 32,545 43,647 126,266 111,143 Coiled Tubing 29,928 28,599 81,973 79,724 Production Equipment 21,706 18,463 59,268 50,055 Valve Solutions 15,171 15,775 49,650 45,567 Eliminations ( 1,278 ) ( 372 ) ( 2,150 ) ( 710 ) Total revenue $ 179,253 $ 181,835 $ 553,659 $ 509,255 The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 United States $ 103,453 $ 124,896 $ 352,183 $ 336,754 Middle East 27,359 12,751 64,058 38,700 Canada 12,333 14,169 40,400 35,761 Europe & Africa 16,832 14,291 39,177 45,186 Latin America 9,185 6,191 30,218 25,891 Asia-Pacific 10,091 9,537 27,623 26,963 Total revenue $ 179,253 $ 181,835 $ 553,659 $ 509,255 10. Commitments and Contingencies 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 September 30, 2023 and December 31, 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 DURACOIL TM products do not infringe certain Tenaris patents related to coiled tubing. Tenaris filed counterclaims against Global Tubing alleging DURACOIL TM products infringe three patents. Tenaris sought unspecified damages and a permanent injunction. In response, Global Tubing alleged that its products do not infringe and the Tenaris patents are invalid and unenforceable. On March 20, 2023, the court agreed with Global Tubing, finding all patents unenforceable and dismissing all Tenaris infringement claims. Global Tubing intends to seek an award of its attorneys’ fees and costs incurred as a result of the litigation. Tenaris has appealed the final judgment and Global Tubing has filed a cross-appeal. 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. 15 Table of Contents Forum Energy Technologies, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 11. 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 Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net income (loss) - basic $ 7,969 $ 16,477 $ ( 2,096 ) $ 16,542 Interest on dilutive convertible notes due 2025 — 2,762 — 8,286 Net income (loss) - diluted $ 7,969 $ 19,239 $ ( 2,096 ) $ 24,828 Weighted average shares outstanding - basic 10,235 5,778 10,208 5,736 Dilutive effect of stock options and restricted stock 158 227 — 206 Dilutive effect of convertible notes due 2025 — 4,547 — 4,547 Weighted average shares outstanding - diluted 10,393 10,552 10,208 10,489 Earnings (loss) per share Basic $ 0.78 $ 2.85 $ ( 0.21 ) $ 2.88 Diluted $ 0.77 $ 1.82 $ ( 0.21 ) $ 2.37 The calculation of diluted earnings per share excluded approximately 46 thousand shares that were anti-dilutive for the three months ended September 30, 2023. For the nine months ended September 30, 2023, we excluded all potentially dilutive restricted shares and stock options in calculating diluted earnings per share as the effect was anti-dilutive due to net losses incurred for the period. For the three months and nine months ended September 30, 2022, the diluted earnings per share calculation excluded approximately 54 thousand and 95 thousand shares, respectively. Diluted earnings per share was calculated using treasury stock method for the restricted shares and stock options; and if-converted method for the convertible notes. 12. Stockholders' Equity Stock-based compensation During the nine months ended September 30, 2023, the Company granted 86,912 time-based restricted stock units to employees that vest ratably over three years . In addition, during the nine months ended September 30, 2023, the Company granted 86,912 performance restricted stock units to employees (assuming target performance) that vest based upon the total shareholder return of the Company's common stock as compared to a group of peer companies over three different 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 each award is allocated to each performance period. The performance restricted stock units may settle for between 0 % and 200 % of the target units granted in shares of the Company’s common stock. 13. Related Party Transactions The Company has sold and purchased inventory, services and fixed assets to and from various affiliates of certain directors. The dollar amounts of these related party activities are not significant to the Company’s unaudited condensed consolidated financial statements. 16 Table of Contents Forum Energy Technologies, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 14 . Subsequent Events On November 1, 2023, the Company and its wholly owned subsidiary entered into a purchase agreement with Variperm Holdings Ltd. ("Variperm") and its shareholders to acquire all of the issued and outstanding common shares of Variperm. The Company expects the transaction to close during January 2024. Variperm, headquartered in Canada, is a manufacturer of downhole technology solutions, providing sand and flow control products for heavy oil applications. Total consideration for the acquisition includes approximately $ 150.0 million of cash and 2.0 million shares of the Company's common stock, subject to customary purchase price adjustments set forth in the purchase agreement. The purchase agreement was filed in the Company's Current Report on Form 8-K on November 3, 2023. On November 1, 2023, the Company entered into an amendment to the Credit Facility that, among other things, permits the acquisition of Variperm, permits the incurrence of either new secured notes in an amount not to exceed $ 200.0 million or other financing, extends the maturity date of the Credit Agreement to September 8, 2028, increases the aggregate revolving commitments to $ 250.0 million from $ 179.0 million, and updates the CDOR provisions with Canadian Overnight Repo Rate Average . 17